<PAGE>
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended
12-31-99 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 1-6605
----------------
EQUIFAX INC.
------------
(Exact name of Registrant as specified in its Charter)
<TABLE>
<CAPTION>
<S> <C>
GEORGIA 58-0401110
- ------------------------------------------------------------- ------------------------------------
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1550 Peachtree St., N.W., Atlanta, GA 30309
- ------------------------------------------------------- --------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (404) 885-8000
--------------------------
</TABLE>
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock
($1.25 Par Value) New York Stock Exchange
----------------- -----------------------
Securities registered pursuant to Section 12(g) of the Act:
None
----
(Title of class)
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 (SECTION 229.405 OF THIS CHAPTER) 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. [X]
AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF THE
REGISTRANT, COMPUTED BY REFERENCE TO THE CLOSING SALES PRICE ON THE NEW YORK
STOCK EXCHANGE ON FEBRUARY 25, 2000: $2,809,657,446.
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S CLASSES OF
COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
Class Outstanding at February 25, 2000
----- --------------------------------
COMMON STOCK, $1.25 PAR VALUE 141,050,489
- ----------------------------------- --------------
DOCUMENTS INCORPORATED BY REFERENCE
THE PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL
27, 2000, IS INCORPORATED BY REFERENCE, TO THE EXTENT INDICATED UNDER ITEMS 10,
11, 12, 13 AND 14, INTO PARTS III AND IV OF THIS FORM 10-K.
THE ANNUAL REPORT TO SECURITY HOLDERS FOR THE FISCAL YEAR ENDED DECEMBER 31,
1999 IS INCORPORATED BY REFERENCE, TO THE EXTENT INDICATED UNDER ITEMS 3, 6, 7,
8 AND 14, INTO PARTS I, II AND IV.
<PAGE>
PART I
ITEM 1. BUSINESS
- ------- --------
Equifax is a leader in shaping global commerce by bringing buyers and sellers
together through information, transaction processing and knowledge-based
businesses. Global operations include consumer and commercial credit information
services, credit card processing, check guarantee and authorization, software,
modeling, database management, analytics, consulting and direct to consumer
services.
The Company was founded as a credit reporting agency under the name "Retail
Credit Company" in Atlanta, Georgia, in 1899. Over the next several years, the
Company established itself in the area of investigation of applicants for
insurance. The business grew, and by 1920, the Company had numerous branch
offices throughout the United States and Canada. Since that time, the Company
has continued to expand on its domestic and international basis and diversify by
means of internal development and strategic acquisitions. In late 1975, the
Company changed its name from "Retail Credit Company" to "Equifax Inc." In
mid-1997, the Company divested its insurance services operations which was
accomplished through the spinoff of a subsidiary company to shareholders.
Equifax Inc. is a holding company which conducts its business operations through
subsidiary companies. The Company's business areas are divided into separate
groups and are conducted on a "profit center" basis with self-contained
functional integrity, although Equifax Inc. supplies centralized overall
financial, legal, communications, media relations, tax and similar services. The
specific products and services presently offered by the Company are described
below under the respective Company segment headings.
In May 1999, at the Annual Shareholders' Meeting, the Company announced the
election of Thomas F. Chapman as Chairman of the Board, in addition to his
position of Chief Executive Officer.
In June 1999, the Company announced the election of Lee A. Kennedy as President
and Chief Operating Officer.
In June 1999, the Company commenced its card processing operations in the United
Kingdom in partnership with Groupe Cofinoga and Banque Nationale de Paris.
In July 1999, the Company entered into an agreement with EDS for the outsourcing
of its Payment Services data processing operations. EDS will manage the data
center for Equifax's 6,000 financial institution clients and 100,000 merchants.
In August 1999, the Company entered into a ten year agreement with Price
WaterhouseCoopers for the outsourcing of certain human resources, financial,
compensation and benefits administrative functions.
During 1999, the Company also acquired fourteen U.S. consumer reporting
affiliates and three in Canada.
In January 2000, the Company acquired Procard, the second largest credit card
processor in Chile.
-1-
<PAGE>
In February 2000, the Company announced its plans to acquire the Consumer
Information Solutions Group of R. L. Polk and Company for approximately $260
million in cash. This Group provides consumer marketing information services to
a wide range of industries. The transaction is expected to close April 30, 2000.
Since January 1993, the Company has had an open market share repurchase program.
During 1999, the Company repurchased 6,944,000 shares at a cost of $210.2
million.
Reference is made to acquisitions and investments in unconsolidated affiliates
reported in Note 3 and industry segment information reported in Note 11 of the
Notes to Consolidated Financial Statements, included as Exhibit 13.3 in Part IV,
Item 14 of this report, which are incorporated by reference.
A description of the Company's products or services by segment follows:
North American Information Services Segment
- -------------------------------------------
This segment includes Equifax Credit Information Services, Inc.; Credit
Northwest Corporation; Equifax-Rochester, Inc.; Acrofax Inc.; Equifax Consumer
Services, Inc.; Equifax Secure, Inc.; Equifax Knowledge Engineering, Inc.;
Equifax Canada Inc.; and Equifax Canada (AFX) Inc.
The Company's principal classes of service for this segment are informational
services for consumer credit reporting purposes and risk management services.
Customers include banks, financial institutions, retailers, credit card issuers,
utilities and telecommunications companies, transportation companies, mortgage
lenders, healthcare administration companies, consumers and government.
Informational services for consumer and commercial credit reporting purposes in
the U.S. and Canada accounted for 35% of the Company's 1999 total revenue, as
compared with 37% in 1998 and 40% in 1997. Risk management services in the U.S.
and Canada accounted for 8% of the Company's 1999 total revenue, as compared
with 9% in 1998 and 10% in 1997.
Businesses in this segment primarily furnish consumer credit reporting
information and decision support and credit management services designed to meet
specific customer needs. These services include consumer credit reporting
information, credit marketing services, risk management, account acquisition
services, notification services, locate services, fraud detection and prevention
services, mortgage information and collections outsourcing. In Canada, these
services also include commercial credit information. Distribution of information
to customers is made primarily through electronic data interfaces.
Additionally, emerging businesses in this segment include custom analytics and
database solutions for customer relationship management and, also, a variety of
e-commerce solutions including online identity verification services and digital
certificate products.
In the U.S., the Company's consumer credit services operations, including
non-owned affiliate bureaus, compete with two other automated credit reporting
companies -- Experian Corporation and Trans Union Corporation. Equifax Canada
Inc. is the leading provider of both consumer and commercial credit information
in Canada.
-2-
<PAGE>
Payment Services Segment
- ------------------------
This segment includes Equifax Payment Services, Inc.;Equifax Check Services,
Inc.; Equifax Card Services, Inc.; Equifax Card Services (Madison), Inc.; Credit
Union Card Services, Inc.; Light Signatures, Inc.; Financial Insurance Marketing
Group, Inc.; First Bankcard Systems, Inc.; Equifax Mauritius Private Limited;
Equifax Card Solutions, S.A.; Equifax E-Banking Solutions, Inc.; Equifax Ltd.;
Equifax Australia plc.; Equifax Card Solutions Limited; Equifax Pty Ltd.;
Equifax SNC; Equifax Venture Infotek Ltd. (50%); Telecredit Canada, Inc.;
Transax Plc; Transax France plc.; Partech S.A. (51%); Unnisa Solucoes en Meios
de Pagamento Ltda. (59%); and Transax (Ireland) Ltd.
The Company's principal classes of service for this segment are Card Solutions
and Check Solutions. Card Solutions provides a broad range of products and
services supporting every phase of the card payment industry, including credit
and debit card transaction processing, card processing software, portfolio
management services, portfolio analysis, cardholder customer service, marketing
services, risk management services and merchant processing. In 1999, Card
Solutions had operations in the U.S., U.K. and Brazil, and a joint venture in
India and, in January 2000 purchased Procard in Chile. Card Solutions customers
include banks, credit unions and savings institutions in the U.S. and leading
credit card issuers outside the U.S. Card software product customers are diverse
and include some of the world's largest financial institutions. This class of
service accounted for 25% of the Company's 1999 total operating revenue, as
compared with 22% in 1998 and 21% in 1997. Check Solutions in the U.S. supports
customers with check risk management solutions, including check guarantee and
authorization services, data file exchanges, risk management consulting, check
collections, and database marketing and fraud identification. Check Solutions
now includes international operations in the U.K., Canada, Ireland, France, New
Zealand and Australia. Check Solutions customers include national and regional
retail chains, online brokerages, hotels, automotive dealers, grocers and other
retailers. Check Solutions accounted for 13% of the Company's 1999 total
operating revenue, as compared with 13% in 1998 and 14% in 1997.
Companies in this segment are leading providers of their products and services
in the United States, although competition is considerable. In Brazil, Unnisa is
the largest third party processor.
Business in this segment is somewhat seasonal to some extent. The volume of
check and credit and debit card processing is highest during the holiday
shopping season and during other periods of increased consumer spending.
Equifax Europe Segment
- ----------------------
This segment includes Equifax Plc; UAPT-Infolink plc; The Infocheck Group Ltd.;
Credit Consultants International Ltd.; Credit Link (U.K.) Ltd.; Dicodi, S.A.;
Equifax Decision Systems B.V.; Information Tecnica Del Credito, S.L. (Incresa);
Infolink Ltd.; Messagegram Ltd.; Ultimate Business Services plc.; Ultimate Media
Concepts Ltd.; Via Ejectiva, S.A.; VIV Limited; Credinformacoes, Informacoes de
Credito, LDA; Precision Marketing Information Ltd. (49% owned); and The Equifax
Database Company Ltd. Also included in this segment are CCI Group plc., CCI
Trace and Investigation Services Ltd., The Database
-3-
<PAGE>
Company Ltd., Equifax Iberica, S.A. and ASNEF-Equifax Servicios de Informacion
Sobre Solvencia y Credito, S.L. (95% owned).
The Company's principal class of service is providing consumer and commercial
information and consumer marketing lists in the United Kingdom, Spain and
Portugal.
The businesses in this segment primarily provide consumer and commercial credit
services, but also provide other financial services, including credit
application processing, credit scoring, auto lien and other information,
marketing services, modeling and analytics, and risk management services.
Customers include banks, financial institutions, retailers, automobile
manufacturers, utilities and telecommunications companies, auto finance and
leasing firms, automobile dealers and rental companies and mortgage lenders.
Throughout the United Kingdom, Spain and Portugal, Equifax also supports small
and medium-size businesses operating in a variety of diverse markets.
Equifax Europe has operations in the United Kingdom, Spain, Portugal and
Ireland.
Latin America Segment
- ---------------------
This segment includes Equifax South America, Inc.; Equifax de Chile, S.A.;
Equifax de Mexico Sociedad de Informacion Crediticia, S.A.; DICOM S.A.;
Organizacion Veraz S.A. (66 2/3%); Equifax do Brasil, Ltda., which owns 80% of
the stock of Seguranca ao Credito e Informacoes (SCI); Equifax Peru Srl.;
Infocorp S.A. (51%); and Dicom CentroAmerica (51%).
The principal class of service for this segment is consumer and commercial
credit information services. In addition to credit information, DICOM provides
import/export data, legal trademark, stock market and other consumer
information. Customers include retailers, banks, financial institutions,
utilities, telecommunications companies, manufacturers and individual consumers.
SCI is a leading commercial credit information provider in Brazil, and also
provides consumer credit information, while DICOM and Veraz are the leading
providers of consumer and commercial credit information in Chile and Argentina
respectively. Equifax Latin America also has operations in Peru and El Salvador.
Other Segment
- -------------
This segment includes High Integrity Systems, Inc.
The Company's single class of service for this segment was lottery services. In
1996, the Company subcontracted many of its lottery obligations to GTECH
Corporation, and as a result, these operations are not material to a general
understanding of the Company's business. Other than this subcontract, which
extends until mid 2002, the Company is no longer in the lottery business.
-4-
<PAGE>
================================================================================
The principal methods of competition for the Company are price, scope, speed,
ease of use, and quality of the information and services provided.
None of the Company's segments is dependent on any single customer, and the
Company's largest customer provides less than 10% of the Company's total
revenues.
The Company had approximately 12,700 employees as of December 31, 1999.
ITEM 2. PROPERTIES
- ------- ----------
The Company is in a service industry and does not own any mines, extractive
properties or manufacturing plants. Consequently, an understanding of the
Company's property holdings is not deemed to be material to an understanding of
the Company's business taken as a whole.
The Company owns a total of three office buildings, one of which is located in
Wexford, Ireland; one in Salisbury, England; and one in Santiago, Chile. The
Company owns approximately 23.5 acres in Windward Office Park located in
Alpharetta, Georgia adjacent to office space currently under lease by the
Company.
The Company ordinarily leases office space of the general commercial type for
conducting its business and is obligated under approximately 261 leases and
other rental arrangements for its headquarters and field locations. The
Company's operating leases involve principally office space.
ITEM 3. LEGAL PROCEEDINGS
- ------- -----------------
Reference is made to Note 9 of the Notes to Consolidated Financial Statements,
included in Part IV, Item 14 of this report, which is incorporated by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------- ---------------------------------------------------
No matters were submitted during the fourth quarter to a vote of security
holders.
-5-
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------
The Company's executive officers, as of March 17, 2000, are listed below, with
certain information relating to each of them:
<TABLE>
<CAPTION>
Name and Position Officer
With Company Age Since
------------ --- -----
<S> <C> <C>
Thomas F. Chapman, Chairman and Chief Executive Officer* 56 1991
Lee A. Kennedy, President and Chief Operating Officer* 49 1997
William V. Catucci, Executive Vice President & Group Executive - 61 1999
North American Information Services
C. Richard Crutchfield, Executive Vice President & Group Executive - 52 1997
Europe
Philip J. Mazzilli, Executive Vice President & Chief Financial Officer 59 February 2000
William R. Phinney, Executive Vice President & Group Executive - 61 1997
Latin America
Larry J. Towe, Executive Vice President & Group Executive - 52 1999
Payment Services
John T. Chandler, Corporate Vice President & Chief Administrative 52 1995
Officer
Karen H. Gaston, Corporate Vice President, Human Resources 47 1998
& Community Relations
Bruce S. Richards, Corporate Vice President & General Counsel 45 1996
Michael T. Vollkommer, Corporate Vice President & Controller 41 1999
Marietta Edmunds Zakas, Corporate Vice President, 41 1995
Corporate Secretary and Director of Investor Relations
Michael G. Schirk, Vice President & Treasurer 50 1999
*Also serves as a Director
</TABLE>
-6-
<PAGE>
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. Each
elected officer is selected to serve until their successors have been elected
and duly qualified subject to earlier termination in accordance with the
By-laws. Election of officers occurs each year at the Board of Directors meeting
held in conjunction with the Annual Meeting of the Shareholders.
Mr. Chapman, elected in May 1999, serves as Chairman and Chief Executive Officer
of the Company. Prior to this election, Mr. Chapman served as President and
Chief Executive Officer of the Company since January 1998. Previously, he served
as president and Chief Operating Officer of the Company. Before that, he was
Executive Vice President and Group Executive of the Company's former Financial
Services Group. He has served as an officer of the Company for at least five
years.
Mr. Kennedy, elected in June 1999, serves as President and Chief Operating
Officer. Prior to this election, Mr. Kennedy served as Executive Vice President
and Group Executive - Payment Services since 1997. Before that, he served as
Group Executive of the Company's Payment Services Group since 1995. From 1990 to
1995, he served as Senior Vice President and General Manager of the Company's
Card Services Division.
Mr. Catucci, elected in October 1999, serves as Executive Vice President and
Group Executive - North American Information Services. Prior to joining the
Company, Mr. Catucci served as President and Chief Executive Officer of
Unitel/AT&T Canada Long Distance Services from 1996 to 1999 and as a Vice
President of AT&T for more than five years.
Mr. Crutchfield, elected in October 1997, serves as Executive Vice President and
Group Executive - Europe. He also served as Chief Technology Officer of the
Company from October 1997 through March 2000. Mr. Crutchfield served as Senior
Vice President and Chief Information Officer since April 1997. Previously, he
served as Chief Technology Officer for the Company's Financial Services Group
for more than five years.
Mr. Mazzilli, elected February 2000, serves as Executive Vice President and
Chief Financial Officer. Prior to his election he served as Executive Vice
President and Chief Financial Officer of Nova Corporation which provides
transaction processing and related software application products to small
merchants. From 1992 through June 1999, he served as Corporate Vice President,
Treasurer and Controller of Equifax.
Mr. Phinney, elected October 1997, serves as Executive Vice President and Group
Executive - Latin America. Prior to this election, Mr. Phinney served as Vice
President and Area Manager, Latin America, since 1994. Before that, he served as
Vice President of Finance and Planning for the Insurance Services Group since
1991.
Mr. Towe, elected July 1999, serves as Executive Vice President and Group
Executive - Payment Services. Prior to his election Mr. Towe served as Senior
Vice President and General Manager, Equifax Card Solutions, International since
May 1997. Before that, since May 1996, he served as President, FBS Software
which the Company acquired in July 1994. Before that he was Executive Vice
President and head of sales and marketing of FBS Software.
Mr. Chandler, elected in October 1995, serves as Corporate Vice President and
Chief Administrative Officer of the Company. Prior to this election, Mr.
Chandler served as Vice President-Compensation and Benefits Administration upon
joining the Company in 1991.
Ms. Gaston, elected April 1998, serves as Corporate Vice President, Human
Resources and Community Relations for the Company. Prior to this election, Ms.
Gaston served as Senior Vice President of Human
-7-
<PAGE>
Resources Services, Communications and Administration since September 1995 for
the Company's Financial Services Group. Before that, she served as an Assistant
Vice President and then Vice President of Human Resources since 1992.
Mr. Richards, elected in October 1996, serves as Corporate Vice President and
General Counsel of the Company. Prior to this election, Mr. Richards served as
Senior Vice President and Group Counsel of the Company's Financial Services
Group since 1993.
Mr. Vollkommer, elected in December 1999, serves as Corporate Vice President and
Controller of the Company. Prior to joining the Company, Mr. Vollkommer served
as Vice President-Finance for Superior TeleCom Inc., from 1998 until 1999. From
1994-1998, he held executive officer positions with Alumax Inc., a producer of
primary aluminum and aluminum fabricated products.
Ms. Zakas, elected in October 1995, serves as Corporate Vice President,
Corporate Secretary and Director of Investor Relations of the Company. Prior to
this election, Ms. Zakas served as Corporate Vice President and Treasurer for
the period January 1996 through October 1996 and as Corporate Vice
President-Investor Relations for the period October 1995 through January 1996.
Prior to that, she served as Vice President and Director of Investor Relations
of the Company since September 1993.
Mr. Schirk, elected in June 1999, serves as Vice President and Treasurer of the
Company. Prior to his election, Mr. Schirk served as Vice President and
Assistant Treasurer - Treasury Services since January 1996. Before that, he
served as Assistant Vice President and Senior Financial Analyst - Capital
Finance Group since joining the Company in 1992.
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,
which is the principal market on which the stock is traded.
DIVIDENDS PER SHARE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Quarter 1993 1994 1995 1996 1997 1998 1999
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
First $0.070 $0.070 $0.078 $0.083 $0.083 $0.088 $0.090
Second 0.070 0.078 0.078 0.083 0.088 0.088 0.090
Third 0.070 0.078 0.078 0.083 0.088 0.088 0.090
Fourth 0.070 0.078 0.083 0.083 0.088 0.090 0.093
- ----------------------------------------------------------------------------------------------------------------------
Annual $0.280 $0.303 $0.315 $0.330 $0.345 $0.353 $0.363
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
-8-
<PAGE>
<TABLE>
<CAPTION>
STOCK PRICES
- ---------------------------------------------------------------------------------------------------------------------------
(In Dollars) 1995 1996 1997 1998 1999
- ---------------------------------------------------------------------------------------------------------------------------
High Low High Low High Low High Low High Low
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
First Quarter 15.219 11.297 20.141 15.891 30.094 23.938 37.625 31.750 39.875 31.375
Second Quarter 15.656 13.703 24.844 17.563 33.281 23.719 40.688 33.938 38.438 33.250
Third Quarter 18.844 14.594 24.500 21.594 33.000 27.750 44.125 29.750 36.938 26.750
Fourth Quarter 19.469 16.109 30.875 23.719 36.438 28.625 45.000 31.438 28.313 20.125
- ---------------------------------------------------------------------------------------------------------------------------
Year 19.469 11.297 30.875 15.891 36.438 23.719 45.000 29.750 39.875 20.125
</TABLE>
As of February 25, 2000, there were approximately 11,625 holders of record of
the Company's common stock.
ITEM 6. SELECTED FINANCIAL DATA
- ------- -----------------------
Reference is made to Exhibit 13.1, included in Part IV, Item 14 of this report,
which is incorporated by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- ------- -----------------------------------------------------------------------
OF OPERATIONS
-------------
Reference is made to Exhibit 13.2, included in Part IV, Item 14 of this report,
which is incorporated by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
- -------- ---------------------------------------------------------
The Company does not have material market risk exposure from market risk
sensitive instruments.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ------- -------------------------------------------
Reference is made to Exhibit 13.3, included in Part IV, Item 14 of this report,
which is incorporated by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------- ---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
None.
-9-
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- -------- --------------------------------------------------
The Company's Proxy Statement for the Annual Meeting of Shareholders to be held
on April 27, 2000, contains, on pages 2 through 6 thereof, information relating
to the Company's Directors and persons nominated to become Directors, which is
incorporated by reference. Information relating to the Executive Officers at the
Company is included in Item 1 of this Report.
ITEM 11. EXECUTIVE COMPENSATION
- -------- ----------------------
The Company's Proxy Statement for the Annual Meeting of Shareholders to be held
on April 27, 2000, contains, on pages 10 through 16, 18 and 19 thereof,
information relating to Executive Officer compensation, which is incorporated by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -------- --------------------------------------------------------------
The Company's Proxy Statement for the Annual Meeting of Shareholders to be held
on April 27, 2000, contains on page 9 thereof, information relating to security
ownership of certain beneficial owners and management, which is incorporated by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------- ----------------------------------------------
The Company's Proxy Statement for the Annual Meeting of Shareholders to be held
on April 27, 2000, contains, on page 10 thereof, information relating to certain
relationships and related transactions, which is incorporated by reference.
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
- -------- ---------------------------------------------------------------
(A) The following documents are filed as part of this report:
(1) FINANCIAL STATEMENTS
o Consolidated Balance Sheets - December 31, 1999 and 1998
o Consolidated Statements of Income for the Years Ended December 31,
1999, 1998 and 1997
-10-
<PAGE>
o Consolidated Statements of Shareholders' Equity for the Years Ended
December 31, 1999, 1998 and 1997
o Consolidated Statements of Cash Flows for the Years Ended December
31, 1999, 1998 and 1997
o Notes to Consolidated Financial Statements
(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 to these statements.
(3) EXHIBITS
A list of exhibits included as part of this Annual Report is set
forth in the Exhibit Index appearing elsewhere in this Report and
is incorporated by reference.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the fourth quarter
of the year ended December 31, 1999.
-11-
<PAGE>
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 duly authorized officer.
EQUIFAX INC.
Date March 29, 2000 By /s/Marietta Edmunds Zakas
-- -------------------------
Marietta Edmunds Zakas,
Corporate Vice President, Corporate
Secretary and Director of Investor Relations
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.
Date March 29, 2000 /s/Thomas F. Chapman
-- --------------------
Thomas F. Chapman, Chairman of the Board
and Chief Executive Officer
Date March 29, 2000 /s/Lee A. Kennedy
-- -----------------
Lee A. Kennedy, President and
Chief Operating Officer
Date March 29, 2000 /s/Philip J. Mazzilli
-- ---------------------
Philip J. Mazzilli, Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
Date March 29, 2000 /s/Michael T. Vollkommer
-- ------------------------
Michael T. Vollkommer, Corporate Vice
President and Controller
(Principal Accounting Officer)
-12-
<PAGE>
Date March 29, 2000 /s/Lee A. Ault
-- --------------
Lee A. Ault, III, Director
Date March 29, 2000 /s/John L. Clendenin
-- --------------------
John L. Clendenin, Director
Date March 15, 2000 /s/A. W. Dahlberg
-- -----------------
A. W. Dahlberg, Director
Date March 20, 2000 /s/Robert P. Forrestal
-- ----------------------
Robert P. Forrestal, Director
Date March 29, 2000 /s/L. Phillip Humann
-- --------------------
L. Phillip Humann, Director
Date March 15, 2000 /s/Larry L. Prince
-- ------------------
Larry L. Prince, Director
Date March 29, 2000 /s/D. Raymond Riddle
-- --------------------
D. Raymond Riddle, Director
Date March 29, 2000 /s/Betty L. Siegel
-- ------------------
Dr. Betty L. Siegel, Director
Date March 29, 2000 /s/Louis W. Sullivan
-- --------------------
Dr. Louis W. Sullivan, Director
Date March 17, 2000 /s/Jacquelyn M. Ward
-- --------------------
Jacquelyn M. Ward, Director
-13-
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER
- -------
Plan of Acquisition, Reorganization, Arrangement, Liquidation or
----------------------------------------------------------------
Succession
----------
2.1 Distribution Agreement, Plan of Reorganization and Distribution
(24 pages) (7)
Articles of Incorporation and Bylaws
------------------------------------
3.1 . Amended and Restated Articles of Incorporation (3 pages) (5)
3.2 . Bylaws (23 pages)
Instruments Defining the Rights of Security Holders, Including
--------------------------------------------------------------
Indentures
----------
4.1 . Loan Agreement (151 pages)(9)
4.2 . Portion of Prospectus and Trust Indenture (134 pages) (1)
4.3 . Rights Agreement, dated October 25, 1995, between Equifax Inc. and
SunTrust Bank, Atlanta with Form of Right Certificate attached as
Exhibit "A" (54 pages) (3)
4.4 . Indenture Relating to Debt Securities (98 pages) (11)
Material Contracts and Compensation Plans
-----------------------------------------
10.1 . Equifax Inc. 1988 Performance Share Plan for Officers, as amended
(13 pages) (9)(12)
10.2 . Equifax Inc. Executive Incentive Plan (6 pages) (9)(11)
10.3 . Deferred Compensation Plan (22 pages) (4)(12)
10.4 . Change in Control Agreement (11 pages) (9)(12)
10.5 . Equifax Inc. Omnibus Stock Incentive Plan, as amended (17 pages)
(9)(11)
10.6 . Form of 1999 Incentive and Non-Qualified Stock Option Agreements
(10 pages) (11)(12)
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<PAGE>
10.7 . Form of 1999 Restricted Stock Award Agreement (3 pages) (11)(12)
10.8 . Form of 1998 Incentive and Non-Qualified Stock Option Agreements
(8 pages) (6)(12)
10.9 . Form of 1998 Restricted Stock Award Agreement (3 pages) (6)(12)
10.10 . Form of 1996 Incentive and Non-Qualified Stock Option Agreements
(8 pages) (2)(12)
10.11 . Form of 1996 Non-Qualified Stock Option Agreement (4 pages) (2)(12)
10.12 . Form of 1996 Restricted Stock Award Agreement (3 pages) (2)(12)
10.13 . Form of 1995 Incentive and Non-Qualified Stock Option Agreements
(8 pages) (2)(12)
10.14 . Form of 1995 Restricted Stock Award Agreement (4 pages) (2)(12)
10.15 . Equifax Inc. Non-Employee Director Stock Option Plan and Agreement
(10 pages)(11)(12)
10.16 . Equifax Inc. Supplemental Executive Retirement Plan (24 pages)
(2)(12)
10.17 . Equifax Inc. Supplemental Executive Retirement Plan Amendment
(2 pages)(6)(12)
10.18 . Agreement For Computerized Credit Reporting Services (205 pages)
10.19 . Amendments to Agreement for Computerized Credit Reporting Services
and related documents (66 pages) (6)
10.20 . Amendment to Agreement for Computerized Credit Reporting Services
(8 pages) (1)
10.21 . Amendment to Agreement for Computerized Credit Reporting Services
(9 pages)
10.22 . Amendment to Agreement for Computerized Credit Reporting Services
(14 pages) (2)
10.23 . Computer and network operations agreement (redacted version) (74
pages) (10)
10.24 . Lease Agreement (69 pages)
-15-
<PAGE>
10.25 . Lease Agreement (76 pages) (11)
10.26 . Transaction Document #1 ( 7 pages) (13)
10.27 . Master Agreement (62 pages) (13)
10.28 . Human Resources Business Process and Support Services Agreement
with First Amendment and schedule of omitted exhibits (72 pages)
10.29 . Finance & Accounting Business Process and Support Services
Agreement, with First amendment and schedule of omitted exhibits
(71 pages)
10.30 . Compensation of Directors - The Company's bylaws, which are filed
as an exhibit to this Form 10-K Annual Report, describe on page 7
and 8, under Article Two, "Compensation of Directors," the fees
paid to Directors of the Company. This information is incorporated
by reference.
Annual Report to Security Holders
---------------------------------
13.1 . Summary of Selected Financial Data (2 pages)
13.2 . Management's Discussion and Analysis of Financial Condition and
Results of Operations (11 pages)
13.3 . Financial Statements and Supplementary Data (29 pages)
21 Subsidiaries of the Registrant (4 pages)
------------------------------
23 Consent of Independent Public Accountants to incorporation
-----------------------------------------------------------
by reference (1 page)
------------
27 Financial Data Schedule (for SEC use only)
-----------------------
(1)Previously filed as pages 8 through 16 and Exhibit 4.1 on Amendment No. 1 to
Form S-3, Registration Statement No. 33-62820, filed June 17, 1993, and
incorporated by reference.
(2)Previously filed as an exhibit on Form 10-K, filed March 30, 1995, and
incorporated by reference.
(3)Previously filed as exhibits on Form 8-A, filed November 2, 1995, and
incorporated by reference.
(4)Previously filed as an exhibit on Form 10-K, filed April 1, 1996, as amended
on Form 10-K/A, filed April 4, 1996, and incorporated by reference.
(5)Previously filed as an exhibit on Schedule 14A, filed, March 26, 1996, and
incorporated by reference.
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<PAGE>
(6)Previously filed as an exhibit on Form 10-K, filed March 31, 1997, and
incorporated by reference.
(7)Previously filed as an exhibit to Pre-effective Amendment No. 1 to
Registration Statement on Form S-1, Registration No. 333-30297, filed July 16,
1997, and incorporated by reference.
(8)Previously filed as pages 1 through 22 to the Company's Registration
Statement on Form
S-3, Registration No. 333-47599, filed March 9, 1998, and incorporated by
reference.
(9)Previously filed as an exhibit on Form 10-K, filed March 31, 1998, and
incorporated by reference.
(10)Previously filed as an exhibit on Form 10-Q, filed November 16, 1998, and
incorporated by reference.
(11)Previously filed as an exhibit on Form 10-K, filed March 31, 1999, and
incorporated by reference.
(12)Management Contract or Compensatory Plan
(13) Document omits information pursuant to a Request for Confidential Treatment
under Rule 406 of the Securities Act of 1933
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<PAGE>
EXHIBIT 3.2
___________________________________
EQUIFAX INC.
BYLAWS
___________________________________
Effective January 2000
<PAGE>
EQUIFAX INC.
=================
BYLAWS
=================
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE ONE MEETINGS OF THE SHAREHOLDERS................... 1
Section 1.1 Annual Meeting................................. 1
Section 1.2 Special Meetings............................... 1
Section 1.3 Notice of Meetings............................. 1
Section 1.4 Voting Groups.................................. 1
Section 1.5 Quorum......................................... 1
Section 1.6 Vote Required for Action....................... 2
Section 1.7 Adjournments................................... 2
Section 1.8 Presiding Officer.............................. 2
Section 1.9 Voting of Shares............................... 2
Section 1.10 Proxies........................................ 2
Section 1.11 Record Date.................................... 3
Section 1.12 Shareholder Proposals and Nominations.......... 3
ARTICLE TWO BOARD OF DIRECTORS............................. 5
Section 2.1 General........................................ 5
Section 2.2 Number of Directors and Term of Office......... 5
Section 2.3 Election of Directors.......................... 5
Section 2.4 Vacancies...................................... 5
Section 2.5 Term Limits.................................... 5
Section 2.6 Stock Ownership Requirement.................... 6
Section 2.7 Meetings....................................... 6
Section 2.8 Special Meetings............................... 6
Section 2.9 Notice of Meetings............................. 6
Section 2.10 Quorum; Adjournments........................... 6
Section 2.11 Vote Required for Action....................... 7
Section 2.12 Action by Directors Without a Meeting.......... 7
Section 2.13 Compensation of Directors...................... 7
</TABLE>
<PAGE>
ARTICLE THREE ELECTIONS OF OFFICERS AND COMMITTEES........... 7
Section 3.1 Election of Officers........................... 7
Section 3.2 Executive Committee............................ 8
Section 3.3 Other Committees............................... 8
ARTICLE FOUR OFFICERS....................................... 8
Section 4.1 Officers; Term Limits.......................... 8
Section 4.2 Compensation of Officers....................... 9
Section 4.3 Chairman of the Board.......................... 9
Section 4.4 Vice Chairman of the Board..................... 9
Section 4.5 Chief Executive Officer........................ 9
Section 4.6 President...................................... 9
Section 4.7 Executive Vice Presidents...................... 10
Section 4.8 Vice Presidents................................ 10
Section 4.9 Treasurer...................................... 10
Section 4.10 Secretary...................................... 10
Section 4.11 Voting of Stock................................ 10
ARTICLE FIVE INDEMNIFICATION................................ 11
Section 5.1 Definitions.................................... 11
Section 5.2 Basic Indemnification Arrangement.............. 12
Section 5.3 Advances for Expenses.......................... 12
Section 5.4 Court-Ordered Indemnification and Advances for
Expenses...................................... 13
Section 5.5 Determination of Reasonableness of Expenses.... 13
Section 5.6 Indemnification of Employees and Agents........ 14
Section 5.7 Liability Insurance............................ 14
Section 5.8 Witness Fees................................... 14
Section 5.9 Report to Shareholders......................... 14
Section 5.10 No Duplication of Payments..................... 14
Section 5.11 Subrogation.................................... 14
Section 5.12 Contract Rights................................ 15
Section 5.13 Amendments..................................... 15
ARTICLE SIX CAPITAL STOCK.................................. 15
Section 6.1 Direct Registration of Shares.................. 15
Section 6.2 Certificates for Shares........................ 15
Section 6.3 Transfer of Shares............................. 16
Section 6.4 Duty of Company to Register Transfer........... 16
Section 6.5 Lost, Stolen or Destroyed Certificates......... 16
Section 6.6 Authorization to Issue Shares and Regulations
Regarding Transfer and Registration............ 16
-ii-
<PAGE>
ARTICLE SEVEN DISTRIBUTIONS AND DIVIDENDS.................... 17
Section 7.1 Authorization or Declaration................... 17
Section 7.2 Record Date with Regard to Distributions
and Share Dividends............................ 17
ARTICLE EIGHT MISCELLANEOUS.................................. 17
Section 8.1 Corporate Seal................................. 17
Section 8.2 Inspection of Books and Records................ 17
Section 8.3 Conflict with Articles of Incorporation or Code 17
Section 8.4 Severability................................... 17
ARTICLE NINE AMENDMENTS..................................... 18
Section 9.1 Amendments..................................... 18
ARTICLE TEN FAIR PRICE REQUIREMENTS........................ 18
Section 10.1 Fair Price Requirements........................ 18
ARTICLE ELEVEN BUSINESS COMBINATIONS.......................... 18
Section 11.1 Business Combinations.......................... 18
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<PAGE>
BYLAWS OF EQUIFAX INC.
____________________
ARTICLE ONE
Meetings of the Shareholders
Section 1.1 Annual Meeting. The Annual Meeting of the Shareholders of the
Company shall be held during the first five months after the end of each fiscal
year of the Company at such time and place, within or without the State of
Georgia, as shall be fixed by the Board of Directors, for the purpose of
electing Directors and for the transaction of such other business as may be
properly brought before the meeting.
Section 1.2 Special Meetings. Special meetings of the Shareholders may be held
at the principal office of the Company in the State of Georgia or at such other
place, within or without the State of Georgia, as may be named in the call
therefor. Such special meetings may be called by the Chairman of the Board of
Directors, the Vice Chairman, the President, the Board of Directors by vote at a
meeting, a majority of the Directors in writing without a meeting, or by
unanimous call of the Shareholders.
Section 1.3 Notice of Meetings. Unless waived in accordance with the Georgia
Business Corporation Code (the "Code"), a notice of each meeting of Shareholders
stating the date, time and place of the meeting shall be given not less than 10
days nor more than 60 days before the date thereof to each Shareholder entitled
to vote at that meeting. In the case of an Annual Meeting, the notice need not
state the purpose or purposes of the meeting unless the Articles of
Incorporation or the Code requires the purpose or purposes to be stated in the
notice of the meeting. Any irregularity in such notice shall not affect the
validity of the Annual Meeting or any action taken at such meeting. In the case
of a special meeting of the Shareholders, the notice of meeting shall state the
purpose or purposes for which the meeting is called, and only business within
the purpose or purposes described in such notice may be conducted at the
meeting.
Section 1.4 Voting Groups. Voting group means all shares of one or more
classes or series that are entitled to vote and be counted together collectively
on a matter at a meeting of Shareholders. All shares entitled to vote generally
on the matter are for that purpose a single voting group.
Section 1.5 Quorum. With respect to shares entitled to vote as a separate
voting group on a matter at a meeting of Shareholders, the presence, in person
or by
<PAGE>
proxy, of a majority of the votes entitled to be cast on the matter by the
voting group shall constitute a quorum of that voting group for action on that
matter unless the Articles of Incorporation or the Code provides otherwise.
Once a share is represented for any purpose at a meeting, other than solely to
object to holding the meeting or to transacting business at the meeting, it is
deemed present for quorum purposes for the remainder of the meeting and for any
adjournment of the meeting unless a new record date is or must be set for the
adjourned meeting pursuant to Section 1.11 of these Bylaws.
Section 1.6 Vote Required for Action. If a quorum exists, action on a matter
(other than the election of Directors) is approved if the votes cast favoring
the action exceed the votes cast opposing the action, unless the Articles of
Incorporation, provisions of these Bylaws validly adopted by the Shareholders,
or the Code requires a greater number of affirmative votes. If the Articles of
Incorporation or the Code provide for voting by two or more voting groups on a
matter, action on that matter is taken only when voted upon by each of those
voting groups counted separately.
Section 1.7 Adjournments. Whether or not a quorum is present to organize a
meeting, any meeting of Shareholders (including an adjourned meeting) may be
adjourned by the holders of a majority of the voting shares represented at the
meeting to reconvene at a specific time and place, but no later than 120 days
after the date fixed for the original meeting unless the requirements of the
Code concerning the selection of a new record date have been met.
Section 1.8 Presiding Officer. The Chairman of the Board shall call the
meeting of the Shareholders to order and shall act as chairman of such meeting.
In the absence of the Chairman of the Board, the meeting shall be called to
order by any one of the following officers then present, in the following order:
the Vice Chairman of the Board, the Chief Executive Officer, the President, the
senior Executive Vice President, the next senior Executive Vice President, or
any one of the Vice Presidents, who shall act as chairman of the meeting. The
Secretary of the Company shall act as secretary of the meeting of the
Shareholders. In the absence of the Secretary, at any meeting of the
Shareholders, the presiding officer may appoint any person to act as secretary
of the meeting.
Section 1.9 Voting of Shares. Unless the Articles of Incorporation or the Code
provides otherwise, each outstanding share having voting rights shall be
entitled to one vote on each matter submitted to a vote at a meeting of
Shareholders.
Section 1.10 Proxies. A Shareholder entitled to vote pursuant to Section 1.9
may vote in person or by proxy pursuant to an appointment of proxy executed by
the Shareholder either in writing or pursuant to an electronic or telephonic
transmission, provided that the transmission contains or is accompanied by
information from which it can be determined that the Shareholder authorized the
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<PAGE>
transmission. An appointment of proxy shall be valid for only one meeting to be
specified therein, and any adjournments of such meeting, but shall not be valid
for more than eleven months unless expressly provided therein. Appointments of
proxy shall be dated and filed with the records of the meeting to which they
relate. If the validity of any appointment of proxy is questioned, it must be
submitted for examination to the Secretary of the Company or to a proxy officer
or committee appointed by the Board of Directors. The Secretary or, if
appointed, the proxy officer or committee shall determine the validity or
invalidity of any appointment of proxy submitted, and reference by the Secretary
in the minutes of the meeting to the regularity of an appointment of proxy shall
be received as prima facie evidence of the facts stated for the purpose of
establishing the presence of a quorum at the meeting and for all other purposes.
Section 1.11 Record Date. For the purpose of determining Shareholders entitled
to notice of a meeting of the Shareholders, to demand a special meeting, to
vote, or to take any other action, the Board of Directors may fix a future date
as the record date, which date shall be not more than 70 days prior to the date
on which the particular action, requiring a determination of the Shareholders,
is to be taken. A determination of the Shareholders entitled to notice of or to
vote at a meeting of the Shareholders is effective for any adjournment of the
meeting unless the Board of Directors fixes a new record date, which it must do
if the meeting is adjourned to a date more than 120 days after the date fixed
for the original meeting. If no record date is fixed by the Board of Directors,
the 70th day preceding the date on which the particular action, requiring a
determination of the Shareholders, is to be taken shall be the record date for
that purpose.
Section 1.12 Shareholder Proposals and Nominations.
(a) No proposal for a Shareholder vote (other than a proposal that appears
in the Company's proxy statement after compliance with the procedures set forth
in Securities and Exchange Commission Rule 14a-8) shall be submitted by a
Shareholder (a "Shareholder Proposal") to the Company's Shareholders unless the
Shareholder submitting such proposal (the "Proponent") shall have filed a
written notice setting forth with particularity (i) the names and business
addresses of the Proponent and all natural persons, corporations, partnerships,
trusts or any other type of legal entity or recognized ownership vehicle
(collectively, a "Person") acting in concert with the Proponent; (ii) the name
and address of the Proponent and the Persons identified in clause (i), as they
appear on the Company's books (if they so appear); (iii) the class and number of
shares of the Company beneficially owned by the Proponent and by each Person
identified in clause (i); (iv) a description of the Shareholder Proposal
containing all material information relating thereto; and (v) such other
information as the Board of Directors reasonably determines is necessary or
appropriate to enable the Board of Directors and Shareholders of the Company to
consider the Shareholder Proposal. The presiding officer at any meeting of the
Shareholders may determine that any Shareholder Proposal was not made in
accordance with the procedures prescribed in these Bylaws or is otherwise not in
accordance with law, and if it is so determined, such
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<PAGE>
officer shall so declare at the meeting and the Shareholder Proposal shall be
disregarded.
(b) Only persons who are selected and recommended by the Board of Directors
or the committee of the Board of Directors designated to make nominations, or
who are nominated by Shareholders in accordance with the procedures set forth in
this Section 1.12, shall be eligible for election, or qualified to serve, as
Directors. Nominations of individuals for election to the Board of Directors of
the Company at any Annual Meeting or any special meeting of Shareholders at
which Directors are to be elected may be made by any Shareholder of the Company
entitled to vote for the election of Directors at that meeting by compliance
with the procedures set forth in this Section 1.12. Nominations by Shareholders
shall be made by written notice (a "Nomination Notice"), which shall set forth
(i) as to each individual nominated, (A) the name, date of birth, business
address and residence address of such individual; (B) the business experience
during the past five years of such nominee, including his or her principal
occupations and employment during such period, the name and principal business
of any corporation or other organization in which such occupations and
employment were carried on, and such other information as to the nature of his
or her responsibilities and level of professional competence as may be
sufficient to permit assessment of such prior business experience; (C) whether
the nominee is or has ever been at any time a director, officer or owner of five
percent or more of any class of capital stock, partnership interests or other
equity interest of any corporation, partnership or other entity; (D) any
directorships held by such nominee in any company with a class of securities
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended, or subject to the requirements of Section 15(d) of such Act or any
company registered as an investment company under the Investment Company Act of
1940, as amended; and (E) whether such nominee has ever been convicted in a
criminal proceeding or has ever been subject to a judgment, order, finding or
decree of any federal, state or other governmental entity, concerning any
violation of federal, state or other law, or any proceeding in bankruptcy, which
conviction, order, finding, decree or proceeding may be material to an
evaluation of the ability or integrity of the nominee; and (ii) as to the Person
submitting the Nomination Notice and any Person acting in concert with such
Person, (X) the name and business address of such Person, (Y) the name and
address of such Person as they appear on the Company's books (if they so
appear), and (Z) the class and number of shares of the Company that are
beneficially owned by such Person. A written consent to being named in a proxy
statement as a nominee, and to serve as a Director if elected, signed by the
nominee, shall be filed with any Nomination Notice. If the presiding officer at
any meeting of the Shareholders determines that a nomination was not made in
accordance with the procedures prescribed by these Bylaws, such officer shall so
declare to the meeting and the defective nomination shall be disregarded.
(c) If a Shareholder Proposal or Nomination Notice is to be submitted at an
Annual Meeting of the Shareholders, it shall be delivered to the Secretary of
the
-4-
<PAGE>
Company at the principal executive office of the Company within the time
period specified in Securities and Exchange Commission Rule 14a-8(a)(3)(i).
Subject to Section 1.3 as to matters that may be acted upon at a special meeting
of the Shareholders, if a Shareholder Proposal or Nomination Notice is to be
submitted at a special meeting of the Shareholders, it shall be delivered to the
Secretary of the Company at the principal executive office of the Company no
later than the close of business on the earlier of (i) the 30th day following
the public announcement that a matter will be submitted to a vote of the
Shareholders at a special meeting, or (ii) the 15th day following the day on
which notice of the special meeting was given.
ARTICLE TWO
Board of Directors
Section 2.1 General. Subject to the Articles of Incorporation, all corporate
powers shall be exercised by or under the authority of, and the business and
affairs of the Company shall be managed under the direction of, the Board of
Directors. In addition to the powers and authority expressly conferred upon it
by these Bylaws and the Articles of Incorporation, the Board of Directions may
exercise all such lawful acts and things as are not by law, by the Articles of
Incorporation or by these Bylaws directed or required to be exercised or done by
the Shareholders.
Section 2.2 Number of Directors and Term of Office. The number of Directors
shall be not less than nine, nor more than 20 Shareholders, and shall be fixed
within such range by the Board of Directors. The Directors shall be divided
into three classes, designated as Class I, Class II and Class III. Each class
shall consist, as nearly as may be possible, of one-third of the total number of
Directors constituting the entire Board of Directors. At each Annual Meeting of
the Shareholders, successors to the class of Directors whose term expires at
that Annual Meeting of Shareholders shall be elected for a three-year term. If
the number of Directors has changed, any increase or decrease shall be
apportioned among the classes so as to maintain the number of Directors in each
class as nearly equal as possible, and any additional Director of any class
elected to the Board of Directors to fill a vacancy resulting from an increase
in such a class shall hold office for a term that shall coincide with the
remaining term of that class, unless otherwise required by law, but in no case
shall a decrease in the number of Directors for a class shorten the term of an
incumbent Director. A Director shall hold office until the Annual Meeting of
Shareholders for the year in which such Director's term expires and until his or
her successor shall be elected and qualified, subject, however, to prior death,
resignation, retirement, disqualification or removal from office.
Section 2.3 Election of Directors. A Director shall be elected by a plurality
of the votes cast by the shares entitled to vote in the election at a meeting of
Shareholders at which a quorum is present.
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<PAGE>
Section 2.4 Vacancies. Any vacancy on the Board of Directors that results from
an increase in the number of Directors or from prior death, resignation,
retirement, disqualification or removal from office of a Director shall be
filled by a majority of the Board of Directors then in office, though less than
a quorum, or by the sole remaining Director. Any Director elected to fill a
vacancy resulting from prior death, resignation, retirement, disqualification or
removal from office of a director, shall have the same remaining term as that of
his or her predecessor.
Section 2.5 Term Limits. A Director reaching 70 years of age (or 65 years of
age for Directors who are also employees of the Company) or ceasing to continue
a regular business relationship (as defined below) shall automatically retire
from the Board, except that a non-employee Director who ceases to continue a
regular business relationship may continue serving as a Director until the next
Annual Meeting of the Shareholders or 70 years of age, whichever first occurs.
Notwithstanding the preceding, a non-employee Director, or a retiring Chairman
of the Board and Chief Executive Officer (or either), may, at the request of the
Executive Committee and if ratified by the Board, continue to serve as a
Director until age 70 if he or she continues in a position or business activity
that the Board determines would be of substantial benefit to the Company. For
purposes of this Section 2.5, the expression "regular business relationship"
means a relationship as an employee, consultant or officer of a substantial
business, professional or educational organization, which requires exercise of
business judgment on a regular basis, and which is not lower in seniority than
the position with such organization occupied by the Director at the time of the
Director's first election to the Board of Directors of the Company.
Section 2.6 Stock Ownership Requirement. Every Director shall be a Shareholder
of the Company. Directors shall serve for the terms for which they are elected
and until their successors shall have been duly chosen, unless any such term is
sooner ended as herein permitted; provided, however, that if a Director ceases
to be a Shareholder, the disposition of the stock shall constitute a resignation
of the Director's office as a Director.
Section 2.7 Meetings. Regular meetings of the Board of Directors shall be held
on the last Wednesday in the months of January, April, July and October, if not
a legal holiday, or, if a legal holiday, then on the next succeeding day not a
legal holiday. When desirable to do so, the date of the meeting may be changed
on the approval of the Board of Directors or the Executive Committee.
Section 2.8 Special Meetings. Special meetings of the Board of Directors shall
be held whenever called by the direction of the Chairman of the Board, or in his
or her absence, by the Vice Chairman, or in his or her absence, by the
President. Special meetings of the Board may also be called by one-third of the
Directors then in office. Unless otherwise indicated in the notice thereof, any
and all business of the Company may be transacted at any special meeting of the
Board of Directors.
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<PAGE>
Section 2.9 Notice of Meetings. Unless waived in accordance with the Code,
notice of each regular or special meeting of the Board of Directors, stating the
date, time and place of the meeting, shall be given not less than two days
before the date thereof to each Director.
Section 2.10 Quorum; Adjournments. A majority of the Board of Directors shall
constitute a quorum for the transaction of business. Whether or not a quorum is
present to organize a meeting, any meeting of Directors (including a reconvened
meeting) may be adjourned by a majority of the Directors present, to reconvene
at a specific time and place. At any adjourned meeting, any business may be
transacted that could have been transacted at the meeting prior to adjournment.
If notice of the original meeting was properly given, it shall not be necessary
to give any notice of the adjourned meeting or of the business to be transacted
if the date, time and place of the adjourned meeting are announced at the
meeting prior to adjournment.
Section 2.11 Vote Required for Action. If a quorum is present when a vote is
taken, the affirmative vote of a majority of Directors present is the act of the
Board of Directors unless the Code, the Articles of Incorporation, or these
Bylaws require the vote of a greater number of Directors.
Section 2.12 Action by Directors Without a Meeting. Any action required or
permitted to be taken at any meeting of the Board of Directors or any action
that may be taken at a meeting of a committee of the Board of Directors may be
taken without a meeting if the action is taken by all the members of the Board
of Directors or of the committee, as the case may be. The action must be
evidenced by one or more written consents describing the action taken, signed by
each Director or each Director serving on the committee, as the case may be, and
delivered to the Company for inclusion in the minutes or filing with the
corporate records.
Section 2.13 Compensation of Directors. Directors who are salaried officers or
employees of the Company shall receive no additional compensation for service as
a Director or as a member of a committee of the Board of Directors. Each
Director who is not a salaried officer or employee of the Company shall be
compensated as set forth below. A Director may also serve the Company in a
capacity other than that of Director or employee and receive compensation, as
determined by the Board of Directors, for services rendered in any other
capacity.
Subject to the above, (i) the Chairman of the Board shall receive a fee of
$7,500 per quarter, and each other Director shall receive a fee of $5,000 per
quarter, for services as a Director, (ii) the Chairman of the Executive
Committee shall receive an additional fee of $4,000 per quarter and any other
member of the Executive Committee shall receive an additional fee of $1,000 per
quarter, (iii) any Director who is chairman of any other committee elected or
appointed by the Board shall receive an additional fee of $1,000 per quarter,
and (iv) each Director shall also receive a fee of $1,000 for attendance at any
meeting of the Board or of a
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<PAGE>
committee thereof. In addition, each Director who is not a salaried officer or
employee of the Company shall be entitled to receive stock option awards as
provided for under the Equifax Inc. Non-Employee Director Stock Option Plan, or
any successor plan or plans.
ARTICLE THREE
Elections of Officers and Committees
Section 3.1 Election of Officers. At the April meeting of the Board of
Directors in each year, or, if not done at that time, then at any subsequent
meeting, the Board of Directors shall proceed to the election of executive
officers of the Company, and of the Executive Committee, as hereinafter provided
for.
Section 3.2 Executive Committee. The Board of Directors may elect from their
members an Executive Committee which shall include the Chairman of the Board,
the Chief Executive Officer, and the President. The Executive Committee shall
consist of not less than three nor more than five members, the precise number to
be fixed by resolution of the Board of Directors from time to time.
Each member shall serve for one year and until his or her successor shall
have been elected, unless that term is sooner terminated by the Board of
Directors. The Board of Directors shall fill the vacancies in the Executive
Committee by election. The Chairman of the Board, if there is one, or, if not
the Chief Executive Officer, shall be the Chairman of the Executive Committee.
All action by the Executive Committee shall be reported to the Board of
Directors at its meeting next succeeding such action, and shall be subject to
revision or alteration by the Board of Directors, provided that no rights or
interests of third parties shall be affected by any such revision or alteration.
The Executive Committee shall fix its own rules and proceedings, and shall meet
where and as provided by such rules or by resolution of the Board of Directors.
In every case, the affirmative vote of a majority of all the members of the
Committee shall be necessary to its adoption of any resolution.
Except as prohibited by the Code, during the interval between the meetings
of the Board of Directors, the Executive Committee shall possess and may
exercise all the powers of the Board in the management of all the affairs of the
Company, including the making of contracts, the purchase and sale of property,
the execution of legal instruments, and all other matters in which specific
direction shall not have been given by the Board of Directors.
Section 3.3 Other Committees. The Board of Directors is authorized and
empowered to appoint from its own body or from the officers of the Company, or
both, such other committees as it may think best, and may delegate to or confer
upon such committees all or such part of its powers except as prohibited by the
Code, and may prescribe the exercise thereof as it may deem proper.
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<PAGE>
ARTICLE FOUR
Officers
Section 4.1 Officers; Term Limits. The officers of the Company, unless
otherwise provided by the Board from time to time, shall consist of the
following: a Chairman of the Board, a Chief Executive Officer, a President, one
or more Vice Presidents (one or more of whom may be designated Executive Vice
President, one or more of whom may be designated Corporate Vice President and
one or more of whom may be designated Senior Vice President), a Treasurer, and a
Secretary, who shall be elected by the Board of Directors. The Board of
Directors may from time to time elect a Vice Chairman of the Board. The Board
of Directors, or any officer to whom the Board may delegate such authority, may
also appoint such other officers as it or they may see fit, and may prescribe
their respective duties. All officers, however elected or appointed, may be
removed with or without cause by the Board of Directors, and any officer
appointed by another officer may also be removed, with or without cause, by the
appointing officer or any officer senior to the appointing officer. Any two or
more of the offices may be filled by the same person. No person shall serve as
Chairman of the Board and Chief Executive Officer (or either), beyond his or her
65th birthday.
Section 4.2 Compensation of Officers. The Executive Committee shall approve
salaries of all elected officers and such other employees as may be designated
by the Executive Committee, except that salaries of members of the Executive
Committee shall be fixed by the Management Compensation Committee of the Board
of Directors or by the Board of Directors.
Section 4.3 Chairman of the Board. The Chairman of the Board of Directors
shall serve as Chief Executive Officer of the Company, unless determined
otherwise by the Board of Directors. The Chairman of the Board shall preside at
all meetings of the Shareholders, the Board of Directors, and the Executive
Committee. Except where by law the signature of the Chief Executive Officer or
President is required, the Chairman of the Board shall have the same power as
the Chief Executive Officer or President to sign all authorized certificates,
contracts, bonds, deeds, mortgages, and other instruments. The Chairman of the
Board shall have such other powers and duties as from time to time may be
assigned by the Board of Directors.
Section 4.4 Vice Chairman of the Board. If the Chairman of the Board is not
designated Chief Executive Officer by the Board of Directors, then, if so
designated by the Board of Directors, the Vice Chairman shall serve as Chief
Executive Officer. It shall be the duty of the Vice Chairman of the Board, in
the absence of the Chairman of the Board, to preside at meetings of the
Shareholders, at meetings of the Directors, and at meetings of the Executive
Committee. The Vice Chairman shall do and perform all acts incident to the
office of Vice Chairman and, if so designated, those of Chief Executive Officer,
subject to the approval and direction of the Board of Directors.
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<PAGE>
Section 4.5 Chief Executive Officer. The Chief Executive Officer shall direct
the business and policies of the Company and shall have such other powers and
duties as from time to time may be assigned by the Board of Directors.
Section 4.6 President. The President shall be the Chief Operating Officer of
the Company and shall have general charge of the business of the Company subject
to the specific direction and approval of the Board of Directors or its Chairman
or Vice Chairman or the Executive Committee. If the Chairman or Vice Chairman
of the Board is not designated Chief Executive Officer by the Board of
Directors, the President shall also serve as Chief Executive Officer. In the
event of a vacancy in the office of Chairman and Vice Chairman of the Board or
during the absence or disability of both the Chairman and the Vice Chairman, the
President shall serve as Chief Executive Officer and shall have all of the
rights, powers and authority given hereunder to the Chairman of the Board. The
President may sign all authorized certificates, contracts, bonds, deeds,
mortgages and other instruments, except in cases in which the signing thereof
shall have been expressly delegated to some other officer or agent of the
Company. In general, the President shall have the usual powers and duties
incident to the office of a president of a corporation and such other powers and
duties as from time to time may be assigned by the Board or Chairman or Vice
Chairman of the Board.
Section 4.7 Executive Vice Presidents. Each shall have authority, on behalf of
the Company, to execute, approve, or accept agreements for service, bids, or
other contracts, and shall sign such other instruments as each is authorized or
directed to sign by the Board of Directors or its Committee or by the Chief
Executive Officer or the President. Each shall do and perform all acts incident
to the office of the Executive Vice President of the Company or as may be
directed by its Board of Directors or its Committee or the Chief Executive
Officer or the President.
Section 4.8 Vice Presidents. There shall be one or more Vice Presidents of the
Company, as the Board of Directors may from time to time elect. Each Vice
President shall have such power and perform such duties as may be assigned by or
under the authority of the Board of Directors.
Section 4.9 Treasurer. The Treasurer shall be responsible for the custody of
all funds and securities belonging to the Company and for the receipt, deposit
or disbursement of funds and securities under the direction of the Board of
Directors. The Treasurer shall cause to be maintained full and true accounts of
all receipts and disbursements and shall make reports of the same to the Board
of Directors, the Chief Executive Officer, and the President upon request. The
Treasurer shall perform all duties as may be assigned from time to time by the
Board of Directors.
Section 4.10 Secretary. The Secretary shall be responsible for preparing
minutes of the acts and proceedings of all meetings of the Shareholders and of
the Board of Directors and any committees thereof. The Secretary shall have
authority to give all notices required by law or these Bylaws, and shall be
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responsible for the custody of the corporate books, records, contracts and other
documents. The Secretary may affix the corporate seal to any lawfully executed
documents and shall sign any instruments as may require the Secretary's
signature. The Secretary shall authenticate records of the Company and shall
perform whatever additional duties and have whatever additional powers the Board
of Directors may from time to time assign. In the absence or disability of the
Secretary or at the direction of the Chief Executive Officer, any Assistant
Secretary may perform the duties and exercise the powers of the Secretary.
Section 4.11 Voting of Stock. Unless otherwise ordered by the Board of
Directors or Executive Committee, the Chairman of the Board, the Vice Chairman,
the President or any Executive Vice President of the Company shall have full
power and authority in behalf of the Company to attend and to act and to vote at
any meetings of shareholders of any corporation in which the Company may hold
stock, and at such meetings may possess and shall exercise any and all rights
and powers incident to the ownership of such stock which such owner thereof (the
Company) might have possessed and exercised if present. The Board of Directors
or Executive Committee, by resolution from time to time, may confer like powers
upon any other person or persons.
ARTICLE FIVE
Indemnification
Section 5.1 Definitions. As used in this Article, the term:
(a) "Company" includes any domestic or foreign predecessor entity of the
Company in a merger or other transaction in which the predecessor's
existence ceased upon consummation of the transaction.
(b) "Director" or "Officer" means an individual who is or was a member of
the Board of Directors or an officer elected by the Board of
Directors, respectively, or who, while a Director or Officer, is or
was serving at the Company's request as a director, officer, partner,
trustee, employee, or agent of another domestic or foreign
corporation, partnership, joint venture, trust, employee benefit plan,
or other entity. A Director or Officer is considered to be serving an
employee benefit plan at the Company's request if his or her duties to
the Company also impose duties on, or otherwise involve services by,
the Director or Officer to the plan or to participants in or
beneficiaries of the plan. "Director" or "Officer" includes, unless
the context otherwise requires, the estate or personal representative
of a Director or Officer.
(c) "Disinterested Director" or "Disinterested Officer" means a Director
or Officer, respectively who at the time of an evaluation referred to
in subsection 5.5(b) is not:
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(1) A Party to the Proceeding; or
(2) An individual having a familial, financial, professional, or
employment relationship with the person whose advance for
Expenses is the subject of the decision being made with respect
to the Proceeding, which relationship would, in the
circumstances, reasonably be expected to exert an influence on
the Director's or Officer's judgment when voting on the decision
being made.
(d) "Expenses" includes counsel fees.
(e) "Liability" means the obligation to pay a judgment, settlement,
penalty, fine (including an excise tax assessed with respect to an
employee benefit plan), or reasonable Expenses incurred with respect
to a Proceeding.
(g) "Party" includes an individual who was, is, or is threatened to be
made a named defendant or respondent in a Proceeding.
(h) "Proceeding" means any threatened, pending, or completed action, suit,
or proceeding, whether civil, criminal, administrative, arbitrative or
investigative and whether formal or informal.
(i) "Reviewing Party" shall mean the person or persons making the
determination as to reasonableness of Expenses pursuant to Section 5.5
of this Article, and shall not include a court making any
determination under this Article or otherwise.
Section 5.2 Basic Indemnification Arrangement.
(a) The Company shall indemnify an individual who is a Party to a
Proceeding because he or she is or was a Director or Officer against
Liability incurred in the Proceeding; provided, however, that the
Company shall not indemnify a Director or Officer under this Article
for any Liability incurred in a Proceeding in which the Director or
Officer is adjudged liable to the Company or is subjected to
injunctive relief in favor of the Company:
(1) For any appropriation, in violation of his or her duties, of any
business opportunity of the Company;
(2) For acts or omissions which involve intentional misconduct or a
knowing violation of law;
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(3) For the types of liability set forth in Section 14-2-832 of the
Code; or
(4) For any transaction from which he or she received an improper
personal benefit.
(b) If any person is entitled under any provision of this Article to
indemnification by the Company for some portion of Liability incurred,
but not the total amount thereof, the Company shall indemnify such
person for the portion of such Liability to which such person is
entitled.
Section 5.3 Advances for Expenses.
(a) The Company shall, before final disposition of a Proceeding, advance
funds to pay for or reimburse the reasonable Expenses incurred by a
Director or Officer who is a Party to a Proceeding because he or she
is a Director or Officer if he or she delivers to the Company:
(1) A written affirmation of his or her good faith belief that his or
her conduct does not constitute behavior of the kind described in
subsection 5.2(a) above; and
(2) His or her written undertaking (meeting the qualifications set
forth below in subsection 5.3(b)) to repay any funds advanced if
it is ultimately determined that he or she is not entitled to
indemnification under this Article or the Code.
(b) The undertaking required by subsection 5.3(a)(2) above must be an
unlimited general obligation of the proposed indemnitee but need not
be secured and shall be accepted without reference to the financial
ability of the proposed indemnitee to make repayment. If a Director
or Officer seeks to enforce his or her rights to indemnification in a
court pursuant to Section 5.4 below, such undertaking to repay shall
not be applicable or enforceable unless and until there is a final
court determination that he or she is not entitled to indemnification,
as to which all rights of appeal have been exhausted or have expired.
Section 5.4 Court-Ordered Indemnification and Advances for Expenses.
A Director or Officer who is a Party to a Proceeding shall have the rights to
court-ordered indemnification and advances for expenses as provided in the Code.
Section 5.5 Determination of Reasonableness of Expenses.
(a) The Company acknowledges that indemnification of a Director or Officer
under Section 5.2 has been pre-authorized by the Company
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<PAGE>
as permitted by Section 14-2-859(a) of the Code, and that pursuant to
Section 14-2-856 of the Code, no determination need be made for a
specific Proceeding that indemnification of the Director or Officer is
permissible in the circumstances because he or she has met a
particular standard of conduct. Nevertheless, except as set forth in
subsection 5.5(b) below, evaluation as to reasonableness of Expenses
of a Director or Officer for a specific Proceeding shall be made as
follows:
(1) If there are two or more Disinterested Directors, by the Board of
Directors of the Company by a majority vote of all Disinterested
Directors (a majority of whom shall for such purpose constitute a
quorum) or by a majority of the members of a committee of two or
more Disinterested Directors appointed by such a vote; or
(2) If there are fewer than two Disinterested Directors, by the Board
of Directors (in which determination Directors who do not qualify
as Disinterested Directors may participate); or
(3) By the Shareholders, but shares owned by or voted under the
control of a Director or Officer who at the time does not qualify
as a Disinterested Director or Disinterested Officer may not be
voted on the determination.
(b) Notwithstanding the requirement under subsection 5.5(a) that the
Reviewing Party evaluate the reasonableness of Expenses claimed by the
proposed indemnitee, any Expenses claimed by the proposed indemnitee
shall be deemed reasonable if the Reviewing Party fails to make the
evaluation required by subsection 5.5(a) within sixty (60) days
following the proposed indemnitee's written request for
indemnification or advance for Expenses.
Section 5.6 Indemnification of Employees and Agents. The Company may indemnify
and advance Expenses under this Article to an employee or agent of the Company
who is not a Director or Officer to the same extent and subject to the same
conditions that a Georgia corporation could, without shareholder approval under
Section 14-2-856 of the Code, indemnify and advance Expenses to a Director, or
to any lesser extent (or greater extent if permitted by law) determined by the
Chief Executive Officer, in each case consistent with public policy.
Section 5.7 Liability Insurance. The Company may purchase and maintain
insurance on behalf of an individual who is a Director, Officer, employee or
agent of the Company or who, while a Director, Officer, employee or agent of the
Company, serves at the Company's request as a director, officer, partner,
trustee, employee or agent of another domestic or foreign corporation,
partnership, joint venture, trust, employee benefit plan, or other entity
against Liability asserted
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<PAGE>
against or incurred by him or her in that capacity or arising from his or her
status as a Director, Officer, employee, or agent, whether or not the
corporation would have power to indemnify or advance Expenses to him or her
against the same Liability under this Article or the Code.
Section 5.8 Witness Fees. Nothing in this Article shall limit the Company's
power to pay or reimburse Expenses incurred by a person in connection with his
or her appearance as a witness in a Proceeding at a time when he or she is not a
Party.
Section 5.9 Report to Shareholders. To the extent and in the manner required
by the Code from time to time, if the Company indemnifies or advances Expenses
to a Director or Officer in connection with a Proceeding by or in the right of
the Company, the Company shall report the indemnification or advance to the
Shareholders.
Section 5.10 No Duplication of Payments. The Company shall not be liable under
this Article to make any payment to a person hereunder to the extent such person
has otherwise actually received payment (under any insurance policy, agreement
or otherwise) of the amounts otherwise payable hereunder.
Section 5.11 Subrogation. In the event of payment under this Article, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of the indemnitee, who shall execute all papers required and shall
do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Company effectively to bring
suit to enforce such rights.
Section 5.12 Contract Rights. The right to indemnification and advancement of
Expenses conferred hereunder to Directors and Officers shall be a contract right
and shall not be affected adversely to any Director or Officer by any amendment
of these Bylaws with respect to any action or inaction occurring prior to such
amendment; provided, however, that this provision shall not confer upon any
indemnitee or potential indemnitee (in his or her capacity as such) the right to
consent or object to any subsequent amendment of these Bylaws.
Section 5.13 Amendments. It is the intent of the Company to indemnify and
advance Expenses to its Directors and Officers to the full extent permitted by
the Code, as amended from time to time. To the extent that the Code is
hereafter amended to permit a Georgia business corporation to provide to its
directors greater rights to indemnification or advancement of Expenses than
those specifically set forth hereinabove, this Article shall be deemed amended
to require such greater indemnification or more liberal advancement of Expenses
to the Company's Directors and Officers, in each case consistent with the Code
as so amended from time to time. No amendment, modification or rescission of
this Article, or any provision hereof, the effect of which would diminish the
rights to indemnification or advancement of Expenses as set forth herein shall
be effective
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as to any person with respect to any action taken or omitted by such person
prior to such amendment, modification or rescission.
ARTICLE SIX
Capital Stock
Section 6.1 Direct Registration of Shares. The Company may, with the Board of
Directors' approval, participate in a direct registration system approved by the
Securities and Exchange Commission and by the New York Stock Exchange or any
securities exchange on which the stock of the Company may from time to time be
traded, whereby shares of capital stock of the Company may be registered in the
holder's name in uncertificated, book-entry form on the books of the Company.
Section 6.2 Certificates for Shares. Except for shares represented in book-
entry form under a direct registration system contemplated in Section 6.1, the
interest of each Shareholder in the Company shall be evidenced by a certificate
or certificates representing shares of the Company which shall be in such form
as the Board of Directors from time to time may adopt. Share certificates shall
be numbered consecutively, shall be in registered form, shall indicate the date
of issuance, the name of the Company and that it is organized under the laws of
the State of Georgia, the name of the Shareholder, and the number and class of
shares and the designation of the series, if any, represented by the
certificate. Each certificate shall be signed by the Chairman of the Board, the
President or other Chief Executive Officer or a Vice President and also by the
Secretary or may be signed with the facsimile signatures of the Chairman of the
Board, the President or other Chief Executive Officer or a Vice President and of
the Secretary, and in all cases a stock certificate must also be signed by the
transfer agent for the stock. The corporate seal need not be affixed.
Section 6.3 Transfer of Shares. The Board of Directors shall have authority to
appoint a transfer agent and/or a registrar for the shares of its capital stock,
and to empower them or either of them in such manner and to such extent as it
may deem best, and to remove such agent or agents from time to time, and to
appoint another agent or other agents. Transfers of shares shall be made upon
the transfer books of the Company, kept at the office of the transfer agent
designated to transfer the shares, only upon direction of the registered owner,
or by an attorney lawfully constituted in writing. With respect to certificated
shares, before a new certificate is issued, the old certificate shall be
surrendered for cancellation or, in the case of a certificate alleged to have
been lost, stolen, or destroyed, the requirements of Section 6.5 of these Bylaws
shall have been met. Transfer of shares shall be in accordance with such
reasonable rules and regulations as may be made from time to time by the Board
of Directors.
Section 6.4 Duty of Company to Register Transfer. Notwithstanding any of the
provisions of Section 6.3 of these Bylaws, the Company is under a duty to
register the transfer of its shares only if:
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(a) the certificate or transfer instruction is endorsed by the appropriate
person or persons; and
(b) reasonable assurance is given that the endorsement or affidavit is
genuine and effective; and
(c) the Company either has no duty to inquire into adverse claims or has
discharged that duty; and
(d) the requirements of any applicable law relating to the collection of
taxes have been met; and
(e) the transfer in fact is rightful or is to a bona fide purchaser.
Section 6.5 Lost, Stolen or Destroyed Certificates. Any person claiming a
share certificate to be lost, stolen or destroyed shall make an affidavit or
affirmation of the fact in the manner required by the Company and, if the
Company requires, shall give the Company a bond of indemnity in form and amount,
and with one or more sureties satisfactory to the Company, as the Company may
require, whereupon an appropriate new certificate may be issued in lieu of the
one alleged to have been lost, stolen or destroyed.
Section 6.6 Authorization to Issue Shares and Regulations Regarding Transfer
and Registration. The Board of Directors and the Executive Committee shall have
power and authority to issue shares of capital stock of the Company and to make
all such rules and regulations as, respectively, they may deem expedient
concerning the transfer and registration of shares of the capital stock of the
Company.
ARTICLE SEVEN
Distributions and Dividends
Section 7.1 Authorization or Declaration. Unless the Articles of Incorporation
provide otherwise, the Board of Directors from time to time in its discretion
may authorize or declare distributions or share dividends in accordance with the
Code.
Section 7.2 Record Date with Regard to Distributions and Share Dividends. For
the purpose of determining Shareholders entitled to a distribution (other than
one involving a purchase, redemption, or other reacquisition of the Company's
shares) or a share dividend, the Board of Directors may fix a date as the record
date. If no record date is fixed by the Board of Directors, the record date
shall be determined in accordance with the provisions of the Code.
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ARTICLE EIGHT
Miscellaneous
Section 8.1 Corporate Seal. If the Board of Directors determines that there
should be a corporate seal for the Company, it shall be in the form as the Board
of Directors may from time to time determine.
Section 8.2 Inspection of Books and Records. The Board of Directors shall have
power to determine which accounts, books and records of the Company shall be
opened to the inspection of Shareholders, except those as may by law
specifically be made open to inspection, and shall have power to fix reasonable
rules and regulations not in conflict with the applicable law for the inspection
of accounts, books and records which by law or by determination of the Board of
Directors shall be open to inspection. Without the prior approval of the Board
of Directors in its discretion, the right of inspection set forth in Section 14-
2-1602(c) of the Code shall not be available to any Shareholder owning two
percent or less of the shares outstanding.
Section 8.3 Conflict with Articles of Incorporation or Code. To the extent
that any provision of these Bylaws conflicts with any provision of the Articles
of Incorporation, such provision of the Articles of Incorporation shall govern.
To the extent that any provision of these Bylaws conflicts with any non-
discretionary provision of the Code, such provision of the Code shall govern.
Section 8.4 Severability. In the event that any of the provisions of these
Bylaws (including any provision within a single section, subsection, division or
sentence) is held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, the remaining provisions of these Bylaws shall remain
enforceable to the fullest extent permitted by law.
ARTICLE NINE
Amendments
Section 9.1 Amendments. Subject, in each case, to the Articles of
Incorporation:
(a) the Board of Directors shall have power to alter, amend or repeal these
Bylaws or adopt new Bylaws; and
(b) any Bylaws adopted by the Board of Directors may be altered, amended or
repealed, and new Bylaws may be adopted, by the Shareholders, as
provided by the Code; and
(c) Articles Ten and Eleven of these Bylaws shall be amended only in the
manner provided by relevant provisions of the Code.
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ARTICLE TEN
Fair Price Requirements
Section 10.1 Fair Price Requirements. All of the requirements of Article 11,
Part 2, of the Code, included in Sections 14-2-1110 through 1113 (and any
successor provisions thereto), shall be applicable to the Company in connection
with any business combination, as defined therein, with any interested
shareholder, as defined therein.
ARTICLE ELEVEN
Business Combinations
Section 11.1 Business Combinations. All of the requirements of Article 11,
Part 3, of the Code, included in Sections 14-2-1131 through 1133 (and any
successor provisions thereto), shall be applicable to the Company in connection
with any business combination, as defined therein, with any interested
shareholder, as defined therein.
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EXHIBIT 10.18
================================================================================
AGREEMENT FOR COMPUTERIZED
CREDIT REPORTING SERVICES AND
OPTIONS TO PURCHASE AND SELL
ASSETS
August 1, 1988
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
I. DEFINITIONS ................................................... 3
II. CONVERSION TO ACROPAC SYSTEM(TM) .............................. 15
1. Conversion Services ..................................... 15
2. Master Register system .................................. 17
3. Conversion Completion ................................... 18
III. ACROPAC(TM) SERVICES .......................................... 19
4. Services Description .................................... 19
5. Time of Performance ..................................... 25
6. Equipment ............................................... 25
7. Ownership of Data ....................................... 26
8. Charges for ACROPAC System(TM) Services ................. 28
IV. PUT AND CALL OF ASSETS ........................................ 32
9. Certain Calculations; Payment of Consideration .......... 32
10. Put of Accounts Management Assets and Liabilities........ 32
11. Put of Subsidiaries' Assets and Liabilities ............. 40
12. Call of Subsidiaries' Assets and Liabilities ............ 51
13. Conditional Right to Require Stock Sale and Price
Adjustment .............................................. 53
13A. Generally Accepted Accounting Principles;
Cooperation; Securities Laws ............................ 55
V. GUARANTEE OF OPERATING INCOME ................................. 55
14. Guarantee ............................................... 55
VI. DURATION OF THIS AGREEMENT .................................... 62
15. Duration ................................................ 62
VII. BREACH OF THIS AGREEMENT ...................................... 63
16. Breach ................................................. 63
17. Limitation ............................................. 65
18. Rights Upon Termination ................................ 65
(i)
<PAGE>
VIII. REPRESENTATIONS, WARRANTIES AND COVENANTS ..................... 68
19. Representations and Warranties of CSC, Bureaus and
Accounts Management ..................................... 68
20. Representations and Warranties of Equifax and CBI ....... 71
21. Covenants of CSC, Bureaus and Accounts Management
and CBI ................................................. 73
IX. MISCELLANEOUS TERMS AND PROVISIONS ............................ 75
22. Limitations Upon Liability of CBI ....................... 75
23. Release With Respect to Accuracy of Data ................ 76
24. Modifications to ACROPAC(TM)............................. 77
25. Compliance With Laws .................................... 78
26. Force Majeure ........................................... 78
27. Relationship of Parties ................................. 79
28. No Third-Party Benefits ................................. 79
29. Assignment .............................................. 80
30. Retention of Credit Data ................................ 81
31. Remote Terminals ........................................ 81
32. Purchase of Supplies .................................... 81
33. Sales of Reporting and Collection Businesses ............ 81
34. Exclusion of Naples ..................................... 82
35. CSC Guaranty of Performance ............................. 82
36. Equifax Guaranty of Performance ......................... 84
37. Notices ................................................. 86
38. Severability ............................................ 86
39. Exhibits ................................................ 87
40. Confidentiality of ACROPAC System(TM) ................... 87
41. Confidentiality of Information .......................... 88
42. Injunctive Relief ....................................... 88
43. Use of ACROPAC(TM) Services ............................. 89
44. CBI Affiliate System .................................... 89
45. No Limitation on Business ............................... 90
46. Conversion of Associates ................................ 91
47. Credit Bureau of Albuquerque ............................ 91
48. Special Provisions ...................................... 92
49. Survival ................................................ 95
50. Headings ................................................ 96
51. Governing Law ........................................... 96
52. Waiver of Rights ........................................ 96
53. Entire Agreement ........................................ 96
54. Counterparts ............................................ 96
(ii)
<PAGE>
EXHIBITS
Page of
Exhibits
--------
Exhibit A - The Automated Credit Reporting Online Package
(ACROPAC(TM)) System Description ........................... 1
Exhibit B - Purge Rules for ACROPAC System(TM).......................... 12
Exhibit C - Description of Online Services ............................. 16
Exhibit D - Equipment Required for Continuation of Bureau Operation
under ACROPAC System(TM).................................... 22
Exhibit E - Service Areas .............................................. 24
Exhibit F - Associates and Associates' Zip Codes ....................... 26
Exhibit G - License Agreement .......................................... 27
Exhibit H - Financial Statements ....................................... 40
Exhibit I - Leases to be Assigned ...................................... 41
Exhibit J - Zip Codes in New Mexico of Amarillo Credit Association
and Retail Merchant's Association, Inc. (in Lubbock) ....... 43
(iii)
<PAGE>
EXHIBIT 10.18
THIS AGREEMENT, made as of this 1st day of August, 1988, by and among THE
CREDIT BUREAU, INCORPORATED OF GEORGIA and EQUIFAX INC., both Georgia
corporations with their principal places of business at 1600 Peachtree Street,
N.W., Atlanta, Georgia 30309 ("CBI" and "Equifax," respectively), and COMPUTER
SCIENCES CORPORATION, a Nevada corporation with its principal place of business
at 2100 East Grand Avenue, El Segundo, California 90245 ("CSC"), CSC CREDIT
SERVICES, INC., a Texas corporation with its principal place of business at 652
E. North Belt, Suite 400, Houston, Texas 77060 ("Credit Services"), CREDIT
BUREAU OF CINCINNATI, INC., an Ohio corporation with its principal place of
business at 309 Vine Street, Suite 650, Cincinnati, Ohio 45202 ("Cincinnati"),
CREDIT BUREAU OF GREATER KANSAS CITY, INC., a Missouri corporation with its
principal place of business at 906 Grand Avenue, Suite 300, Kansas City,
Missouri 64106 ("Kansas City"), JOHNS HOLDING COMPANY, a Delaware corporation
with its principal place of business at 260 E. Wood Street, Decatur, Illinois
62523 ("JHC"), CSC CREDIT SERVICES OF MINNESOTA, INC., a Texas corporation with
its principal place of business at 652 E. North Belt, Suite 400, Houston, Texas
77060 ("Minnesota") (Credit Services, Cincinnati, Kansas City, JHC and Minnesota
being hereinafter referred to collectively as the "Bureaus" and sometimes
individually as a "Bureau"), and CSC ACCOUNTS MANAGEMENT, INC., a Texas
corporation with its principal
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place of business at 652 E. North Belt, Suite 400, Houston, Texas 77060
("Accounts Management");
W I T N E S S E T H :
WHEREAS, CBI has developed, owns and employs an automated credit reporting
system entitled "The Automated Credit Reporting Online Package"; and
WHEREAS, Bureaus desire to purchase and otherwise utilize, and CBI desires
to sell and otherwise provide, the services of CBI and the ACROPAC System(TM)
upon the terms and conditions hereinafter set forth; and
WHEREAS, CBI provides simultaneously ACROPAC System(TM) services to
various other credit reporting entities or bureaus and has developed systems and
methods by which such bureaus and CBI may exchange data, market credit services
or otherwise interact with respect to ACROPAC System(TM) services, and Bureaus
wish to participate therein; and
WHEREAS, Bureaus desire that their credit reporting operations be
converted by CBI as necessary for Bureaus to participate in the ACROPAC
System(TM) upon the terms and conditions hereinafter set forth; and
WHEREAS, Bureaus desire that the ACROPAC System(TM) services described by
this Agreement be provided by CBI to Bureaus; and
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WHEREAS, Bureaus, Accounts Management and CBI desire to provide for the
option to sell by Subsidiaries, as hereinafter defined, and the option to
purchase and assume by CBI of, the assets and liabilities of Subsidiaries upon
the terms set forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
I. DEFINITIONS
For purposes of this Agreement:
"Accounts Management" means CSC Accounts Management, Inc., a Texas
corporation;
"Accounts Management Acquired Corporations" shall have the meaning
ascribed thereto in Paragraph 10(c) of this Agreement;
"Accounts Management Assets and Liabilities" shall have the meaning
ascribed thereto in Paragraph 10(b) of this Agreement;
"Accounts Management Assets and Liabilities Price" shall have the meaning
ascribed thereto in Paragraph 10(a) of this Agreement;
"Accounts Management Current Assets Amount" shall have the meaning
ascribed thereto in Paragraph 10(a) (iii) of this Agreement;
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"Accounts Management Long-Term Debt Amount" shall have the meaning
ascribed thereto in Paragraph 10(a) (iii) of this Agreement;
"Accounts Management Net Worth Amount" shall have the meaning ascribed
thereto in Paragraph 10(a) (iii) of this Agreement;
"Accounts Management Underfunding Amount" shall have the meaning ascribed
thereto in Paragraph 10(a) (iii) of this Agreement;
"Acquired Corporations" shall have the meaning ascribed thereto in
Paragraph 11(c) of this Agreement.
"Acquired Product" means the sum of (i) the product of (A) 3.0, times (B)
the Reporting Revenues of the Acquired Corporations generated during the
Calculation Period, plus (ii) the product of (C) 1.0, times (D) the sum of the
Collection Revenues and the Other Business Revenues of the Acquired Corporations
generated during the Calculation Period (such Reporting Revenues, Collection
Revenues and Other Business Revenues of the Acquired Corporations to be
calculated taking into account the provisions of Paragraph 9 (a) of this
Agreement);
"acquisition date" shall have the meaning ascribed thereto in Paragraph 48
of this Agreement;
"Acquisition Debt" of any Person means any amounts owed by such Person
resulting, directly or indirectly, from the financing of the purchase price of
the outstanding shares of
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capital stock or assets of an entity acquired by such Person (which amounts in
no event shall include any liabilities of such entity at the time of acquisition
that are unrelated to any direct or indirect financing of the purchase price of
such entity);
"ACROPAC(TM)", "ACROPAC System(TM) ", "ACROPAC II(TM) " and "ACROPAC II
System(TM)" mean the CBI Automated Credit Reporting Online Package which, for
purposes of this Agreement, shall mean the reporting system described in Exhibit
A to this Agreement and shall include the automated credit reporting system
owned, utilized, offered and employed by CBI from time to time;
"Affiliate Bureaus" means those credit bureaus not owned by CBI, other
than the Bureaus, to which CBI provides ACROPAC(TM) services;
"Albuquerque" shall have the meaning ascribed thereto in Paragraph 47 of
this Agreement;
"Asset Sale' shall have the meaning ascribed thereto in Paragraph 13(a) of
this Agreement;
"Associates" shall have the meaning ascribed thereto in Paragraph 7(d) of
this Agreement;
"billable inquiry" shall have the meaning ascribed thereto in Paragraph
8(a) of this Agreement;
"Bureau" and "Bureaus" mean, respectively, Credit Services, Cincinnati,
Kansas City, JHC and Minnesota and such
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other entities as may be deemed to be Bureaus pursuant to Paragraph 48 hereof,
singly, and all of them, collectively;
"Calculation Period" means the twelve calendar months immediately
preceding the calendar month in which the Subsidiaries or CBI, as the case may
be, give(s) written notice pursuant to Paragraph 11 or 12, respectively, of
their or its intent to sell to CBI or purchase from the Subsidiaries, as the
case may be, the Subsidiaries' Assets and Liabilities;
"Cap" shall have the meaning ascribed thereto in Paragraph 14(d) of this
Agreement;
"CBDC" means Credit Bureau Data Centers, Inc., a Texas corporation and
wholly-owned subsidiary of Credit Services;
"CBI" means The Credit Bureau, Incorporated of Georgia, a Georgia
corporation;
"CBI Appraiser" means one of the largest fifteen (15) investment banking
firms (as measured by total revenues) in the United States as to which
information pertaining to revenues is publicly available, selected by CBI to
appraise the Subsidiaries' Assets and Liabilities;
"Change of Control" of an entity means the acquisition after the date of
this Agreement by any Person, or any number of Persons acting in concert with
one another, directly or indirectly, of shares of any and all classes of
outstanding capital stock of such entity sufficient in total combined voting
power to elect a majority of the board of directors
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of that entity (assuming, for this purpose, that all members are elected at the
same time, notwithstanding the existence of a classified board of directors);
"Cincinnati" means Credit Bureau of Cincinnati, Inc., an Ohio corporation;
"Collection Product" means the product of (A) 1.0, times (B) the sum of
the Collection Revenues of the Bureaus and Accounts Management generated during
the Calculation Period;
"Collection/Reporting Revenue Amount" shall have the meaning ascribed
thereto in Paragraph 10(c) of this Agreement;
"Collection Revenues of any entity means the revenues of such entity
generated from the performance by such entity of Collection Services;
"Collection Services" of any entity means services provided by such entity
relating to the collection of debt assigned to such entity or owned or held by a
customer of such entity, consisting of collection of delinquent accounts, check
verification services, check authorization services, check guarantee services,
billing services, services performed by accounts reCBIvable systems (including,
without limitation, billing, monitoring, scoring and control services), skip
tracing, sales or rentals of computer terminals, modems and other related
equipment and assets used in connection with collection of debt, and any other
types of services performed from time to time by CBI relating to collection of
debt;
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"Cost Allocation System" shall have the meaning ascribed thereto in
Paragraph 8(c) of this Agreement;
"Credit Services" means CSC Credit Services, Inc., a Texas corporation;
"CSC" means Computer Sciences Corporation, a Nevada corporation;
"CSC Consolidated Group" shall have the meaning ascribed thereto in
Paragraph 13(b) of this Agreement;
"demographic data" means identification information, including name,
address, previous address, date of birth, social security number, dependents,
employer, name of spouse and similar information;
"Designated Date" shall have the meaning ascribed thereto in Paragraph
11(a) (i) of this Agreement;
"Equifax" means Equifax Inc., a Georgia corporation;
"ERISA" shall have the meaning ascribed thereto in Paragraph 10(a) (iii)
of this Agreement;
"Exit Costs" shall have the meaning ascribed thereto in Paragraph 14(e) of
this Agreement;
"Federal Income Tax Law Amendment" shall have the meaning ascribed thereto
in Paragraph 13(a) of this Agreement;
"Financial Statements" shall have the meaning ascribed thereto in
Paragraph 19(e) of this Agreement;
"Flat Amount" shall have the meaning ascribed thereto in Paragraph 8(a) of
this Agreement;
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"Following Year" shall have the meaning ascribed thereto in Paragraph 8(a)
of this Agreement;
"Group" shall have the meaning ascribed thereto in Paragraph 14(a) of this
Agreement;
"Guaranteed Amount" shall have the meaning ascribed thereto in Paragraph
14(b) of this Agreement;
"Index" means the Consumer Price Index for All Urban Consumers: U.S. City
Average, All Items (1967=100), issued by the Bureau of Labor Statistics of the
U.S. Department of Labor, as the same from time to time may be modified,
supplemented or adjusted by the Bureau of Labor Statistics;
"Initial Term" shall have the meaning ascribed thereto in Paragraph 15 of
this Agreement;
"Initial Term Expiration Date" shall have the meaning ascribed thereto in
Paragraph 11(a) (i) of this Agreement;
"JHC" means Johns Holding Company, a Delaware corporation;
"Kansas City" means Credit Bureau of Greater Kansas City, Inc., a Missouri
corporation;
"Late Conversion Damages" shall have the meaning ascribed thereto in
Paragraph 3 of this Agreement;
"Master Register" or "Master Register System" shall have the meaning
ascribed thereto in Paragraph 2 of this Agreement;
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"Minnesota" means CSC Credit Services of Minnesota, Inc., a Texas
corporation;
"Most Favored Customer Rate" for any good or service provided by CBI
hereunder shall mean the lowest rate charged by CBI to an Affiliate Bureau for
such good or service;
"Naples" shall have the meaning ascribed thereto in Paragraph 34 of this
Agreement;
"Net CBI Liability" shall have the meaning ascribed thereto in Paragraph
14(d) of this Agreement;
"Net Payment Amount" shall have the meaning ascribed thereto in Paragraph
14(c) (v) of this Agreement;
"online" shall have the meaning ascribed thereto in Paragraph 4(c) of this
Agreement;
"Online Cut-Over Date" shall have the meaning ascribed thereto in
Paragraph 3 of this Agreement;
"Operating Assets" of any entity means tangible operating assets used in
the ordinary course of business of such entity, and shall include, but not be
limited to, plant, property and equipment, and land, buildings, leasehold
improvements, furniture and fixtures of such entity;
"Operating Income" shall have the meaning ascribed thereto in Paragraph
14(e) of this Agreement;
"Other Business Product" means the product of (A) 1.0, times (B) the sum
of the Other Business Revenues of the Bureaus
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and Accounts Management generated during the Calculation Period;
"Other Business Revenues" of any entity means revenues of such entity
other than Reporting Revenues and Collection Revenues;
"Owned Months" shall have the meaning ascribed thereto in Paragraph 9(a)
of this Agreement;
"Person" shall mean an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof;
"Preceding Quarters" shall have the meaning ascribed thereto in Paragraph
14(c) (iii) of this Agreement;
"Renewal Term" shall have the meaning ascribed thereto in Paragraph 15 of
this Agreement;
"Reporting Product" means the product of (A) 3.0, times (B) the sum of the
Reporting Revenues of the Bureaus and Accounts Management generated during the
Calculation Period;
"Reporting Revenues" of an entity means the revenues (excluding any
Royalty) generated from the performance of Reporting Services by such entity;
"Reporting Services" of any entity means consumer credit reporting
services performed by such entity consisting of local, national or inter-bureau
sales of credit reports,
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property appraisals, property surveys, property title reports, mortgage credit
reports or other legal or public information, whether given verbally, in
writing, through access by a computer terminal or otherwise, sales or rentals of
computer terminals, modems and other related equipment and assets used in
connection with consumer credit reporting, pre-screening promotional sales,
account monitoring, scoring and control services, preparation and sales of
extracts, indexes, bulletins and lists, consumer interviews, any other sale of
products or services derived from a consumer credit reporting data base, and any
other types of services performed from time to time by CBI relating to consumer
credit reporting;
"Revenues" of a referenced entity means revenues of that entity, including
revenues of all subsidiaries of the referenced entity, unless such subsidiary is
selling assets to CBI pursuant to Paragraph 10, 11 or 12 hereof;
"Royalty" shall have the meaning ascribed thereto in Paragraph 8(e) of
this Agreement;
"Specified Months" shall have the meaning ascribed thereto in Paragraph
10(a) (i) of this Agreement;
"Stock Sale" shall have the meaning ascribed thereto in Paragraph 13(a) of
this Agreement;
"Subject Guaranteed Amount" shall have the meaning ascribed thereto in
Paragraph 14(c) (ii) of this Agreement;
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"Subject Operating Income" shall have the meaning ascribed thereto in
Paragraph 14(c) (i) of this Agreement;
"Subject Quarter" shall have the meaning ascribed thereto in Paragraph
14(c) of this Agreement;
"Subject Year" shall have the meaning ascribed thereto in Paragraph 14(c)
of this Agreement;
"Subsidiaries" means the Bureaus, Accounts Management and the Acquired
Corporations, collectively;
"Subsidiaries' Appraiser" means one of the largest fifteen (15) investment
banking firms (as measured by total revenues) in the United States as to which
information pertaining to revenues is publicly available, selected by
Subsidiaries to appraise the Subsidiaries' Assets and Liabilities;
"Subsidiaries' Assets and Liabilities" shall have the meaning ascribed
thereto in Paragraph 11(b) of this Agreement;
"Subsidiaries' Current Assets Amount" shall have the meaning ascribed
thereto in Paragraph 11(a) (v) of this Agreement;
"Subsidiaries' Long-Term Debt Amount" shall have the meaning ascribed
thereto in Paragraph 11(a) (v) of this Agreement;
"Subsidiaries' Net Worth Amount" shall have the meaning ascribed thereto
in Paragraph 11(a) (v) of this Agreement;
"Subsidiaries' Underfunding Amount" shall have the meaning ascribed
thereto in Paragraph 11(a) (v) of this Agreement;
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"Sunset Date" shall have the meaning ascribed thereto in Paragraph 13(a)
of this Agreement;
"Termination Notice" shall have the meaning ascribed thereto in Paragraph
12(a) of this Agreement;
"Test Statement" shall have the meaning ascribed thereto in Paragraph
14(c) of this Agreement;
"Third Appraiser" means one of the largest fifteen (15) investment banking
firms (as measured by total revenues) in the United States as to which
information pertaining to revenues is publicly available, selected by mutual
agreement of the CBI Appraiser and the Subsidiaries' Appraiser to appraise the
Subsidiaries' Assets and Liabilities;
"Total Revenue" shall have the meaning ascribed thereto in Paragraph 14(b)
of this Agreement;
"Total Revenue Amount" shall have the meaning ascribed thereto in
Paragraph 10(c) of this Agreement;
"Two-Month Period" shall have the meaning ascribed thereto in Paragraph
4(i) of this Agreement;
"Year-to-Date Guaranteed Amount" shall have the meaning ascribed thereto
in Paragraph 14 (c) (iv) of this Agreement; and
"Year-to-Date Operating Income" shall have the meaning ascribed thereto in
Paragraph 14(c) (iii) of this Agreement;
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II. CONVERSION TO ACROPAC SYSTEM(TM)
1. Conversion Services: (a) Certain automated credit reporting records and
other such files of Bureaus require conversion to permit utilization of the
ACROPAC System(TM) with respect thereto pursuant to this Agreement. CBI shall
convert such automated credit reporting records and other such files of Bureaus
for use on the ACROPAC System(TM) in accordance with the provisions of Paragraph
3 of this Agreement.
(b) Bureaus shall obtain from Bureaus' current provider of automated
credit reporting services the computer documentation, sample files on magnetic
tape, file copies and other pertinent data, information and documents necessary
to accomplish such file conversion by CBI. Any costs incurred by Bureaus'
current provider of automated credit reporting services for preparation and
delivery by such current provider of such data, documents, documentation, sample
files or complete copies, on magnetic tape, of the files and data of Bureaus
maintained or held by such current provider, including, but not limited to,
costs of copying, preparing and shipping of the necessary data, will be borne by
CBI. CBI shall pay for all costs of conversion, including such programming and
related tasks as are necessary to convert Bureaus' files and records from the
system of Bureaus' current provider to the ACROPAC System(TM) data format.
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(c) Bureaus will designate and make available to CBI a representative
qualified to assist in the resolution of issues arising during conversion,
including those involving missing data, incomplete data or data which is
incompatible with the ACROPAC System(TM). CBI shall provide data processing
personnel to accomplish necessary systems and conversion tasks and shall
designate a representative for liaison with Bureaus.
(d) Bureaus shall provide CBI at all reasonable times with access to all
files, records and other material necessary for the conversion of Bureaus' data
and shall permit CBI, or cause CBI to be permitted, to place such equipment on
the premises of Bureaus as is reasonably necessary to effect the conversion of
Bureaus' data to the ACROPAC System(TM).
(e) In preparing Bureaus' magnetic tapes, files and records for conversion
hereunder and in converting the same, CBI shall apply the purge rules as set
forth by Exhibit B hereto.
(f) Bureaus will cooperate with and reasonably assist CBI regarding
conversion of reporting records, files and other information of Bureaus to the
ACROPAC System(TM) as provided in this Paragraph 1.
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2. Master Register System:
(a) Prior to the commencement of conversion, Bureaus shall
reasonably assist CBI in preparing the Master Register System, as described in
Exhibit C attached hereto, for utilization of the ARAPAC II component of the
ACROPAC System(TM).
(b) Prior to the commencement of conversion, Bureaus shall provide
to CBI complete current lists of all customers of Bureaus, along with the
account numbers of each customer and such other information concerning each
customer as CBI shall reasonably request. Upon reCBIpt of said lists and
information, CBI shall assign to each customer of Bureaus new account numbers
compatible with the ACROPAC System(TM). CBI shall also provide Bureaus with a
table reflecting the conversion from the old account numbers to the new numbers.
(c) CBI also shall provide each Bureau from time to time at no
charge with a list of additional account numbers to be assigned to any future
customers of such Bureau in quantities sufficient for such purpose. Each Bureau
shall be responsible for assigning such additional account numbers to new
customers of such Bureau, and such Bureau shall maintain its customer Master
Register on the ACROPAC System(TM) through equipment of such Bureau.
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3. Conversion Completion: CBI warrants that conversion of all records and
files of Bureaus to the ACROPAC System(TM) shall be completed by, and the online
date with respect to all such converted data shall occur no later than, the date
which is eighteen (18) months from the date of this Agreement, at or prior to
7:00 a.m., Eastern Standard/Eastern Daylight Time (the "Online Cut-Over Date").
Bureaus agree to cooperate with CBI in order to complete such conversion by the
Online Cut-Over Date. Each Bureau shall, within thirty (30) days after reCBIpt
of a written request from CBI, provide to CBI the following: (i) a test tape
that consists of at least one percent (1%) of the records and files of such
Bureau to be converted to the ACROPAC System(TM); (ii) information concerning
the record layout, specifications and billing system related to the records and
files to be converted hereunder; and (iii) two (2) complete sets, on magnetic
tape or tapes, of the entire credit reporting file of such Bureau to be
converted hereunder. If CBI fails to convert all such records and files of
Bureaus to the ACROPAC System(TM) by the Online Cut-Over Date, then Bureaus
shall reCBIve monthly credits on invoices, commencing with the first month after
the Online Cut-Over Date, for any lost revenues, extraordinary expenses and
other damages sustained by Bureaus arising from CBI's late conversion of such
records and files (collectively, the "Late Conversion Damages"). Any such
credits for the Late
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Conversion Damages shall be given in addition to any amounts paid by CBI
pursuant to Paragraph 14 of this Agreement, and such credits shall in no event
be deemed a payment made by CBI pursuant to Paragraph 14 of this Agreement.
III. ACROPAC(TM) SERVICES
4. Services Description. Commencing with completion of conversion of all
records and files of any Bureau to the ACROPAC System(TM) or the Online Cut-Over
Date, whichever shall first occur, and for the term of this Agreement:
(a) (i) CBI shall furnish and provide to such Bureau ACROPAC(TM)
online services hereunder for all credit data and records owned or in the
possession of such Bureau, all of which data and records shall be included upon
the ACROPAC System(TM) and identified with respect to such Bureau in accordance
with Paragraph 7 hereof, as such data and records are updated, supplemented and
periodically purged in accordance herewith, and for all consumer credit
reporting and similar or related services based upon or utilizing such data and
records.
(ii) In the service areas listed on Exhibit E attached hereto, such
Bureau shall use, employ and participate in the ACROPAC System(TM), pursuant to
and in accordance with this Agreement exclusively (that is, to the exclusion of
all other automated credit reporting or credit information systems), for all
consumer credit data or records owned or law-
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fully possessed by such Bureau, including all credit reporting data and records
of such Bureau within the ACROPAC System(TM), as identified pursuant to
Paragraph 7 hereto and as updated, supplemented, and periodically purged in
accordance herewith, to the extent such Bureau uses such consumer credit data or
records to provide consumer credit reporting services. In the service areas
listed on Exhibit E attached hereto, CBI shall provide during the term of this
Agreement ACROPAC(TM) online services and other services described herein only
and exclusively to Bureaus, those credit bureaus reCBIving credit reporting
services from CBDC on the date hereof (limited, however, to those zip codes now
assigned to such credit bureaus and identified on Exhibit F), any credit bureaus
acquired in such service areas by CSC or any Bureau, and any customers of any of
the foregoing.
(b) CBI shall have no responsibility whatsoever for the cost,
operation, maintenance or other features of any telecommunication system or
network used by such Bureau or its customers in connection with services
provided under this Agreement from the front-end processor(s) outward to the
customer terminals; provided that CBI shall pay all costs relating to the
network management function and all such front-end processor(s), which are
located at the CBI data processing center in Atlanta, Georgia. CBI agrees to
provide host based network management software for use in isolat-
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ing and resolving communication systems problems and to cooperate fully with
such Bureau in using such software for such function.
(c) For purposes of this Agreement, the term "online" shall mean
direct access to credit information maintained in the ACROPAC System(TM) to
which any Bureau is entitled to access pursuant to, and for purposes or uses
permitted by, this Agreement by means of the appropriate inquiry through a
terminal maintained by such Bureau or by a customer of such Bureau. With respect
to each Bureau, credit reporting services hereunder shall commence on the Online
Cut-Over Date or the completion of conversion of all records and files of such
Bureau to the ACROPAC System(TM), whichever shall first occur.
(d) In accordance with the Autodata Input provisions of Exhibit C
hereto and subject to the provisions of Paragraph 4(i) of this Agreement, CBI
will, at its expense, update each Bureau's credit data subject to this Agreement
with such traditional credit record autodata input from credit grantor sources
which then supply the same to either CBI or such Bureau. Unless CBI specifically
directs to the contrary, such Bureau shall be responsible for obtaining such
automated record data and authorization for its use from suppliers that supply
to such Bureau. From time to time, CBI may obtain and add to each Bureau's
ACROPAC System(TM) files, other data (including that described by Paragraph 7(b)
herein below)
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generally not included within traditional credit grantor trade autodata input.
(e) CBI shall purge credit data on the ACROPAC system(TM) identified
as belonging to such Bureau pursuant to Paragraph 7 hereof in accordance with
the retention requirement of the Fair Credit Reporting Act (15 U.S.C.ss.1681, et
seq.) and the purge rules of CBI as set forth on Exhibit B hereto. Any other
purging of such Bureau's data shall be performed only by mutual consent of CBI
and such Bureau.
(f) Services under this Agreement shall not include the use or sale
of credit data of CBI, any credit bureau owned by CBI or of any Affiliate Bureau
for purposes not authorized by CBI (which purposes shall be authorized by CBI
during times when similar authorization is permitted to any Affiliate Bureau or
credit bureau owned by CBI), and no Bureau shall utilize or sell any such data,
or permit any customer of such Bureau to utilize or sell any such data, for
unauthorized purposes.
(g) CBI shall provide, at CBI's expense, all new product
developments, system enhancements, advertising and promotion of the ACROPAC
System(TM). In connection therewith, a representative of Bureaus shall be
appointed by CBI to the Change Control Board which shall be maintained by CBI
for the purpose of formulating, directing, prioritizing and mon-
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itoring such developments, enhancements, advertising and promotion.
(h) CSC and such Bureau shall be entitled to access all data,
features, functions, components, services, benefits and options of the ACROPAC
System(TM) and other credit reporting or collections systems offered to any
credit bureau owned by CBI or any Affiliate Bureau, at the Most Favored Customer
Rate.
(i) CBI agrees to use its best efforts to cause, during any
two-month period during the term of this Agreement (a "Two-Month Period"):
(1) The ACROPAC System(TM) to be fully operational and accessible
online by terminals of Bureaus and their customers for an average,
computed over the entire said Two-Month Period, of not less than
ninety-eight percent (98%) of the hours indicated in Paragraph 5 of this
Agreement; and
(2) CBI's ACROPAC(TM) average response time per response to Bureaus,
computed over the entire said Two-Month Period, to be not more than ten
(10) seconds; and
(3) Ninety percent (90%) of all non-malfunctioning automated record
data reCBIved by CBI from vendors or any Bureau during said Two-Month
Period to be updated within fourteen (14) days of reCBIpt by CBI, and one
hundred percent (100%) of all such non-malfunctioning automated record
data to be updated within twenty (20) days of reCBIpt by CBI; and new
supplier data reCBIved by CBI in the standard format to be updated within
thirty (30) days of reCBIpt by CBI, and malfunctioning record data that
remains within the control of CBI to be updated within thirty (30) days of
malfunction.
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Should CBI fail to perform to any of the above levels and should
such failure not be caused by the act of a third party outside the control of
CBI, Credit Services' sole remedy shall be to give notice of such failure to CBI
within fifteen (15) days after the end of such Two-Month Period. CBI's sole
obligation with respect to such notice shall be to respond in writing thereto
within fourteen (14) days after reCBIpt thereof as to what efforts will be
undertaken to correct any such failure.
(j) No pre-screening, credit promotions, marketing lists or similar
programs with respect to credit data of CBI, any credit bureau owned by CBI or
of any Affiliate Bureau shall be provided, performed, sold or marketed by any
Bureau except solely upon and pursuant to terms and conditions authorized and
agreed to by CBI (which terms in any event shall not provide for charges higher
than the Most Favored Customer Rate).
(k) Subject to the condition provided in the next sentence, such
Bureau shall be allowed and have the right to use the ACROPAC System(TM) to
obtain, at cost, name and address data of CBI, Bureaus and credit bureaus owned
by CBI for new movers services and to sell such data to customers of such
Bureau. Such right to use of the ACROPAC System(TM) to obtain such data is
conditoned upon CBI agreeing to the
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percentage of its share of revenues from sale of such data to such customers.
5. Time of Performance. CBI shall provide to Bureaus the online credit
reporting services described hereunder on Monday through Friday from 7:30 a.m.
until 1:00 a.m., Saturday from 7:00 a.m. until 10:00 p.m., and on Sunday from
12:30 p.m. until 10:00 p.m., all Eastern Standard Time/Eastern Daylight Time;
provided, however, that, notwithstanding anything hereinabove to the contrary,
no such services shall be provided on Christmas or New Year's Day, and such
services may be interrupted on Sundays for emergency maintenance purposes.
6. Equipment. Each Bureau, at its own expense, hereby agrees to acquire or
retain such data processing equipment compatible with ACROPAC(TM) and required
for such Bureau to operate and perform under this Agreement as shall be
specified by CBI in its reasonable judgment. Such equipment required as of the
date hereof is specified in Exhibit D attached hereto. CBI may specify such
additional or different types or quantities of data processing equipment as CBI
reasonably deems necessary to continue such Bureau's participation on
ACROPAC(TM) and said Bureau agrees to acquire and install the same. In the event
any such equipment is acquired from CBI, the terms, including warranties,
associ-
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ated with acquisition or use thereof shall be solely as set forth in a separate
agreement.
7. Ownership of Data. For all purposes of this Agreement, each Bureau
shall be the owner of all data and information in the ACROPAC System(TM), as
such may be purged, modified or enhanced from time to time, as set forth by the
following:
(a) From and after the Online Cut-Over Date or the completion of
conversion of all credit records and files of a Bureau, whichever shall first
occur, and notwithstanding CBI's failure to properly designate data as belonging
to such Bureau by coding within ACROPAC(TM), such Bureau shall be the owner of
all credit records and files, including credit account data and subject files,
(i) delivered to CBI by such Bureau and pertaining to those subjects residing in
those service areas set forth on Exhibit E which do not have zip codes listed on
Exhibit F, and (ii) delivered to CBI by suppliers of Bureaus, CBI, credit
bureaus owned by CBI or Affiliate Bureaus and pertaining to those subjects
residing in those service areas set forth on Exhibit E which do not have zip
codes listed on Exhibit F.
(b) Notwithstanding any other provisions of this Agreement, each
Bureau shall be deemed to own demographic data included within the ACROPAC(TM)
files identified pursuant to Paragraph 7(a).
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(c) Each Bureau agrees that it shall cease to own any ACROPAC(TM)
credit data described by Paragraphs 7(a) or 7(b) at the time the consumer
subject thereof transfers residence out of the service areas defined by Exhibit
E. Upon such transfer, the credit data for such consumer shall be owned by the
ACROPAC(TM) Affiliate Bureau, if any, which maintains credit data files for an
area encompassing the new residence of such consumer or, if there is no such
Affiliate Bureau, by CBI. CBI agrees that it shall cease to own any ACROPAC(TM)
credit data at the time the consumer subject thereof transfers residence into
the service areas defined by Exhibit E. Upon such transfer, the credit data for
such consumer shall be owned by the Bureau or the Associate, as the case may be,
which maintains credit data files for an area encompassing the new residence of
such consumer.
(d) CBI agrees and warrants that in the event any of the credit
bureaus (the "Associates") listed on Exhibit F attached hereto (all of which are
credit bureaus currently reCBIving credit reporting services from CBDC) cease
using the ACROPAC System(TM), if CBI has the right to deliver, CBI shall
deliver, to Bureaus upon such cessation a copy of the then current credit
records and files (including credit account data, demographic data and subject
files) of such credit bureau contained on the ACROPAC System(TM), together with
the
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right to use and sell information contained in such credit records and files.
8. Charges for ACROPAC System(TM) Services.
(a) Charges of CBI for the online services described in this
Agreement shall be as follows: Each Bureau shall pay to CBI the amount set forth
herein for each billable inquiry as to any credit file or data of such Bureau,
whether such inquiry is made by a customer of such Bureau or any other person or
party. For the purposes of this Agreement, a "billable inquiry" is defined as an
inquiry into the ACROPAC System(TM), by terminal or otherwise, for the purpose
of obtaining a credit report or credit data, whether oral, written or otherwise,
for sale, directly or indirectly, to a customer of such Bureau or any other
person or entity. Any of the following inquiries shall not constitute a billable
inquiry: (i) an inquiry from which it is determined that there is no file on an
individual, unless such inquiry results in a charge to a customer of such
Bureau, and (ii) any other inquiry as to which a report is not sent to a
customer of such Bureau, including, without limitation, an inquiry made by such
Bureau for purposes of performing maintenance on its credit files. Billable
inquiry charges shall be paid only by the Bureau which owns the ACROPAC(TM) file
accessed in all cases; no more than one billable inquiry shall be deemed to have
occurred within twenty-four (24) hours of the first
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inquiry in respect of a single credit report, if such inquiries were made from
the same inquiring account number. A record of all charges for billable
inquiries shall be kept daily by CBI, and CBI shall furnish to each Bureau a
report of such inquiries and the charges made therefor pursuant to Paragraph
8(b) hereof. Each Bureau shall pay to CBI for each billable inquiry the lesser
of (A) the Flat Amount (as hereinafter defined) or (B) the Most Favored Customer
Rate for a billable inquiry.
For purposes of this Agreement, the "Flat Amount" shall be equal to (i) during
the Initial Term, $0.230, (ii) during the first year of any Renewal Term, the
sum of (I) the Flat Amount for the immediately preceding year, plus (II) ten
percent (10%) of the Flat Amount for such immediately preceding year, and (iii)
during any year which is not part of the Initial Term or is not the first year
of any Renewal Term (a "Following Year"), the Flat Amount for the immediately
preceding year increased by the lesser of (X) the percentage increase of the
Most Favored Customer Rate applied by CBI at the beginning of such Following
Year for a billable inquiry or (Y) the percentage increase of the Index for the
month ending immediately prior to the first day of such Following Year over the
Index for the same calendar month occurring in the next preceding year.
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(b) Each Bureau shall be invoiced monthly for charges incurred
hereunder during the month preceding such invoice. Said monthly invoice amount
shall represent all monthly charges made under this Agreement, including,
without limitation, those pursuant to Paragraph 8(a), and including any excise,
use, privilege, or sales or other similar tax or assessment (but excluding any
tax on income or other similar tax) now or hereafter imposed upon such Bureau by
or under the authority of any federal, state or local law, rule or regulation
with respect to the services or materials furnished under this Agreement. All
invoices shall be due and payable by such Bureau within thirty (30) days from
date of reCBIpt of invoice.
(c) CBI and Bureaus shall comply with the procedures and terms of
the Cost Allocation System, as described on Exhibit A hereto or as such terms or
procedures may from time to time be modified or supplemented by CBI in its sole
discretion; provided, however, that in no event shall CBI so modify or
supplement the terms and procedures of the Cost Allocation System as it applies
to Bureaus without so modifying and supplementing the Cost Allocation System
relating to Affiliate Bureaus and credit bureaus owned by CBI. CBI and Bureaus
shall make such payments, charges or remittances as may be due thereunder.
Bureaus specifically acknowledge that such Cost Allocation System is of
significant impor-
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tance to the proper and efficient operation of the ACROPAC System(TM) for the
mutual benefit of CBI, its owned credit bureaus, Bureaus and Affiliate Bureaus.
Each Bureau covenants and agrees that it will refrain from any activities
inconsistent with, or contrary to, the terms or objectives of the Cost
Allocation System.
(d) CBI shall charge Bureaus for services in connection with special
marketing services or similar programs as described in Paragraph 4(j) above at
the Most Favored Customer Rate for such services or programs.
(e) CBI shall pay to Credit Services within thirty (30) days after
the end of each month during the term of this Agreement, $0.07 per billable
inquiry made during such month by any credit bureau or other entity (or customer
thereof), including Bureaus (the "Royalty") regarding a subject residing in a
service area set forth on Exhibit E attached hereto if the credit file on such
subject is not owned by CSC or a Bureau. CBI shall notify Credit Services in
writing as soon as practicable after the end of each month during the term of
this Agreement of the amount of Royalty due Credit Services for such month.
Credit Services shall have the right at reasonable times to inspect and review
the books and records of CBI to insure that all Royalty due Credit Services
hereunder is being paid by CBI to Credit Services in accordance with this
Agreement.
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IV. PUT AND CALL OF ASSETS
9. Certain Calculations; Payments of Consideration.
(a) If an Acquired Corporation has not been owned by CSC or any
Bureau for the entire Calculation Period, then for purposes of calculating the
Acquired Product, the amount of Reporting Revenues, Collection Revenues and
Other Business Revenues generated by such Acquired Corporation during the
Calculation Period shall be deemed to be equal to the respective amounts of
Reporting Revenues, Collection Revenues and Other Business Revenues generated
during the number of months (the "Owned Months") such Acquired Corporation has
been owned by CSC or a Bureau, multiplied by a fraction the numerator of which
is 12 and the denominator of which is the Owned Months,
(b) Any payment to be made by CBI or Equifax to CSC and/or the
Subsidiaries pursuant to the provisions of Article IV or Article V of this
Agreement shall be paid in cash at the offices of Credit Services by cashier's
check drawn on, or by federal funds immediately available at, a financial
institution designated by Credit Services from time to time.
10. Put of Accounts Management Assets and Liabilities.
(a) During the following periods or upon the occurrence of any of
the following events, Accounts Management
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and the Accounts Management Acquired Corporations shall have the right to sell
to CBI, and require CBI to purchase and assume, the Accounts Management Assets
and Liabilities on the terms hereinafter set forth:
1. At any time on or after March 25, 1991 during the term of this
Agreement, but in no event after August 1, 2013;
2. If a Change of Control of CBI or Equifax shall occur during the term
of this Agreement prior to March 25, 1991; or
3. If a Federal Income Tax Law Amendment (as defined in Paragraph 13(a)
hereof) is enacted during the term of this Agreement prior to March
25, 1991 and CBI notifies Accounts Management within three (3) days
after such Federal Income Tax Law Amendment becomes law that due to
such Federal Income Tax Law Amendment Accounts Management and the
Accounts Management Acquired Corporations shall have the right to
sell to CBI, and require CBI to purchase and assume, the Accounts
Management Assets and Liabilities.
CBI shall be bound and obligated to purchase and assume the Accounts Management
Assets and Liabilities from Accounts Management within one hundred eighty (180)
days after reCBIving written notice from Accounts Management and the Accounts
Management Acquired Corporations of their intention to sell the Accounts
Management Assets and Liabilities to CBI; provided, however, that if any federal
governmental department or administrative agency files a motion in any court for
a temporary restraining order restraining CBI's purchase of the Accounts
Management Assets and Liabilities,
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such 180-day period shall be extended by the number of days elapsed between the
filing of such motion and the ruling (including a dismissal) on such motion and
by the number of days, if any, any temporary restraining order granted by such
court is in effect. CBI must notify Accounts Management in writing at least
thirty (30) days prior to the closing of the sale of the Accounts Management
Assets and Liabilities of CBI's intended date of closing of such sale. Subject
to the provisions of Paragraph 10(a) (iii) below, the price which CBI shall pay
for the purchase of the Accounts Management Assets and Liabilities (the
"Accounts Management Assets and Liabilities Price") shall be as follows:
(i) An amount equal to the sum of (A) the product of (I) 3.0,
times (II) the Reporting Revenues of Accounts Management and
the Accounts Management Acquired Corporations generated during
the twelve calendar months immediately preceding the month in
which Accounts Management and the Accounts Management Acquired
Corporations give notice of their intent to sell the Accounts
Management Assets and Liabilities plus (B) the product of
(III) 1.0, times (IV) the Collection Revenues and Other
Business Revenues of Accounts Management and the Accounts
Management Acquired Corporations generated during the twelve
months immediately preceding the month in which Accounts
Management and the Accounts Management Acquired Corporations
give notice of their intent to sell the Accounts Management
Assets and Liabilities. If an Accounts Management Acquired
Corporation or a division of Accounts Management has been
owned by Accounts Management for less
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than the entire twelve calendar months preceding the month in
which Accounts Management gives such notice of its intent to
sell the Accounts Management Assets and Liabilities, then for
purposes of calculating the Reporting Revenues, Collection
Revenues and Other Business Revenues of Accounts Management
and the Accounts Management Acquired Corporations for such
twelve-month period, the Reporting Revenues, Collection
Revenues and Other Business Revenues shall be deemed to
include the respective amount of Reporting Revenues,
Collection Revenues and Other Business Revenues attributable
to each such division or Accounts Management Acquired
Corporation during the number of months (the "Specified
Months") such division or Accounts Management Acquired
Corporation has been owned by Accounts Management, multiplied
by a fraction the numerator of which is 12 and the denominator
of which is the Specified Months;
(ii) Notwithstanding the provisions of the immediately preceding
subparagraph (i), if Accounts Management and the Accounts
Management Acquired Corporations give notice of their intent
to sell the Accounts Management Assets and Liabilities to CBI
and CBI is unable to consummate such purchase of the Accounts
Management Assets and Liabilities within one hundred eighty
(180) days after reCBIving such notice by reason of a
statutory or regulatory provision or an injunction or other
administrative or judicial order prohibiting the consummation
of such purchase (which such provision, injunction or order
shall not be enacted or issued at the request of CBI),
Accounts Management and the Accounts Management Acquired
Corporations shall have the right to withdraw (but shall not
be required to withdraw) their notice of intent to sell and to
exercise their right to renotice their intent to sell and to
sell to CBI at a subsequent time, until such sale is
consummated;
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<PAGE>
provided, however, that if such provision or order is enacted
or issued and Accounts Management and the Accounts Management
Acquired Corporations do not withdraw their notice, then if
such provision or order is rescinded or expires or is
otherwise modified or affected, thus enabling CBI to
consummate such purchase of the Accounts Management Assets and
Liabilities, CBI shall have one hundred eighty (180) days from
the date of such rescission, expiration, or other modification
to consummate such purchase. In the event Accounts Management
and the Accounts Management Acquired Corporations withdraw
their notice and exercise their right to renotice their intent
to sell to CBI at a subsequent time, the purchase price of the
Accounts Management Assets and Liabilities at such subsequent
time shall be determined in accordance with the procedure set
forth in Paragraph 10(a) (i) above.
(iii) Notwithstanding the provisions of the immediately preceding
subparagraphs (i) and (ii), the purchase price of the Accounts
Management Assets and Liabilities shall be reduced by any of
the Accounts Management Current Assets Amount, the Accounts
Management Long-Term Debt Amount, the Accounts Management Net
Worth Amount and the Accounts Management Underfunding Amount,
if any such Amount is greater than zero.
(I) "Accounts Management Current Assets Amount" shall be the
amount, if any, by which total current liabilities
(excluding income taxes payable) of Accounts Management
and the Accounts Management Acquired Corporations
exceeds total current assets (excluding cash and cash
equivalents) of Accounts Management and the Accounts
Management Acquired Corporations.
(II) "Accounts Management Long-Term Debt Amount" shall be
the amount, if
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any, by which long-term liabilities excluding current
maturities of Accounts Management and the Accounts
Management Acquired Corporations (excluding notes
payable to parent, other intercompany debt and
Acquisition Debt) exceeds the aggregate book value (net
of accumulated depreciation and amortization) of the
Operating Assets of Accounts Management and the Accounts
Management Acquired Corporations.
(III) "Accounts Management Net Worth Amount" shall be the
amount, if any, by which the total stockholder's equity
of Accounts Management and the Accounts Management
Acquired Corporations is less than zero.
(IV) "Accounts Management Underfunding Amount" shall be the
amount of any "accumulated funding deficiency" (as
defined in Section 302(a) (2) of the Employee Retirement
Income Security Act of 1974, as amended, or any
successor or similar law hereinafter enacted ("ERISA"))
for any employee pension benefit plan (as defined in
Section 3(2) of ERISA) subject to the funding
requirements of Title IV of ERISA sponsored by Accounts
Management or any Accounts Management Acquired
Corporation.
All calculations made pursuant to subparagraph I, II or
III of this subparagraph (iii) shall be made as of the last
day of the month ending on or immediately preceding the date
on which Accounts Management and the Accounts Management
Acquired Corporations give notice of their intention to sell
the Accounts Management Assets and Liabilities. All
calculations made pursuant to subparagraph IV of this
subparagraph (iii) shall be made as of the last day of the
plan year ending on or immediately preceding the date on which
Accounts Management and
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the Accounts Management Acquired Corporations give notice of
their intention to sell the Accounts Management Assets and
Liabilities.
(b) The "Accounts Management Assets and Liabilities" to be purchased and
assumed by CBI shall consist of the following:
(i) all of the assets (except cash and cash equivalents and stock
of any wholly-owned corporation) of Accounts Management;
(ii) all of the assets (except cash and cash equivalents) of the
Accounts Management Acquired Corporations; and
(iii) all commitments and all direct and contingent liabilities of
Accounts Management and the Accounts Management Acquired
Corporations incurred in the ordinary course of business of
Accounts Management or the Accounts Management Acquired
Corporations, as the case may be, including all contracts used
in the ordinary course of business of such entities
(including, for example, office leases, equipment and software
leases, bureau customer contracts and employment contracts),
but excluding the following:
(A) liabilities relating to income taxes accrued by Accounts
Management and the Accounts Management Acquired
Corporations, to other taxes of Accounts Management and
the Accounts Management Acquired Corporations past due
at the time of purchase of the Accounts Management
Assets and Liabilities and to such other taxes that have
not been accrued by Accounts Management and the Accounts
Management Acquired Corporations,
(B) aggregate liabilities relating to litigation of Accounts
Management and the Accounts Management Acquired
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<PAGE>
Corporations in excess of $187,500 (it being expressly
agreed that up to $187,500 of liabilities relating to
such litigation shall be included in the Accounts
Management Assets and Liabilities). For purposes of this
subparagraph (b) (iii) (B), the selling entities shall
retain and defend all such litigation and shall have the
right, from time to time, to require CBI to reimburse
such entities for all damages, losses, judgments,
expenses and costs (including attorneys' fees and
expenses) up to an aggregate amount equal to $187,500,
(C) Acquisition Debt of Accounts Management and the Accounts
Management Acquired Corporations, and
(D) Notes payable to parent and other intercompany debt of
Accounts Management and the Accounts Management Acquired
Corporations.
(c) "Accounts Management Acquired Corporations" means those Acquired
Corporations (i) all of the stock or substantially all of the assets of which
are acquired by Accounts Management after the date hereof, and (ii) that at the
time of their respective acquisitions each meet the following test:
The Collection/Reporting Revenue Amount of such Acquired
Corporation shall be equal to or greater than 80% of the aggregate
Total Revenue Amount of such Acquired Corporation.
The "Collection/Reporting Revenue Amount" for any entity shall be
the amount equal to the sum of all Reporting Revenues and Collection Revenues of
such entity
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generated during the fiscal year immediately preceding the date on which such
entity was purchased by CSC and/or a Bureau and/or Accounts Management.
The "Total Revenue Amount" for any entity shall be the amount of all
revenues of such entity generated during the fiscal year immediately preceding
the date on which such entity was purchased by CSC and/or a Bureau and/or
Accounts Management.
(d) Accounts Management shall not purchase any Accounts Management
Acquired Corporation between the date on which Accounts Management and the
Accounts Management Acquired Corporations give CBI notice of their intention to
sell the Accounts Management Assets and Liabilities and the date such sale is
consummated; provided, however, that if such notice is withdrawn by Accounts
Management and the Accounts Management Acquired Corporations pursuant to
paragraph 10(a) (ii) hereof, Accounts Management may purchase any Accounts
Management Acquired Corporation after such withdrawal and prior to any
subsequent notice given by Accounts Management and the Accounts Management
Acquired Corporations to CBI of their intention to sell the Accounts Management
Assets and Liabilities.
11. Put of Subsidiaries' Assets and Liabilities. (a) During the following
periods or upon the occurrence of
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any of the following events, the Subsidiaries shall have the right to sell to
CBI, and require CBI to purchase and assume, the Subsidiaries' Assets and
Liabilities on the terms hereinafter set forth:
1. At any time on or after March 25, 1991 during the term of this
Agreement, but in no event after August 1, 2013;
2. If a Change of Control of CBI or Equifax shall occur during
the term of this Agreement prior to March 25, 1991; or
3. If a Federal Income Tax Law Amendment (as defined in Paragraph
13 (a) hereof) is enacted during the term of this Agreement
prior to March 25, 1991 and CBI notifies the Subsidiaries
within three (3) days after such Federal Income Tax Law
Amendment becomes law that due to such Federal Income Tax Law
Amendment the Subsidiaries shall have the right to sell to
CBI, and require CBI to purchase and assume, the Subsidiaries'
Assets and Liabilities.
CBI shall be bound and obligated to purchase and assume the Subsidiaries' Assets
and Liabilities from the Subsidiaries within one hundred eighty (180) days after
reCBIving a joint written notice from the Subsidiaries of their intention to
sell the Subsidiaries' Assets and Liabilities to CBI; provided, however, that if
any federal governmental department or agency files a motion in any court for a
temporary restraining order restraining CBI's purchase of the Subsidiaries'
Assets and Liabilities, such 180-day period shall be extended by the number of
days elapsed between the filing of such motion and the ruling (including a
dismissal) on such motion and by the
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number of days, if any, any temporary restraining order granted by such court is
in effect. CBI must notify the Subsidiaries in writing at least thirty (30) days
prior to the closing of the sale of the Subsidiaries' Assets and Liabilities of
CBI's intended date of closing of such sale. Subject to the provisions of
Paragraph 11(a) (v) below, the price which CBI shall pay for the purchase of the
Subsidiaries' Assets and Liabilities shall be as follows:
(i) If on or prior to the date ("Designated Date") which occurs
three (3) years prior to the expiration date of the Initial
Term ("Initial Term Expiration Date") the Subsidiaries give
CBI such written notice of their intention to sell the
Subsidiaries' Assets and Liabilities, the purchase price of
the Subsidiaries' Assets and Liabilities shall be (A) if CBI
shall have purchased the Accounts Management Assets and
Liabilities prior to the purchase of the Subsidiaries' Assets
and Liabilities, an amount equal to the greater of (I) Three
Hundred Sixty-Five Million Dollars ($365,000,000), minus the
Accounts Management Assets and Liabilities Price, plus the
Acquired Product (less any part thereof attributable to the
Accounts Management Acquired Corporations), or (II) the sum of
the Collection Product (less any part thereof attributable to
the Collection Revenues of Accounts Management), plus the
Reporting Product (less any part thereof attributable to the
Reporting Revenues of Accounts Management), plus the Acquired
Product (less any part thereof attributable to the Accounts
Management Acquired Corporations), plus the Other Business
Product (less any part thereof attributable to the Other
Business Revenues of Accounts Management), plus $21,716,000,
or (B) if CBI shall not have purchased the Accounts Management
Assets and Liabilities prior to such purchase of the
Subsidiaries' Assets and Liabilities, an amount equal to the
greater of (III) Three Hundred
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Sixty-Five Million Dollars ($365,000,000) plus the Acquired
Product, or (IV) the sum of the Collection Product, plus the
Reporting Product, plus the Acquired Product, plus the Other
Business Product, plus $21,716,000;
(ii) If on a date which occurs after the Designated Date and on or
before the Initial Term Expiration Date, the Subsidiaries give
CBI such written notice of their intention to sell the
Subsidiaries' Assets and Liabilities, the purchase price of
the Subsidiaries' Assets and Liabilities shall be an amount
equal to the sum of the Collection Product plus the Reporting
Product, plus the Acquired Product, plus the Other Business
Product, plus $21,716,000 (less, if CBI shall have purchased
the Accounts Management Assets and Liabilities prior to the
purchase of the Subsidiaries Assets and Liabilities, any part
of the Collection Product, Reporting Product, Acquired Product
and Other Business Product attributable to the Collection
Revenues, Reporting Revenues and Other Business Revenues of
Accounts Management or the Accounts Management Acquired
Corporations, as the case may be);
(iii) If after the Initial Term Expiration Date the Subsidiaries
give CBI such written notice of their intention to sell the
Subsidiaries' Assets and Liabilities, the purchase price of
the Subsidiaries' Assets and Liabilities shall be (a) equal to
an amount mutually agreed upon by CBI and the Subsidiaries as
such purchase price, or (b) if CBI and the Subsidiaries cannot
mutually agree upon such purchase price, determined by
appraisal (which appraisal, if the Accounts Management Assets
and Liabilities have previously been purchased by CBI, shall
not include any value respecting the Accounts Management
Assets and Liabilities) in accordance with the following
procedure:
The CBI Appraiser and the Subsidiaries' Appraiser shall
perform and submit within sixty (60) days after the
Subsidiaries give such written notice of their intention
to sell the Subsidiaries' Assets and Liabilities,
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their respective appraisals of the Subsidiaries' Assets
and Liabilities. If the difference between such
appraisals is an amount equal to or less than ten
percent (10%) of the higher of such appraisals, the
purchase price of the Subsidiaries' Assets and
Liabilities shall be equal to the average of such
appraisals. If the difference between the appraisals
submitted by the CBI Appraiser and the Subsidiaries'
Appraiser is an amount greater than ten percent (10%) of
the higher of such appraisals, then CBI and the
Subsidiaries shall endeavor to mutually agree upon a
purchase price that is equal to or greater than ninety
percent (90%) of the higher of such appraisals. If CBI
and the Subsidiaries cannot so mutually agree, the Third
Appraiser shall perform and submit its appraisal of the
Subsidiaries' Assets and Liabilities within sixty (60)
days after its selection by the CBI Appraiser and the
Subsidiaries' Appraiser. In such event, the CBI
Appraiser and the Subsidiaries' Appraiser shall instruct
the Third Appraiser that its appraisal must fall between
the respective appraisals submitted by the CBI Appraiser
and the Subsidiaries' Appraiser, and the purchase price
of the Subsidiaries' Assets and Liabilities shall then
be equal to the appraisal submitted by the Third
Appraiser.
(iv) Notwithstanding the provisions of the immediately preceding
subparagraphs (i), (ii) and (iii), if the Subsidiaries
initially give notice of their intent to sell the
Subsidiaries' Assets and Liabilities to CBI and CBI is unable
to consummate such purchase of the Subsidiaries' Assets and
Liabilities within one hundred eighty (180) days after
reCBIving such notice by reason of a statutory or regulatory
provision or an injunction or other administrative or judicial
order prohibiting
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the consummation of such purchase (which such provision,
injunction or order shall not be enacted or issued at the
request of CBI), the Subsidiaries shall have the right to
withdraw (but shall not be required to withdraw) their notice
of intent to sell and to exercise their right to renotice
their intent to sell and to sell to CBI at a subsequent time,
until such sale is consummated; provided, however, that if
such provision or order is enacted or issued and the
Subsidiaries do not withdraw their notice, then if such
provision or order is rescinded or expires or is otherwise
modified or affected, thus enabling CBI to consummate such
purchase of the Subsidiaries' Assets and Liabilities, CBI
shall have one hundred eighty (180) days from the date of such
rescission, expiration or other modification to consummate
such purchase. In the event the Subsidiaries withdraw their
notice and exercise their right to renotice their intent to
sell to CBI at a subsequent time, the purchase price of the
Subsidiaries' Assets and Liabilities at such subsequent time
shall be determined in accordance with Paragraph 11(a) (i),
(ii) or (iii), as the case may be, based upon the point in
time that such right to sell is subsequently exercised by
again giving written notice to CBI.
(v) Notwithstanding the provisions of the immediately preceding
subparagraphs (i), (ii), (iii) and (iv), the purchase price of
the Subsidiaries' Assets and Liabilities shall be reduced by
any of the Subsidiaries' Current Assets Amount, the
Subsidiaries' Long-Term Debt Amount, the Subsidiaries' Net
Worth Amount and the Subsidiaries' Underfunding Amount, if any
such Amount is greater than zero.
(I) "Subsidiaries' Current Assets Amount" shall be the
amount, if any, by which total current liabilities
(excluding income taxes payable) of the Subsidiaries
exceeds total current assets (excluding cash and cash
equivalents) of the Subsidiaries.
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(II) "Subsidiaries' Long-Term Debt Amount" shall be the
amount, if any, by which the long-term liabilities
excluding current maturities of the Subsidiaries
(excluding notes payable to parent, other intercompany
debt and Acquisition Debt) exceeds the aggregate book
value (net of accumulated depreciation and amortization)
of the Operating Assets of the Subsidiaries.
(III) "Subsidiaries' Net Worth Amount" shall be the amount, if
any, by which the total stockholder's equity of the
Subsidiaries is less than zero.
(IV) "Subsidiaries' Underfunding Amount" shall be the amount
of any "accumulated funding deficiency" (as defined in
Section 302(a) (2) of ERISA) for any employee pension
benefit plan (as defined in Section 3(2) of ERISA)
subject to the funding requirements of Title IV of ERISA
sponsored by any Subsidiary.
All calculations made pursuant to subparagraph I, II or III of
this subparagraph (v) shall be made as of the last day of the month
ending on or immediately preceding the date on which the
Subsidiaries or CBI, as the case may be, give(s) notice of their or
its intention to sell or purchase, as the case may be, the
Subsidiaries' Assets and Liabilities. All calculations made pursuant
to subparagraph IV of this subparagraph (v) shall be made as of the
last day of the plan year ending on or immediately preceding the
date on which the Subsidiaries or CBI, as the case may be, give(s)
notice of their or its intention to sell or purchase, as the case
may be, the Subsidiaries' Assets and Liabilities.
If CBI purchases the Accounts Management Assets and
Liabilities prior to purchasing the Subsidiaries' Assets and
Liabilities, the total current assets, total current liabilities,
total stockholder's equity, long-term liabilities excluding current
maturities, Operating Assets and employee pension benefit plans of
Accounts Management and the Accounts Management Acquired
Corporations shall
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not be included when making the calculations contemplated by this
subparagraph (v).
(b) The "Subsidiaries' Assets and Liabilities" to be purchased and
assumed by CBI shall consist of the following:
(i) all of the assets (except cash and cash equivalents) of the
Bureaus and, if CBI shall not have previously purchased the
Accounts Management Assets and Liabilities, of Accounts
Management;
(ii) all of the assets (except cash, cash equivalents and, if CBI
shall have previously purchased the Accounts Management Assets
and Liabilities, assets of the Accounts Management Acquired
Corporations) of the Acquired Corporations; and
(iii) all commitments and all direct and contingent liabilities of
the Bureaus, the Acquired Corporations (except, if CBI shall
have previously purchased the Accounts Management Assets and
Liabilities, liabilities of the Accounts Management Acquired
Corporations) and, if CBI shall not have previously purchased
the Accounts Management Assets and Liabilities, of Accounts
Management, incurred in the ordinary course of business of
Bureaus, such Acquired Corporations, or Accounts Management,
as the case may be, including all contracts used in the
ordinary course of business of such entities (including, for
example, office leases, equipment and software leases, bureau
customer contracts and employment contracts), but excluding
the following:
(A) liabilities relating to income taxes accrued by the
Subsidiaries, to other taxes of the Subsidiaries past
due at the time of purchase of the Subsidiaries' Assets
and Liabilities and to such other taxes that have not
been accrued by the Subsidiaries,
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(B) aggregate liabilities relating to litigation of the
Bureaus, the Acquired Corporations and, if CBI shall not
have previously purchased the Accounts Management Assets
and Liabilities, of Accounts Management in excess of
$750,000 (it being expressly agreed that up to $750,000
of liabilities relating to such litigation shall be
included in the Subsidiaries' Assets and Liabilities if
CBI shall not have previously purchased the Accounts
Management Assets and Liabilities, and up to $562,500 of
such liabilities shall be included in the Subsidiaries'
Assets and Liabilities if CBI shall have previously
purchased the Accounts Management Assets and
Liabilities). For purposes of this subparagraph (b)
(iii) (B), the selling entities shall retain and defend
all such litigation and shall have the right, from time
to time, to require CBI to reimburse such entities for
all damages, losses, judgments, expenses and costs
(including attorneys' fees and expenses) up to an
aggregate amount equal to $750,000 or $562,500, as the
case may be,
(C) Acquisition Debt of the Subsidiaries, and
(D) Notes payable to parent and other intercompany debt of
the Subsidiaries.
(c) "Acquired Corporations" means the corporations or other entities
(i) all of the stock or substantially all of the assets of which are acquired by
CSC and/or the Bureaus and/or Accounts Management after the date hereof, (ii)
that are wholly-owned by CSC, directly or through one or more of the Bureaus
and/or Accounts Management, as of the closing of any purchase and sale of the
Subsidiaries' Assets
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and Liabilities, (iii) that individually meet the following test:
TEST 1:
The Collection/Reporting Revenue Amount of any such
corporation or such other entity shall be equal to or greater than
80% of the aggregate Total Revenue Amount of such corporation or
other entity.
and (iv) that collectively meet the following test:
TEST 2:
The corporations and other entities shall have been purchased
by CSC and/or the Bureaus and/or Accounts Management in compliance
with the following schedule:
The aggregate Total Revenue Amounts
of all such corporations and such
other entities purchased by CSC
During the following year and/or the Bureaus and/or Accounts
of any Initial Term or Management during such year shall
Renewal Term: not exceed:
------------------------- ----------------------------------
1 $20,000,000
2 $20,000,000 less the aggregate
Total Revenue Amounts of all
corporations and other entities
purchased by CSC and/or the
Bureaus and/or Accounts
Management in year 1
3 $20,000,000 less the aggregate
Total Revenue Amounts of all
corporations and other entities
purchased by CSC and/or the
Bureaus and/or Accounts
Management in years 1
and 2
4 $25,000,000 less the aggregate
Total Revenue Amounts of all
corporations and other entities
purchased by CSC and/or the
Bureaus and/or Accounts
Management in years 1-3
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5 $30,000,000 less the aggregate
Total Revenue Amounts of all
corporations and other entities
purchased by CSC and/or the
Bureaus and/or Accounts
Management in years 1-4
6 $35,000,000 less the aggregate
Total Revenue Amounts of all
corporations and other entities
purchased by CSC and/or the
Bureaus and/or Accounts
Management in years 1-5
7 $40,000,000 less the aggregate
Total Revenue Amounts of all
corporations and other entities
purchased by CSC and/or the
Bureaus and/or Accounts
Management in years 1-6
8 $44,000,000 less the aggregate
Total Revenue Amounts of all
corporations and other entities
purchased by CSC and/or the
Bureaus and/or Accounts
Management in years 1-7
9 $48,000,000 less the aggregate
Total Revenue Amounts of all
corporations and other entities
purchased by CSC and/or the
Bureaus and/or Accounts
Management in years 1-8
10 $50,000,000 less the aggregate
Total Revenue Amounts of all
corporations and other entities
purchased by CSC and/or the
Bureaus and/or Accounts
Management in years 1-9
(d) The Bureaus and Accounts Management shall not purchase any
Acquired Corporation between the date on which the Subsidiaries give CBI notice
of their intention to sell the Subsidiaries' Assets and Liabilities and the date
such sale is consummated; provided, however, that if such notice is withdrawn by
the Subsidiaries pursuant to Paragraph 11 (a) (iv)
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hereof, the Bureaus and Accounts Management may purchase any Acquired
Corporation after such withdrawal and prior to any subsequent notice given by
the Subsidiaries to CBI of their intention to sell the Subsidiaries' Assets and
Liabilities.
12. Call of Subsidiaries' Assets and Liabilities. (a) Subject to the
provisions of Paragraph 13 of this Agreement, if on or prior to August 1, 2013
(i) a Change of Control of CSC shall occur while this Agreement is in effect, or
(ii) (A) CSC, Bureaus and, if CBI shall not have purchased the Accounts
Management Assets and Liabilities, Accounts Management give CBI written notice
("Termination Notice") at least six (6) months prior to the expiration of the
Initial Term or any Renewal Term of their intention to terminate this Agreement
at the end of such Initial Term or Renewal Term, as the case may be, and (B) on
or prior to the last day of such Initial Term or Renewal Term, as the case may
be, the Subsidiaries have not notified CBI of their intention to sell the
Subsidiaries' Assets and Liabilities to CBI, then CBI shall have the right to
purchase and assume, and require the Subsidiaries to sell, the Subsidiaries'
Assets and Liabilities to CBI at the applicable purchase price set forth in
Paragraph 11(a)(i), (ii) or (iii) of this Agreement, as the case may be,
depending on the date CBI gives written notice to the Subsidiaries of its
intention to purchase the Subsidiaries' Assets and Liabilities; provided,
however, that such right of CBI shall exist only if CBI gives
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written notice to Subsidiaries within sixty (60) days after such Change of
Control of CSC or the expiration of the Initial Term or Renewal Term, as the
case may be (this Agreement being deemed for such purposes to be in effect
during such sixty (60) days after the expiration of the Initial Term or Renewal
Term, as the case may be, and, if such notice is given, until such purchase is
consummated), of its intention to purchase the Subsidiaries' Assets and
Liabilities from the Subsidiaries. The Subsidiaries shall be bound and obligated
to sell the Subsidiaries' Assets and Liabilities to CBI within one hundred
eighty (180) days after receiving written notice from CBI of its intention to
purchase the Subsidiaries' Assets and Liabilities from the Subsidiaries.
(b) Notwithstanding the provisions of the immediately preceding
subparagraph (a), if CBI gives notice of its intent to purchase the
Subsidiaries' Assets and Liabilities pursuant to such subparagraph (a) and CBI
is unable to consummate such purchase of the Subsidiaries' Assets and
Liabilities within one hundred eighty (180) days after giving such notice by
reason of a statutory or regulatory provision or an injunction or other
administrative or judicial order prohibiting the consummation of such purchase
(which such provision, injunction or order shall not be enacted or issued at the
request of CSC or any Subsidiary), then CBI's right to purchase the
Subsidiaries' Assets and Liabilities shall termi-
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nate upon the expiration of such one hundred eighty (180) days; provided,
however, that CBI shall have the right to purchase, upon the terms set forth in
the immediately preceding subparagraph (a), the Subsidiaries' Assets and
Liabilities upon each new Change of Control of CSC occurring while this
Agreement is in effect and on or prior to August 1, 2013.
(c) If CSC, Bureaus and, if CBI shall not have purchased the
Accounts Management Assets and Liabilities, Accounts Management give CBI a
Termination Notice, then CBI shall provide the services of CBI and the ACROPAC
system(TM) described herein to the Subsidiaries on a month-to-month basis upon
the same terms and conditions contained herein until CBI consummates the
purchase of the Subsidiaries' Assets and Liabilities pursuant to this Paragraph
12 or until the Subsidiaries are able to begin receiving automated credit
reporting data processing services from a Person other than CBI.
13. Conditional Right to Require Stock Sale and Price Adjustment.
(a) If, as a result of an amendment to the federal income tax laws
that becomes law after the date of this Agreement, CBI would not be entitled to
depreciate the credit records and files included in any purchase and sale
described in Paragraphs 10, 11 and 12 ("Asset Sale") unless
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such Asset Sale is consummated by a date which occurs more than thirty (30) days
after the date that the Federal Income Tax Law Amendment becomes law ("Sunset
Date") (such amendment containing such Sunset Date being hereinafter referred to
as a "Federal Income Tax Law Amendment"), and if, without any default by CBI, an
Asset Sale is not consummated before the Sunset Date, the Asset Sale shall be
restructured as a sale of stock of Accounts Management, Credit Services,
Cincinnati and Kansas City ("Stock Sale"), as the case may be, and the price
shall be adjusted as provided in Paragraph 13(b). In connection with such Stock
Sale, the seller shall agree to indemnify CBI against any liabilities of the
entities covered by such Stock Sale which CBI would not have assumed pursuant to
such Asset Sale; provided, the seller shall receive a credit in respect of such
indemnity equal to the assets which would not have been transferred in such
Asset Sale.
(b) If an Asset Sale is converted into a Stock Sale in accordance
with Paragraph 13 (a), the purchase price for the Stock Sale shall be the price
that would have been paid pursuant to Paragraph 10, 11 or 12 in the Asset Sale,
reduced by an amount equal to the excess, if any, of
(1) the amount of federal income tax that the CSC Consolidated Group
would have incurred on an Asset Sale, over
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(2) the amount of federal income tax that the CSC Consolidated Group
incurs on the Stock Sale (determined without regard to any reduction in
tax liability resulting from the indemnity under Paragraph 13 (a) above).
The "CSC Consolidated Group" means the affiliated group of corporations that
file consolidated returns for federal income tax purposes of which CSC is the
common parent and of which the Subsidiaries are members and any successor to
such affiliated group.
13A. Generally Accepted Accounting Principles; Cooperation;
Securities Laws. Collection Revenues, Reporting Revenues and Other Business
Revenues shall be calculated in accordance with generally accepted accounting
principles consistently applied. The Subsidiaries, CSC and CBI agree to
cooperate and to act expeditiously with regard to any filings with government
agencies required in connection with the transactions contemplated by Paragraphs
10, 11, 12 and 13 hereof. CBI, the Subsidiaries and CSC agree that they will not
take any action or execute and deliver any undertakings that will cause any such
transaction not to be exempt under applicable federal and state securities laws.
V. GUARANTEE OF OPERATING INCOME
14. Guarantee. (a) CBI hereby agrees to guarantee during the fiscal
quarters of Credit Services' fiscal years 1989 (excluding all months in fiscal
year 1989 prior to August, 1988), 1990 and 1991, the aggregate operating income
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(the "Operating Income") of Cincinnati, Kansas City, Credit Services, and the
direct and indirect subsidiaries of Credit Services (excluding any Acquired
Corporation owned by any of the foregoing) (collectively, the "Group") upon the
terms and conditions hereinafter set forth.
(b) For purposes of this Agreement, the "Guaranteed Amount" for any
quarter shall mean:
(i) For fiscal months August and September, 1988 (which shall be
deemed a fiscal quarter for purposes of this Paragraph 14),
the greater of (A) $3,189,000 or (B) 16.98% of all revenue
(from any source whatsoever) generated by the Group ("Total
Revenue") during such two month period;
(ii) For each of the last two fiscal quarters of fiscal year 1989,
the greater of (A) $4,814,000 or (B) 16.99% of the Total
Revenue during such quarter;
(iii) For any fiscal quarter occurring during fiscal year 1990, the
greater of (A) $5,550,000 or (B) 18.38% of the Total Revenue
during such quarter; and
(iv) For any fiscal quarter occurring during fiscal year 1991, the
greater of (A) $6,050,000 or (B) 18.13% of the Total Revenue
during such quarter.
(c) Within thirty (30) days after the end of each such fiscal
quarter during Credit Services' fiscal years 1989, 1990 and 1991, Credit
Services shall deliver to CBI a statement (a "Test Statement") which sets forth
the following information in respect of such fiscal quarter (the "Subject
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Quarter") and the fiscal year (the "Subject Year") of which such Subject Quarter
is a part:
(i) the Operating Income of the Group for such Subject Quarter
(the "Subject Operating Income");
(ii) the Guaranteed Amount for such Subject Quarter (the "Subject
Guaranteed Amount");
(iii) the sum of (A) the Subject Operating Income, plus (B) the
aggregate Operating Income of the Group for all fiscal
quarters (the "Preceding Quarters") in such Subject Year
preceding such Subject Quarter (the "Year-to-Date Operating
Income"), excluding, in fiscal year 1989, all Operating Income
of the Group for months prior to August, 1988;
(iv) the sum of (A) the Subject Guaranteed Amount, plus (B) the sum
of all Guaranteed Amounts for the Preceding Quarters (the
"Year-to-Date Guaranteed Amount"), excluding, in fiscal year
1989, any Guaranteed Amounts for months prior to August, 1988;
(v) an amount (the "Net Payment Amount") equal to (A) the sum of
the amounts received under this Article V by Credit Services
from CBI in respect of the Preceding Quarters, reduced by (B)
the sum of the amounts paid by Credit Services to CBI under
this Article V in respect of the Preceding Quarters; and
(vi) the amount of Exit Costs incurred by the Group during such
Subject Quarter.
Payments to be made under this Article V shall be calculated and paid in
accordance with the following procedure:
If the Subject Quarter is the first fiscal quarter of the Subject Year (the
months of August and September, 1988 being deemed the first fiscal quarter of
fiscal year 1989), then:
(I) if the Subject Operating Income is less than the Subject Guaranteed
Amount, then CBI shall pay Credit
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Services within ten (10) days after delivery of the Test Statement
the amount by which such Subject Operating Income is less than such
Subject Guaranteed Amount.
(II) if the Subject Operating Income is equal to or greater than the
Subject Guaranteed Amount, then Credit Services shall not receive
from CBI, and shall not make to CBI, any payment under this Article
V in respect of such Subject Quarter.
If the Subject Quarter is the second, third or fourth fiscal quarter of the
Subject Year (for purposes of this Paragraph 14, fiscal year 1989 being deemed
to contain only three fiscal quarters, consisting of a first, third and fourth
quarters), then:
(I) if the Subject Operating Income is less than the Subject Guaranteed
Amount, then CBI shall pay Credit Services within ten (10) days
after delivery of the Test Statement an amount, if any, equal to the
lesser of (A) the amount by which the Subject Operating Income is
less than the Subject Guaranteed Amount, or (B) the amount by which
the Year-to-Date Guaranteed Amount exceeds the Year-to-Date
Operating Income.
(II) if the Subject Operating Income is greater than the Subject
Guaranteed Amount, then Credit Services shall pay CBI within ten
(10) days after delivery of the Test Statement an amount, if any,
equal to the lesser of (A) the amount by which the Subject Operating
Income exceeds the Subject Guaranteed Amount, or (B) the Net Payment
Amount.
(III) if the Subject Operating Income is equal to the Subject Guaranteed
Amount, then Credit Services shall not receive from CBI, and shall
not make to CBI, any payment in respect of such Subject Quarter.
The payments made under this subparagraph (c) in respect of a Subject Year shall
not be adjusted or affected in any manner by the amount of Operating Income of
the Group for any other
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fiscal year, and the net amount of payments received by Credit Services in
respect of a Subject Year shall never be adjusted after the adjustment
contemplated by this subparagraph (c) for the last fiscal quarter of such
Subject Year.
(d) "Net CBI Liability" shall mean the amount equal to the aggregate
payments made by CBI to Credit Services under this Paragraph 14, reduced by the
aggregate payments made by Credit Services to CBI under this Paragraph 14. The
Net CBI Liability shall not exceed the Cap in any event; provided, however, that
if the conversion of all records and files of Bureaus to the ACROPAC System(TM)
has not been completed by the date which is thirty-two (32) months from the date
of this Agreement, then there shall be no Cap and CBI shall be obligated and
liable for all amounts to be paid by it pursuant to the immediately preceding
subparagraphs (a)-(c) as if no limit on CBI's liability or obligations under
this Article V had been set forth in this subparagraph (d). "Cap" shall mean
(i) $20,000,000, if the conversion to the ACROPAC System(TM) of
all records and files of Bureaus and Associates is completed
on or prior to the date which is twelve (12) months from the
date of this Agreement;
(ii) $25,000,000, if the conversion to the ACROPAC System(TM) of
all records and files of Bureaus and Associates is completed
on or prior to the date which is eighteen (18) months from the
date of this Agreement but later than the date which is twelve
(12) months from the date of this Agreement;
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(iii) an amount equal to $30,000,000 minus the Late Conversion
Damages, if the conversion to the ACROPAC System(TM) of all
records and files of Bureaus and Associates is completed on or
prior to the date which is twenty-four (24) months from the
date of this Agreement but later than the date which is
eighteen (18) months from the date of this Agreement; and
(iv) an amount equal to $40,000,000 minus the Late Conversion
Damages, if the conversion to the ACROPAC System(TM) of all
records and files of Bureaus and Associates is completed on or
prior to the date which is thirty-two (32) months from the
date of this Agreement but later than the date which is
twenty-four (24) months from the date of this Agreement.
Once the Cap has been established and determined pursuant to this subparagraph
(d) and CBI has paid Credit Services a net amount (i.e., after crediting amounts
paid by Credit Services to CBI under this Article V) equal to the Cap, CBI shall
not be required to make any additional payments to Credit Services pursuant to
this Article V.
(e) Operating Income of the Group shall mean net income of the
Group, as calculated in accordance with generally accepted accounting principles
(except for the provisions for income taxes) consistently applied, before the
following: (1) estimated income taxes, (2) general and administrative costs
charged by parent, (3) investment and interest income, (4) interest expense and
(5) interest expense charged by parent. Operating Income of the Group shall be
calculated to reflect and include, but shall not be limited to, charges for
insurance and other personnel and third-party charges
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allocated to Credit Services by CSC, CSC Industry Service Group (or its
successor) general and administrative costs (which such general and
administrative costs shall not exceed in any one fiscal year one percent (1%) of
the Total Revenue generated during such fiscal year, those being 1989 (excluding
Total Revenue generated during any month prior to August, 1988), 1990 and 1991),
and the following costs (the "Exit Costs"): data communications expenses
incurred by the Group in exiting the data processing business, the write-off of
the ARIES System, the write-down of the building located at 2505 Fannin Street,
Houston, Texas 77002, any termination charges relating to leases to which any of
the Group is a party, severance pay paid to employees of the Group, bonuses paid
to retain employees knowledgeable about the credit reporting business, and other
costs to the Group of exiting the credit reporting data processing business;
provided, however, that the leases listed on Exhibit I attached hereto shall be
assigned (to the extent they may be assigned) by the appropriate member(s) of
the Group to CBI promptly after such member(s) decide(s) such leases are no
longer needed for the operation of its or their business(es), and after such
assignment, such leases shall not be included in the Exit Costs. For purposes of
this Agreement, the Exit Costs which may be charged in order to calculate
Operating Income shall not exceed an aggregate amount of $16,500,000 for fis-
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cal years 1989 (excluding any month in fiscal year 1989 occurring prior to
August, 1988), 1990 and 1991. Total Revenue shall be calculated in accordance
with generally accepted accounting principles consistently applied.
(f) For purposes of establishing CBI's liability for payments under
this Article V, each member of the Group agrees to operate in the ordinary
course of business (except to the extent that such member takes actions in
connection with entering into this Agreement and consummating the transactions
contemplated hereby, including incurring Exit Costs and other expenses arising
out of this Agreement).
(g) CBI shall have the right at reasonable times to inspect and
review the books and records of each member of the Group to insure that the
information contained in the Test Statements is accurate.
VI. DURATION OF THIS AGREEMENT
15. Duration. Subject to earlier termination pursuant to Paragraph 16(a)
hereof, this Agreement shall commence on the date hereof and shall continue for
an initial term of ten (10) years from August 1, 1988 (the "Initial Term").
Unless Accounts Management, Bureaus and CSC shall give written notice to CBI at
least six (6) months prior to the expiration of the Initial Term of Accounts
Management's, Bureaus' and CSC's intention to terminate this Agreement at the
end of such Initial Term, this Agreement, including all
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of its provisions, shall be automatically renewed for an additional term of ten
(10) years (a "Renewal Term") and such automatic renewal of this Agreement shall
continue for successive additional Renewal Terms unless such prior written
notice of desire to terminate shall be given by Accounts Management, CSC and
Bureaus at least six (6) months prior to the expiration of the then current
Renewal Term.
VII. BREACH OF THIS AGREEMENT
16. Breach. (a) Notwithstanding the provisions of Paragraph 15, this
Agreement may be terminated by Accounts Management, CSC and Bureaus or CBI at
any time upon the failure of the other party to pay any sum required to be paid
hereunder promptly when such sum shall become due (it being understood that to
the extent the due date of any payment to be made hereunder is not otherwise
specifically provided for herein, all payments shall be due within thirty (30)
days after receipt of invoice therefor) and the continuance of such failure for
a period of thirty (30) days after notice specifying such failure shall have
been given to such party. Any termination under or pursuant to this Paragraph
16(a) shall be effective one hundred eighty (180) days after the date upon which
the party terminating this Agreement shall have sent to the other party or
parties notice by certified mail of such failure.
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(b) Upon default (other than a default specified in Paragraph 16(a))
by the other party in the performance or breach of any provision, covenant or
warranty of this Agreement and the continuance of such default or breach for a
period of twenty (20) business days (or such longer period as such other party
may reasonably require to cure such default or breach) after notice specifying
such default shall have been given to such party, the non-defaulting party shall
have the right to bring suit for damages or equitable relief, but shall not have
the right to terminate this Agreement. The bringing of such suit shall be the
sole and exclusive remedy of the non-defaulting party for a breach or default
described by this Paragraph 16(b). Without limitation upon the foregoing, the
parties hereto specifically acknowledge that defaults or breaches subject to
this Paragraph 16(b) shall include: (i) the use by any Bureau, or any customer
thereof, of any data of the ACROPAC System(TM) owned by CBI, by any credit
bureau owned by CBI or by any Affiliate Bureau in a manner or for purposes not
authorized by CBI (which purposes shall be authorized by CBI during times when
similar authorization is permitted to any Affiliate Bureau or credit bureau
owned by CBI); (ii) the use by CBI, any credit bureau owned by CBI or any
Affiliate Bureau, or any customer thereof, of any data of the ACROPAC System(TM)
owned by any Bureau in a manner or for purposes not authorized by the Bureau;
(iii)
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failure to use or employ the ACROPAC System(TM) or provide consumer credit
reporting services exclusively (except as contemplated by Paragraph 45 hereof)
in accordance with Paragraph 4 hereof; (iv) assignment of ACROPAC System(TM)
account numbers contrary to the requirements of Paragraph 2 hereof; (v) failure
to comply with the procedures and terms of the Cost Allocation System pursuant
to Paragraph 8(c) hereof; or (vi) any assignment or transfer, or attempted
assignment or transfer, inconsistent with the provisions of Paragraph 29 of this
Agreement.
17. Limitation. Except as specifically provided herein, termination
pursuant to Paragraphs 15 or 16(a) above shall not limit, modify, or be in
substitution for, any of the rights of action or claims under this Agreement, at
law or in equity, which any aggrieved party may otherwise have.
18. Rights Upon Termination. (a) If after CBDC has ceased operating its
data processing center (i) this Agreement is terminated by CBI or Equifax acting
as a debtor in possession, by a trustee appointed to act for CBI or Equifax as a
debtor or by a bankruptcy court in a case filed under the Federal Bankruptcy
Code on behalf of CBI or Equifax, or (ii) any final and non-appealable
administrative or judicial order is issued prohibiting or limiting any provision
of this Agreement relating to the provision by CBI of ACROPAC(TM) services,
then, in the case of (i) above, within sixty (60) days after such
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termination, or in the case of (ii) above, within sixty (60) days after such
order is issued, CBI shall provide to the Bureaus (I) a complete workable
current copy on magnetic tape, as designated by the Bureaus, in CBI format, of
all credit data on the ACROPAC System(TM) belonging to the Bureaus, (II) a copy
of the latest version of the ACROPAC System(TM) and all programs, including
source code, software documentation, training manuals, and other appurtenances
related thereto or derived therefrom, together with the right to use the ACROPAC
System(TM) and all such related rights and properties (which right to use the
ACROPAC System(TM) and such related rights and properties shall be a license
granted by CBI to the Bureaus and shall be evidenced by a written License
Agreement executed by CBI in the form attached hereto as Exhibit G), and (III)
test tapes and assistance in conversion and training of personnel required to
effect such conversion. Said tape referred to in (I) above shall be furnished to
Bureaus at the then current cost to CBI of copying and preparing such complete
tape. Except as set forth herein, CBI shall have no further obligation to
recreate or convert the credit files and records of such Bureau after delivery
of said tape; provided, however, that CBI shall provide, immediately prior to
the commencement of Bureaus' independent operation of their copy of the ACROPAC
System(TM), an updated complete copy on magnetic tape, in CBI format, of all
credit data on the ACROPAC System(TM)
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belonging to the Bureaus. After providing to Bureaus such updated complete
current copy of all credit data on the ACROPAC System(TM) belonging to the
Bureaus and upon receipt of written directives from the Bureaus (and not before
receipt of such written directives), CBI shall purge all such credit data
belonging to the Bureaus from the ACROPAC System(TM). For a period of two (2)
years after Bureau's conversion of said updated complete current copy, CBI shall
not offer on a local level consumer credit reporting services relating to, and
Bureaus shall not offer on a local level consumer credit reporting services
other than those relating to, subjects residing in the areas set forth on
Exhibit E hereto. After Bureau's conversion of said updated complete current
copy, notwithstanding the provisions of Paragraph 8(e) hereof, Bureaus shall
continue to receive Royalty and shall be able to perform local and national
sales using said copy of the ACROPAC System(TM). Prior to the completion of such
conversion by Bureaus of said updated complete current copy, and until Bureaus
have notified CBI in writing that Bureaus are ready to commence their
independent operation of their copy of the ACROPAC System(TM), Bureaus shall
continue, at Bureaus' option, as contract customers of CBI on a month-to-month
basis upon the same terms and conditions contained in this Agreement. In the
case of (ii) above, this
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Agreement shall terminate upon such written notification by Bureaus.
(b) If this Agreement is terminated by any party hereto pursuant to
Paragraph 16 (a), following such termination CBI shall provide the services of
CBI and the ACROPAC System(TM) described herein to Bureaus, at Bureaus' option,
on a month-to-month basis upon the same terms and conditions contained in this
Agreement until the Bureaus are able to begin receiving automated credit
reporting data processing services from a Person other than CBI.
VIII. REPRESENTATIONS, WARRANTIES AND COVENANTS
19. Representations and Warranties of CSC, Bureaus and Accounts
Management. CSC, Bureaus and Accounts Management, jointly and severally,
represent and warrant to CBI as follows:
(a) Organization and Standing. Except as disclosed to CBI in writing
as of the date hereof, each of CSC, the Bureaus and Accounts Management is a
corporation duly organized, validly existing, and in good standing under the
laws of its state of incorporation, is qualified or licensed to transact
business as a foreign corporation in every jurisdiction where the character of
the property owned or leased by it and the nature of the business conducted by
it require it to be so qualified or licensed and where the failure to be so
qualified or licensed would have a material adverse effect on it.
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(b) Authority. Except as disclosed to CBI in writing as of the date
hereof, each of CSC, the Bureaus and Accounts Management has the full corporate
power and authority to execute and deliver this Agreement, to perform hereunder,
and to consummate the transactions contemplated hereby without the necessity of
any act, approval or consent of any other Person whomsoever, except such as have
been, or will be, obtained. This Agreement has been approved by the respective
Boards of Directors, or the Executive Committees thereof, of each of them, and
constitutes the valid and legally binding obligation of each of CSC, the Bureaus
and Accounts Management enforceable against each of them in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws from time to time in effect
which affect the enforcement of creditors' rights generally, and except as
enforcement of remedies may be limited by general equitable principles.
(c) Agreement Does Not Violate Other Instruments. Except as
disclosed to CBI in writing as of the date hereof, the execution and delivery of
this Agreement by each of CSC, the Bureaus and Accounts Management does not, and
the consummation of the transactions contemplated hereby will not, violate any
provisions of the respective Articles of Incorporation, as amended, or Bylaws,
as amended, of each of CSC, the Bureaus and Accounts Management or violate or
constitute an occurrence
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of default under any provision of, or conflict with, result in acceleration of
any obligation under, or give rise to a right by any party to terminate its
obligations under, any mortgage, deed of trust, conveyance to secure debt, note,
loan, lien, lease, agreement, instrument, or any order, judgment, decree or
other arrangement to which each is a respective party or by which each is
respectively bound or by which the respective assets of each are affected.
(d) Litigation. There is no suit, action, proceeding, claim or
investigation pending or threatened against or affecting any of CSC, the Bureaus
or Accounts Management that would impair the ability of any of CSC, the Bureaus
or Accounts Management to consummate the transactions contemplated by this
Agreement.
(e) Unaudited Combined Financial Statements of Credit Services.
Attached hereto as Exhibit H are copies of the unaudited combined balance sheets
of Cincinnati, Kansas City and Credit Services and Credit Services' direct and
indirect subsidiaries, as of March 31, 1988 and June 30, 1988 and the related
unaudited combining statements of earnings and the unaudited combined statements
of changes in stockholder's equity and cash flow for the year ended March 31,
1988 and for the three months ended June 30, 1988, together with related
footnote disclosures as of and for the year ended March 31, 1988 (the "Financial
Statements") and for the three months
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ended June 30, 1988 (for significant changes since March 31, 1988 only), all
prepared in accordance with generally accepted accounting principles
consistently applied, except for the method used by Credit Services in
estimating for income taxes. The Financial Statements have been prepared
internally by Credit Services and fairly present, except for income taxes, the
combined financial condition of Cincinnati, Kansas City, Credit Services and
Credit Services' direct and indirect subsidiaries and the results of their
operations for the periods presented. The amounts included in such Financial
Statements are included in the consolidated accounts of CSC. Any liabilities
incurred or accrued since June 30, 1988 to the date of this Agreement were
incurred or accrued in the ordinary course of business and do not, either
individually or in the aggregate, have a material adverse effect on the combined
assets of Cincinnati, Kansas City, Credit Services and Credit Services' direct
and indirect subsidiaries.
(f) On the date hereof, the Bureaus, Accounts Management and CBDC
own or lease all of the assets used in the Reporting Services and Collection
Services businesses of CSC.
20. Representations and Warranties of Equifax and CBI. Equifax and
CBI, jointly and severally, represent and warrant to CSC, the Bureaus and
Accounts Management as follows:
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(a) Organization and Standing. Each of Equifax and CBI is a duly
organized and validly existing corporation in good standing under the laws of
Georgia, and is qualified or licensed to transact business as a foreign
corporation in every jurisdiction where the character of the property owned or
leased by it and the nature of the business conducted by it require it to be
qualified or licensed, and where the failure to be so qualified or licensed
would have a material adverse effect on it.
(b) Corporate Power and Authority. Each of Equifax and CBI has the
full corporate power and authority to execute and deliver this Agreement, to
perform hereunder, and to consummate the transactions contemplated hereby
without the necessity of any act, approval or consent of any other Person
whomsoever, except such as have been, or will be, obtained. This Agreement has
been approved by the respective Boards of Directors of Equifax and CBI, or the
Executive Committees thereof, and constitutes the valid and binding obligation
of each of Equifax and CBI enforceable against it in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, and other similar laws from time to time in effect
which affect the enforcement of creditors' rights generally, and except as
enforcement of remedies may be limited by general equitable principles.
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(c) Agreement Does Not Violate Other Instruments. The execution and
delivery of this Agreement by Equifax and CBI does not, and the consummation of
the transactions contemplated hereby will not, violate any provisions of the
respective Articles of Incorporation, as amended, or Bylaws, as amended, of
Equifax and CBI or violate or constitute an occurrence of default under any
provision of, or conflict with, result in acceleration of any obligation under,
or give rise to a right by any party to terminate its obligations under, any
mortgage, deed of trust, conveyance to secure debt, note, loan, lien, lease,
agreement, instrument, or any order, judgment, decree or other arrangement to
which each is a respective party or by which each is bound or by which the
assets of each are affected.
(d) Litigation. There is no suit, action, proceeding, claim or
investigation pending or threatened against or affecting Equifax or CBI that
would impair the ability of Equifax or CBI to consummate the transactions
contemplated by this Agreement.
21. Covenants of CSC, Bureaus and Accounts Management and CBI. (a)
At the closing of any purchase and sale contemplated by Article IV of this
Agreement, the Subsidiaries, Accounts Management or CSC, as the case may be,
shall deliver to CBI good and marketable title to assets included in the
Subsidiaries' Assets and Liabilities, the Accounts Management
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Assets and Liabilities or to the stock of Credit Services, Cincinnati, Kansas
City or Accounts Management, as the case may be.
(b) CSC covenants that, so long as the provisions of Articles IV and
V of this Agreement remain in effect, it will prepare, or cause to be prepared,
and deliver, or cause to be delivered, to CBI, unaudited quarterly combined
financial statements of Cincinnati, Kansas City and Credit Services (and their
subsidiaries), as soon as available, accompanied by a certificate executed by an
officer of Credit Services certifying that such financial statements have been
prepared in accordance with generally accepted accounting principles (except for
the provisions for income taxes) consistently applied subject to the right, as
permitted by such principles, to choose alternative treatments of certain
matters.
(c) CBI covenants that so long as the provisions of Articles IV and
V of this Agreement remain in effect, it will prepare, or cause to be prepared,
and deliver, or cause to be delivered, to CSC, unaudited quarterly financial
statements of CBI and representative samples of financial statements of bureaus
owned by CBI (without identifying such bureaus), as soon as available,
accompanied by a certificate executed by an officer of CBI certifying that such
financial statements have been prepared in accordance with generally accepted
accounting principles consistently applied subject
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to the right, as permitted by such principles, to choose alternative treatments
of certain matters.
(d) Equifax covenants that so long as the provisions of Articles IV
and V of this Agreement remain in effect, it will prepare, or cause to be
prepared, and deliver, or cause to be delivered, to CSC, as soon as available,
audited annual financial statements of Equifax, certified by Arthur Anderson &
Co. that such financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied subject to the
right, as permitted by such principles, to choose alternative treatments of
certain matters.
IX. MISCELLANEOUS TERMS AND PROVISIONS
22. Limitations Upon Liability of CBI. Notwithstanding anything in
this Agreement to the contrary, CSC and Bureaus agree that the liability of CBI
shall be limited in respect of a breach or default of CBI's obligation to
provide services pursuant to and as described in Articles II and III and
Paragraphs 23 and 25 hereof as follows:
(a) in the event that the default or breach shall be the loss or
destruction of credit data of Bureaus on the ACROPAC System(TM) due to an act or
omission of CBI, CBI shall restore such files through utilization of back-up
load tapes;
(b) in the event that the default or breach shall be the loss or
destruction of equipment of the Bureaus on
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the ACROPAC System(TM) due to an act or omission of CBI, CBI shall replace such
equipment; and
(c) in any other event and as to any other default or breach by CBI,
CBI's liability shall be limited to actual direct damages and indirect
consequential damages suffered or incurred by CSC and Bureaus; provided,
however, that CBI shall not be required to pay in respect of such indirect
consequential damages an amount in excess of the actual insurance proceeds
received in respect of such indirect consequential damages as covered by
insurance, if any, of CBI. CSC and Bureaus shall not sue CBI in order to recover
proceeds of insurance against such indirect consequential damages unless and
until such proceeds have been paid to CBI and not paid to CSC and the Bureaus.
Nothing contained in this subparagraph (c) shall be interpreted to require CBI
to carry any such insurance covering such indirect consequential damages. No
limitation of liability of CBI shall apply in respect of any provision of this
Agreement other than those provisions of Articles II and III and Paragraphs 23
and 25 hereof which obligate CBI to provide services pursuant to and as
described in said Articles II and III and Paragraphs 23 and 25 hereof.
23. Release With Respect to Accuracy of Data. Bureaus hereby release CBI
and CBI hereby releases Bureaus from any and all claims, demands, actions,
causes of action, suits,
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costs, damages, expenses, compensation, penalties, liabilities and obligations
of any kind or nature whatsoever arising out of or relating in any way to
negligent actions concerning inaccurate or invalid information furnished by CBI
to Bureaus or by Bureaus to CBI, as the case may be, in connection herewith;
provided, however, that Bureaus do not hereby release CBI from any claims,
demands, actions, causes of action, suits, costs, damages, expenses,
compensation, penalties, liabilities, and obligations arising out of or relating
in any way to (i) any invalidity or inaccuracy of promotions or pre-screenings
performed by CBI for Bureaus or (ii) any violation by CBI of the Fair Credit
Reporting Act.
24. Modifications to ACROPAC(TM). During the term of this Agreement, CBI
may implement any and all modifications, changes or improvements to or within
the ACROPAC System(TM) or with respect to the procedures or regulations
governing the operations thereof as CBI shall deem necessary, in its sole
discretion after requesting and receiving within a reasonable time the input and
suggestions of Bureaus, to the continued successful operation of ACROPAC(TM) or
the CBI affiliate system, and Bureaus specifically agree to comply therewith.
Any such modifications or improvements as implemented by CBI shall apply equally
to all credit bureaus within the CBI affiliate system.
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25. Compliance With Laws. Subject to and as limited by the provisions of
Paragraph 23 hereinabove, CBI agrees that in the performance by it of services
under this Agreement, CBI will comply in good faith in all material respects
with any federal, state or local laws, ordinances, regulations or administrative
orders specifically pertaining to such services, including but not limited to,
the Fair Credit Reporting Act, as such laws, ordinances, regulations or orders
are presently constituted or as the same from time to time may be amended;
provided, however, that nothing herein shall in any manner or to any extent
alter, lessen, modify or substitute for the obligation of Bureaus to comply in
good faith in all material respects with all such laws, ordinances, regulations
or orders, and Bureaus specifically agree to so comply therewith. In the event
that CBI shall conclude that compliance with any such future or amended law,
ordinance, regulation or order will materially increase the cost of performing
the services of CBI provided for by this Agreement, Bureaus and CBI shall
undertake to agree upon a revised schedule of charges and fees under Paragraph 8
hereof.
26. Force Majeure. Notwithstanding any provisions to the contrary herein
contained, no party hereto shall be liable to the other party for any delay or
interruption in performance as to any obligation hereunder resulting from
governmental emergency orders, judicial or governmental action,
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emergency regulations, sabotage, riots, vandalism, labor strikes, or disputes,
acts of God, fires, electrical failure, major computer hardware or software
failures, equipment delivery delays, acts of third parties, or any other cause,
if such delay or interruption in performance is beyond its reasonable control.
27. Relationship of Parties. Nothing contained in this Agreement shall be
construed as creating a joint venture, partnership, licensor-licensee (except as
otherwise provided in Paragraph 18 of this Agreement), principal-agent or mutual
agency relationship between or among the parties hereto, and no party shall, by
virtue of this Agreement, have any right or power to create any obligation,
express or implied, on behalf of any other party. No party, nor any employee of
a party, shall be deemed to be an employee of another party by virtue of this
Agreement.
28. No Third-Party Benefits. CBI, Accounts Management, CSC and Bureaus
acknowledge, agree and intend that this Agreement is entered into solely for the
respective benefit of each of them, each Acquired Corporation, Naples and the
respective successors and permitted assigns of each, and nothing in this
Agreement shall be construed as giving any person, firm, corporation or other
entity (including, without limitation on the foregoing, any customer of
Bureaus), other than the parties hereto, the Acquired Corporations,
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Naples and the respective successors and permitted assigns of each, any right,
remedy or claim under or in respect of this Agreement or any provision hereof.
29. Assignment. The parties hereto acknowledge the special and unique
purposes of this Agreement and, therefore, agree that, notwithstanding any other
provisions to the contrary contained in this Agreement, neither this Agreement
nor any of the rights or obligations hereunder shall be assignable by any
Bureau, CSC or Accounts Management without the prior written consent of CBI and
Equifax or by CBI or Equifax without the prior written consent of Accounts
Management, CSC and Bureaus; provided, however, that CSC and any affiliate of
CSC shall be permitted to assign this Agreement and their respective rights and
obligations hereunder to any other affiliate of CSC without the prior written
consent of CBI; and provided further, that CBI shall be permitted to assign this
Agreement and its respective rights and obligations hereunder to Equifax or any
affiliate of Equifax without the prior written consent of CSC, the Bureaus and
Accounts Management; and provided further, that any assignment whatsoever shall
contain a provision to the effect that the assignee shall assume and be subject
to the terms of this Agreement and that in no event shall the assignor by such
assignment be relieved of any of its obligations hereunder.
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30. Retention of Credit Data. Except as may be necessary to effect an
orderly transition to a successor data processor, each Bureau specifically
covenants and agrees that during the term of this Agreement, or any renewal
thereof, such Bureau will not sell, transfer or otherwise provide to any other
Person (other than CBI or Equifax or affiliates of such Bureau) duplicates, in
whole or material part, of the consumer credit data and credit files of such
Bureau at any time subject to the ACROPAC System(TM).
31. Remote Terminals. There shall be no restrictions upon the source or
type of remote terminals used by any Bureau, or any of its customers, except
that such terminals shall be compatible with the ACROPAC System(TM).
32. Purchase of Supplies. Bureaus may purchase from CBI Credit Report
Blank Forms 2000-A, 250-WS, 250, as well as such other supplies as CBI may make
available for purchase. CBI will invoice Bureaus pursuant to Paragraph 8(b) of
this Agreement for such supplies purchased at prices equal to the cost incurred
by CBI in obtaining the same, plus handling and shipping expenses of CBI.
33. Sales of Reporting and Collections Businesses. CSC, Bureaus and
Accounts Management covenant that during the term of this Agreement they shall
not, except as contemplated herein, dispose of a material part of their
Collection Services and Reporting Services businesses (except for dispositions
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made in the ordinary course of business or which do not materially adversely
affect the revenues of the Group and the Acquired Corporations, in the
aggregate, or dispositions to another affiliate of CSC).
34. Exclusion of Naples. The parties hereto recognize and agree that the
Credit Bureau of Naples, a credit bureau owned by JHC ("Naples"), shall not
initially receive credit reporting data processing services from CBI pursuant to
this Agreement. If, however, in the future JHC wishes Naples to receive such
data processing services from CBI, CBI shall provide such services and shall
charge for such services upon the terms contained in this Agreement. The assets
and liabilities of Naples shall be included in the Subsidiaries' Assets and
Liabilities (as if Naples were a Bureau) in the sales contemplated by Paragraphs
11 and 12 of this Agreement.
35. CSC Guaranty of Performance. CSC hereby unconditionally guarantees to
CBI the prompt and full performance and payment when due of all obligations set
forth in this Agreement of the Bureaus and Accounts Management and the payment
of all costs and expenses incurred by CBI in enforcing CSC's guaranty, including
reasonable attorneys' fees. CSC's guaranty shall be unlimited as to amount and
shall be a continuing guaranty. CSC hereby waives notice of acceptance of its
guaranty and of any liability to which it applies or may apply. CSC's guaranty
is an absolute guaranty of performance
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and payment and not of collection, and CSC waives any right to require that any
action be brought by CBI against Bureaus and/or Accounts Management prior to
requesting CSC to perform under its guaranty. Should CBI seek to enforce the
obligations of CSC under this guaranty in any court, CSC waives any necessity,
substantive or procedural, that a judgment previously be rendered against
Bureaus and/or Accounts Management, or that any action be brought against
Bureaus and/or Accounts Management, or that Bureaus and/or Accounts Management
be joined in such cause. The obligations of CSC under this guaranty shall not be
affected in any way by receivership, insolvency, bankruptcy or other proceedings
affecting Bureaus and/or Accounts Management.
CBI may at any time, without the consent of or notice to CSC (unless
otherwise required herein), and without impairing or releasing the obligations
of CSC under this guaranty, upon or without any terms or conditions and in whole
or in part: (1) change the manner and terms or extend the time of performance or
payment of, or alter, any obligation of Bureaus and/or Accounts Management
hereby guaranteed, and CSC's guaranty shall apply to said obligations as such
may be changed, extended or altered in any manner; (2) exercise or refrain from
exercising any rights against Bureaus and/or Accounts Management; (3) settle or
compromise any obligations hereby guaranteed or hereby incurred; and (4) apply
any sums
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paid in respect of any obligation of Bureaus and/or Accounts Management
regardless of what other obligations of Bureaus and/or Accounts Management to
CBI remain unpaid.
Notwithstanding any payment made by CSC by reason of this guaranty,
CSC shall not be subrogated to the rights of CBI until all obligations
guaranteed hereunder have been paid or performed. No delay on the part of CBI in
exercising any right hereunder or failure to exercise the same shall operate as
a waiver of such right.
36. Equifax Guaranty of Performance. Equifax hereby unconditionally
guarantees to CSC, Bureaus and Accounts Management the prompt and full
performance and payment when due of all obligations set forth in this Agreement
of CBI and the payment of all costs and expenses incurred by CSC, Bureaus and
Accounts Management in enforcing Equifax's guaranty, including reasonable
attorneys' fees. Equifax's guaranty shall be unlimited as to amount and shall be
a continuing guaranty. Equifax hereby waives notice of acceptance of its
guaranty and of any liability to which it applies or may apply. Equifax's
guaranty is an absolute guaranty of performance and payment and not of
collection, and Equifax waives any right to require that any action be brought
by CSC, Bureaus and Accounts Management against CBI prior to requesting Equifax
to perform under its guaranty. Should CSC, Bureaus and Accounts Management seek
to enforce the obligations of Equifax under
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this guaranty in any court, Equifax waives any necessity, substantive or
procedural, that a judgment previously be rendered against CBI, or that any
action be brought against CBI, or that CBI be joined in such cause. The
obligations of Equifax under this guaranty shall not be affected in any way by
receivership, insolvency, bankruptcy or other proceedings affecting CBI.
CSC, Bureaus and Accounts Management may at any time, without the
consent of or notice to Equifax (unless otherwise required herein), and without
impairing or releasing the obligations of Equifax under this guaranty, upon or
without any terms or conditions and in whole or in part: (1) change the manner
and terms or extend the time of performance or payment of, or alter, any
obligation of CBI hereby guaranteed, and Equifax's guaranty shall apply to said
obligations as such may be changed, extended or altered in any manner; (2)
exercise or refrain from exercising any rights against CBI; (3) settle or
compromise any obligations hereby guaranteed or hereby incurred; and (4) apply
any sums paid in respect of any obligation of CBI regardless of what other
obligations of CBI to CSC, Bureaus or Accounts Management remain unpaid.
Notwithstanding any payment made by Equifax by reason of this
guaranty, Equifax shall not be subrogated to the rights of CSC, Bureaus or
Accounts Management until all obligations guaranteed hereunder have been paid or
performed.
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No delay on the part of CSC, Bureaus or Accounts Management in exercising any
right hereunder or failure to exercise the same shall operate as a waiver of
such right.
37. Notices. All notices, requests, demands, and other communications
hereunder shall be in writing except as expressly stated in this Agreement, and
shall be deemed to have been duly given when received upon delivery by hand or
by certified mail, return receipt requested, addressed as follows:
(a) If to Accounts Management, CSC or the Bureaus:
At the respective addresses set forth on Page 1 of this
Agreement, to the attention of the respective Presidents. A
copy of any notice to any Bureau or Accounts Management shall
also be sent to CSC, to the attention of the President of CSC.
(b) If to CBI or Equifax:
The Credit Bureau, Incorporated of Georgia
1600 Peachtree Street, N.W.
Post Office Box 4091
Atlanta, Georgia 30302
Attention: President
The parties hereto may, by notice given hereunder, designate any further or
different addresses to which such notices shall be sent.
38. Severability. In the event any provision of this Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provision hereof.
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39. Exhibits. All Exhibits attached hereto are a part of this Agreement
and are expressly incorporated herein.
40. Confidentiality of ACROPAC System(TM). Accounts Management, CSC and
Bureaus acknowledge and agree that CBI is the owner of the ACROPAC System(TM)
and of all interests, programs, codes, software documentation or other
appurtenances related thereto or derived therefrom. Accounts Management, CSC and
Bureaus further acknowledge and agree that the ACROPAC System(TM) and any codes,
procedures or ACROPAC System(TM) documentation are confidential and proprietary
to CBI. Except as contemplated by Paragraph 18 hereof, during the term of this
Agreement and thereafter, Accounts Management, CSC and Bureaus agree to
maintain, and Accounts Management, CSC and Bureaus agree to cause their
respective directors, officers, employees and agents to maintain, in strict
confidence and not to disclose to any other person or entity, all such
information, materials and know-how as may be provided to Accounts Management,
Bureaus or CSC by CBI during the term of this Agreement and to take such actions
as are necessary to protect against disclosure thereof. Except as contemplated
by Paragraph 18 hereof, Accounts Management, CSC and Bureaus shall make no use
of any such information, materials and know-how whatsoever except solely for the
purpose of this Agreement, in accordance with the terms and during the existence
of this Agreement. Unless
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otherwise provided herein, upon the termination of this Agreement, Bureaus will
return to CBI all manuals, materials and documents pertaining to CBI or the
ACROPAC System(TM) obtained from CBI during the term hereof, and all copies and
partial copies thereof.
41. Confidentiality of Information. From time to time during this
Agreement, Accounts Management, CSC and Bureaus may receive from CBI and CBI may
receive from Accounts Management, CSC or any Bureau, confidential, competitive
or commercially sensitive information concerning the business of CBI or CSC or
such Bureau or Accounts Management, as the case may be, marketing, sales or
products of CBI, credit bureaus owned by CBI or of Affiliate Bureaus or of CSC
or such Bureau or Accounts Management, as the case may be, which, when provided
to CSC, Bureaus, Accounts Management or CBI, as the case may be, is not
generally known by the public. CSC, Bureaus, Accounts Management and CBI agree
to maintain and agree to cause their respective directors, officers, employees
and agents to maintain such information in strict confidence, to not disclose
the same to any other person or entity and to take all appropriate action to
protect against disclosure thereof.
42. Injunctive Relief. Accounts Management, CSC, Bureaus and CBI
acknowledge and agree that use or disclosure of the information described by
Paragraphs 40 and 41 of this
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Agreement in a manner inconsistent with this Agreement will give rise to
irreparable injury to CBI or Accounts Management, CSC and Bureaus, as the case
may be, which cannot be adequately compensated in damages and that CBI or
Accounts Management, CSC and Bureaus, as the case may be, may seek and obtain
equitable, injunctive relief to prevent or restrain such unauthorized use or
disclosure, together with any other remedies which may be available to CBI or
Accounts Management, CSC and Bureaus, as the case may be.
43. Use of ACROPAC(TM) Services. Except as provided in Paragraph 18 of
this Agreement, CBI does not convey or transfer, nor does any Bureau obtain any
right or interest in, any of the programs, systems, data or materials utilized
or provided by CBI in the performance of this Agreement. Under this Agreement,
CBI provides ACROPAC(TM) services solely to Bureaus and their customers
(including the credit bureaus located in Hopkinsville, Kentucky, Longview, Texas
and Wichita Falls, Texas) and Bureaus agree that they will not, except as
provided in Paragraph 46 of this Agreement, resell or subcontract such services
to other credit bureaus or to any other Person.
44. CBI Affiliate System. Bureaus specifically acknowledge that CBI
provides to Affiliate Bureaus and credit bureaus owned by CBI ACROPAC(TM)
services from CBI and that CBI maintains procedures for the efficient provision
of such services and coordination among credit bureaus owned by CBI,
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Affiliate Bureaus and CBI. Bureaus agree that they will comply with such
reasonable directives and reasonable guidelines with respect to operation of the
CBI affiliate system and cooperation among credit bureaus owned by CBI,
Affiliate Bureaus and Bureaus as CBI may promulgate from time to time. Except as
contemplated by Paragraph 45 hereof, (i) access by Bureaus, CBI, credit bureaus
owned by CBI and Affiliate Bureaus to the respective files of each shall be only
for obtaining credit data solely for purposes or uses authorized and permitted
by the ACROPAC System(TM) and the bureau so accessed and (ii) no access to, or
use of, credit data from such respective bureau files shall be permitted other
than in accordance with authorization by the accessed bureau and by CBI.
45. No Limitation on Business. Nothing contained in this Agreement shall
prevent, or be construed to prevent, Accounts Management, CSC, the Bureaus and
any direct or indirect subsidiary thereof from entering into or engaging in any
credit reporting, collection or other business of any kind or nature in any area
or locality. Nothing contained in this Agreement shall prevent Accounts
Management, CSC, the Bureaus and any such subsidiary from accessing any
information stored in the ACROPAC System(TM) and then processing and
incorporating such information into any of their products or services, so long
as such parties comply with all applicable laws when using such information. The
charge for each such
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access shall be determined in accordance with Paragraph 8(a) hereof.
46. Conversion of Associates. Credit Services shall use its best efforts
to cause CBDC to assign the service contracts between CBDC and credit bureaus
currently using the data processing services of CBDC to CBI as soon as
practicable after the date of this Agreement. If any such customer of CBDC
refuses to consent to such assignment to CBI, CBI, as a subcontractor of CBDC,
shall provide its services and the services of the ACROPAC System(TM) to such
customer, and Credit Services shall cause CBDC to remit to CBI for the provision
of such services any amounts received by CBDC from such customer for the
performance of services under such service contract of said customer.
47. Credit Bureau of Albuquerque. Credit Services hereby agrees that it
shall not, if both CBI and the Credit Bureau of Albuquerque ("Albuquerque")
have, on or before December 31, 1988, executed a definitive purchase agreement
(providing for the purchase by CBI of all of the assets or stock of Albuquerque)
or a data processing service contract (providing for the furnishing by CBI of
ACROPAC System(TM) services), receive any Royalty with respect to billable
inquiries made regarding subjects residing in New Mexico (except for subjects
residing in the zip codes set forth on Exhibit J attached hereto, which zip
codes are in the service areas of
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the Amarillo Credit Association and Retail Merchant's Association, Inc. located
in Lubbock, Texas). If CBI consummates such purchase of Albuquerque contemplated
by said definitive purchase agreement or provides such ACROPAC(TM) services
pursuant to said service contract, the State of New Mexico (except for the zip
codes set forth on Exhibit J attached hereto) shall be deleted from Exhibit E as
of the date of such definitive purchase agreement or service contract.
48. Special Provisions
(a) In the event that as of any time first occurring after the date
of its acquisition ("acquisition date") by CSC and/or the Bureaus and/or
Accounts Management, an Acquired Corporation (i) conducts a consumer credit
reporting business pertaining to subjects residing in those service areas set
forth in Exhibit E and (ii) either is provided ACROPAC(TM) services by CBI or is
not precluded by a contract between such Acquired Corporation and a third party
from being provided ACROPAC(TM) services by CBI, then the parties hereto and
said Acquired Corporation shall execute an addendum to this Agreement which adds
such Acquired Corporation as a party hereto and which provides that wherever the
term "Bureau" or "Bureaus" appears in the following Paragraphs of this
Agreement, such term shall be deemed to include such Acquired Corporation:
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(A) Paragraphs 1 through 3 (except such Paragraphs shall not apply
if the Acquired Corporation is already an Affiliate Bureau;
and further except that the Online Cut-Over Date shall occur
on a date mutually and reasonably agreeable to CBI and such
Acquired Corporation);
(B) Paragraphs 4 through 8 (except the exclusions as to Exhibit F
set forth in Paragraph 7(a) shall not apply to the extent such
Acquired Corporation owns files on subjects residing in zip
codes listed on Exhibit F)
(C) Paragraphs 16 through 18;
(D) Paragraphs 22 through 25;
(E) Paragraphs 29 through 33;
(F) Paragraphs 36 through 37; and
(G) Paragraphs 40 through 45.
(b) In the event that as of any time first occurring after its
acquisition date, an Acquired Corporation (i) conducts a consumer credit
reporting business pertaining to subjects residing in service areas other than
those set forth in Exhibit E, (ii) is provided ACROPAC(TM) services by CBI or is
not precluded by a contract between such Acquired Corporation and a third party
from being provided ACROPAC(TM) services by CBI, and (iii) if such services are
not being provided by CBI, receives permission from CBI to be served by CBI on
the ACROPAC System(TM) then the parties hereto and said Acquired Corporation
shall execute an addendum to this Agreement which adds such Acquired Corporation
as a party hereto and which provides that wherever the term "Bureau" or
"Bureaus" appears in the following Para-
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graphs of this Agreement, such term shall be deemed to include such Acquired
Corporation:
(A) Paragraphs 1 through 3 (except such Paragraphs shall not apply
if the Acquired Corporation is already an Affiliate Bureau;
and further except that the Online Cut-over Date shall occur
on a date mutually and reasonably agreeable to CBI and such
Acquired Corporation; and further except that the Acquired
Corporation shall pay all costs of conversion of its files);
(B) Paragraphs 4 (a) (i) and 4 (b) through (k);
(C) Paragraphs 5 through 8 (except that references to service
areas in Paragraph 7(a) shall be to service areas covered by
files owned by such Acquired Corporation; further except that
references in Paragraph 7(c) to service areas defined by
Exhibit E shall instead be deemed to be references to service
areas covered by files owned by such Acquired Corporation;
further except that Paragraph 7(d) shall not be applicable
under any circumstance; and further except that a charge for a
billable inquiry under Paragraph 8(a) shall be equal to the
Most Favored Customer Rate);
(D) Paragraphs 16 through 18 (except that the reference in
Paragraph 18 (a) to areas set forth in Exhibit E shall be
deemed to be a reference to the service areas of such Acquired
Corporation);
(E) Paragraphs 22 through 25;
(F) Paragraphs 29 through 33;
(C) Paragraphs 36 through 37; and
(H) Paragraphs 40 through 45.
(c) In the event an Acquired Corporation conducts a consumer credit
reporting business pertaining to subjects residing in service areas other than
those set forth in
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Exhibit E, CSC agrees that (i) if such Acquired Corporation is not provided
ACROPAC(TM) services by CBI, CSC, at CBI's request and to the extent not
prohibited by a contract between such Acquired Corporation and a third party,
will deliver to CBI a copy of the consumer credit reporting file owned by such
Acquired Corporation; (ii) CBI shall have an option to purchase the Acquired
Corporation at a price equal to the price paid by CSC for such Acquired
Corporation, which option shall terminate on the later to occur of (x) the first
anniversary of the acquisition date of such Acquired Corporation or (y) the date
on which conversion of the consumer credit reporting file owned by such Acquired
Corporation is no longer prohibited by a contract between such Acquired
Corporation and a third party; (iii) no such Acquired Corporation shall be
deemed to be an Acquired Corporation for purposes of Article IV hereof; (iv)
except to the extent permitted by CBI, employees of CSC and its affiliates shall
not attend any informational meetings of the Affiliate Bureaus; and (v) promptly
after such an acquisition CBI shall in writing be notified of such acquisition
and shall at its request be furnished with such information which shall be
reasonably adequate to inform CBI regarding its decision regarding its option to
acquire such Acquired Corporation.
49. Survival. Paragraphs 12(a), 12(c), 18(a), 18(b), 40 and 41 hereof
contain certain provisions which, to the extent expressly stated therein, shall
survive the termination hereof.
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50. Headings. The section and other headings in this Agreement are
inserted solely as a matter of convenience for reference and are not a part of
this Agreement.
51. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
52. Waiver of Rights. Failure of any party to enforce any of its
respective rights or remedies hereunder with respect to any specific act or
failure to act of any party shall not constitute a waiver of the rights of such
party to enforce such rights and remedies with respect to any other or
subsequent act or failure to act.
53. Entire Agreement. This Agreement, including the Exhibits hereto,
constitutes the entire Agreement between the parties and supersedes and cancels
any and all prior Agreements between the parties relating to the subject matter
hereof. Neither this Agreement nor any provision hereof may be changed, waived,
discharged or in any manner modified orally, but only by agreement in writing
signed by all parties to this Agreement.
54. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall take effect as an original, and all of which,
together, shall evidence one and the same Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
THE CREDIT BUREAU, INCORPORATED
OF GEORGIA
By: /s/ [ILLEGIBLE]
----------------------------------
Title: President
-------------------------------
"CBI"
EQUIFAX INC.
By: /s/ [ILLEGIBLE]
----------------------------------
Title: Senior Vice President
-------------------------------
"EQUIFAX"
COMPUTER SCIENCES CORPORATION
By: /s/ [ILLEGIBLE]
----------------------------------
Title: Vice President
-------------------------------
"CSC"
CSC CREDIT SERVICES, INC.
By: /s/ [ILLEGIBLE]
----------------------------------
Title: President
-------------------------------
"CREDIT SERVICES"
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EXHIBIT A
THE AUTOMATED CREDIT REPORTING ONLINE PACKAGE
(ACROPAC(TM))
SYSTEM DESCRIPTION
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GENERAL DESCRIPTION:
The CBI Automated Credit Reporting Online Package (ACROPAC(TM) or
ACROPAC II System(TM)) is a complete online reporting system designed to utilize
advanced computer systems to upgrade substantially the services and efficiency
of today's credit bureau operations. The system was developed to meet the
changing needs of the credit grantor and to meet the following objectives:
- To provide accuracy of information with speed.
- To provide more complete information required for credit
granting decisions.
- To update, online, existing reference files through automated
methods.
- To be expandable and flexible in order to incorporate new
bureau services as required.
The ACROPAC II SYSTEM(TM) of programs is based upon extensive
computer experience, as well as the analysis of bureau operations and credit
grantor requirements. All processing steps affecting the logic and the decisions
relating to services which the system can provide attempt to serve the desires
of the credit bureau and credit grantor for accuracy, content and usage. These
programs are designed to use contemporary data processing equipment and
communication
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networks. System software encompasses the following primary tasks:
- Conversion of manual records to the online system with edit
rules for accuracy and statistical reports for audit purposes.
- Conversion of automated credit files from other vendors of
computerized reporting services.
- Processing of credit grantor automated account history
information to update and create new files on a periodic
basis. ACROPAC II(TM) offers various programs to extract data
from a wide range of different computer systems and record
formats in order to process such data into the online system.
- Telecommunications software to control and distribute
inquiries and responses to and from the computer center. This
software is designed for reliability and use of low and high
speed communication lines.
- The online software is a combination of many individual
programs designed to provide EDP internal control functions
and also provide the information in correct formats necessary
for transmission and display. This software
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provides for terminal maintenance entry, billing data entry,
editing of input and assistance messages to guide terminal
operators.
- The System produces statistics for participating credit
bureaus to assist in work organization. It maintains control
of all records, including necessary purge functions.
The ACROPAC II System(TM) is designed to support many credit bureaus
from a single computer center location, with a primary objective of providing
required services at minimum operating cost. The concept provides for a
centralized programming and operating organization equipped to guide and develop
online system performance while increasing joint utilization of EDP hardware by
System bureaus.
COMPUTER CENTER HARDWARE
The System Center currently utilizes AMDAHL 5880 and 5890 computers.
Reference files are stored on random access disc units, providing large volume
storage and rapid access. The Center supports compatible teletypes for credit
grantor locations and Harris 9178 Series Video Display Stations with hardcopy
printers at bureau locations.
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ONLINE BUREAU OPERATIONS
Access and display of reference files for oral reports is
accomplished through Harris 9178 Video Display Stations by input of required
identifying information. The Bureau operator enters the following basic items
for file retrieval:
Customer Account Number
Display Type
Customer Name
Person Calling
Name of Subject
Address of Subject
Other items of identifying information can be entered, such as
previous address and social security number, to increase the probability of an
accurate determination concerning the existence of a record on the subject of
the inquiry. After the file has been read to the customer, a charge is
automatically captured by the System.
The procedure for retrieving a file for updating purposes is the
same as that for oral reporting; however, the file is printed by request of the
terminal operator and the billing for that update is entered by the terminal
operator. When the updated information has been obtained, a maintenance entry is
made by the operator to update the
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automated file and a printed report may be requested. The charge of the service
rendered is then entered.
Functions which can be performed by a Harris 9178 bureau terminal
operator include:
Request in--file displays
Order hardcopy of displayed file
Automatic capture of in-file and no--file charges
Specific billing entries for standard services
Add maintenance to existing files
Create new files
Delete files and specific items in a file
Instruct printer to start or stop printing
All terminal input information is captured by the online system and
is posted to the file by the ACROPAC II(TM) online update programs. All
transactions performed by the devices are recorded on magnetic tape as well as
disc recording devices for online back-up purposes statistical information
generation. Two level back-ups of the online file provide for file recovery, if
necessary. Such back-ups shall be created no less than once per week. At least
one copy of such back-up will be stored at an off-premises location.
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CUSTOMER (CREDIT GRANTOR) TERMINALS
The ACROPAC II System(TM) provides the necessary software and
communications facilities to support teletype compatible terminals at speeds of
10, 15, 30, 120 and 240 CPS terminals with tape capability at System bureau
customer locations. These terminals provide direct access to the ACROPAC(TM)
automated files. All in-file report charges are automatically captured by the
System at the time of request.
AUTOMATIC PURGING OF OLD INFORMATION
After a bureau is operational on the ACROPAC System(TM), an online
purge program deletes unwanted information, in accordance with legal guidelines,
from files when retrieved. Exhibit B to this Agreement reflects purge rules
currently in effect.
FORM DESTINATION
The System allows each participating bureau to send requests for
updated reports to other bureaus on the System via the terminal. Each bureau can
also return an updated report to an inquiring bureau via the terminal. The form
may then be printed by the bureau receiving the report.
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MARKETING SERVICE CENTER
This center is capable of running CBI's online and off-line system and all
support systems. This site, which is located in another part of the city, will
be used in the event the primary site, housed at 1600 Peachtree Street, in
Atlanta, Georgia, becomes unavailable.
COST ALLOCATION SYSTEM
The Cost Allocation System is designed to assist the bureau with more aggressive
sales of system files and to assure that all bureaus have an incentive to build
and maintain files with care and quality, thus allowing each bureau a fair
return as file owner. Outlined below is how the Cost Allocation System is
designed:
1. The file owner pays the Billable Inquiry charge regardless of how
the file is sold.
2. The file is billed at the file owner's rate.
3. The file owner receives 100% of the revenue.
4. On direct access terminal (customer) and system to system access -
when Bureau "A's" customer receives a file from Bureau "B" at "B's"
price, then Bureau "A" receives a twenty-five cents ($.25) cost
allocation from Bureau "B". On direct access terminal (customer) and
system to system access - when a CBI national customer receives a
file from
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Bureau "B" at "B's" price, then CBI National Sales receives a
twenty-five cents ($.25) cost allocation from Bureau "B".
5. On CRT (inhouse) access - when Bureau "A" receives a file from
Bureau "B" at "B's" price, then Bureau "A" receives a fifty cents
($.50) cost allocation from Bureau "B". On CRT (inhouse) access -
when a CBI national customer receives a file from Bureau "B" at
"B's" price, then CBI National Sales receives a fifty cents ($.50)
cost allocation from Bureau "B".
6. All system files are included in the Cost Allocation System.
7. Cost Allocation will occur on all in-file services.
CREDIT MARKETING SERVICE (CMS)
- CMS will represent the bureau at the national and regional
level on promotion program sales.
- CMS will also assist the bureau on any promotion program sold
by the bureau.
- CMS has a special unit in data processing dedicated to
promotions and Account Monitoring.
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Interface transaction sharing takes place on promotions after data processing
costs have been deducted:
1. CMS completes the sale - 75% of the net revenue goes to the
affiliated bureau as the file owner and CMS receives 25% as the
seller of the program.
2. Affiliated bureau completes the sale - CMS receives 6% of the net
revenue. If the program is confined to one bureau, that bureau
receives 94% of the net revenue.
If the revenue is between CBI or other affiliated bureaus, the owner
of the file receives 75% of the net revenue. The bureau making the
sale receives 25% of total net revenue.
Interface transaction sharing takes place on Account Monitoring after data
processing costs have been deducted:
1. CBI/CMS completes the sale - 75% of the net revenue goes to the
affiliated bureau as the file owner and CBI/CMS receives 25% as the
seller of the program.
2. Affiliated bureau completes the sale - CBI/CMS receives 6% of the
net revenue. If the program is
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confined to one bureau, that bureau receives 94% of the net revenue.
If the revenue is between CBI/CMS or other affiliated bureaus, the owner of the
file receives 75% of the net revenue. The bureau making the sale receives 25% of
total net revenue.
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EXHIBIT B
PURGE RULES FOR ACROPAC SYSTEM(TM)
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ONLINE PURGE RULES APRIL, 1983
TRADE AND NON-MEMBER TRADE----WHOLE LINE 6 YEARS 9 MONTHS FROM THE DATE OF
LAST ACTIVITY (DLA), OR FROM THE DATE OPENED IF NO DATE OF LAST ACTIVITY IS
PRESENT, IF THE CURRENT STATUS IS 2 OR HIGHER. IF NO DATE OF LAST ACTIVITY OR
DATE OPENED PRESENT, PURGE IMMEDIATELY IF CURRENT STATUS IS 2 OR HIGHER.
- ----WHOLE LINE 5 YEARS FROM DATE OF LAST ACTIVITY, OR FROM DATE REPORTED IF NO
DATE OF LAST ACTIVITY IS PRESENT, IF CURRENT STATUS IS 0, 1 OR BLANK.
- ----30/60/90 COUNTERS (ONLY) A) IF DATE OF LAST ACTIVITY IS BLANK AND DATE
OPENED IS BLANK OR OLDER THAN 6 YEARS 9 MONTHS AND CURRENT STATUS IS "0" or "1".
B) IF DATE OF LAST ACTIVITY IS PRESENT AND DATE OPENED IS BLANK OR OLDER THAN 6
YEARS 9 MONTHS AND CURRENT STATUS IS "0" or "1" AND MONTHS REVIEWED IS GREATER
THAN 83.
- ----PREVIOUS HIGH 5 YEARS FROM DATE OF PREVIOUS HIGH.
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- ----STATUS CODES (A, N, Q, T, U, & X) 6 MONTHS FROM DATE REPORTED. ALL OTHERS 5
YEARS FROM DATE REPORTED.
CHECKING AND SAVINGS----6 MONTHS FROM DATE REPORTED
SPECIAL SERVICE ITEMS----#1, 2, & 6----1 YEAR FROM DATE REPORTED
#5----2 YEARS FROM DATE REPORTED
#4 & 7----NO PURGE
INQUIRIES----2 YEARS FROM DATE OF INQUIRY (LOCAL AND FOREIGN)
NAME, ADDRESSES, EMPLOYMENTS, ID, FILE SINCE, NONRESPONSIBILITY, OTHER INCOME,
DEATH NOTICES, FORMER NAME, AND ALSO KNOWN AS----NO PURGE
COLLECTION ITEMS----6 YEARS 9 MONTHS FROM DATE OF LAST PAYMENT OR DATE ASSIGNED
IF NO DATE OF LAST PAYMENT, FOR BOTH PAID AND UNPAID
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FORECLOSURE, GARNISHMENT, LIEN, JUDGEMENT, DIVORCE, SECURED LOAN, SEPARATE
MAINTENANCE, WAGE EARNER, SUITS, AND FINANCIAL COUNSELOR----6 YEARS 9 MONTHS
FROM DATE FILED
BANKRUPTCY----9 YEARS 9 MONTHS FROM DATE FILED
FOREIGN BUREAU HEADING----1 YEAR FROM DATE REPORTED IF THERE ARE NO ITEMS UNDER
THE HEADING. ITEMS UNDER THE HEADING WILL PURGE ACCORDING TO THE RULES ABOVE FOR
EACH INDIVIDUAL ITEM. THE HEADING WILL NOT PURGE UNTIL THE LAST ITEM UNDER THE
HEADING HAS PURGED.
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EXHIBIT C
DESCRIPTION OF ONLINE SERVICES
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REMOTE BUREAU OPERATIONS
The CBI ACROPAC System(TM) stores and maintains credit bureau
records so that they are distinctively identified and immediately accessible to
bureau terminal operators for oral reporting and file maintenance. Both of these
activities may occur concurrently. Bureau customers with compatible terminals
may also access bureau records, but only to obtain in-file credit reports. Other
bureaus with appropriate telecommunication capabilities may also access ACROPAC
bureau records, but for reports only. In each of these instances, the ACROPAC
System(TM) will automatically note the requestor, the service rendered and the
assigned charge.
Additionally, the records of each bureau are purged in accordance
with the retention sections of the Fair Credit Reporting Act. The purge rules
followed by CBI as of the date of this Agreement are attached hereto as Exhibit
B. The purge program enhances effective reporting, efficient use of equipment
and economical bureau operations.
Transmissions which require written reports will be placed in
storage. On request from the bureau, those reports will be transmitted by
long-line facilities to the bureau processor/printer.
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AUTODATA INPUT
The ACROPAC System(TM) has the capability of merging credit pay
record information from customer accounts receivable magnetic tape into the
individual subject credit files of System bureaus. Subject to the provisions of
the Agreement to which this Exhibit is attached, this service is provided to
each bureau on the ACROPAC System(TM). Subject also to such Agreement, no charge
will be made for the periodic merging with a bureau file base of information
received from any company customer tapes which pertains to subjects residing in
the area described on Exhibit E to this Agreement.
SAFE-GUARDS
CBI employs reasonable methods and measures to safeguard against the
unauthorized use of the information contained in the credit files and records of
System bureaus. These safeguards include the following:
1. Operational procedures in the ACROPAC System(TM) which will validate
a customer's account number before a credit report issues.
2. Customer terminals are not capable of altering any vital information
in the subject files. The
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customer terminal is capable of adding only limited identifying
information to files.
MASTER REGISTER SYSTEM---ARAPAC II
Except as otherwise agreed, Bureaus will receive customer statements
each month in the same format as bureaus owned by CBI. Such statements encompass
the current charges to bureau customers for each month, excluding statements for
off-line billing to such customers as Associated Credit Bureau, Inc. and Credit
Bureau Reports, Inc. This monthly billing service includes accounts receivable
reports. Cycle billings may be required whereby billings may be prepared for
various bureaus on the System at different times each month.
The CBI ACROPAC System's(TM) Data Center will transmit a Daily
Record of Revenue to System bureaus, providing a record, by type of report, of
the number of reports produced and the dollar amount charged from the start of
each calendar month. This report offers bureau management a method of reviewing
allocation of manpower resources and of identifying primary sources of revenue
on a timely basis.
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OPERATIONAL AND TECHNICAL SUPPORT
CBI will provide to System bureaus copies of all ACROPAC(TM)
Operating Manuals used by CBI in the operation of CBI automated regional
centers, as the same are revised from time to time. CBI will furnish to each
System bureau the identity of CBI personnel who will act as coordinators between
such bureau and the ACROPAC System(TM) Data Center. Such personnel will inform
bureaus of changes and improvements to the ACROPAC System(TM) and provide
instructions for implementing these changes and improvements.
OTHER SERVICES
The System also forwards statistical reports periodically to
bureaus. These reports reflect individual terminal operator performance and
total credit reporting operations of the bureau. Primary statistical reports
produced include:
A. Daily
Operator Delete Report, on fiche
Terminal Audit Trail, on fiche
Daily Revenue Report, printed in bureau
Daily Transaction Listing, on fiche
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Terminal Department Daily Production Report, printed in bureau
Terminal Department Deletion Report, printed in bureau
B. Monthly
Customer Accounts Aging Schedule
Final Revenue Report
Statement Registers
Cost Allocation Details
Cost Allocation Statistics
Stats By Customer
Stats By Line Of Service
Zip Code Analysis Report (Available to Bureaus in 120 days
after the date of this Agreement or upon a revision of the
ARAPAC System(TM))
C. On Request
Printed Code Books of Masterfile
Masterfile Labels
Updated Masterfile
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EXHIBIT D
EQUIPMENT REQUIRED FOR CONTINUATION OF
BUREAU OPERATION UNDER ACROPAC SYSTEM(TM)
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EQUIPMENT
HARRIS DATA SYSTEMS
9126 - 44C PROCESSOR - 4x4
9126 - 88C PROCESSOR - 8x8
4 PORT 3270 ADAPTER
4 PORT ASYNC ADAPTER
CRTS AND KEYBOARDS
PRINTERS
TELEPHONE SUPPORT EQUIPMENT
9600 BAUD MODEMS
AT&T LONG LINES --------------- TO ATLANTA
DATA SETS AND LOCAL LINES
DIAL BACK-UP SYSTEM
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EXHIBIT E
SERVICE AREAS
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SERVICE AREAS
Arkansas Nebraska
Illinois (except for Cook, DeKalb, New Mexico
DuPage, Grundy, Kane, Kendall,
Lake, McHenry and Will Counties) North Dakota
Indiana Ohio
Iowa Oklahoma
Kansas South Dakota
Kentucky Texas
Bienville, Bossier, Caddo, Claiborne, Wisconsin
Desoto, Jackson, Lincoln, Natchitoches,
Red River, Sabine, Webster, Morehouse,
Oauchita, Richland, Union and West Carroll
Parishes, Louisiana
Minnesota
Missouri
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EXHIBIT F
ASSOCIATES AND ASSOCIATES' ZIP CODES
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EXHIBIT G
LICENSE AGREEMENT
This License Agreement ("Agreement") is made by and among The Credit
Bureau, Incorporated of Georgia ("CBI"), CSC Credit Services, Inc. ("CSC"),
Credit Bureau of Cincinnati, Inc. ("Cincinnati"), Credit Bureau of Greater
Kansas City, Inc. ("Kansas City"), Johns Holding Company ("JHC"), and CSC Credit
Services of Minnesota, Inc. ("Minnesota") (CSC, Cincinnati, Kansas City, JHC,
and Minnesota being each hereinafter referred to as a "Bureau" and all of them,
collectively, as "Bureaus") as of this day of ____________, 19___. In
consideration of the grants and mutual covenants made in this Agreement, Bureaus
and CBI agree as follows:
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I. Definitions
1.1 "Permitted Sublicensee" means a corporation, which at the relevant
time, qualifies as the following: An organization wholly owned by a Bureau.
There shall be no more than one Permitted Sublicensee at any one time.
1.2 "The Software" means the most current version (as of the date hereof)
of the CBI Automated Credit Reporting Online Package software system known as
the ACROPAC System(TM).
1.3 "The Software Package" means the Software together with all programs,
object code, source code, software documentation, training manuals and other
appurtenances related thereto or derived therefrom.
2. License Grants
2.1 Licenses. Subject to the terms and conditions of this Agreement, CBI
irrevocably grants to Bureaus:
A. A non-exclusive license to use the Software Package at the
normal respective places of business of each Bureau and
Permitted
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Sublicensee for the purpose of providing services to each
Bureau, Permitted Sub-licensee, and persons to whom credit
reporting or data processing services are provided by each
Bureau or Permitted Sub-licensee;
B. A non-exclusive license to copy the Software solely for
back-up purposes.
2.2 License Limitations: Bureaus shall use the Software Package only for
the purposes described in Paragraph 2.1(A). In addition, Bureaus shall not
market the services provided to others by them utilizing the Software Package
under or by reference to the name "ACROPAC," or any variation thereof, or in any
manner that could reasonably be viewed as indicating the involvement of CBI in
the provision of such services.
3. Delivery, Installation, Documentation, and Training
3.1 Software Installation: Two copies of the Software shall be delivered
in machine readable format on magnetic tape in a format useable at the time of
delivery. Until the system operated by Bureaus is fully operational, CBI shall
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assist Bureaus with the installation of the Software as and when reasonably
requested by Bureaus. During such period, and as and when reasonably requested,
CBI shall provide Bureaus assistance with testing the Software and shall provide
assistance with any other steps necessary to prepare the Software for use by
Bureaus and/or its customers.
3.2 Training: CBI shall provide 180 trainer-days of training to Bureaus
to be used as and when requested by Bureaus. One trainer-day means one day of
training by one qualified instructor. Bureaus may request Phase 1 training,
which means manager training at the offices of CBI in Atlanta, Georgia.
Additionally, Bureaus may request Phase 2 training, which means on-site training
at Bureaus' user locations. Phase 1 training requires one trainer for every
three trainees. Bureaus agree to pay reasonable travel, meals, and lodging
expenses for Phase 2 trainers.
3.3 Documentation: By not later than the completion of the initial
installation of the Software, CBI shall provide to each Bureau one copy of all
educational, training, operations, and user manuals and similar documentation
relating to the Software. Each Bureau may copy all or part of such manuals and
documentation solely for internal use by such Bureau and any Permitted
Sublicensee.
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3.4 Source Code: CBI shall provide to Bureaus upon completion of the
Software installation the most current source code for the Software and one copy
of the most current programmer documentation. Bureaus shall have a
non-exclusive license to enhance, modify, or change the source code or to merge
the source code with other software. Bureaus shall not provide the source code
to third parties other than a Permitted Sublicensee. CBI shall provide technical
training, by qualified instructors, when and as requested by Bureaus, to enable
Bureaus to bring their system online in a fully operational state.
4. License Fees: Bureaus shall not be required to pay CBI any fee for use of
the Software by Bureaus and any Permitted Sublicensee.
5. Confidential Information
5.1 Confidential Information: Bureaus acknowledge that CBI considers the
Software Package and source code to contain confidential information belonging
to CBI, and Bureaus agree and will cause a Permitted Sublicensee at all times to
keep the Software Package confidential and, except as expressly permitted
herein, shall not disclose or permit others to disclose the Software Package or
any portion
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thereof. Bureaus are permitted to disclose the Software Package to its employees
and independent contractors who are required to have knowledge of the Software
Package in the performance of their duties, provided that the Bureaus require
each such employee and independent contractor to keep the Software Package
confidential and enforce such requirement. CBI acknowledges that in the
performance of this Agreement it may have access to information which Bureaus
consider confidential. Each party acknowledges that this Agreement does not
convey title to any confidential information of the other party. CBI shall not
copy, use, disclose, or commercially exploit or allow anyone else to copy, use,
disclose, or commercially exploit the confidential information of the Bureaus
without the express written consent of the Bureaus. CBI shall exercise all
reasonable precautions to prevent access to, use of, or copying of the
confidential information belonging to the Bureaus.
5.2 Liens: Bureaus shall not suffer or permit any lien or encumbrance of
any nature or description to attach to all or any part of the Software Package
or source code.
5.3 Retention of Rights: All applicable rights to patents, copyrights,
trademarks and trade secrets in the Software Package shall remain the sole and
separate property
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<PAGE>
of CBI. Any authorized copies of any part of the Software Package shall include
such copyright and other disclosures requested by CBI reasonably required in
connection with the protection of these rights.
6. Warranty of Rights CBI warrants:
(a) that the Software does not infringe any copyright, patent right,
trademark right, trade secret right, or other proprietary rights of any
third party;
(b) that CBI is the owner of the Software and that it has the right
and power to grant the licenses and other rights granted to Bureaus under
this Agreement;
(c) that this Agreement does not violate any other agreement by
which CBI may be bound;
(d) that the Software and other materials hereunder shall be
provided free of all liens, claims, encumbrances and other restrictions
which will interfere with the Bureaus' use and possession described in
this Agreement; and
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<PAGE>
(e) that Bureaus' use and possession of the Software and other
materials will not be interrupted or otherwise disturbed by CBI or any
person, firm, or entity asserting a claim under or through CBI.
Subject to the limitations set forth elsewhere in this Section 6, CBI shall
indemnify Bureaus from any violation of the Warranties of Rights provided in
this Section 6 and shall, at its own expense, defend any action to the extent
that such action is a violation of such Warranties of Rights or is based on a
claim which if true would constitute a violation of such Warranties of Rights.
CBI shall have the right to control the defense of all such claims and Bureaus
may only settle such claims (1) with prior written approval from CBI or (2) if
CBI refuses to indemnify Bureaus or defend such claims.
EXCEPT FOR THE WARRANTIES EXPRESSED IN THIS SECTION 6, CBI MAKES NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AND ALL OTHER SUCH
REPRESENTATIONS AND WARRANTIES, EXPRESS AND IMPLIED, INCLUDING WITHOUT
LIMITATION, THOSE OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
ARISING FROM THE DELIVERY, PERFORMANCE OR USE OF THE SOFTWARE, ARE HEREBY
SPECIFICALLY EXCLUDED.
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<PAGE>
EXCEPT WITH RESPECT TO A BREACH OF THE WARRANTY SET FORTH IN SECTION 6
(a), CBI SHALL BE LIABLE TO BUREAUS ONLY FOR DIRECT DAMAGES ARISING FROM A
BREACH OF THIS AGREEMENT AND SHALL NEVER BE OBLIGATED TO OR LIABLE TO BUREAUS
FOR ANY CONSEQUENTIAL DAMAGES ARISING FROM ANY SUCH BREACH.
7. Term and Termination
This Agreement shall be effective when signed by all parties. This
Agreement shall be perpetual, unless Bureaus, in their sole discretion,
terminate this Agreement.
8. Miscellaneous
8.1 Bureaus shall be responsible for compliance with all applicable laws,
rules, and regulations of any competent governmental authority in use and
application of the Software and related materials.
8.2 In the event either party violates any term of this Agreement, the
other party may obtain injunctive relief, specific performance, or any other
relief available at law or in equity. In any action between the parties relating
to this Agreement, the court may award all or any
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<PAGE>
part of the costs and expenses relating to such action, including attorneys'
fees, as the court shall deem just.
8.3 This Agreement shall be binding upon the parties' respective
successors and permitted assignees. Neither party may assign this Agreement or
any rights or obligations under this Agreement without the prior written consent
of the other party, and any such attempted assignment shall be void except that
either party may assign its rights and obligations under this Agreement to any
entity controlled by, controlling, or under common control of such party,
provided that such assignee assumes and agrees to perform all of the liabilities
and obligations of the assigning party hereunder.
8.4 Each party shall be excused for any delay or failure to fulfill its
obligations under this Agreement due to causes beyond its control such as
natural disasters, acts of government, strikes of other entities, acts of war,
civil disturbances, court order, or other causes beyond its reasonable control.
8.5 If any clause or provision of this Agreement is deemed or declared
invalid or unenforceable, all other terms and provisions shall remain in full
force and effect.
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<PAGE>
8.6 No delay or omission by either party to exercise any right or power
under this Agreement shall impair any such right or power or be construed as a
waiver thereof.
8.7 CBI has the sole right and obligation to supervise, manage, direct,
perform, or cause to be performed the work to be performed by CBI under this
Agreement.
8.8 Except to the extent provided in that certain Agreement for
Computerized Credit Reporting Services and Options to Purchase and Sell Assets,
dated as of August 1, 1988, among the parties thereto, this Agreement contains
the entire understanding of the parties and supercedes all prior written or
verbal agreements or representations regarding the subject hereof. No change or
waiver of any provision of this Agreement shall be valid unless in writing and
signed by the party against whom such change or waiver is sought to be enforced.
No employee, agent, or representative of either party has authority to bind such
party by any oral representation or warranty.
8.9 Wherever under this Agreement one party is required to give notice to
the other, such notice shall be sufficient if given in person, or if mailed by
United States mail, first class postage prepaid, and addressed as follows:
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<PAGE>
To CBI:
The Credit Bureau, Incorporated of Georgia
1600 Peachtree Street, N.W.
Atlanta, Georgia 30309
Attn: Corporate Secretary
To Bureaus:
c/o CSC Credit Services, Inc.
652 E. North Belt, Suite 400
Houston, Texas 77060
Attn: President
THE CREDIT BUREAU, INCORPORATED
OF GEORGIA
By:______________________________
Name:____________________________
Title:___________________________
Date:____________________________
CSC CREDIT SERVICES, INC.
By:______________________________
Name:____________________________
Title:___________________________
Date:____________________________
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<PAGE>
CREDIT BUREAU OF CINCINNATI, INC.
By:______________________________
Name:____________________________
Title:___________________________
Date:____________________________
CREDIT BUREAU OF GREATER KANSAS
CITY, INC.
By:______________________________
Name:____________________________
Title:___________________________
Date:____________________________
JOHNS HOLDING COMPANY
By:______________________________
Name:____________________________
Title:___________________________
Date:____________________________
CSC CREDIT SERVICES
OF MINNESOTA, INC.
By:______________________________
Name:____________________________
Title:___________________________
Date:____________________________
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<PAGE>
EXHIBIT H
FINANCIAL STATEMENTS
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<PAGE>
EXHIBIT I
LEASES TO BE ASSIGNED
DATE OF
LEASE OR
MASTER
LESSOR LEASEE AGREEMENT LEASE AGREEMENT NUMBER
------ ------ --------- ----------------------
1. Comdisco, Inc. CBDC 4/4/81 Master Lease with
Equipment Schedules
No. 15 (2/3/86) and
No. CE-3 (5/26/87)
2. Amdahl Credit 7/10/84 LA-2-84-012
Corporation Services (Master Agreement)
with Equipment
Schedules
No. 1 (7/10/84)
No. 3 (6/24/85)
No. 4 (8/15/85
No. 5 (5/23/86)
No. 6-R1 (7/17/87)
3. Memorex Credit 11/22/85 2432 (Master Lease) with
Finance Services Equipment Schedules
Company No. 1 (11/22/85)
No. 2 (11/22/85)
No. 4 (11/22/85)
No. 5 (5/27/86)
No. 6 (5/27/86)
No. 7 (5/27/86)
No. 8 (8/28/86)
No. 9 (9/18/86)
No. 10 (12/30/86)
No. 15 (12/31/87)
No. 15A (12/3/87)
No. 16 (1/19/88)
No. 17 (2/24/88)
No. 18 (2/24/88)
No. 19 (4/21/88)
No. 20 (6/24/88)
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<PAGE>
4. IBM Credit CSC 6/8/84 2280122 (Master Agreement)
Corporation with Supplements
No.87-016(6/28/87) (CBDC)
No.028723-A(12/30/87) (CBDC)
No.87-045(12/2/87) (CBDC)
No.028723(12/30/87 (CBDC)
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<PAGE>
EXHIBIT J
ZIP CODES IN NEW MEXICO OF
AMARILLO CREDIT ASSOCIATION AND
RETAIL MERCHANT'S ASSOCIATION, INC.
(IN LUBBOCK)
LUBBOCK AMARILLO
------- --------
88101 88101
88401
88415
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<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 131
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=002
ZIP RANGES TULSA, OK
67333-67333 KS
67337-67337 KS
71820-71820 AR
71822-71823 AR
71830-71830 AR
71832-71833 AR
71836-71836 AR
71841-71842 AR
71846-71846 AR
71851-71854 AR
71865-71866 AR
71927-71928 AR
71932-71932 AR
71936-71937 AR
71944-71945 AR
71953-71953 AR
71971-71973 AR
72701-72702 AR
72717-72717 AR
72727-72730 AR
72735-72735 AR
72741-72741 AR
72744-72744 AR
72753-72753 AR
72764-72764 AR
72769-72770 AR
72774-72774 AR
72821-72821 AR
72826-72826 AR
72835-72736 AR
72850-72850 AR
72855-72855 AR
72859-72859 AR
72863-72863 AR
72865-72865 AR
72901-72904 AR
72906-72906 AR
72913-72914 AR
72916-72916 AR
72920-72921 AR
72923-72924 AR
72926-72941 AR
72943-72951 AR
72955-72956 AR
72959-72959 AR
73027-73027
73061-73061
73077-73077
73449-73449
73701-73716
73718-73723
73725-73739
73740-73749
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 132
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=002
ZIP RANGES
73751-73761
73763-73769
73771-73771
73773-73773
73834-73834
74000-74099
74100-74199
74301-74330
74332-74334
74336-74338
74340-74342
74344-74353
74356-74357
74359-74359
74361-74362
74364-74369
74401-74404
74420-74472
74477-74477
74501-74502
74520-74529
74533-74533
74536-74536
74540-74543
74545-74555
74557-74569
74571-74578
74601-74661
74701-74724
74726-74766
74824-74825
74827-74830
74832-74833
74834-74834 *BEST*
74835-74835
74837-74839
74841-74841
74843-74847
74850-74850
74853-71853
74855-74856
74859-74862
74864-74864 *BEST*
74865-74867
74869-74872
74874-74877
74879-74880
74881-74881 *BEST*
74882-74882
74901-74966
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 135
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=007
ZIP RANGES LAKE CHARLES, LA
70532-70532
70546-70546
70549-70549
70591-70591
70601-70602
70605-70606
70609-70609
70611-70612
70615-70616
70630-70637
70639-70643
70645-70669
71223-71223
71403-71403
71437-71437
71439-71439
71443-71443
71446-71446
71459-71459
71461-71461
71463-71463
71474-71475
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 136
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=008
ZIP RANGES MARION, IN
46702-46702
46713-46713
46750-46750
46770-46770
46783-46783
46792-46792
46911-46911
46914-46914
46919-46919
46921-46921
46926-46926
46928-46928
46930-46930
46933-46933
46938-46938
46940-46941
46943-46944
46946-46946
46951-46954
46957-46959
46962-46962
46970-46971
46973-46974
46980-46980
46983-46984
46986-46987
46989-46992
47326-47326
47336-47336
47348-47348
47359-47359
47369-47369
47371-47371
47373-47373
47381-47381
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 137
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=010
ZIP RANGES AMARILLO, TX
73901-73951
79001-79020
79022-79029 *BEST*
79034-79036
79039-79040
79042-79042
79044-79051
79053-79063
79065-79071
79077-79098
79100-79188
79201-79220
79226-79226
79230-79230
79237-79237
79240-79240
79245-79245
79251-79251
79257-79257
79261-79261
88101-88101 NM
88401-88401 NM
88415-88415 NM
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 142
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=014
ZIP RANGES ELKHART, IN
46507-46507 *BEST*
46514-46517
46526-46526
46540-46540
46542-46543
46550-46550
46553-46553
46565-46565 *BEST*
46573-46573
49112-49112 MI
49130-49130 MI
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 144
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=016
ZIP RANGES SIOUX FALLS, SD
51230-51230 IA *BEST*
51235-51235 IA *BEST*
51237-51237 IA *BEST*
51240-51243 IA *BEST*
51246-51246 IA *BEST*
52749-52749 IA
56116-56116 MN *BEST*
56128-56128 MN *BEST*
56134-56134 MN *BEST*
56135-56135 MN *BEST*
56138-56138 MN
56139-56140 MN *BEST*
56144-56144 MN *BEST*
56147-56147 MN *BEST*
56156-56157 MN *BEST*
56164-56164 MN *BEST*
56170-56170 MN *BEST*
56173-56173 MN *BEST*
56177-56177 MN *BEST*
56186-56186 MN *BEST*
57001-57007
57010-57078
57100-57116
57118-57189
57191-57198
57201-57211
57212-57214 *BEST*
57215-57217
57218-57218 *BEST*
57219-57219
57220-57220 *BEST*
57221-57230
57231-57276
57278-57279
57300-57399
57401-57425
57426-57436
57437-57440
57441-57469
57470-57483
57501-57582
57584-57585
57601-57637
57639-57640
57643-57661
57701-57739
57741-57795
68718-68718 NE
67827-68727 NE
68730-68730 NE
68736-68736 NE
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 145
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=016
ZIP RANGES
68760-67860 NE
68774-68774 NE
68783-68783 NE
68786-68786 NE
68792-68792 NE
<PAGE>
AR918 88043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 147
TABLE NAME=88043 TABLE DATE=08/01/88
CENTER=000 BUREAU=019
ZIP RANGES FARGO, ND
56513 - 56514 MN
56520 - 56520 MN
56522 - 56522 MN
56525 - 56525 MN
56529 - 56530 MN
56534 - 56536 MN
56543 - 56543 MN * BEST *
56546 - 56547 MN
56549 - 56549 MN
56552 - 56553 MN
56560 - 56560 MN
56565 - 56565 MN
56579 - 56580 MN
56582 - 56582 MN
56585 - 56585 MN
56594 - 56594 MN
58001 - 58002
58003 - 58003 * BEST *
58004 - 58008
58009 - 58010
58011 - 58011 * BEST *
58012 - 58013
58014 - 58015
58016 - 58018
58020 - 58021
58023 - 58024
58027 - 58029
58030 - 58037
58038 - 58041
58042 - 58043
58047 - 58049
58051 - 58054
58057 - 58063
58064 - 58064 * BEST *
58065 - 58065
58067 - 58070
58071 - 58071 * BEST *
58072 - 58072
58075 - 58075
58077 - 58079
58081 - 58081
58102 - 58103
58105 - 58109
58152 - 58152
58429 - 58429
58432 - 58432
58436 - 58436
58439 - 58439
58441 - 58441
58447 - 58447
58461 - 58462
58469 - 58469
58471 - 58471
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 148
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=019
ZIP RANGES
58474-58474
58479-58480
58490-58490
58492-58492
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 151
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=023
ZIP RANGES ROCHESTER, MN
55009-55009
55018-55019
55021-55021
55026-55027
55041-55041
55046-55046
55049-55049
55052-55053
55058-55060
55066-55066
55081-55081
55086-55089
55310-55310
55314-55314
55332-55332
55333-55333 *BEST*
55335-55335
55342-55342
55901-55903
55904-55904 *BEST*
55905-55905
55909-55920
55921-55921 *BEST*
55922-55931
55932-55992
56001-56010
56013-56024
56025-56025 *BEST*
56026-56029
56030-56030 *BEST*
56031-56038
56039-56039 *BEST*
56040-56051
56052-56052 *BEST*
56053-56055
56056-56056 *BEST*
56057-56059
56060-56060 *BEST*
56061-56062
56063-56063 *BEST*
56064-56070
56072-56079
56080-56080 *BEST*
56081-56084
56085-56085 *BEST*
56087-56098
56101-56101
56110-56115
56117-56127
56129-56133
56136-56137
56141-56143
56145-56145
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 152
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=023
ZIP RANGES
56149-56155
56159-56162
56165-56169
56171-56171
56174-56176
56178-56181
56183-56185
56187-56187
56201-56201
56209-56209
56212-56214
56216-56216 *BEST*
56218-56218
56220-56220
56222-56224
56229-56230
56232-56232
56234-56234
56237-56239
56241-56242
56245-56245
56247-56247
56251-56251
[ILLEGIBLE]-56258
56260-56266
56270-56270
56272-56272
56275-56275
56277-56277
56279-56279 *BEST*
56280-56282
56283-56290
[ILLEGIBLE]-56295
56297-56297
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 153
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=024
ZIP RANGES LUBBOCK, TX
79009-79009 *BEST*
79021-79021 *BEST*
79027-79027
79031-79032
79041-79041 *BEST*
79043-79043 *BEST*
79052-79052 *BEST*
79063-79064 *BEST*
79072-79073
79082-79082 *BEST*
79088-79088 *BEST*
79220-79220 *BEST*
79222-79222
79229-79229 *BEST*
79231-79231 *BEST*
79235-79236 *BEST*
79241-79241 *BEST*
79242-79242
79243-79244 *BEST*
79248-79248 *BEST*
79249-79249
79250-79250 *BEST*
79256-79258 *BEST*
79301-79314
79315-79315 *BEST*
79316-79324
[ILLEGIBLE]-79325 *BEST*
79326-79341
79342-79342 *BEST*
79343-79354
79355-79355 *BEST*
79356-79358
79359-79360 *BEST*
79361-79399
79401-79499
88101-88101} NM *BEST*
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 155
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=026
ZIP RANGES WATERLOO, IA
50041-50041
50227-50227
50401-50401
50420-50420
50421-50421 *BEST*
50423-50423 *BEST*
50424-50426
50427-50428
50430-50432
50433-50433 *BEST*
50434-50436
50438-50441
50444-50446
50447-50447 *BEST*
50448-50450
50452-50454
50455-50455 *BEST*
50456-50461
50464-50469
50470-50470 *BEST*
50471-50473
50475-50479
50481-50482
50484-50484 *BEST*
50602-50607
50610-50611
50612-50612 *BEST*
50613-50614
50616-50616
50619-50621
50622-50626
50628-50629
50630-50631
50633-50634
50635-50636 *BEST*
50638-50638
50640-50645
50647-50648
50649-50649 *BEST*
50650-50653
50655-50655 *BEST*
50657-50662
50665-50671
50673-50674
50676-50677
50680-50682
50701-50707
52001-52001
52030-52033
52039-52040
52043-52049
52051-52056
52060-52060
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 156
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=026
ZIP RANGES
52064-52079
52101-52101
52130-52130 *BEST*
52132-52132 *BEST*
52133-52133
52135-52136
52139-52140
52141-52141 *BEST*
52142-52142
52144-52144
52146-52147
52150-52151
52154-52160
52l61-52161 *BEST*
52162-52172
52175-52175
52207-52207
52210-52210
52224-52224 *BEST*
52326-52326
52329-52329
52435-52435
53518-53518 WI
53554-53554 WI
53569-53569 WI
53573-53573 WI
53801-53818 WI
53820-53520 WI
53824 53825 WI
53827-53827 WI
61001-61001 IL
61025-61025 IL
61028-61028 IL
61036-61036 IL
61041-61041 IL
61059-61059 IL
61075-61075 IL
61086-61085 IL
61087-61087 IL
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 168
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=038
ZIP RANGES TERRE HAUTE, IN
42101-42102 KY
42120-42120 KY
42122-42123 KY
42127-42128 KY
42130-42131 KY
42134-42134 KY
42141-42141 KY
42150-42150 KY
42152-42153 KY
42156-42156 KY
42159-42160 KY
42163-42164 KY
42170-42171 KY
42201-42202 KY
42206-42207 KY
42209-42210 KY
42219-42219 KY
42235-42235 KY
42250-42252 KY
42256-42257 KY
42259-42259 KY
42261-42261 KY
42263-42265 KY
42267-42268 KY
42270-42276 KY
42283-42285 KY
42287-42288 KY
47438-47438
47441-47441 *BEST*
47443-47443 *BEST*
47445-47445 *BEST*
47449-47449 *BEST*
47453-47453 *BEST*
47465-47465 *BEST*
47471-47471 *BEST*
47596-47596
47801-47809
47830-47834
47836-47838
47840-47842
47845-47866
47868-47872
47874-47882
47884-[ILLEGIBLE]
47928-47928
47966-47966
47974-47974
47985-47985
61912-61912 IL *BEST*
61917-61917 IL *BEST*
61920-61920 IL *BEST*
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 169
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=038
ZIP RANGES
61938-61938 IL *BEST*
61940-61940 IL *BEST*
61943-61944 IL *BEST*
61948-61949 IL *BEST*
61955-61955 IL *BEST*
62413-62413 IL
62420-62420 IL
62423-62423 IL
62427-62427 IL
62433-62433 IL
62440-62441 IL *BEST*
[ILLEGIBLE]-62442 IL
62447-62447 IL *BEST*
62449-62449 IL
62451-62451 IL
62454-62454 IL
62464-62464 IL
62469-62469 IL *BEST*
62477-62478 IL
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 170
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=039
ZIP RANGES PETERSBURG, VA
23002-23002
23030-23030
23083-23083
23105-23105
23147-23147
23801-23805
23821-23899
23901-23975
24529-24529
24580-24580
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 174
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=045
ZIP RANGES JEFFERSON CITY, MO
63388-63388
65001-65001
65011-65038
65040-65055
65058-65067
65069-65085
65101-65102
65106-65106
65109-65109 *BEST*
65231-65231
65251-65251 *BEST*
65262-65262 *BEST*
65401-65401
65435-65436
65440-65441
65443-65443 *BEST*
65446-65446
65449-65449
65452-65452
65456-65459
65461-65463
65470-65470
65473-65473
65486-65486 *BEST*
65532-65532
65534-65536
65540-65542
65550-65550
65552-65552
65556-65556
65559-65560
65565-65565
65572-65572
65580-65580
65582-65582 *BEST*
65583-65583
65786-65786 *BEST*
66201-66204 KS
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 175
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=046
ZIP RANGES JOPLIN, MO
64748-64748
64752-64752
64755-64756
64759-64759
64762-64762
64766-64766
64769-64769
64801-64874
66701-66701 KS *BEST*
66702-66702 KS
66710-66714 KS *BEST*
66715-66715 KS
66716-66720 KS *BEST*
66721-66723 KS
66724-66725 KS *BEST*
66726-66726 KS
66727-66728 KS *BEST*
66730-66730 KS *BEST*
66731-60751 KS
66753-66759 KS
66761-66766 KS
66768-66799 KS
67330-67332 KS
67336-67336 KS
67341-67342 KS
67350-67350 KS
67354-67354 KS
67356-67357 KS
67365-67365 KS
72711-72714 AR
72718-72718 AR
72722-72722 AR
72732-72734 AR
72736-72736 AR
72739-72739 AR
72743-72743 AR
72745-72745 AR
72747-72747 AR
72751-72751 AR
72756-72756 AR
72761-72761 AR *BEST*
72767-72768 AR
72771-72771 AR
74331-74331 OK
74335-74335 OK
74339-74339 OK
74343-74343 OK
74354-74355 OK
74358-74358 OK
74360-74360 OK
74363-74363 OK
74370-74370 OK
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 176
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=047
ZIP RANGES MICHIGAN CITY, IN
46301-46301
46303-46303 *WIDE AREA 0001*
46304-46304
46307-46307 *WIDE AREA 0001*
46310-46310
46311-46311 *WIDE AREA 0001*
46319-46321 *WIDE AREA 0001*
46322-46322
46323-46327 *WIDE AREA 0001*
46340-46342
46345-46351
46355-46356 *WIDE AREA 0001*
46360-46360
46365-46365
46366-46366 * BEST *
46367-46368
46371-46373
46374-46374 * BEST *
46375-46377 *WIDE AREA 0001*
46379-46381
46382-46384
46390-46393
46394-46394 *WIDE AREA 0001*
46401-46404 *WIDE AREA 0001*
46405-46405
46406-46411 *WIDE AREA 0001*
46531-46531
46532-46532 * BEST *
46534-46534 [ILLEGIBLE]
46560-46560
46574-46574
46925-46925
46960-46960
46968-46968
46985-46985
46996-46996
47922-47922
47943-47943
47946-47946
47948-47948
47951-47951
47957-47957
47963-47964
47977-47978
49116-49117 MI * BEST *
49128-49128 MI * BEST *
49129-49129 MI
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 178
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=049
ZIP RANGES COLUMBIA, MO
63333-63334
63339-63339
63345-63345
63351-63353
63361-63361
63363-63364
63371-63371
63382-63382
63384-63384
63388-63388
63401-63402
63431-63431
63433-63439
63441-63441
63446-63448
63452-63452
63456-63465
63467-63471
63530-63530
63532-63534
63537-63538
63549-63549
63552-63552
63656-63656
65010-65010
65039-65039
65056-65056
65068-65068
65201-65230
65231-65231 * BEST*
65232-[ILLEIGIBLE]
65286-65286 * BEST*
65287-65299
65370-65370
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 180
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=053
ZIP RANGES CLEVELAND, OH
44001-44055
44057-44066
44068-44086
44088-44099
44101-44199
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 188
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=054
ZIP RANGES SOUTHEAST OHIO
41121 - 41121 KY * WIDE AREA 0001 *
41127 - 41127 KY * WIDE AREA 0001 *
41131 - 41131 KY * WIDE AREA 0001 *
41135 - 41135 KY * WIDE AREA 0001 *
41137 - 41137 KY * WIDE AREA 0001 *
41139 - 41139 KY * WIDE AREA 0001 *
41141 - 41141 KY * WIDE AREA 0001 *
41144 - 41145 KY * WIDE AREA 0001 *
41156 - 41156 KY * WIDE AREA 0001 *
41158 - 41158 KY * WIDE AREA 0001 *
41163 - 41163 KY * WIDE AREA 0001 *
41166 - 41166 KY * WIDE AREA 0001 *
41169 - 41170 KY * WIDE AREA 0001 *
41174 - 41175 KY * WIDE AREA 0001 *
41179 - 41179 KY * WIDE AREA 0001 *
41183 - 41184 KY * WIDE AREA 0001 *
41189 - 41189 KY * WIDE AREA 0001 *
41229 - 41229 KY * WIDE AREA 0001 *
43076 - 43076 * WIDE AREA 0001 *
43101 - 43101 * WIDE AREA 0001 *
43106 - 43106 * WIDE AREA 0001 *
43111 - 43111 * WIDE AREA 0001 *
43115 - 43115 * WIDE AREA 0001 *
43121 - 43121 * WIDE AREA 0001 *
43127 - 43128 * WIDE AREA 0001 *
43135 - 43135 * WIDE AREA 0001 *
43138 - 43138 * WIDE AREA 0001 *
43142 - 43142 * WIDE AREA 0001 *
43144 - 43145 * WIDE AREA 0001 *
43149 - 43149 * WIDE AREA 0001 *
43152 - 43152 * WIDE AREA 0001 *
43158 - 43158 * WIDE AREA 0001 *
43160 - 43160 * WIDE AREA 0001 *
43701 - 43720 * WIDE AREA 0001 *
43722 - 43799 * WIDE AREA 0001 *
43801 - 43803 * WIDE AREA 0001 *
43805 - 43830 * WIDE AREA 0001 *
43836 - 43836 * WIDE AREA 0001 *
43842 - 43845 * WIDE AREA 0001 *
43914 - 43915 * WIDE AREA 0001 *
43931 - 43931 * WIDE AREA 0001 *
43946 - 43946 * WIDE AREA 0001 *
45105 - 45105 * WIDE AREA 0001 *
45144 - 45144 * WIDE AREA 0001 *
45601 - 45601 * WIDE AREA 0001 *
45610 - 45631 * WIDE AREA 0001 *
45633 - 45636 * WIDE AREA 0001 *
45638 - 45638 * WIDE AREA 0001 *
45640 - 45640 * WIDE AREA 0001 *
45642 - 45662 * WIDE AREA 0001 *
45669 - 45698 * WIDE AREA 0001 *
45701 - 45701 * WIDE AREA 0001 *
<PAGE>
DATE 08/03/88 TIME 17.30.41 PAGE 188
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=054
ZIP RANGES
45719 - 45721 * WIDE AREA 0001 *
45723 - 45730 * WIDE AREA 0001 *
45732 - 45732 * WIDE AREA 0001 *
45734 - 45[ILLEGIBLE] * WIDE AREA 0001 *
45738 - 45746 * WIDE AREA 0001 *
45750 - 45750 * WIDE AREA 0001 *
45760 - 45761 * WIDE AREA 0001 *
45763 - 45764 * WIDE AREA 0001 *
45766 - 45789 * WIDE AREA 0001 *
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 203
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=061
ZIP RANGES COUNCIL BLUFFS, IA
50847 - 50847 * BEST *
50864 - 50864
51446 - 51447 * BEST *
51501 - 51503
51510 - 51510
51521 - 51521
51525 - 51527
51529 - 51534
51536 - 51537
51540 - 51542
51545 - 51546
51548 - 51551
51553 - 51557
51559 - 51566
51570 - 51571
51573 - 51579
51601 - 51601
51630 - 51632
51636 - 51641
51645 - 51645
51647 - 51647
51649 - 51650
51652 - 51653
51655 - 51656
68110 - 68110 NE
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 208
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=064
ZIP RANGES NACOGDOCHES, TX
71005 - 71005 LA * BEST *
71019 - 71019 LA * BEST *
71025 - 71025 LA * BEST *
71027 - 71027 LA * BEST *
71030 - 71030 LA * BEST *
71032 - 71032 LA * BEST *
71035 - 71036 LA * BEST *
71046 - 71046 LA * BEST *
71049 - 71050 LA * BEST *
71052 - 71052 LA * BEST *
71063 - 71063 LA * BEST *
71065 - 71065 LA * BEST *
71078 - 71078 LA * BEST *
71406 - 71406 LA * BEST *
71419 - 71419 LA * BEST *
71429 - 71429 LA * BEST *
71449 - 71449 LA * BEST *
71453 - 71453 LA * BEST *
71462 - 71462 LA * BEST *
71486 - 71486 LA * BEST *
75631 - 75631 * BEST *
75633 - 75633 * BEST *
75637 - 75637 * BEST *
75639 - 75639 * BEST *
75641 - 75641 * BEST *
75643 - 75643 * BEST *
75652 - 75652 * BEST *
75658 - 75658 * BEST *
75662 - 75662 * BEST *
75666 - 75667 * BEST *
75669 - 75669 * BEST *
75673 - 75673 * BEST *
75680 - 75682 * BEST *
75684 - 75685 * BEST *
75687 - 75687 * BEST *
75689 - 75689 * BEST *
75691 - 75691 * BEST *
75757 - 75757 * BEST *
75759 - 75761 * BEST *
75763 - 75764 * BEST *
75766 - 75766 * BEST *
75772 - 75772 * BEST *
75779 - 75780 * BEST *
75784 - 75788 * BEST *
75801 - 75802
75832 - 75832
75834 - 75835
75839 - 75839
75843 - 75845
75847 - 75847
75849 - 75849
75851 - 75851
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 209
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=064
ZIP RANGES
75856 - 75856
75858 - 75858
75861 - 75863
75865 - 75865
75901 - 75901
75925 - 75927
75929 - 75931
75934 - 75935
75937 - 75937
75939 - 75939
75941 - 75941
75943 - 75949
75954 - 75954 * BEST *
75958 - 75963
75968 - 75969
75972 - 75976 * BEST *
75978 - 75978
75980 - 75980
77326 - 77326
77332 - 77332
77335 - 77335
77350 - 77351
77360 - 77360
77370 - 77370
78961 - 78961 * BEST *
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 210
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=065
ZIP RANGES CAPE GIRARDEAU, MO
62274 - 62274 IL
62832 - 62832 IL
62888 - 62988 IL
62901 - 62901 IL
62905 - 62907 IL
62910 - 62910 IL
62913 - 62914 IL
62916 - 62916 IL
62918 - 62918 IL
62920 - 62927 IL
62929 - 62929 IL
62932 - 62932 IL
62936 - 62936 IL
62938 - 62939 IL
62941 - 62942 IL
62948 - 62948 IL
62951 - 62[ILLEGIBLE] IL
62957 - 62957 IL
62959 - 62964 IL
62966 - 62967 IL
62969 - 62976 IL
62979 - 62979 IL
62983 - 62983 IL
62985 - 62985 IL
62988 - 62990 IL
62992 - 62996 IL
62998 - 62999 IL
63620 - 63621
63623 - 63623
63625 - 63625
63629 - 63629
63632 - 63636
63638 - 63638
63645 - 63646
63650 - 63650
63654 - 63655
67658 - 63659
63662 - 63663
63665 - 63666
63669 - 63669
63673 - 63673
63675 - 63676
63701 - 63799
63801 - 63882
63901 - 63967
72310 - 72310 AR
72313 - 72313 AR
73215 - 72315 AR
73221 - 72321 AR
72329 - 72330 AR
72338 - 72339 AR
72350 - 72351 AR
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE [ILLEGIBLE]
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=065
ZIP RANGES
72370 - 72370
72381 - 72381
72388 - 72388
72391 - 72391
72395 - 72395
72412 - 72412
72422 - 72422
72425 - 72426
72428 - 72428 AR
72430 - 72430
72438 - 72438
72441 - 72443
72450 - 72450
72453 - 72454
72456 - 72456
72461 - 72461
72463 - 72464
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 213
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=067
ZIP RANGES CHARLESTON, WV
24710 - 24711
24716 - 24716
24719 - 24720
24726 - 24728
24818 - 24818
24822 - 24823
24827 - 24827
24834 - 24834
24839 - 24840
24845 - 24845
24847 - 24847
24849 - 24849
24854 - 24854
24857 - 24857
24859 - 24860
24867 - 24867
24869 - 24870
24874 - 24874
24880 - 24880
24882 - 24882
24896 - 24896
24898 - 24898
24901 - 24999
25002 - 25005
25007 - 25021
25023 - 25046
25048 - 25075
25077 - 25094
25101 - 25105
25107 - 25120
25122 - 25122
25124 - 25182
25184 - 25186
25188 - 25199
25201 - 25236
25238 - 25246
25248 - 25249
25251 - 25252
25256 - 25257
25259 - 25259
25261 - 25264
25266 - 25266
25268 - 25279
25281 - 25286
25300 - 25399
25501 - 25501
25506 - 25506
25513 - 25513
25516 - 25516
25518 - 25518
25521 - 25529
25536 - 25536
25540 - 25540
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 214
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=067
ZIP RANGES
25542 - 25544
25546 - 25546
25557 - 25557
25560 - 25561
25563 - 25569
25571 - 25599
25801 - 25814
25816 - 25818
25821 - 25882
25901 - 25921
25923 - 25970
25972 - 25999
26130 - 26130
26136 - 26137
26145 - 26145
26147 - 26147
26151 - 26151
26153 - 26153
26158 - 26158
26164 - 26164
26173 - 26173
26202 - 26209
26215 - 26217
26221 - 26223
26233 - 26233
26240 - 26240
26261 - 26262
26264 - 26266
26288 - 26288
26291 - 26291
26298 - 26299
26335 - 26335
26601 - 26610
26612 - 26633
26639 - 26635
26639 - 26699
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 215
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=068
ZIP RANGES SOUTHBEND, IN
46366 - 46366
46374 - 46374
46501 - 46501
46504 - 46504
46506 - 46506
46508 - 46513
46518 - 46525
46527 - 46530
46531 - 46531 * BEST *
46532 - 46533
46534 - 46534 * BEST *
46535 - 46539
46541 - 46541
46544 - 46545
46552 - 46552
46554 - 46559
46560 - 46560 * BEST *
46561 - 46564
46566 - 46572
46574 - 46574 * BEST *
46580 - 46595
46601 - 46637
46701 - 46701
46710 - 46710
46720 - 46720
46723 - 46725
46732 - 46732
46755 - 46755
46760 - 46760
46764 - 46764
46767 - 46767
46784 - 46784
46787 - 46787
46796 - 46796
46910 - 46910
46912 - 46912
46922 - 46922
46931 - 46931
46935 - 46935
46939 - 46939
46945 - 46945
46960 - 46960 * BEST *
46968 - 46968 * BEST *
46975 - 46975
46982 - 46982
49031 - 49031 MI
49045 - 49045 MI
49047 - 49047 MI
49057 - 49057 MI
49065 - 49065 MI
49067 - 49067 MI
49095 - 49095 MI
49102 - 49111 MI
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 216
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=068
ZIP RANGES
49112 - 49112 * BEST *
49113 - 49120
49125 - 49125
49128 - 49128
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 218
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=070
ZIP RANGES BURLINGTON, NC
27001 - 27012
27016 - 27016
27019 - 27019
27021 - 27021
27023 - 27023
27040 - 27040
27045 - 27045
27050 - 27051
27101 - 27199
27201 - 27213
27215 - 27217
27230 - 27231
27233 - 27235
27240 - 27241
27243 - 27246
27248 - 27250
27253 - 27255
27258 - 27258
27260 - 27280
27282 - 27284
27288 - 27292
27298 - 27298
27301 - 27310
27312 - 27322
27340 - 27344
27348 - 27350
27353 - 27355
27358 - 27370
27373 - 27373
27377 - 27399
27401 - 27410
27412 - 27413
27414 - 27417
27419 - 27499
28423 - 28424
28430 - 28432
28436 - 28439
28442 - 28442
28449 - 28450
28455 - 28456
28463 - 28463
28472 - 28472
<PAGE>
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=071
ZIP RANGES MANSFIELD, OH
43302 - 43302
43314 - 43317
43320 - 43323
43325 - 43[ILLEGIBLE]
43330 - 43330
43332 - 43332
43334 - 43335
43337 - 43338
43340 - 43342
43345 - 43346
[ILLEGIBLE]- 43351
43356 - 43356
43359 - 43359
43407 - 43407 * BEST *
43410 - 43410 * BEST *
43413 - 43413
43420 - 43420 * BEST *
43431 - 43431 * BEST *
43435 - 43435 * BEST *
43438 - 43438 * BEST *
43442 - 43442 * BEST *
43462 - 43462
43464 - 43464 * BEST *
43469 - 43469 * BEST *
44801 - 44805
44807 - 44807
44809 - 44809
44811 - 44811
44813 - 44818
44820 - 44820
44822 - 44830
44833 - 44833
44836 - 44851
44853 - 44857
44859 - 44867
44870 - 44870
44874 - 44875
44878 - 44878
44880 - 44883
44887 - 44887
44889 - 44890
44901 - 44907
45801 - 45810
45812 - 45812
45814 - 45817
45820 - 45820
45827 - 45827
45830 - 45833
45835 - 45841
45843 - 45844
45847 - 45848
45850 - 45850
45853 - 45854
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 220
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=071
ZIP RANGES
45856 - 45856
45858 - 45859
45863 - 45864
45867 - 45868
45872 - 45872
45874 - 45877
45881 - 45881
45886 - 45887
45889 - 45891
45893 - 45894
45897 - 45899
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 221
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=072
ZIP RANGES SPRINGFIELD, OH
43001 - 43001
43008 - 43010
43013 - 43013
43018 - 43018
43023 - 43023
43025 - 43025
43027 - 43027
43030 - 43031
43033 - 43033
43044 - 43044
43047 - 43047
43055 - 43056
43060 - 43060
43062 - 43062
43070 - 43073
43078 - 43078
43080 - 43080
43083 - 43084
43721 - 43721
45319 - 45319
45323 - 45323
45341 - 45341
45344 - 45344
45349 - 45349
45364 - 45364
45368 - 45369
45372 - 45372
45389 - 45389
45501 - 45506
45564 - 45564
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 222
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=073
ZIP RANGES CANTON, OH
43804 - 43804
43832 - 43832
43837 - 43837
43840 - 43840
43907 - 43907
43973 - 43974
43976 - 43976
43979 - 43979
43981 - 43981
43983 - 43984
43986 - 43986
43988 - 43989
44449 - 44449
44601 - 44609
44612 - 44616
44618 - 44627
44629 - 44632
44634 - 44636
44639 - 44653
44655 - 44659
44662 - 44675
44678 - 44684
44686 - 44686
44688 - 44689
44692 - 44699
44701 - 44795
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 223
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=074
ZIP RANGES AKRON, OH
44056 - 44056
44067 - 44067
44087 - 44087
44201 - 44288
44301 - 44321
44401 - 44406
44408 - 44408 * BEST *
44410 - 44412
44413 - 44413 * BEST *
44415 - 44418
44420 - 44420
44422 - 44423 * BEST *
44424 - 44425
44427 - 44427 * BEST *
44428 - 44428
44429 - 44429 * BEST *
44430 - 44430
44431 - 44432 * BEST *
44436 - 44436 * BEST *
44437 - 44440
44441 - 44443 * BEST *
44444 - 44444
44445 - 44445 * BEST *
44446 - 44446
44450 - 44450
44451 - 44452 * BEST *
44453 - 44453
44454 - 44455 * BEST *
44460 - 44460 * BEST *
44470 - 44470
44471 - 44471 * BEST *
44473 - 44473
44481 - 44486
44490 - 44490 * BEST *
44491 - 44491
44492 - 44493 * BEST *
44501 - 44515
44555 - 44555
44610 - 44611
44617 - 44617
44628 - 44628
44633 - 44633
44637 - 44638
44654 - 44654
44660 - 44661
44676 - 44677
44685 - 44685
44687 - 44687
44690 - 44691
<PAGE>
AR918 88043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 224
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=075
ZIP RANGES COLUMBUS, OH
43002 - 43007
43011 - 43012
43014 - 43017
43019 - 43019
43021 - 43022
43026 - 43026
43028 - 43029
43032 - 43032
43034 - 43010
43045 - 43046
43048 - 43048
43050 - 43050
43054 - 43054
43061 - 43061
43064 - 43068
43074 - 43074
43077 - 43077
43081 - 43081
43085 - 43085
43102 - 43105
43107 - 43110
43112 - 43114
43116 - 43119
43123 - 43126
43130 - 43130
43136 - 43137
43140 - 43141
43143 - 43143
43146 - 43148
43150 - 43151
43153 - 43157
43162 - 43164
43201 - 43299
43344 - 43344
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 232
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=081
ZIP RANGES OPELOUSAS, LA
70512 - 70512
70515 - 70515
70524 - 70525
70535 - 70535
70541 - 70541
70550 - 70551
70554 - 70554
70570 - 70571
70576 - 70577
70580 - 70580
70584 - 70586
70589 - 70589
70750 - 70750
71320 - 71320
71322 - 71322
71327 - 71327
71333 - 71333
71338 - 71338
71341 - 71341
71345 - 71345
71347 - 71347
71350 - 71351
71353 - 71353
71355 - 71356
71358 - 71358
71362 - 71362
71364 - 71364
71367 - 71367
71376 - 71376
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 233
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=082
ZIP RANGES DAYTON, OH
43310 - 43311
43318 - 43319
43324 - 43324
43331 - 43331
43333 - 43333
43336 - 43336
43343 - 43343
43347 - 43348
43357 - 43358
43360 - 43360
43370 - 43370
45003 - 45003 * BEST *
45070 - 45070 * BEST *
45301 - 45318
45320 - 45322
45324 - 45340
45342 - 45342
45345 - 45347
45350 - 45356
45358 - 45363
45365 - 45365
45370 - 45371
45373 - 45373
45377 - 45378
45380 - 45385
45387 - 45388
45390 - 45390 * BEST *
45401 - 45479
45822 - 45822
45828 - 45828
45845 - 45846
45860 - 45860
45862 - 45862
45865 - 45866
45869 - 45871
45882 - 45885
45888 - 45888
45895 - 45896
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 234
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=084
ZIP RANGES BISMARCK, ND
57638 - 57638 SD
57641 - 57642 SD
58381 - 58381 * BEST *
58384 - 58384 * BEST *
58401 - 58402 * BEST *
58412 - 58413 * BEST *
58420 - 58420 * BEST *
58423 - 58424 * BEST *
58426 - 58426 * BEST *
58428 - 58428 * BEST *
58430 - 58430 * BEST *
58434 - 58434 * BEST *
58444 - 58444 * BEST *
58455 - 58455 * BEST *
58460 - 58460 * BEST *
58463 - 58463 * BEST *
58467 - 58467 * BEST *
58475 - 58478 * BEST *
58481 - 58482 * BEST *
58487 - 58489 * BEST *
58494 - 58496 * BEST *
58500 - 58599 * BEST *
58600 - 58699 * BEST *
58701 - 58705 * BEST *
58712 - 58713 * BEST *
58716 - 58717 * BEST *
58719 - 58719 * BEST *
58722 - 58723 * BEST *
58725 - 58726 * BEST *
58730 - 58736 * BEST *
58740 - 58741 * BEST *
58744 - 58744 * BEST *
58746 - 58747 * BEST *
58757 - 58759 * BEST *
58761 - 58761 * BEST *
58763 - 58763 * BEST *
58765 - 58765 * BEST *
58770 - 58771 * BEST *
58778 - 58778 * BEST *
58780 - 58781 * BEST *
58784 - 58785 * BEST *
58789 - 58790 * BEST *
58792 - 58792 * BEST *
58794 - 58795 * BEST *
58800 - 58899 * BEST *
59217 - 59217 MT
59221 - 59221 MT
59243 - 59243 MT
59257 - 59257 MT
59262 - 59262 MT
59270 - 59271 MT
59315 - 59315 MT
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 235
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=084
ZIP RANGES
59339 - 59339 MT
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 236
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=085
ZIP RANGES CLEVELAND, TN
28781 - 28781 NC
28901 - 28801 NC
28905 - 28903 NC
30139 - 30139 GA
30143 - 30143 GA
30148 - 30148 GA
30175 - 30175 GA
30177 - 30177 GA
30186 - 30186 GA
30513 - 30515 GA
30522 - 30522 GA
30539 - 30541 GA
30555 - 30555 GA
30559 - 30561 GA
30700 - 30708 GA
30710 - 30720 GA
30722 - 30729 GA
30732 - 30746 GA
30749 - 30752 GA
30754 - 30757 GA
35700 - 35799 AL
37016 - 37018
37020 - 37020
37026 - 37026
37034 - 37034
37037 - 37037
37060 - 37060
37085 - 37086
37110 - 37110
37118 - 37118
37130 - 37132
37144 - 37144
37149 - 37149
37153 - 37153
37158 - 37160
37167 - 37167
37180 - 37180
37183 - 37183
37190 - 37190
37300 - 37399
37400 - 37499
37700 - 37704
37723 - 37723
37737 - 37737
37742 - 37742
37748 - 37748
37763 - 37763
37771 - 37772
37774 - 37774
37777 - 37777
37780 - 37799
37800 - 37805
37808 - 37808
37826 - 37826
37840 - 37840
37842 - 37842
37846 - 37846
37853 - 37854
37873 - 37873
37878 - 37878
37882 - 37882
37886 - 37886
37889 - 37889
38449 - 38449
38453 - 38453
38488 - 38488
38501 - 38506 * BEST *
38542 - 38545 * BEST *
38548 - 38549 * BEST *
38551 - 38551 * BEST *
38553 - 38556 * BEST *
38559 - 38559 * BEST *
38561 - 38562 * BEST *
38564 - 38565 * BEST *
38568 - 38568 * BEST *
38570 - 38570 * BEST *
38573 - 38575 * BEST *
38577 - 38585 * BEST *
38587 - 38587 * BEST *
38589 - 38589 * BEST *
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 238
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=088
ZIP RANGES CBC WEST VIRGINIA
25006 - 25006
25095 - 25099
25106 - 25106
25123 - 25123
25187 - 25187
25237 - 25237
25247 - 25247
25250 - 25250
25253 - 25255
25258 - 25258
25260 - 25260
25265 - 25265
25267 - 25267
25280 - 25280
25287 - 25299
25401 - 25499
25502 - 25504
25507 - 25507
25509 - 25512
25514 - 25515
25517 - 25517
25519 - 25520
25530 - 25535
25537 - 25539
25541 - 25541
25545 - 25545
25550 - 25556
25558 - 25559
25562 - 25562
25570 - 25570
25669 - 25669
25699 - 25699
25701 - 25799
26001 - 26099
26101 - 26129
26133 - 26135
26138 - 26144
26146 - 26146
26148 - 26150
26152 - 26152
26154 - 26157
26159 - 26163
26167 - 26172
26174 - 26199
26201 - 26201
26210 - 26214
26218 - 26219
26224 - 26232
26234 - 26238
26241 - 26250
26263 - 26263
26267 - 26287
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 239
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=088
ZIP RANGES
26292 - 26297
26301 - 26334
26336 - 26399
26401 - 26499
26501 - 26599
26611 - 26611
26634 - 26634
26636 - 26638
26700 - 26799
26800 - 26899
41101 - 41101 KY
41128 - 41129 KY
41132 - 41132 KY
41140 - 41140 KY
41142 - 41143 KY
41146 - 41146 KY
41150 - 41150 KY
41152 - 41153 KY
41164 - 41164 KY
41168 - 41168 KY
41172 - 41173 KY
41178 - 41178 KY
41181 - 41182 KY
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 243
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=091
ZIP RANGES WILLIAMSON, WV
24314 - 24315 VA
24366 - 24366 VA
24601 - 24606 VA
24609 - 24609 VA
24611 - 24614 VA
24616 - 24616 VA
24618 - 24620 VA
24622 - 24624 VA
24628 - 24628 VA
24631 - 24631 VA
24633 - 24633 VA
24635 - 24635 VA
24637 - 24637 VA
24639 - 24641 VA
24645 - 24645 VA
24647 - 24647 VA
24651 - 24651 VA
24655 - 24656 VA
24658 - 24659 VA
24701 - 24709
24712 - 24715
24717 - 24718
24721 - 24725
24729 - 24739
24740 - 24747
24750 - 24799
24801 - 24811
24813 - 24817
24819 - 24821
24824 - 24826
24828 - 24833
24835 - 24838
24841 - 24844
24846 - 24846
24848 - 24848
24850 - 24853
24855 - 24856
24858 - 24858
24861 - 24866
24868 - 24869
24871 - 24873
24877 - 24879
24881 - 24881
24883 - 24895
24897 - 24898
24899 - 24899
25022 - 25022
25047 - 25047
25076 - 25076
25121 - 25121
25183 - 25183
25505 - 25505
25508 - 25508
<PAGE>
AR918 BB043 ZIP TABLE PRINT DATE 08/03/88 TIME 17.30.41 PAGE 244
TABLE NAME=BB043 TABLE DATE=08/01/88
CENTER=000 BUREAU=091
ZIP RANGES
25547 - 25547
25601 - 25668
25670 - 25698
25820 - 25820
25922 - 25922
25971 - 25971
40981 - 40981 KY
41111 - 41111 KY
41124 - 41126 KY
41149 - 41149 KY
41155 - 41155 KY
41157 - 41157 KY
41159 - 41162 KY
41171 - 41171 KY
41176 - 41177 KY
41180 - 41180 KY
41201 - 41228 KY
41230 - 41299 KY
41301 - 41306 KY
41310 - 41310 KY
41313 - 41313 KY
41315 - 41321 KY
41326 - 41327 KY
41329 - 41333 KY
41334 - 41334 KY
41339 - 41342 KY
41346 - 41346 KY
41348 - 41350 KY
41353 - 41357 KY
41360 - 41360 KY
41363 - 41363 KY
41365 - 41367 KY
41369 - 41377 KY
41384 - 41385 KY
41390 - 41394 KY
41401 - 41499 KY
41501 - 41599 KY
41601 - 41631 KY
41633 - 41663 KY
41665 - 41699 KY
41701 - 41731 KY
41733 - 41757 KY
41760 - 41763 KY
41765 - 41799 KY
41801 - 41899 KY
<PAGE>
CSC CREDIT SERVICES, INC.
AND SUDSIDIARIES AND CERTAIN AFFILIATES
UNAUDITED COMBINED BALANCE SHEETS
(In thousands)
March 31, June 30,
1988 1988
--------- ---------
ASSETS
Current Assets:
Cash & Cash Equivalents $ 2,565 $ 3,284
Receivables, net of allowance for doubtful
accounts of $214 and $241 (Note 2) 14,508 14,677
Prepaid expenses & other current assets 1,427 1,486
--------- ---------
Total Current Assets 18,500 19,447
--------- ---------
Investments & Other Assets:
Purchased credit information files, net
of accumulated amortization of $10,574
and $11,190 42,053 41,743
Excess of cost of businesses acquired over
related net assets, net of accumulated
amortization of $863 and $964 15,953 15,552
Purchased software, net of accumulated
amortization of $504 and $574 1,109 1,039
Capitalized product development costs 3,365 4,271
Other assets 643 669
--------- ---------
Total Investment and Other Assets 63,123 63,274
--------- ---------
Property and Equipment--at cost (Note 3):
Computer and related equipment 18,016 18,656
Land, buildings and leasehold improvements 5,483 5,573
Furniture and other equipment 4,699 4,723
--------- ---------
28,198 28,952
Less accumulated depreciation & amortization (12,377) (13,405)
--------- ---------
Net Property and Equipment 15,821 15,547
--------- ---------
$ 97,444 $ 98,268
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Current maturities of notes payable representing
withholds under acquisition agreements (Note 3) $ 816 $ 789
Current maturities of long-term liabilities (Note 3) 904 892
Accounts payable 2,793 2,163
Accrued payroll and related costs 3,800 4,245
Other accrued liabilities 2,387 2,551
Income taxes payable (Note 4) 4,573 6,120
--------- ---------
Total Current Liabilities 15,273 16,760
--------- ---------
Long-Term Liabilities, excluding current
maturities (Note 3) 627 368
Notes Payable Representing Withholds Under
Acquisition Agreements, excluding current maturities 231 231
Notes Payable to Parent (Note 7) 47,606 45,486
--------- ---------
48,464 46,085
--------- ---------
Commitments and Contingent Liabilities (Note 5)
Stockholder's Equity:
Common stock (Note 6) 94 94
Additional paid-in capital 26,992 26,992
Retained earnings 6,621 8,337
--------- ---------
Total Stockholder's Equity 33,707 35,423
--------- ---------
$ 97,444 $ 98,268
========= =========
See Notes to Combined Financial Statements.
<PAGE>
CSC CREDIT SERVICES, INC.
AND SUBSIDIARIES AND CERTAIN AFFILIATES
UNAUDITED COMBINED STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
(In thousands)
Three Months
Year Ended Ended
March 31, June 30,
1988 1988
-------- ----------
Common Stock $ 94 $ 94
Additional Paid-in Capital 26,992 26,992
Retained Earnings:
Beginning of Period 6,664 6,621
Net Earnings 9,202 1,716
Dividends Received from Affiliates 6,168
Dividends Paid to Parent (15,413)
-------- --------
End of Period 6,621 8,337
-------- --------
Total Stockholder's Equity $ 33,707 $ 35,423
======== ========
See Notes to Combined Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
Year Ended March 31, 1988
-----------------------------------------------------
Credit
Reporting Collections Other
Division Data Center Division Operations Combined
--------- ----------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
REVENUES
Credit Reports $ 47,957 $ 47,957
Business Promotion Services 7,358 7,358
Mortgage Reports 6,043 6,043
Data Processing Fees 7,047 7,047
Collection Commission Fees 28,563 28,563
Other 4,105 1,332 1,301 6,738
-------- -------- ----- ------ --------
TOTAL REVENUES 65,463 7,047 29,895 1,301 103,706
-------- -------- ----- ------ --------
OPERATING EXPENSES:
Payroll Expenses 15,341 5,846 16,207 554 37,948
Purchased Credit Information 7,237 57 7,294
Telephone and Communications Expense 2,763 3,201 2,165 83 8,212
Amortization of Goodwill and Credit File Information 2,823 314 (1) 3,136
Equipment Related Expenses 2,243 4,536 1,446 97 8,322
Occupancy Expenses 1,660 686 1,751 260 4,357
Postage, Printing & Office Supplies 1,211 362 1,972 99 3,644
Public Relations, Advertising & Travel 957 210 610 52 1,829
Commisssions Paid Other Agencies 956 956
General and Administrative Costs 3,288 987 1,431 100 5,806
CSC Industry Services Group Allocated
General and Administrative Costs 183 59 79 5 326
Other Expenses 2,332 783 1,920 143 5,178
-------- -------- ----- ------ --------
TOTAL OPERATING EXPENSES 40,038 16,670 28,908 1,392 87,008
-------- -------- ----- ------ --------
OPERATING INCOME 25,425 (9,623) 987 (91) 16,698
OTHER INCOME (EXPENSES):
Investment Income 29 2 31 17 79
Interest Expense (190) (203) (104) (59) (556)
Interest Expense Charged by Parent (1,670) (501) (726) (51) (2,948)
General and Administrative Costs Allocated by Parent (717) (230) (309) (21) (1,277)
-------- -------- ----- ------ --------
Earnings Before Taxes 22,877 (10,555) (121) (205) 11,996
Estimated Income Taxes 5,329 (2,459) (28) (48) 2,794
-------- -------- ----- ------ --------
Net Earnings $ 17,548 ($ 8,096) ($ 93) ($ 157) $ 9,202
======== ======== ===== ====== ========
<CAPTION>
Three Months Ended June 30, 1988
-----------------------------------------------------
Credit
Reporting Collections Other
Division Data Center Division Operations Combined
--------- ----------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
REVENUES
Credit Reports $ 12,853 $ 12,853
Busines Promotion Services 1,767 1,767
Mortgage Reports 2,250 2,250
Data Processing Fees 1,917 1,917
Collection Commission Fees 7,132 7,132
Other 1,058 482 249 1,789
-------- -------- ----- ----- --------
TOTAL REVENUES 17,928 1,917 7,614 249 27,708
-------- -------- ----- ----- --------
OPERATING EXPENSES:
Payroll Expenses 4,189 1,587 3,866 137 9,779
Purchased Credit Information 1,896 8 1,904
Telephone and Communications Expense 790 807 522 24 2,143
Amortization of Goodwill and Credit File Information 752 77 829
Equipment Related Expenses 576 1,332 388 14 2,310
Occupancy Expenses 437 183 436 50 1,106
Postage, Printing & Office Supplies 342 91 533 23 989
Public Relations, Advertising & Travel 309 55 165 11 540
Commisssions Paid Other Agencies 256 256
General and Administrative Costs 930 298 400 27 1,655
CSC Industry Services Group Allocated
General and Administrative Costs 54 17 23 2 96
Other Expenses 635 104 617 80 1,436
-------- -------- ----- ----- --------
TOTAL OPERATING EXPENSES 10,910 4,474 7,291 368 23,043
-------- -------- ----- ----- --------
OPERATING INCOME 7,018 (2,557) 323 (119) 4,665
OTHER INCOME (EXPENSES):
Investment Income 1 2 4 7
Interest Expense (15) (36) (8) (1) (60)
Interest Expense Charged by Parent (601) (193) (259) (18) (1,071)
General and Administrative Costs Allocated by Parent (217) (70) (93) (6) (386)
-------- -------- ----- ----- --------
Earnings Before Taxes 6,186 (2,856) (35) (140) 3,155
Estimated Income Taxes 2,822 (1,303) (16) (64) 1,439
-------- -------- ----- ----- --------
Net Earnings $ 3,364 ($ 1,553) ($ 19) ($ 76) $ 1,716
======== ======== ===== ===== =======
</TABLE>
See Notes to Combined Financial Statements.
<PAGE>
CSC CREDIT SERVICES, INC.
AND SUBSIDIARIES AND CERTAIN AFFILIATES
UNAUDITED COMBINED STATEMENT OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Three Months
Year Ended Ended
March 31, June 30,
1988 1988
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 9,202 $ 1,716
Adjustments to reconcile net earnings to net
Cash provided:
Depreciation and amortization 7,063 1,923
Provision for losses on accounts receivable 672 69
Changes in assets and liabilities, net of effects of acquistions:
Increase in accounts receivable (2,537) (169)
Increase in prepaid expenses (574) (59)
Increase in accounts payable, accrued liabilities, and
current maturities of notes payable representing with- (3,519) (60)
holds under acquisition agreements and long-term liabilities
Decrease (increase) in income taxes payable (2,183) 1,547
Increase in capitalized development costs (3,365) (906)
Decrease (increase) in notes payable to parent 5,423 (2,184)
-------- --------
Net cash provided by operating activities 10,182 1,877
-------- --------
Cash flows from investing activities:
Purchases of property and equipment (3,702) (1,170)
Acquisitions, net of cash acquired (3,165) 0
Other investing cash flows 585 310
-------- --------
Net cash used in investing activities (6,282) (860)
-------- --------
Cash flows from financing activities:
Principal payments on long-term liabilities (1,079) (271)
Payments on notes payable representing withholds under
acquisition agreements (3,168) (27)
Notes payable representing withholds under acquisition
agreements incurred 852 0
-------- --------
Net cash used in financing activities (3,395) (298)
-------- --------
Net increase in cash and cash equivalents 505 719
Cash and cash equivalents at beginning of period 2,060 2,565
-------- --------
Cash and cash equivalents at end of period $ 2,565 $ 3,284
======== ========
</TABLE>
See Notes to Combined Financial Statement.
<PAGE>
CSC Credit Services, Inc.
and Subsidiaries and Certain Affiliates
Notes to Combined Financial Statements
March 31, 1988
Note 1 - Summary of Significant Accounting Policies
Principles of Combination
The accompanying combined financial statements include the accounts of CSC
Credit Services, Inc., its wholly-owned subsidiaries and two of its affiliates
(collectively referred to as the "Company"), as follows:
Wholly-Owned Subsidiaries:
Johns Holding Company
CSC Credit Services of Minnesota, Inc.
CSC Accounts Management, Inc.
Credit Bureau Data Centers, Inc.
Aircall Communications, Inc.
Affiliates (wholly-owned subsidiaries of Computer
Sciences Corporation):
Credit Bureau of Cincinnati, Inc. ("Cincinnati")
Credit Bureau of Greater Kansas City, Inc. ("Kansas City")
CSC Credit Services, Inc. is a wholly-owned subsidiary of Computer Sciences
Corporation ("CSC" or "Parent"). All material intercompany and interdivisional
transactions and balances have been eliminated. Certain costs have been
allocated by CSC to the Company predicated on various allocation methods
(directly chargeable, separately allocated and overall allocation of CSC
Corporate general and administrative costs) and multiple allocation bases
(primary usage, headcount or cost input). In addition, the Company's general and
administrative costs and intercompany interest charges have been allocated to
its Divisions based on a combination of revenue contribution and headcount.
Income Recognition
Revenues from credit reporting activities are recorded at the time the service
is utilized by the customer. The amount of revenue is determined by reference to
specific contractual agreements.
-1-
<PAGE>
Data processing fees are determined by reference to specific contractual
agreements and are recognized when the service is provided to the customer.
Revenues from the collection agency service are recorded at the time the funds
are collected by the agency. The amount of revenue recorded is determined by
reference to specific contractual agreements.
Depreciation and Amortization
The cost of property and equipment, less applicable residual values, is
generally depreciated on the straight-line method for financial accounting
purposes from the date the specific asset is complete, installed and ready for
normal use, as follows:
Buildings 20 to 40 years
Computers 5 years
Communications equipment 5 years
Furniture and other equipment 5 to 10 years
Leasehold improvements Shorter of lease term or
useful life
Software 5 to 10 years
Credit information files 20 years
Excess of cost of business
acquired over related net assets 40 years
Development Costs
Significant costs incurred in the internal development of computer software
which is to be sold, leased or otherwise marketed as a separate product or as
part of a product or process are accounted for in accordance with Statement of
Financial Accounting Standards No. 86. During fiscal l988, the Company
capitalized $3,365,O0O of software development costs. Capitalized development
costs are to be amortized over the expected useful life of the related program
or system.
Acquisitions
During fiscal 1988, the Company made several acquisitions. In conjunction with
these acquisitions the Company acquired assets with a fair value of $2,389,000
and assumed liabilities of $2,326,000. The excess cost of businesses acquired
over related net assets was $139,000.
-2-
<PAGE>
Retirement Plans
During 1988, the Company terminated its defined benefit plans and replaced them
with a defined contribution compensation deferred plan.
Note 2 - Receivables
Receivables, consist of the following (in thousands):
Billed trade accounts $13,055
Notes 401
Other 1,052
-------
$14,508
=======
All amounts shown above are expected to be collected during fiscal year 1989.
Note 3 - Debt
Notes payable representing withholds under acquisition agreements bear interest
ranging from 6% to 10.5% payable in monthly installments through fiscal year
1992.
Long-term liabilities at March 31, 1988 consisted of the following (in
thousands):
Long-
Current Term
Maturities Portion Total
---------- ------- -----
Capitalized lease liabilities, with
interest rates varying from 6.8% to
14.0%, payable in monthly installments
through fiscal year 1992 $ 789 $ 299 $1,088
Mortgages payable, collateralized
by real property, with interest rates
varying from 9.75% to 14.0%,
payable in monthly installments
through fiscal year 1993 87 320 407
Other 28 8 36
------ ------ ------
$ 904 $ 627 $1,531
====== ====== ======
-3-
<PAGE>
Maturities of notes payable representing withholds under acquisition agreements
and long-term liabilities are as follows (in thousands):
Due in Fiscal Year
----------------------------------------------
1989 1990 1991 1992 1993
------ ------ ------ ------ ------
Notes payable $ 816 $ 120 $ 92 $ 9 $ 10
Long-term liabilities 904 392 118 114 13
------ ------ ------ ------ ------
$1,720 $ 502 $ 210 $ 123 $ 23
====== ====== ====== ====== ======
Capitalized lease liabilities shown above represent amounts due under leases for
the use of computes and certain telephone equipment. Amounts which have been
capitalized as property and equipment relating to such leases aggregated
$3,064,000 less accumulated depreciation through March 31, 1988 of $2,138,000.
All of these leases conclude by May 1991.
Note 4 - Income Taxes
The Company's results of operations for tax purposes are includeable in CSC's
consolidated income tax returns. As such, CSC records all deferred taxes due to
timing differences between financial reporting and tax reporting on its
corporate books. Current income taxes are recorded by the Company based upon
statutory rates, adjusted for certain effects of the prior year CSC returns as
filed.
Note 5 - Commitments and Contingent Liabilities
Lease Commitments
Rental expenses under noncancelable operating leases for the use of property and
equipment amounted to $5,822,000. Substantially all operatiang leases are
noncancelable or cancelable only by the payment of penalties. All lease payments
are based on the lapse of time but include, in some cases, payments for
insurance, maintenance and property taxes. There are no purchase options on
operating leases at favorable terms, but most leases have one or more renewal
options. Certain leases on real property are subject to annual escalation for
increases in utilities and property
-4-
<PAGE>
taxes. Minimum fixed rentals required for the next five years and thereafter
under leases in effect at April, 1988 were as follows (in thousands):
Operating Leases
Fiscal Year Capital ------------------------
Equipment Leases Real Estate Equipment
- ----------- ------- ----------- ---------
1989 $ 877 $ 2,487 $ 3,304
1990 262 1,956 2,029
1991 21 1,580 1,554
1992 4 1,267 1,090
1993 1,141 344
Thereafter to 1998 2,885
------- ------- -------
1,164 $10,316 $ 8,321
Less Interest Included 97 ======= =======
-------
$ 1,067
=======
Contingent Liabilities - Legal Proceedings
The Company is currently a party to a number of disputes which involve or may
involve litigation. In the opinion of Company management, ultimate liability, if
any, with respect to these disputes will not be material to the Company's
financial position.
Note 6 - Stockholders Equity
Following are the details of the common stock of CSC Credit Services, Inc.,
Cincinnati and Kansas City:
Credit Bureau Credit Bureau of
CSC Credit of Cincinnati Greater Kansas
Services, Inc. Inc. City, Inc.
-------------- ---------------------- ---------------
Class A Class B
------- -------
Par Value $ 1.00 $ 1.00 No par $ 1.00
Authorized 10,000 250 2,000 1,000
Issued 1,000 16 1,125 1,000
Outstanding 1,000 16 1,125 1,000
Note 7 - Related Party Transactions
During the normal course of business, the Company enters into certain
transactions with CSC and INFONET, a division of CSC. During fiscal 1988, the
Company Utilized the INFONET communications network; accordingly, $2,485,000 was
charged
-5-
<PAGE>
to the Company's results of operations for such services. In addition, effective
April 1, 1998, the Company is contractually obligated to purchase such services
from INFONET in annual amounts not less than $1.9 million per fiscal year for
three years. The Company participates in the CSC health and life insurance
program and was charged $2,317,000 in fiscal 1988 for premiums related to these
programs.
The Company has a long-term revolving note payable with CSC, which bears
interest at 9%. Interest expense related to this note aggregated $2,948,000 in
fiscal year 1988.
<PAGE>
EXHIBIT 10.21
FIFTH AMENDMENT
TO
AGREEMENT FOR
COMPUTERIZED CREDIT REPORTING SERVICES
AND
OPTIONS TO PURCHASE AND SELL ASSETS
This Fifth Amendment to Agreement for Computerized Credit Reporting Services and
Options to Purchase and Sell Assets (the "Fifth Amendment") dated as of the 7th
day of September, 1993, is made by and among Equifax Credit Information
Services, Inc. ("CBI" or "ECIS"), a Georgia corporation, Equifax Inc., a Georgia
corporation ("Equifax") and CSC Enterprises, a Delaware general partnership (the
"Partnership"), CSC Accounts Management, Inc., a Texas corporation ("Accounts
Management"), Credit Bureau of Tulsa, Inc., an Oklahoma corporation, and
Computer Sciences Corporation, a Nevada corporation ("CSC").
WITNESSETH:
WHEREAS, The Credit Bureau, Incorporated of Georgia, Equifax, CSC, CSC Credit
Services, Inc., a Texas corporation ("Credit Services"), CSC Credit Services of
Minnesota, Inc., a Texas corporation ("Minnesota"), Credit Bureau of Cincinnati,
Inc., an Ohio corporation ("Cincinnati"), Credit Bureau of Greater Kansas City,
Inc., a Missouri corporation ("Kansas City"), Johns Holding Company, a Delaware
corporation ("JHC"), and Accounts Management entered into an Agreement for
Computerized Credit Reporting Services and Options to Purchase and Sell Assets,
dated as of August 1, 1988 ("the Original Agreement"); and
WHEREAS, Minnesota has been merged into Credit Services effective September 30,
1988; and
WHEREAS, as of December 28, 1990, Credit Services, CSC Enterprises, Inc., a
Nevada corporation ("CEI"), CSC Ventures, Inc., a Nevada corporation, CBI
Ventures Inc., a Georgia corporation, and Equifax Ventures Inc., a Georgia
corporation, entered into that certain Partnership Agreement (the "Partnership
Agreement") of the Partnership; and
WHEREAS, pursuant to that certain Assignment and Assumption Agreement, dated as
of December 28, 1990, by and among Credit Services, Cincinnati, Kansas City,
JHC, as assignors, and CEI, as assignee, CEI was assigned all of assignors'
right, title, and interest in and to the Original Agreement and CEI assumed all
of the assignors' obligations under the Original Agreement; and
<PAGE>
WHEREAS, pursuant to that certain Assignment and Assumption Agreement, dated as
of December 28, 1990, by and between CEI and Credit Services, as assignors, and
the Partnership, as assignee, CEI assigned to the Partnership, among other
things, all of its right, title, and interest in and to the Original Agreement,
and the Partnership assumed all of CEI's obligations under the Original
Agreement; and
WHEREAS, the Original Agreement was amended as of December 28, 1990, by that
certain First Amendment to Agreement for Computerized Credit Reporting Services
and Options to Purchase and Sell Assets, among ECIS, Equifax, CSC, Credit
Services, Cincinnati, Kansas City, JHC, Accounts Management, CEI, and the
Partnership (the "First Amendment"); and
WHEREAS, the Original Agreement, as amended by the First Amendment, was further
amended as of the 27th day of September, 1991, by that certain Second Amendment
to Agreement for Computerized Credit Reporting Services and Options to Purchase
and Sell Assets, among ECIS, Equifax, the Partnership, Accounts Management, and
CSC (the "Second Amendment"); and
WHEREAS, the Original Agreement, as amended by the First Amendment and the
Second Amendment, was further amended as of the 27th day of September, 1991, by
that certain Third Amendment to Agreement for Computerized Credit Reporting
Services and Options to Purchase and Sell Assets, among ECIS, Equifax, the
Partnership, Accounts Management, and CSC; and
WHEREAS, CBI, as of December 23, 1991, changed its corporate name from The
Credit Bureau, Incorporated of Georgia to Equifax Credit Information Services,
Inc. and desires to use the acronym "ECIS" instead of "CBI" and any reference to
"CBI" or "ECIS" in the Original Agreement, as amended, or this Amendment refers
to Equifax Credit Information Services, Inc., a Georgia corporation; and
WHEREAS, Credit Bureau of Tulsa, Inc. ("CB-Tulsa") was added to the Original
Agreement, as amended, as a party via an Addendum effective as of the 17th day
of February, 1992, and for the purposes of Exhibit M set forth in this Fifth
Amendment CB-Tulsa will be included in any reference to the Partnership; and
WHEREAS, the Original Agreement, as amended by the First Amendment, the Second
Amendment, and the Third Amendment was further amended as of the 31st day of
December, 1992, by that certain Fourth Amendment to Agreement for Computerized
Credit Reporting Services and
-2-
<PAGE>
Options to Purchase and Sell Assets, among ECIS, Equifax, the Partnership,
Accounts Management, CSC, and CB-Tulsa (the "Fourth Amendment," the Original
Agreement, as amended by the First Amendment, the Second Amendment, the Third
Amendment and the Fourth Amendment being referred to herein as the "Agreement");
and
WHEREAS, ECIS has entered into an agreement with Sears, as defined herein,
regarding pricing of certain Special Products, as defined herein; and
WHEREAS, the Partnership, as owner of certain information in the ACROPAC(TM)
System, desires to consent to the method of pricing certain Special Products, as
herein defined, to Sears, as herein defined;
WHEREAS, the parties have previously consented that the products FINDERS and
DTEC shall be treated as seller- rather than owner-based products, but desire
that such policy shall not apply to FINDERS sales to Sears on the terms
described herein;
WHEREAS, the parties hereto have agreed to amend the Agreement in certain
respects as set forth herein; and
NOW THEREFORE, in consideration of the premises and of other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
I. ADDITION OF EXHIBIT M TO THE AGREEMENT
The following new Exhibit M titled "Sears Pricing" is hereby added to the
Agreement as follows:
1. The parties agree that the method of determining
payments in respect of the Cost Allocation System (as
defined in Paragraph 8(c) of the Agreement), billable
inquiries (as defined in Paragraph 8(a) of the
Agreement), and the Royalty (as defined in Paragraph
8(e) of the Agreement) for all Special Products (as
hereinafter defined) accessed by Sears (as hereinafter
defined), whether directly by Sears or for Sears (using
the Sears customer number) by the Partnership, ECIS or
its Affiliate Bureaus shall be determined pursuant to
this Exhibit M.
-3-
<PAGE>
2. "Special Products" is defined to mean the basic
ACROPACT(TM) credit reporting products known as
ACROFILE, ACROPLUS, ACRO SELECT, and FINDERS. A "Unit"
means each unit of a Special Product accessed by Sears
for its use. All other products, including without
limitation, PERSONA, DTEC, ON-LINE DIRECTORY, Canadian
files, Equipment Leasing, Handling or Surcharges for
messenger work, and special services such as "Mail
Return", are not included in Special Products and
payments in respect of all such other products shall not
be affected by this Exhibit M. SAFESCAN will be provided
to Sears at no charge and is not included in the
definition of "Special Products."
3. "Sears" is defined to mean only the Sears
Merchandising Group of Sears, Roebuck and Company and
shall not include any other entity, affiliate or
division; therefore, for example, such affiliates as
Sears Payment Systems and Allstate shall not be included
in the definition of "Sears".
4. Payments in respect of the Cost Allocation System,
billable inquiries and the Royalty under this Exhibit M
shall be determined as follows:
(a) Actual Sears File Price. A factor defined as the
"Actual Sears File Price" will be calculated in
respect of each month by (i) dividing the constant
amount $500,000 ("Sears Monthly Payment") owed by
Sears each month in respect of the pricing agreement
between Sears and ECIS by (ii) the total number of
Units accessed that month by Sears from all ACROPAC
bureau files. (Any reference to a "month" in this
Exhibit M shall be to a calendar month.) For
example, if the number of Units accessed in a given
month by Sears equals 1,000,000, then the Actual
Sears File Price for that month would be $0.50:
Sears Monthly / Units = Actual Sears
Payment Accessed File Price
($500,000) (1,000,000) ($0.50)
(b) Cost Allocation System. The Cost Allocation
System in respect of Special Products shall require
a determination of three elements: (i) the Sellers'
Pool, (ii) the Model Royalty Pool and (iii) the File
Owners' Pool.
(i) The Sellers' Pool will equal a constant
5% of the Sears Monthly Payment. The Partnership
will receive a constant 22% of the Sellers' Pool
each month ("Partnership Share"); the remainder of
the Sellers' Pool will be allocated by ECIS. For
example:
-4-
<PAGE>
Sears Monthly X 5% = Sellers' Pool
Payment ($500,000) ($25,000)
Sellers' Pool X 22% = Partnership Share
($25,000) ($5,500)
(ii) The Model Royalty Pool will be paid to
the third parties ("Model Vendors") that developed
the scoring model system used by Sears in respect of
Units accessed by Sears. The Units to which Sears
applies scoring model systems during a given month
are referred to as the "Scored Units". The Model
Royalty Pool will be calculated in respect of each
month by (x) multiplying the number of Units
accessed by Sears that month by (y) the percentage
of such Units which are Scored Units by (z) a Model
Royalty equal to a constant number of $.05 for DAS
and $.06 for BEACON. For example, if the number of
Units accessed in a given month by Sears equals
1,000,000 and the percentage of such Units which are
Scored Units equals 55%, and the Model chosen by
Sears is DAS, then the Model Royalty Pool for that
month would be $27,500:
Units X Percentage X Model = Model
Accessed of Units Royalty Royalty Pool
(1,000,000) which are ($.05) ($27,500)
Scored
Units (55%)
The Model Vendor will receive all of the Model
Royalty Pool for each month.
(iii) The File Owners' Pool will be
calculated in respect of each month by (x)
subtracting from the Sears Monthly Payment (y) both
the File Sellers' Pool and the Model Royalty Pool.
For example, if the File Sellers' Pool and the Model
Royalty Pool for a given month are $25,000 and
$27,500, respectively, then the File Owners' Pool
for that month would be $447,500:
Sears - File - Model = File
Monthly Sellers' Royalty Owners'
Payment Pool Pool Pool
($500,000) ($25,000) ($27,500) ($447,500)
The File Owners' Pool will be allocated among file
owners regardless of whether the Special Product is
otherwise characterized as a seller-based or
owner-based product. Each file owner will receive
each month a proportion of the File Owners' Pool for
that month based on the number of Units accessed
from its file. For example, if for a given month the
File Owners' Pool is $447,500, the number of Units
-5-
<PAGE>
accessed by Sears is 1,000,000 and the number of
Units accessed from the file of file owner X is
100,000, then file owner X will receive $44,750 from
the File Owners' Pool:
File / Units x Units Accessed = File Owner X
Owners' Accessed from file of Share of File
Pool (1,000,000) File Owner X Owners' Pool
($447,500) (100,000) ($44,750)
(c) Billable Inquiry. The amount payable by the
Partnership for a given month for each billable
inquiry in respect of a Unit (including for purposes
of this Exhibit M, the product FINDERS) will be
calculated by (i) dividing the Actual Sears File
Price for that month by (ii) the national price per
ACRO file report paid by Sears prior to the Sears
Pricing Agreement ("Previous Sears File Price") (a
constant number equal to $1.12) (iii) multiplied by
a constant number equal to $0.23; provided, such
amount per billable inquiry shall in no event exceed
$0.23, or such lower amount provided by the
Agreement. For example, if for a given month, the
Actual Sears File Price is $0.50, the charge for a
billable inquiry for that month will be $0.102679:
Actual / Previous x $0.23 = billable inquiry
Sears Sears charge
File File ($0.102679)
($0.50) ($1.12)
(d) Royalty. The amount payable as Royalty under the
Agreement per billable inquiry in respect of a Unit
(including, for purposes of this Exhibit M, the
product FINDERS) in respect of a given month will be
calculated by (i) dividing the Actual Sears File
Price for that month by (ii) the Previous Sears File
Price ($1.12) multiplied by the Royalty otherwise
payable under the Agreement ($0.07); provided, such
amount shall in no event exceed $0.07. For example,
if for a given month the Actual Sears File Price is
$0.50, the Royalty per billable inquiry for that
month will be $0.03125:
Actual / Previous x Agreement = Royalty per
Sears Sears Royalty billable inquiry
File File ($0.07) ($0.03125)
Price Price
($0.50) ($1.12)
5. This Exhibit M shall be effective as of March 1,
1993, and shall continue in effect until September 1,
1994.
-6-
<PAGE>
6. The Partnership shall have the right to audit ECIS's
relevant records to verify compliance with the terms of
this Exhibit M. Such audit may be conducted after
reasonable notice, during normal business hours, using
reasonable procedures to assure an accurate audit. Each
party will reasonably cooperate with the other during
the conduct of any such audit, it being expressly
understood that in no event shall auditors be permitted
to access the confidential data, files, or information
belonging to a third party or not directly related to
this Exhibit M. Auditors will not be given free access
to facilities, documents, or files. Auditors will work
only in designated locations and will conduct their
business quietly without significant disruption of work
being done by others. Notwithstanding anything to the
contrary herein contained, ECIS will make available to
the Partnership appropriate personnel to answer the
Partnership's questions associated with the audit. All
expenses of the audit are the responsibility of the
Partnership.
2. REFERENCES TO THE AGREEMENT
All capitalized terms which are defined in the Agreement and not otherwise
defined herein shall have the same meaning herein as in the Agreement. On or
after the date hereof, each reference in the Agreement to "this Agreement",
"hereunder", "herein", or words of like import shall mean and be a reference to
the Agreement, as amended by this Fifth Amendment.
3. AUTHORITY
Each of the parties hereto represents to the other parties hereto that:
(a) it has the full corporate (or, in the case of the Partnership,
partnership) power and authority to execute and deliver this Fifth
Amendment, to perform under the Agreement, as amended by this Fifth
Amendment, and to consummate the transactions contemplated by the
Agreement, as amended by this Fifth Amendment, without the necessity of
any act, approval, or consent of any other person whomsoever, except such
as have been obtained; and
(b) the Agreement, as amended by this Fifth Amendment, has been approved
by its Board of Directors, or the Executive Committee thereof (or, in the
case of the Partnership, by the respective Boards of Directors, or the
Executive Committees thereof, of each of its partners), and constitutes
the valid and legally binding obligation of such party enforceable against
such party in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws from time to time
-7-
<PAGE>
in effect which affect the enforcement of creditors' rights generally, and
except as enforcement of remedies may be limited by general equitable
principles.
4. COUNTERPARTS
This Fifth Amendment may be executed in several counterparts, and each
counterpart, when so executed and delivered, shall constitute an original
instrument, and all such separate counterparts shall constitute but one and the
same instrument.
5. MERGER
This Fifth Amendment sets forth the entire understanding of the parties
regarding the subject matter hereof, and all prior such understandings, written
or oral, are merged herein.
6. GOVERNING LAW
THIS FIFTH AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS.
EQUIFAX CREDIT INFORMATION SERVICES, INC.
By: /s/ Joseph E. Dawson
-----------------------------------
Joseph E. Dawson
Its Senior Vice President
-----------------------------------
EQUIFAX INC.
By: /s/ Joseph E. Dawson
-----------------------------------
Joseph E. Dawson
Its Senior Vice President
-----------------------------------
-8-
<PAGE>
CSC ENTERPRISES
By: CSC ENTERPRISES, INC.
Its Managing Partner
By: /s/ Dale B. Elam
-------------------------------
Its Vice President
--------------------------------
CSC ACCOUNTS MANAGEMENT, INC.
By: /s/ Dale B. Elam
-----------------------------------
Its President
-----------------------------------
CREDIT BUREAU OF TULSA, INC.
By: /s/ Dale B. Elam
-----------------------------------
Its President
-----------------------------------
COMPUTER SCIENCES CORPORATION
By: /s/
-----------------------------------
Its President
-----------------------------------
-9-
1
<PAGE>
EXHIBIT 10.24
================================================================================
LEASE AGREEMENT
dated as of March 18, 1994
between
William J. Wade,
not in his individual capacity but solely as the
Individual Owner Trustee of
Equifax Business Trust No. 1994-A,
as Lessor
and
EQUIFAX INC.,
as Lessee
Leveraged Lease of the J. V. White Technology Center
================================================================================
CERTAIN RIGHTS OF THE LESSOR UNDER THIS LEASE AGREEMENT HAVE BEEN ASSIGNED TO,
AND ARE SUBJECT TO A LIEN AND SECURITY INTEREST IN FAVOR OF, NATIONSBANK OF
GEORGIA, NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE, UNDER THE TRUST INDENTURE
DATED AS OF MARCH 18, 1994, BETWEEN THE LESSOR AND THE INDENTURE TRUSTEE, UNDER
THE DEED TO SECURE DEBT AND SECURITY AGREEMENT DATED AS OF MARCH 18, 1994,
BETWEEN THE LESSOR AND THE INDENTURE TRUSTEE AND UNDER THE ASSIGNMENT OF RENTS
AND LEASES DATED AS OF MARCH 18, 1994 BETWEEN THE LESSOR AND THE INDENTURE
TRUSTEE, AS SUCH TRUST INDENTURE, DEED TO SECURE DEBT AND SECURITY AGREEMENT AND
ASSIGNMENT OF RENTS AND LEASES MAY BE AMENDED, MODIFIED OR SUPPLEMENTED FROM
TIME TO TIME IN ACCORDANCE WITH THE PROVISIONS THEREOF. THIS LEASE AGREEMENT HAS
BEEN EXECUTED IN SEVERAL COUNTERPARTS. TO THE EXTENT THAT THIS LEASE AGREEMENT
CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL
CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS
LEASE AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OR POSSESSION OF ANY
COUNTERPART HEREOF OTHER THAN THE "ORIGINAL EXECUTED COUNTERPART", WHICH SHALL
BE IDENTIFIED AS THE COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE
INDENTURE TRUSTEE ON OR FOLLOWING THE SIGNATURE PAGE THEREOF. SEE SECTION 22(e)
FOR FURTHER INFORMATION CONCERNING THE RESPECTIVE RIGHTS OF THE INDENTURE
TRUSTEE AND THE NOTEHOLDERS.
THIS COUNTERPART [IS NOT] THE SOLE EXECUTED CHATTEL PAPER ORIGINAL.
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. Definitions................................................. -1-
SECTION 2. Lease; Lease Term........................................... -1-
(a) Lease..................................................... -1-
(b) Lease Term................................................ -2-
SECTION 3. Rent; Adjustments to Rent................................... -2-
(a) Interim Term.............................................. -2-
(b) Basic Rent................................................ -2-
(c) Supplemental Rent......................................... -3-
(d) Method of Payment......................................... -4-
(e) Adjustments to Rent....................................... -5-
(f) Computation of Adjustments................................ -6-
(g) Sufficiency of Basic Rent and Supplemental Rent........... -7-
SECTION 4. Net Lease................................................... -7-
SECTION 5. Return...................................................... -9-
SECTION 6. Warranty of the Lessor...................................... -11-
(a) Quiet Enjoyment........................................... -11-
(b) Disclaimer of Other Warranties............................ -12-
(c) Enforcement of Certain Warranties......................... -13-
(d) Title Insurance........................................... -13-
SECTION 7. Liens....................................................... -14-
SECTION 8. Operation and Maintenance; Modifications ................... -15-
(a) Operation and Maintenance................................. -15-
(b) Inspection................................................ -16-
(c) Modifications............................................. -17-
(d) Title to Modifications.................................... -18-
(e) Removal or Replacement of Property........................ -19-
(f) Trade and Other Fixtures.................................. -20-
(g) Contest of Taxes or Requirements of Law................... -21-
(h) Reports................................................... -22-
(i) Environmental Compliance.................................. -22-
SECTION 9. Event of Loss............................................... -24-
(a) Events of Loss; Notice.................................... -24-
(b) Repair.................................................... -25-
(c) Event of Loss During the Interim Term and Basic Term...... -26-
(d) Termination of Lease Term................................. -26-
(e) Event of Loss During any Renewal Term..................... -27-
(f) Application of Payments on an Event of Loss............... -27-
(g) Application of Payments Not Relating to an Event of
Loss ..................................................... -28-
(h) Application During Lease Event of Default ................ -30-
<PAGE>
Page
SECTION 10. Insurance.................................................. -31-
(a) Required Insurance........................................ -31-
(b) Other Insurance........................................... -34-
(c) Insurance to be Commercially Available.................... -34-
(d) Self Insurance............................................ -34-
SECTION 11. Rights To Assign or Sublease; Assignment as
Security; Attornment....................................... -35-
(a) Sublease by the Lessee..................................... -35-
(b) Assignment by the Lessee .................................. -36-
(c) Security for Lessor's Obligation to Noteholders............ -37-
(d) Assignments by the Lessor.................................. -37-
SECTION 12. Lease Renewal.............................................. -38-
(a) Option for Fixed-Rate Renewal.............................. -38-
(b) Fair Market Renewal Options................................ -38-
(c) Short-Term Lease Extensions................................ -38-
(d) Notice at Expiration of Lease Term......................... -39-
(e) Elections Irrevocable...................................... -39-
(f) Determination of Fair Market Rental Value.................. -39-
(g) Assistance with Disposition................................ -39-
SECTION 13. Burdensome Buyout Purchase Right........................... -40-
(a) Burdensome Buyout Purchase Right........................... -40-
(b) Notice..................................................... -41-
(c) Determination of Fair Market Sales Value................... -41-
SECTION 14. Early Termination; Obsolescence or Uneconomic
Usefulness Termination..................................... -42-
(a) Obsolescence or Uneconomic Usefulness Termination.......... -42-
(b) Early Termination.......................................... -46-
SECTION 15. Lease Events of Default.................................... -47-
SECTION 16. Remedies................................................... -49-
(a) Remedies................................................... -49-
(b) No Release................................................. -52-
(c) Remedies Cumulative........................................ -53-
SECTION 17. Notices.................................................... -53-
SECTION 18. Successors and Assigns..................................... -53-
SECTION 19. Right of First Offer....................................... -53-
(a) Grant of Right of First Offer.............................. -53-
(b) Savings Clause............................................. -55-
SECTION 20. Right To Perform for Lessee................................ -55-
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Page
SECTION 21. Rejectable Offers.......................................... -56-
(a) Amendments in Writing...................................... -62-
(b) Survival................................................... -62-
(c) Severability of Provisions................................. -63-
(d) True Lease................................................. -63-
(e) Original Lease............................................. -63-
(f) Governing Law.............................................. -63-
(g) Headings................................................... -63-
(h) Estoppel Certificates...................................... -63-
(i) Concerning the Trust....................................... -64-
(j) Counterpart Execution...................................... -65-
(k) Time is of the Essence..................................... -65-
(l) Costs of Transfer.......................................... -65-
Schedule 1............................................................. -68-
Basic Rent Schedule............................................. -68-
Schedule 2............................................................. -69-
Stipulated Loss Value Schedules................................. -69-
2.1 Stipulated Loss Value Schedule During Basic Term . -69-
2.2 Stipulated Loss Value Schedule for Lessor
Designated Event Price and OP Designated
Event Price ...................................... -69-
2.3 Stipulated Loss Value Schedule for Burdensome Buyout
Purchase Price During Renewal Terms .............. -69-
Schedule 3............................................................. -70-
Pricing Assumptions............................................. -70-
Schedule 4............................................................. -71-
Trade Fixtures.................................................. -71-
Exhibit A Description of Project
Exhibit B Form of Lease Supplement
-iii-
<PAGE>
EXHIBIT 10.24
LEASE AGREEMENT
LEASE AGREEMENT (this "Lease"), dated as of March 18, 1994, between
WILLIAM J. WADE, not in his individual capacity, but solely as Individual Owner
Trustee of Equifax Business Trust No. 1994-A, a Delaware business trust (the
"Lessor") and EQUIFAX INC., a Georgia corporation (the "Lessee").
W I T N E S S E T H:
WHEREAS, the Lessor owns the Project; and
WHEREAS, the Lessee desires to lease from the Lessor the Project,
upon the terms and subject to the conditions set forth herein; and
WHEREAS, the Lessor is willing to lease the Project to the Lessee
upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and of 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:
SECTION 1. Definitions. For purposes of this Lease (including the
foregoing recitals), capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to them in Appendix A to the
Participation Agreement of even date herewith among Alphafax Properties Limited
Partnership, as a Seller, Equifax Inc., as a Seller and Lessee, Equifax
Properties, Inc., as General Partner, First Chicago Leasing Corporation, as
Owner Participant, Equifax Business Trust No. 1994-A, as the Trust, Wilmington
Trust Company, as Corporate Owner Trustee, William J. Wade, as Individual Owner
Trustee, NationsBank of Georgia, National Association, as Indenture Trustee, and
Trust Company Bank, as Lender, as such Appendix may be amended from time to time
in accordance with the terms of the Participation Agreement. Unless otherwise
indicated, references in this Lease to sections, paragraphs, clauses,
appendices, schedules and exhibits are to the same contained in or attached to
this Lease.
SECTION 2. Lease; Lease Term.
(a) Lease. Upon the terms and subject to the conditions of this
Lease and subject to the Permitted Exceptions and to the terms and conditions of
the other Transaction Documents, the Lessor hereby grants and leases to the
Lessee, and the Lessee hereby takes and leases from the Lessor, the Project. The
interest in the Project granted by Lessor to Lessee by this Lease is an estate
for years under Georgia law.
<PAGE>
(b) Lease Term. The term of this Lease shall be as follows:
(i) Interim Term. The interim term (the "Interim Term") shall
commence on the Closing Date and shall terminate at the end of
August 31, 1994, unless this Lease is earlier terminated in
accordance with its terms.
(ii) Basic Term. The basic term (the "Basic Term") shall
commence on September 1, 1994, and shall terminate at 11:59 p.m.
(Atlanta time) on March 1, 2012, unless this Lease is earlier
terminated in accordance with its terms.
(iii) Extension of Lease. The Lease Term is subject to further
extension pursuant to Section 12 hereof.
(c) Description. The Project to be leased on the Closing Date is
described on Exhibit A.
(d) Lease Supplement. On the Closing Date, the Lessee shall enter
into a Lease Supplement in the form of Exhibit B with the Lessor, which Lease
Supplement shall (i) state that the Lessee has had an opportunity to inspect and
has inspected the Project, (ii) describe the Project, (iii) set forth the
Purchase Price, and (iv) if appropriate, set out revised Schedules 1 and 2 if
and to the extent rental adjustments have been made on the Closing Date pursuant
to Section 3.
(e) Risk of Loss. Upon the execution and delivery of this Lease and
any Lease Supplement on the Closing Date, all risk of loss with respect to the
Project shall pass to the Lessee.
SECTION 3. Rent; Adjustments to Rent.
(a) Interim Term. No Rent, other than Supplemental Rent, if any,
shall be due and payable by the Lessee to the Lessor during the Interim Term.
(b) Basic Rent. The Lessee shall pay to the Corporate Owner Trustee
for the account of the Lessor, as basic rent (hereinafter referred to as "Basic
Rent"), the following amounts:
(i) on each Basic Rent Payment Date occurring during the Basic
Term, an amount equal to (A) the Purchase Price multiplied by (B)
the percentages set forth opposite such Basic Rent Payment Date on
Schedule 1 to this Lease in advance or arrears as set forth in such
Schedule 1, as such Schedule 1 may (subject always to Section 3(g)
hereof) be amended by any Lease Supplement, plus or minus the Basic
Rent Differential Amount;
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<PAGE>
(ii) on each Basic Rent Payment Date occurring during any
Fixed-Rate Renewal Term, an amount determined in accordance with
Section 12(a);
(iii) on each Basic Rent Payment Date occurring during any
Fair Market Renewal Term, an amount determined in accordance with
Section 12(b); and
(iv) on each Basic Rent Payment Date occurring during any
Short-Term Renewal, an amount determined in accordance with Section
12(c).
(c) Supplemental Rent. The Lessee shall pay as supplemental rent
(herein referred to as "Supplemental Rent"), the following amounts:
(i) when due, any amount payable hereunder as Stipulated Loss
Value as herein provided;
(ii) when due, to or for the account of the Lessor (or any
trustee or co-trustee or additional trustee appointed pursuant to
the Trust Agreement) amounts equal to any amounts payable by the
Lessor in respect of the Make Whole Amount and any other amounts
(other than principal and interest) payable on the Notes or under
the Indenture (including without limitation amounts payable under
Section 2.9, 2.10 and 2.11 thereof);
(iii) when due, or if no due date is specified on demand
therefor, any amount (other than those sums described in clauses (i)
and (ii) above) that the Lessee is obliged to pay to, or for the
account of, the Lessor (or any trustee or co-trustee or additional
trustee appointed pursuant to the Trust Agreement), the Owner
Participant, the Indenture Trustee (or any note registrar, paying
agent, co-trustee or additional trustee appointed pursuant to the
Indenture), any Noteholder or any Indemnitee under this Lease or any
other Transaction Document;
(iv) on demand and in any event not later than the Basic Rent
Payment Date next succeeding the date such amounts shall be due and
payable hereunder, to the extent permitted by Applicable Law,
interest (computed on the basis of a 360-day year of twelve-30 day
months) on any Rent not paid when due at a rate per annum equal to
the Overdue Rate from and including the due date thereof to but
excluding the date of payment thereof (unless payment is made after
12:00 noon, Atlanta time, in which event such date of payment shall
be included);
(v) on each applicable Basic Rent Payment Date, such
additional amount as shall, after reducing the sum of the scheduled
amount of Basic Rent plus such additional amount by
-3-
<PAGE>
any applicable withholding Taxes, cause the amount remaining after
such reduction to equal the aggregate amount of principal and
accrued interest scheduled to be due and payable on all outstanding
Notes on the applicable Basic Rent Payment Date; and
(vi) contemporaneously with making any other payment of
Supplemental Rent (other than Stipulated Loss Value or payments
denominated as interest payable to the Lessor, the Owner Participant
or any Noteholder), such additional amount to the Owner Participant
as shall be sufficient to cause such other Supplemental Rent payment
to have been made on an After-Tax Basis to the Owner Participant.
(d) Method of Payment. Each payment of Rent shall be made in
immediately available funds no later than noon, Atlanta time, on the date such
payment shall be due and payable hereunder, and shall be paid either (i) in the
case of payments other than Excepted Payments, by wire transfer to the Indenture
Trustee to the account specified in Appendix B to the Participation Agreement
for application in accordance with the Indenture (unless the Lien of the
Security Documents shall have been discharged pursuant to Section 10.1 of the
Indenture, in which case such payment shall be paid to, and applied by, the
Corporate Owner Trustee on behalf of the Lessor) to the account specified in
Appendix B to the Participation Agreement or into such other account as the
Indenture Trustee may specify by notice in writing to the Lessee, or (ii) in the
case of Excepted Payments, to such Person as shall be entitled to receive such
payment at such address as such Person may specify by notice to the Lessee;
provided, however, that with respect to Excepted Payments due to the Owner
Participant, all such payments shall be made by wire transfer to the account
specified in Appendix B to the Participation Agreement or such other account as
the Owner Participant may specify in writing to the Lessee. If the date on which
any payment of Rent is due hereunder is not a Business Day, such payment shall
be made as aforesaid on the next succeeding Business Day, with the same force
and effect as if made on the nominal due date provided for in this Lease. Any
provision to this Lease to the contrary notwithstanding, all Basic Rent, all
Supplemental Rent constituting Stipulated Loss Value, proceeds payable pursuant
to Section 14 hereof, all amounts determined by reference to the Make Whole
Amount or other amounts payable to the Indenture Trustee or the Noteholders,
shall in each such case be paid to the Indenture Trustee on behalf of the Lessor
for application in accordance with the provisions of the Indenture (unless the
Lien of the Security Documents shall have been discharged pursuant to Section
10.1 of the Indenture, in which case each such payment shall be paid to, and
applied by, the Corporate Owner Trustee on behalf of the Lessor).
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<PAGE>
(e) Adjustments to Rent.
(i) The percentages for Basic Rent and Stipulated Loss Value,
all as set forth in Schedules 1 and 2 hereto, have been calculated
on the basis of the Pricing Assumptions.
(ii) If (A) the Closing Date is different than March 21, 1994,
(B) on or prior to the Closing Date, the characterization of the
Project by depreciation category as set forth in the Appraisal is
different than that set forth in the Pricing Assumptions, (C) on or
subsequent to the Closing Date, the Debt Rate or the amortization
schedule of the Notes or the amount of Transaction Expenses is other
than as set forth in the Pricing Assumptions including, without
limitation, as a result of any change in the Debt Rate to a fixed or
variable rate of interest on the Reset Date pursuant to Article XIII
of the Participation Agreement and the terms of the Notes, (D) on
the Closing Date, the ratio of the Equity Portion of the Purchase
Price to the Purchase Price is different than as set forth in the
Pricing Assumptions as a result of any adjustments referred to in
clauses (A) through (C) above, in the aggregate, (E) on or prior to
the Closing Date, there is any Change in Tax Law, (F) subsequent to
the Closing Date, any refinancing of the Notes or any Supplemental
Financing is consummated pursuant to Section 9.01 of the
Participation Agreement,(G) subsequent to the Closing Date, the Tax
Indemnity Agreement provides for the readjustment of Stipulated Loss
Value, (H) subsequent to the Closing Date, in the event of a Partial
Taking and the payment of the proceeds thereof to the Indenture
Trustee for application in accordance with the Indenture (unless the
Lien of the Security Documents shall have been discharged in
accordance with Section 10.1 of the Indenture, in which case such
payment shall be paid to, and applied by, the Corporate Owner
Trustee on behalf of the Lessor) as contemplated by Section 9(g)(i)
hereof and Sections 4.5 and 5.1(c) of the Indenture, or (I) on the
Closing Date, any other Pricing Assumption set forth on Schedule 3
proves incorrect then, and in each such case, such percentages for
Basic Rent and Stipulated Loss Value, as applicable, shall (subject
always to Section 3(g) hereof) be adjusted (upward or downward) so
as to preserve the Owner Participant's Net Economic Return. Any such
adjustments shall (subject always to Section 3(g) hereof) be
reflected in a Lease Supplement.
(iii) Any adjustments pursuant to this Section 3(e): (A)
shall, to the extent consistent with preserving the Owner
Participant's Net Economic Return, minimize the net After-Tax
present value cost (utilizing the After-Tax Discount Rate) to the
Lessee (subject to the requirements of Section 3(f)) and minimize
(but not necessarily avoid) the risk that the transactions effected
pursuant to the Participation Agreement and this Lease will be
classified by the Lessee as other than
-5-
<PAGE>
an "operating lease," as such term is defined under then-current
GAAP, and (B) shall, in all events, satisfy the provisions of
Revenue Procedures 75-21 and 75-28, and avoid the application of
section 467(b)(2) of the Code to the same extent and in the same
manner as such provisions are satisfied or avoided, respectively,
under the Pricing Assumptions.
(f) Computation of Adjustments.
(i) Upon the occurrence of an event requiring adjustments
pursuant to Section 3(e), the Owner Participant shall make the
necessary computations on a basis consistent with that used by the
Owner Participant in the computation of the percentages for Basic
Rent and Stipulated Loss Value set forth in the Schedules hereto, as
theretofore adjusted, taking into account only the event giving rise
to the adjustments and the provisions of Section 3(e). Such
adjustments shall be effective (A) on the 30th day after the Owner
Participant shall have furnished to the Lessee an Officer's
Certificate confirming that such adjustments have been properly
computed in accordance with the provisions of this Lease (or on such
earlier day as the Lessee agrees in writing as to such adjustments)
or (B) if the Lessee shall have disputed any computation or amount
set forth in such certificate on or before such 30th day, on the
date on which such dispute is resolved in accordance with Section
3(f)(ii), and shall remain effective until changed in consequence
of any event occurring thereafter requiring further adjustment
pursuant to Section 3(e).
(ii) Within 30 days after the Owner Participant shall have
provided the Lessee with a certificate pursuant to Section 3(f)(i),
the Lessee may request that the Owner Participant furnish all
information necessary to permit the confirmation of the accuracy of
the Owner Participant's computation of the adjustments described in
such certificate to the Qualified Firm. Notwithstanding the
foregoing, the Qualified Firm shall only have access to such books
and records of the Owner Participant as may be necessary to verify
the computation of such adjustments and shall not have access to the
income tax returns of the Owner Participant. The Qualified Firm
shall be required to confirm to the Owner Participant in writing
that all information provided to the Qualified Firm shall remain the
property of the Owner Participant, shall be held in strict
confidence, shall not be duplicated or revealed to any other Person
except to the extent disclosure may be required by Applicable Law,
and shall be returned to the Owner Participant upon completion of
the confirmation process. Within 30 days after its receipt of such
information, the Qualified Firm either shall confirm the accuracy of
such computation or shall notify the Owner Participant that such
computation and the resulting
-6-
<PAGE>
adjustments proposed by the Owner Participant are inaccurate. In the
latter event, the Owner Participant shall consult with the Lessee
and such Qualified Firm as to the proper computation of the
adjustments, whereupon the Owner Participant shall recompute the
adjustments in such a manner as shall enable such Qualified Firm to
confirm their accuracy. The Lessee and the Owner Participant agree
that the sole responsibility of the Qualified Firm shall be to
verify the amount of an adjustment pursuant to this Section 3(f)
and that matters of interpretation are not within the scope of its
responsibilities. All expenses incurred by the Owner Participant and
the Lessee in connection with the verification procedures described
in this paragraph (ii) (including the fees and expenses of the
Qualified Firm) shall be paid by the Lessee, unless the present
value on an After-Tax Basis of Basic Rent (discounted at the
After-Tax Discount Rate) proposed by the Owner Participant shall
exceed the present value on an After-Tax Basis of Basic Rent
(discounted at the After-Tax Discount Rate), properly computed and
confirmed, by more than 10 basis points, in which case all such
expenses shall be paid by the Owner Participant. Each final or
verified adjustment pursuant to this Section 3(f) shall be evidenced
by the execution and delivery of a Lease Supplement in form and
substance satisfactory to the Lessee and the Owner Participant, and
shall be effective as provided herein without regard to the date, if
any, on which such Lease Supplement is so executed and delivered.
(g) Sufficiency of Basic Rent and Supplemental Rent. Notwithstanding
any other provision of this Lease or of any other Transaction Document, (i) the
amount of the installment of Basic Rent payable on each Basic Rent Payment Date
(or on such other date as any installment of Basic Rent is due and payable)
shall be at least equal to the aggregate amount of principal and accrued
interest scheduled to be due and payable on all outstanding Notes on such Basic
Rent Payment Date (or other such date) in respect of all Notes then outstanding
and (ii) each payment of Stipulated Loss Value (when added to all other amounts
required to be paid by the Lessee under this Lease in respect of any Event of
Loss or termination (in whole or in part) of this Lease (including amounts
determined by reference to the Make Whole Amount, if any) shall be at least
equal to an amount sufficient, as of the date of payment, to pay in full the
principal of and the Make Whole Amount, if any, and interest then due on all
outstanding Notes on and as of such date of payment.
SECTION 4. Net Lease. This Lease is a triple net lease and the
Lessee hereby acknowledges and agrees that the Lessee's obligation to pay all
Rent, and the rights of the Lessor in and to such Rent, shall be absolute,
unconditional and irrevocable and shall not be affected by any circumstance of
any character (except as may be expressly provided in this Section 4),
including, without
-7-
<PAGE>
limitation: (i) any set-off, abatement, counterclaim, suspension, recoupment,
reduction, rescission, defense or other right or claim that the Lessee may have
against the Lessor, the Owner Trustees, the Owner Participant, the Indenture
Trustee, any Noteholder, any vendor or manufacturer of or contractor or
subcontractor for the Improvements or any part of any thereof, or any other
Person for any reason whatsoever; (ii) any defect in or failure of the title,
merchantability, condition, design, compliance with specifications, operation or
fitness for use of all or any part of the Project; (iii) any damage to, or
removal, abandonment, dismantling, requisition, taking, condemnation, loss,
theft or destruction of all or any part of the Project or any interference,
interruption or cessation in the use or possession of the Project by the Lessee
or by any other Person for any reason whatsoever or of whatever duration; (iv)
any restriction, prevention or curtailment of or interference with any use of
all or any part of the Project; (v) to the maximum extent permitted by
Applicable Law, any insolvency, bankruptcy, reorganization or similar proceeding
by or against the Lessee, the Lessor, the Owner Trustees, the Owner Participant,
the Indenture Trustee or any other Person; (vi) the invalidity, illegality or
unenforceability of this Lease, any other Transaction Document or any other
instrument referred to herein or therein or any other infirmity herein or
therein or any lack of right, power or authority of the Lessor, the Owner
Trustees, the Lessee, the Owner Participant, the Indenture Trustee, any
Noteholder or any other Person to enter into this Lease, any other Transaction
Document or to perform the obligations hereunder or thereunder or consummate the
transactions contemplated hereby or thereby or any doctrine of force majeure,
impossibility, frustration or failure of consideration; (vii) the breach or
failure of any warranty or representation made in this Lease or any other
Transaction Document by the Lessee, the Lessor, the Owner Trustees, the Owner
Participant, the Indenture Trustee, any Noteholder or any other Person; or
(viii) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing. The Lessee hereby waives, to the maximum extent permitted
by Applicable Law, any and all rights that it may now have or that at any time
hereafter may be conferred upon it, by statute or otherwise, to modify,
terminate, cancel, quit or surrender this Lease or to effect or claim any
diminution or reduction of Rent payable by the Lessee, except in accordance with
the express terms hereof. Except as provided herein, the Lessee agrees that, if
for any reason whatsoever this Lease shall be terminated in whole or in part by
operation of law or otherwise, then, so long as Lessee is in possession and
quiet enjoyment of the Project, the Lessee shall pay, to the maximum extent
permitted by Applicable Law, to the Owner Trustees on behalf of the Lessor or to
the Indenture Trustee, in either such case as expressly provided herein, or to
such other Person as may be entitled thereto, an amount equal to each
installment of Basic Rent and all Supplemental Rent at the time such payment
would have become due and payable in accordance with the terms hereof had this
Lease not been terminated in whole or in
-8-
<PAGE>
part. Absent manifest error, each payment of Rent made by the Lessee shall be
final and the Lessee shall not seek or have any right to recover all or any part
of such payment from the Lessor or the Indenture Trustee or such other Person
for any reason whatsoever. All covenants, agreements and undertakings of the
Lessee herein shall be performed at its cost, expense and risk unless expressly
stated otherwise. Nothing in this Section 4 or elsewhere shall be construed as a
guaranty by the Lessee of any residual value in the Project or as a guaranty of
the Notes. The Lessee's absolute and irrevocable covenant to pay Rent, as
provided in this Section 4, shall not affect the Lessee's rights, at law or in
equity, otherwise to enforce the Lessor's obligations under this Lease or any
other Transaction Documents. There shall be no merger of the leasehold estate
created by this Lease with the fee estate in the Project or any portion thereof
by reason of the fact that the same Person may acquire or hold or own, directly
or indirectly (a) the leasehold estate created hereby or any part thereof or
interest therein and (b) the fee estate in the Project or any portion thereof or
interest therein, unless and until all Persons having any interest in the
interests described in (a) and (b) above which are sought to be merged shall
join in a written instrument effecting such merger and shall duly record the
same.
SECTION 5. Return. Unless Lessee has theretofore acquired the
Project as provided herein, on the Lease Termination Date the Lessee shall
vacate and surrender possession of the Project to the Lessor or to a Person
specified by the Lessor to the Lessee in writing not less than 30 days prior to
the Lease Termination Date (unless such Lease Termination Date results from a
termination pursuant to Section 16, in which event no prior notice shall be
required) . At the time of such surrender, the Project shall be free and clear
of all Liens (other than Liens described in clauses (a) (excluding the rights
and interests of the Lessee in the Transaction Documents), (b) (but only Persons
whose interest in the Project do not terminate by reason of nondisturbance
rights, if any, granted by the Lessor), (c), (d) (to the extent such Taxes are
not due and payable), (g) (to the extent such Liens are fully bonded and
discharged of record), and (h) of the definition of "Permitted Liens", provided,
however, that in the event of any Permitted Lien under clause (d) (other than
any Lien for Taxes not yet due and payable), (e) or (f) which is being contested
by the Lessee, the Lessee may satisfy its obligations hereunder by causing the
Title Insurer to provide affirmative insurance to the Lessor in form and
substance reasonably acceptable to the Lessor regarding such Permitted Lien),
broom clean in all areas and in the condition and state of repair required by
Section 8(a)(i) . Simultaneously with such surrender, the Lessee shall deliver
to the Lessor (or to such specified Person) the following items:
(i) to the extent in the possession or control of the Lessee or
any Affiliate thereof (or should be in the
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<PAGE>
possession or control of the Lessee or any Affiliate assuming
compliance with the terms hereof, which means that the Lessee
will not transfer any of these materials to a Person outside
of the Lessee's control which would result in a failure of the
Lessee to comply with this Section 5(i)): originals or
complete copies, if the same are required to be left on the
Project, of all transferable operating licenses, other
licenses, certificates of occupancy, other certificates,
permits, authorizations and approvals relating to the use and
occupancy of the Project,
(ii) to the extent in the possession or control of the Lessee or
any Affiliate thereof (or should be in the possession or
control of the Lessee or any such Affiliate assuming
compliance with the terms hereof, which means that the Lessee
will not transfer any of these materials to a Person outside
of the Lessee's control which would result in a failure of the
Lessee to comply with this Section 5(ii)): (x) plans and
specifications for all mechanical, electrical and HVAC Systems
pertaining to the Project, (y) as-built drawings, blueprints,
operating and repair manuals, engineering logs and
preventative maintenance records relating to the Project, and
(z) plans and specifications for any Modifications whether
made by Lessee or made by tenants at the Project and, with
respect to those made by tenants, any consents of the Lessee
related thereto,
(iii) the current rent roll for the Project (listing each tenant
which is not an Affiliate of the Lessee by name, and
specifying with respect to each such tenant, the square
footage of such tenant's space, the rental rate per square
footage, the rental rate per month, any amount owed for
special tenant services, parking charges, prepaid rent, if
any, and security deposit, if any), together with (1) the
amount of any rent paid by any tenant at the Project to the
Lessee or any Affiliate of the Lessee attributable to any
period after the Lease Termination Date and (2) with respect
to security deposits, either (x) all security deposits then
held by the Lessee or any Affiliate of the Lessee with respect
to any such tenants or (y) an assignment of all of Lessee's or
such Affiliate's rights with respect to such security deposits
not theretofore rightfully applied and not so held,
(iv) for all lessees and sublessees which are not Affiliates of the
Lessee, the originals (if available) or complete copies of all
then existing
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leases (other than this Lease) and subleases of the Project
(together with all amendments thereto) to which the Lessee or
any Affiliate of the Lessee is a party or which shall be in
the possession or control of the Lessee or any such Affiliate,
(v) keys to the Buildings and all locks located therein in the
possession or control of the Lessee or any Affiliate of the
Lessee, and
(vi) such other papers and documents which are in the possession or
control of the Lessee or any Affiliate thereof which may be
necessary for the ownership or the proper operation of the
Buildings.
In addition, in connection with such surrender, the Lessee shall also use
commercially reasonable efforts to assign to the Lessor (or such specified
Person) (x) all then existing maintenance and management contracts relating to
the Project with Persons other than Affiliates of the Lessee, (y) all then
existing warranties against dealers, manufacturers, vendors, contractors and
subcontractors relating to the Project or any portion thereof not theretofore
assigned to the Lessor, and (z) all then existing claims against dealers,
manufacturers, vendors, contractors and subcontractors which are not Affiliates
of the Lessee relating to the Project or any portion thereof not theretofore
assigned to the Lessor. The obligations of the Lessee under this Section 5 shall
survive the termination of the Lease.
SECTION 6. Warranty of the Lessor.
(a) Quiet Enjoyment. The Lessor warrants that, unless a Lease Event
of Default shall have occurred and be continuing and (except in the case of a
Lease Event of Default specified in Section 15(e)) this Lease shall have been
declared to be in default pursuant to Section 16(a), the Lessee's peaceful
possession, use and enjoyment of the Project in accordance with this Lease shall
not be interrupted or disturbed by the Lessor or any other Person claiming by,
through or under the Lessor except for those Persons claiming by, through or
under Permitted Liens (except of the type described in clause (c) thereof);
provided that the Lessee waives, to the maximum extent permitted by Applicable
Law, any claim for damages, except for willful misconduct, arising in connection
with any alleged breach by the Owner Trustees, the Lessor or the Indenture
Trustee of such warranty after the occurrence and during the continuation of a
Lease Event of Default. The right of quiet enjoyment under this Lease described
above is independent of, and shall not affect, the Lessor's rights otherwise to
initiate legal actions seeking to enforce the obligations of the Lessee under
this Lease or the Lessor's rights under Section 20. If the Lessor interrupts or
disturbs the Lessee's right of quiet enjoyment under this Lease, or if the
Lessor is otherwise in default under this
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Lease, then the Lessee may bring an action against the Lessor to recover from
the Lessor all damages suffered, incurred or sustained by the Lessee (including,
without limitation, court costs and reasonable attorneys' fees actually
incurred) as a result of, by reason of or in connection with such interruption,
disturbance or other default, and/or to obtain specific performance of the
Lessor's obligations under this Lease, but in no event shall the Lessee have the
right to set off against or make a deduction from Basic Rent, Supplemental Rent
or other amounts due under this Lease, nor shall the Lessee have the right to
terminate this Lease pursuant to a claim of constructive eviction or otherwise.
(b) Disclaimer of Other Warranties.
(i) THE WARRANTY SET FORTH IN SECTION 6(a) IS IN LIEU OF ALL
OTHER WARRANTIES OF THE LESSOR, WHETHER WRITTEN, ORAL OR IMPLIED,
WITH RESPECT TO THIS LEASE OR THE PROJECT. As among the Owner
Trustees, the Owner Participant, the Indenture Trustee, the Lessor
and the Lessee, execution by the Lessee of this Lease shall be
conclusive proof of Lessee's acceptance of the Project as complying
with all requirements of this Lease.
(ii) The Project is leased in its present condition without
representation or warranty by the Lessor and subject to the rights
of the parties in possession, to the existing state of title, to all
Applicable Laws now or hereafter in effect and, without limiting the
generality of the foregoing, to all present and future Liens
(exclusive, however, of Lessor's Liens and Owner Participant's
Liens). The Lessee has examined the Project and title thereto and
has found all of the same satisfactory for all purposes. THE LESSOR
HAS NOT MADE AN INSPECTION OF THE PROJECT OR OF ANY FIXTURE OR OTHER
ITEM CONSTITUTING A PORTION THEREOF, AND, EXCEPT AS PROVIDED IN
SECTION 6(a), THE LESSOR MAKES NO WARRANTY OR REPRESENTATION,
EXPRESS OR IMPLIED OR OTHERWISE, WITH RESPECT TO THE SAME OR THE
LOCATION, USE, DESCRIPTION, DESIGN, MERCHANTABILITY, FITNESS FOR USE
FOR ANY PARTICULAR PURPOSE, CONDITION, OR DURABILITY THEREOF, OR AS
TO THE TITLE THERETO OR OWNERSHIP THEREOF OR OTHERWISE, IT BEING
AGREED THAT ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY THE
LESSEE. IN THE EVENT OF ANY DEFECT OR DEFICIENCY OF ANY NATURE IN
THE PROJECT OR ANY FIXTURE OR OTHER ITEM CONSTITUTING A PORTION
THEREOF, WHETHER PATENT OR LATENT, THE LESSOR SHALL HAVE NO
RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO. THE PROVISIONS OF
THIS SECTION 6(b) HAVE BEEN NEGOTIATED AND ARE INTENDED TO BE A
COMPLETE EXCLUSION AND NEGATION BY THE LESSOR OF, AND THE LESSOR
DOES HEREBY DISCLAIM, ANY AND ALL WARRANTIES BY THE LESSOR, EXPRESS
OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE OR OF HABITABILITY WITH RESPECT TO THE PROJECT
OR ANY FIXTURE OR OTHER ITEM CONSTITUTING A PORTION THEREOF, WHETHER
ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANOTHER LAW
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Sale for a breach of any warranty of title made by the Lessee or
Alphafax), such total failure of title shall be treated as a
Requisition of Title with respect to which the Lessor shall have
accepted the Lessee's Rejectable Offer under Sections 9(c) and 21
hereof, and the Lessee shall purchase the Project on the first Loss
Determination Date occurring at least forty-five (45) days after the
date the Title Insurer confirms in writing the total failure of
title. In such event, upon (A) payment of all amounts due under and
compliance with all of the provisions of Sections 9(c) and 21, and
(B) receipt by the Lessor, the Corporate Owner Trustee and the
Indenture Trustee of a release, in form and substance satisfactory
to each of them, from the Title Insurer against any claims to the
funds paid by the Lessee pursuant to clause (A) above, the rights to
all such title insurance proceeds shall vest in the Lessee.
(ii) If the proceeds relate to title defects, events or
circumstances which constitute less than a total failure of title,
(A) said proceeds shall be used to cure such title defects, events
or circumstances (or to reimburse any Person who has effected, in
whole or in part, such cure), and shall be held, pending such use,
in accordance with the provisions of Section 9(g)(ii) or 9(h), as
applicable, and (B) the balance, if any, shall be distributed in
accordance with Section 9(g)(iv) or 9(h), as applicable.
SECTION 7. Liens. The Lessee shall not directly or indirectly
create, incur or suffer to exist any Lien on or with respect to the Project, the
Lessor's title thereto or interest therein, as the case may be, except Permitted
Liens. The Lessee, at its own expense and promptly (and in any event within 30
days) after a Responsible Officer of the Lessee has actual knowledge of the
filing thereof (or the existence thereof if filing is not required to give
effect to such Lien), shall take such action as may be necessary to discharge
any such Lien that may arise. WITHOUT LIMITING THE OBLIGATIONS OF THE TRUST
COMPANY, THE OWNER TRUSTEES, THE TRUST, THE LESSOR, THE INDENTURE TRUSTEE AND
THE OWNER PARTICIPANT TO DISCHARGE LESSOR'S LIENS, INDENTURE TRUSTEE'S LIENS AND
OWNER PARTICIPANT'S LIENS, RESPECTIVELY (PROVISION FOR WHICH IS CONTAINED IN AND
GOVERNED BY THE PARTICIPATION AGREEMENT), NOTICE IS HEREBY GIVEN THAT THE LESSOR
IS NOT AND SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR
TO BE FURNISHED TO LESSEE, OR TO ANYONE HOLDING THE PROJECT OR ANY PART THEREOF
THROUGH OR UNDER THE LESSEE, AND THAT NO MECHANICS' OR OTHER LIENS FOR ANY SUCH
LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF THE
LESSOR IN AND TO THE PROJECT OR ANY PART THEREOF.
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SECTION 8. Operation and Maintenance; Modifications.
(a) Operation and Maintenance.
(i) Standard. The Lessee may use the Project solely as an
office building and technology center complex in accordance with
Applicable Law and, in connection therewith, for such other and
additional lawful ancillary purposes as are consistent therewith,
including, but not limited to, executive, administrative, clerical,
drafting, printing, data processing, billing, employment, legal,
accounting, purchasing and sales purposes, and for all activities
normally incidental thereto or related to the conduct of the
Lessee's business, including, but not limited to, vending machines,
food service for employees and incidental retail, commercial,
banking and other service operations. The Lessee shall maintain all
parts of the Project in the same order, condition and repair as of
the Closing Date, ordinary wear and tear excepted, and shall take
all actions and make all Modifications (if any) to the Project as
may be required by Applicable Laws and Insurance Requirements for
the Project and for other similar real estate projects in the
metropolitan Atlanta, Georgia area. The Lessee may install a sign on
the Site or on the exteriors of the Improvements, and from time to
time may change the signs, without the Lessor's approval. The Lessee
shall have the sole right to name the Project prior to the Lease
Termination Date. At the Lessor's request, the Lessee shall remove
any such signs, at the Lessee's sole cost and expense, on or prior
to the Lease Termination Date and shall repair any damage caused
thereby. In addition, the Lessee may install and, once installed,
modify a television, microwave, satellite or other antenna
communications system (individually and collectively called the
"Antennae") on the roofs of the Improvements for use in connection
with the Lessee's and its subtenant's businesses. The Antennae shall
be installed at the Lessee's expense in a good and workmanlike
manner. The Lessee shall be responsible for procuring whatever
licenses or permits may be required from third Persons for the use
or operations of the Antennae. At the Lessor's request, the Lessee
shall remove all Antennae, at the Lessee's sole cost and expense, on
or prior to the Lease Termination Date and shall repair any damage
caused thereby. The Lessor shall have no obligation to operate,
service, maintain, alter, repair, rebuild or replace the Project or
any part thereof, and the Lessee expressly waives (to the maximum
extent permitted by Applicable Law) the right to perform any such
action at the expense of the Lessor pursuant to any Applicable Law.
(ii) Payment of Taxes and Other Impositions. Upon the written
request by the Lessor and the Indenture Trustee, except as otherwise
provided in Section 7.04 of the Participation Agreement, the Lessee
shall, unless it is
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otherwise contesting such matters in compliance with Section 8(g),
provide the Lessor and the Indenture Trustee with evidence of the
payment of any Taxes, utility charges or other impositions, the
failure of which to be paid would cause the imposition of a Lien
(other than a Permitted Lien) upon the Project.
(iii) Encroachments. The Lessee shall undertake no addition to
or improvement of the Project which encroaches onto property not a
part of the Site unless it shall have obtained a license, easement,
encroachment or other agreement in form and substance reasonably
satisfactory to the Owner Participant and the Indenture Trustee from
the Person owning the property onto which the addition or
improvement encroaches.
(b) Inspection. Upon not less than 10 Business Days' notice to the
Lessee (unless a Material Lease Default or Lease Event of Default shall have
occurred and be continuing or an emergency exists with respect to the Project,
and then upon such notice as may be reasonable under the circumstances), any of
the Corporate Owner Trustee, the Lessor, the Owner Participant, the Indenture
Trustee and the Noteholders, accompanied by an individual designated by the
Lessee (if the Lessee so elects, provided that the Lessee's failure to designate
such an individual shall not constitute the basis for prohibiting any such
inspection), shall have the right to inspect the Project, including any
financial and accounting records and contracts, other than Restricted
Information, relating solely to the use, operation and maintenance of the
Project or as is otherwise necessary to determine whether the covenants, terms
and provisions of the Transaction Documents have been complied with by the
Lessee and to make copies and extracts therefrom, and to discuss the affairs,
finances and accounts of the Lessee specifically as the same relate to the
Project or the Lessee's compliance with the provisions of the Transaction
Documents with its officers (subject, in each case, to Applicable Law, the
provisions of Section 12.09 of the Participation Agreement regarding
confidentiality, and any then-existing security protocols or other standard
policies or procedures established by the Lessee with respect to the Project
from time to time) at their sole expense (unless a Material Lease Default or
Lease Event of Default shall have occurred and be continuing, in which case the
reasonable expense of such inspection shall be the Lessee's responsibility) and
risk (unless a Material Lease Default or Lease Event of Default shall have
occurred and be continuing, in which case such risk shall be borne by the
Lessee) and, in any event, any such inspection shall be conducted during normal
business hours and so as not to interfere unreasonably with the Lessee's or any
permitted sublessee's business or the operation and maintenance of the
Improvements; provided, however, that unless such a Material Lease Default or
Lease Event of Default or such an emergency has occurred and is continuing, (i)
the Corporate Owner
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<PAGE>
Trustee, the Lessor and the Owner Participant together shall act through no more
than two representatives, (ii) the Indenture Trustee and the Noteholders
together shall act through no more than two representatives, and (iii) the
frequency of inspections made pursuant to this Section 8(b) (which need not be
made concurrently) shall be limited to no more than once in any twelve month
period for (y) the Corporate Owner Trustee, the Lessor and the Owner Participant
representatives, and (z) the Indenture Trustee and the Noteholder
representatives, respectively; provided further, however, however, that such
inspections may be made more frequently than once in any twelve month period, as
necessary, if the Corporate Owner Trustee, the Lessor, the Owner Participant,
the Indenture Trustee or the Noteholders, or any one of them, has reason to
believe that the Project is not being properly used, operated, maintained or
repaired in accordance with the terms and provisions of this Lease. None of the
Corporate Owner Trustee, the Lessor, the Owner Participant, the Indenture
Trustee or the Noteholders shall have any duty whatsoever to make any inspection
referred to in this Section 8(b) or shall incur any liability or obligation by
reason of not making any such inspection.
(c) Modifications.
(i) Subject to Sections 8(g) and 13, the Lessee, at its
expense (except as provided in Section 9.01(b) of the Participation
Agreement), shall make all Modifications required by any Applicable
Law, Governmental Action and Insurance Requirements.
(ii) In addition, the Lessee may, at its expense (except as
provided in Section 9.01(b) of the Participation Agreement) and from
time to time, make any Modification that the Lessee may deem
desirable in the conduct of its business so long as the Project
continues to be used for the permitted purposes set forth in Section
8(a)(i) hereof; provided, however, that such Modifications shall be
completed in a good and workmanlike manner, in compliance with
Applicable Law and Insurance Requirements and in a manner that
maintains or improves the value, character, quality, utility and
remaining useful life of the Improvements and does not cause the
Project to be "limited use" property within the meaning of Rev.
Proc. 76-30, 1976-2, C.B. 647; provided, further, that in the event
any Nonseverable Modification or any related series of Nonseverable
Modifications is reasonably expected to have a cost exceeding
$2,000,000, Indexed, the Lessee shall first obtain the prior written
consent of the Owner Participant and the Required Lenders (which
consent shall not be unreasonably withheld or delayed) to such
Nonseverable Modification or series of Nonseverable Modifications;
and provided, finally, that no such Modification shall be made
without the prior written consent of the Owner Participant and the
Indenture
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Trustee if a Material Default or Lease Event of Default shall have
occurred and be continuing.
(d) Title to Modifications. Title to each Modification shall vest
as follows:
(i) in the case of each Nonseverable Modification whether or
not the Corporate Owner Trustee or the Lessor shall have provided or
arranged financing (in whole or in part) of the cost of such
Modification by a Supplemental Financing, the Lessor (acting through
the Individual Owner Trustee) shall, without further act, effective
on the date such Modification shall have been incorporated into the
Project, acquire title to such Modification and such title shall be
subject to the Lien of the Security Documents at no expense to the
Corporate Owner Trustee, the Lessor or the Indenture Trustee
(without further action by the Lessee);
(ii) in the case of each Severable Modification that is not
required by any Applicable Law, Governmental Action or Insurance
Requirements, the Lessee shall retain title to such Modification and
such title shall not be subject to the Lien of the Security
Documents;
(iii) in the case of each Severable Modification required by
Applicable Law, Governmental Action or Insurance Requirements, title
to such Modification shall immediately vest in the Lessor (acting
through the Individual Owner Trustee) and such title shall be
subject to the Lien of the Security Documents at no cost to the
Corporate Owner Trustee, the Lessor or the Indenture Trustee
(without further action by the Lessee); provided, however, that the
Lessee shall take such actions as may be reasonably required by the
Corporate Owner Trustee, the Lessor or the Indenture Trustee to
evidence the transfer of title and the perfection of such Lien; and
(iv) unless the Lessee has then purchased the Project, title
to (A) all Severable Modifications title to which Modifications were
vested in the Lessee pursuant to this Section 8(d), and (B) trade
fixtures and the like pursuant to Section 8(f) in either case which
remain at the Project on the Lease Termination Date (or, in the
event the Lease is terminated pursuant to Section 16(a), on the 45th
day following the Lease Termination Date) shall vest automatically
in the Lessor (acting through the Individual Owner Trustee) as of
such date without the payment of any sum not otherwise required
under this Section 8(d); provided, however, that the Lessee shall
pay, or reimburse the Corporate Owner Trustee, the Lessor and the
Indenture Trustee for, any reasonable costs incurred in connection
with the removal or disposal of such Severable Modifications or
trade fixtures.
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Immediately upon title to a Modification vesting in the Lessor pursuant to
subparagraphs (i) or (iii) of this Section 8(d), such Modification shall,
without further act, become subject to this Lease and be deemed part of the
Improvements for all purposes hereof. Modifications as to which title remains in
the Lessee pursuant to subparagraph (ii) of this Section 8(d) shall not be
deemed a part of the Project.
On the Lease Termination Date, the Lessor will have the option to
purchase any Severable Modification to which the Lessee has retained title under
Section 8(d)(ii) at the then Fair Market Sales Value for such Severable
Modification (determined by the Appraisal Procedure in the absence of agreement
of the parties), and upon payment by the Lessor to the Lessee of such Fair
Market Sales Value by wire transfer of immediately available funds, the Lessee
shall execute and deliver to the Lessor a bill of sale for the Lessee's interest
in such Severable Modification, free of, and with a warranty by the Lessee
against, any Liens arising by, through or under the Lessee. In such case, all
reasonable charges incident to such transfer, including, without limitation, the
Lessee's, the Corporate Owner Trustee's, the Lessor's and the Owner
Participant's reasonable attorneys' fees and (except to the extent required
otherwise by Applicable Law) all applicable sales, use, value-added, transfer,
transaction, and similar taxes required to be paid in connection with such
transfer (but not any taxes imposed on, based on or measured by gross, adjusted
gross or net income, capital gains taxes or any minimum tax or alternative
minimum tax, gross receipts, capital or net worth, franchise, excess profits or
conduct of business (other than Taxes which are, or are in the nature of, sales,
use, transfer, transaction, rental, value added, ad valorem or property Taxes),
payable by the Lessee upon or with respect to the sale or disposition by it of
such Severable Modification) that may be imposed by reason of such transfer and
the delivery of such bill of sale shall be apportioned between the Lessor and
the Lessee in accordance with the then-custom in Alpharetta, Georgia. At least
180 days prior to the expiration of the Lease Term (or promptly after a
termination under Section 16), but not before 36 months prior to the Lease
Termination Date, the Lessee shall provide the Lessor and the Indenture Trustee
(so long as the Lien of the Security Documents has not been discharged in
accordance with Section 10.1 of the Indenture) in writing with a list of each
Severable Modification to which the Lessee has retained title and which the
Lessee intends to remove from the Project. The Lessor must give Lessee notice of
its election to exercise its option, if at all, by written notice to the Lessee
within 120 days after receipt of the Lessee's notice specifying such Severable
Modifications (or within thirty (30) days after receipt of such list in
connection with a termination under Section 16).
(e) Removal or Replacement of Property. Subject to compliance with
Applicable Law and Insurance Requirements, and so
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long as no Material Lease Default or Lease Event of Default shall have occurred
and be continuing, the Lessee may remove or replace any Severable Modification,
and any other property to which the Lessee shall have title as provided in
Section 8(d), Section 8(f) or otherwise; provided, that the Lessee, at its
expense and prior to the Lease Termination Date, shall repair any damage to the
Project (or any part thereof) caused by such removal and shall restore any
diminishment in the value, utility or remaining useful life of the Project
caused by such removal. If any Part is removed from the Project (or any part
thereof) for the purpose of replacement thereof with another Part, title to such
removed Part shall remain the property of the Lessor (acting through the
Individual Owner Trustee), no matter where such removed Part is located, until
such time as the Part constituting a replacement thereof (a "Replacement Part")
shall have been incorporated into the Improvements, at which time title to such
Replacement Part shall then and thereupon vest in the Lessor (acting through the
Individual Owner Trustee) and shall be subject to the Lien of the Security
Documents, and at which time, without further act, title to such removed Part
shall vest in the Lessee or in such Person as shall be designated by the Lessee,
free of the Lien of the Security Documents, and such property shall not
thereafter be part of the Project. Each such Replacement Part shall be free and
clear of all Liens (except Permitted Liens), shall upon installation become a
part of the Project (with title thereto vesting in the Lessor (acting through
the Individual Owner Trustee)), and shall be in as good operating condition as,
and shall have a value, utility and remaining useful life at least equal to,
that of the Part removed, it being assumed for purposes of this sentence that
such removed Part was in the condition and state of repair required by Section 8
(a).
(f) Trade and Other Fixtures. All trade and other fixtures, personal
property, machinery, equipment and the like from time to time located at or used
in connection with the Project, including, without limitation, the trade
fixtures and other property described on Schedule 4 to this Lease, but excluding
always all items of Equipment and all fixtures comprising part of the
Improvements, are acknowledged by the Lessor and the Indenture Trustee to be the
Lessee's or another Person's property and do not constitute part of the Project
(or any part thereof) and, without the Lessor's or the Indenture Trustee's prior
written approval, the Lessee or such Person may make such improvements and
alterations thereto as it may desire, at its own expense. Any such trade or
other fixtures (similar to those listed on Schedule 4 to this Lease) hereafter
made or installed by or for the Lessee or any Person subleasing space from the
Lessee (and not financed by the Lessor pursuant to Section 9.01(b) of the
Participation Agreement) shall remain the property of the Lessee or such Person,
as applicable and in case of damage or destruction thereto by fire or other
causes, the Lessee and such Person shall have the right to recover the value
thereof as its own loss from any insurance
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company with which it has insured the same, or to claim an award in the event of
condemnation, notwithstanding that any of such things might be considered a part
of the Project (or any part thereof). The Lessee or any Person subleasing space
from the Lessee may remove all or any of such things, at any time during the
Lease Term or, at their option, the Lessee or such Person may abandon the same,
in whole or in part, to the Lessor at the expiration or earlier termination of
the Lease Term by vacating such property without removing the same, in which
case, title to such property shall vest in the Lessor; provided that in the case
of any such removal by the Lessee or by any Person subleasing space from the
Lessee, the Lessee shall repair any damage to the Project caused by such
removal; and provided, further, that the Lessee shall pay, or reimburse the
Corporate Owner Trustee, the Lessor and the Indenture Trustee for, any
reasonable costs incurred by the Corporate Owner Trustee, the Lessor or the
Indenture Trustee in connection with the removal or disposal by it of the
abandoned property. If an Event of Loss occurs, the Lessee or any Person
subleasing space from the Lessee shall be solely entitled to any condemnation
award or insurance proceeds attributable to its trade or other fixtures as to
which it retains title pursuant to Section 8(d). Notwithstanding the foregoing,
if the insurance policy covering any item subject to this Section 8(f) also
covers the Project or any portion thereof, such insurance shall be obtained so
as not to conflict with or limit the insurance required to be maintained under
Section 10(a) and neither the Lessee nor any other Person shall take any action,
or omit to take any action, so as to impair any recovery in favor of the Lessee
or any Loss Payee or any Additional Insured of any insurance proceeds under
policies required to maintained under Section 10(a).
(g) Contest of Taxes or Requirements of Law. If, with respect to any
Taxes or any requirement of Applicable Law or any Governmental Action (i) the
Lessee is contesting diligently and in good faith by appropriate proceedings (in
accordance with Section 7.04 of the Participation Agreement with respect to
Taxes) such Taxes or requirement of Applicable Law or Governmental Action, or
(ii) compliance with such requirement or Governmental Action shall have been
excused or exempted by a valid nonconforming use permit, waiver, extension or
forbearance exempting the Lessee from such requirement or Governmental Action or
(iii) the Lessee shall be making a good faith effort and shall be diligently
taking appropriate steps to comply with such requirement or Governmental Action,
then the failure by the Lessee to comply with such requirement or Governmental
Action shall not constitute a Lease Default or Lease Event of Default hereunder;
provided that such contest or noncompliance does not involve (A) any danger of
criminal liability being imposed on the Lessor, the Trust, the Corporate Owner
Trustee, the Owner Participant, the Indenture Trustee or any Noteholder or (B)
any risk of (1) the loss or sale of, or the creation of any Lien (other than a
Permitted Lien) on, the Project, or (2) material civil liability being imposed
on the
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Lessor, the Trust, the Corporate Owner Trustee, the Owner Participant, the
Indenture Trustee or any Noteholder. The Lessee shall provide the Corporate
Owner Trustee, the Lessor and the Indenture Trustee with notice of any contest
of the type described in clause (i) above in detail sufficient to enable the
Lessor and the Indenture Trustee to ascertain whether such contest may have any
material adverse effect of the type described in the above proviso.
(h) Reports. To the extent permissible under Applicable Law, the
Lessee shall, at the Lessee's cost and expense, prepare (or cause to be
prepared) and file in a timely fashion, or, if the Lessor shall be required to
file, the Lessee, at the Lessee's cost and expense, shall prepare or cause to be
prepared and delivered to the Lessor within a reasonable time prior to the date
for filing, and the Lessor (or the Corporate Owner Trustee on behalf of the
Lessor) shall file, all reports, applications, permits, requests or other
filings with respect to the Project or the condition or operation thereof that
shall be required by Applicable Law to be filed with any Governmental Authority
and if, in the Lessee's judgment, it is necessary or appropriate for the Lessor
(or the Corporate Owner Trustee on behalf of the Lessor) to sign, approve or
join in any such report, application, permit, request or other filing, neither
the Lessor nor the Corporate Owner Trustee acting on behalf of the Lessor shall
unreasonably refuse to sign, approve or join therein promptly after the receipt
of the Lessee's written request therefor and reasonable opportunity to review
same (with appropriate consultants reasonably acceptable to the Lessee, if
reasonable in the circumstances), and any reasonable out-of-pocket expenses
incurred by the Corporate Owner Trustee, the Lessor or the Owner Participant in
connection therewith shall be promptly paid on an After-Tax Basis by the Lessee
upon receipt of bills therefor.
(i) Environmental Compliance.
(A) The Lessee shall promptly notify the Lessor, the Corporate
Owner Trustee, the Owner Participant and (unless the Lien of the
Security Documents shall have been discharged in accordance with
Section 10.1 of the Indenture) the Indenture Trustee of (i) any
occurrence or release at, on, under or from the Project, or beyond
the Project which affects the Project, that has resulted in or is
substantially likely to result in any material expense relating to
or material noncompliance with any applicable Environmental Law or
that has resulted in or is substantially likely to result in a
material Environmental Claim, such notice to be given no later than
fourteen (14) Business Days after a Responsible Officer of the
Lessee obtains actual knowledge of the occurrence or release and
(ii) any pending or written threatened material Environmental Claim
against the Lessee and related to or affecting the Project, such
notice to be given no later
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than fourteen (14) Business Days after a Responsible Officer of the
Lessee has actual knowledge that such Environmental Claim has been
commenced or threatened in writing. To the extent possible, all such
notices shall describe in reasonable detail the nature of such
Environmental Claim, occurrence or release and the Lessee's response
thereto.
(B) Upon reasonable written request, the Lessee shall promptly
provide the Lessor and (unless the Lien of the Security Documents
shall have been discharged in accordance with Section 10.1 of the
Indenture) the Indenture Trustee with copies of material,
non-privileged written communications and other material,
non-privileged documents relating to the subject of any notice
required under Section 8(i)(A).
(C) If any release or occurrence happens at the Project that
results or is substantially likely to result in material expense
relating to or material noncompliance with any applicable
Environmental Law or a material Environmental Claim related to or
affecting the Project, the Owner Participant, the Lessor, the
Corporate Owner Trustee or (unless the Lien of the Security
Documents shall have been discharged in accordance with Section 10.1
of the Indenture) the Indenture Trustee may require the Lessee to
perform diligently, at the Lessee's sole cost and expense, an
environmental assessment of appropriate scope under the
circumstances, prepared by an environmental consultant selected by
the Lessee and reasonably acceptable to the requesting Person.
Unless otherwise agreed to by the requesting Person, the report
regarding such assessment shall be addressed to and may be relied
upon by the Lessee, the requesting Person, the Participants, the
Lessor, the Owner Trustees and the Indenture Trustee.
(D) The Lessee will not cause or permit the use, release,
generation, treatment, storage, recycling or disposal of any
Hazardous Substances on the Project or the transportation of
Hazardous Substances to or from the Project by the Lessee, its
sublessees and/or its or their respective agents, employees,
contractors or invitees other than in material compliance with all
applicable Environmental Laws. The Lessee shall not operate a
hazardous waste management facility at the Project.
(E) The Lessee shall comply in all material respects with all
applicable Environmental Laws now or thereafter applicable to the
use, modification, operation, construction or maintenance of the
Project and the Lessee shall have sole responsibility for all
expenses (including
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legal and other professional fees and expenses and costs of
investigation) incurred by any Participant, the Lessor, the Owner
Trustees or the Indenture Trustee associated with such compliance,
including compliance with any applicable Environmental Law or
Governmental Action directed to any Participant, the Lessor, any
Owner Trustee or the Indenture Trustee (prior to the time the Lien
of the Security Documents shall have been discharged in accordance
with Section 10.1 of the Indenture) or to which any Participant, the
Lessor, the Owner Trustees or the Indenture Trustee may become
subject, in connection with the Project, unless, as to any such
Person, such expenses are incurred as a result of the actions of
such Person. The Lessee shall not install, and shall not permit the
installation by its sublessees and/or its and their respective
agents, employees, contractors and invitees of, any underground
storage tanks, surface impoundments or asbestos-containing materials
on the Project other than in compliance in all material respects
with applicable Environmental Law and Governmental Action and the
Lessee shall cause any alterations of the Project undertaken by,
through or under the Lessee to be completed in a way so as to
minimize the possibility of exposure of persons working on or
visiting the Project to Hazardous Substances in excess of safety
levels established by any applicable Environmental Law and so as not
to violate in any material respect any applicable Environmental Law.
SECTION 9. Event of Loss.
(a) Events of Loss; Notice.
(i) If an Event of Loss shall occur or if any substantial or
significant part of the Project shall suffer or be subject to
material damage, loss, condemnation, theft or seizure that does not
constitute an Event of Loss, the Lessee shall promptly, and in any
case within 10 days after a Responsible Officer of the Lessee shall
have actual knowledge of such event, so notify the Lessor and
(unless the Lien of the Security Documents has been discharged
pursuant to Section 10.1 of the Indenture) the Indenture Trustee
and, at the Lessee's sole cost and expense, shall diligently pursue
collection of insurance or condemnation proceeds in a manner
reasonably acceptable to the Lessor and (unless the Lien of the
Security Documents shall have been discharged in accordance with
Section 10.1 of the Indenture) the Indenture Trustee.
(ii) If an Event of Loss (other than an Event of Loss due to
Condemnation) occurs during the Interim Term, Basic Term or any
Renewal Term, the Lessee shall, within 180 days of the occurrence of
such Event of Loss, notify the Lessor and
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(unless the Lien of the Security Documents shall have been
discharged in accordance with Section 10.1 of the Indenture) the
Indenture Trustee in writing (the "Event of Loss Notice") of its
election to either (A) reconstruct the Project so as to meet the
standards of Section 9(b) (but only if, in the reasonable opinion of
the Lessee (as evidenced by an Officer's Certificate), it is
reasonably certain that the Project may be reconstructed in a manner
consistent with Section 9(b) prior to the end of the then-current
Lease Term (including any Renewal Term as to which the Lessee has
given notice in accordance with Section 12)) or (B) terminate the
Lease in accordance with Section 9(c) or 9(e), as applicable. If the
Lessee has given notice pursuant to clause (A) of this Section
9(a)(ii) that it has elected to reconstruct the Project, then the
Lessee shall diligently pursue the commencement of construction and,
within 18 months of the occurrence of such Event of Loss (and in no
event later than a date which should reasonably permit completion of
reconstruction of the Project prior to the expiration of the then
current Lease Term (including any Renewal Term as to which the
Lessee has given notice in accordance with Section 12) shall
commence physical reconstruction (meaning physical work on the Site
or the erection or installation of Improvements) of the Project and
shall thereafter diligently pursue the completion of the
reconstruction. If the Lessee has given notice pursuant to clause
(B) of this Section 9(a)(ii) that it has elected to terminate this
Lease (or, if the Lessee fails to give any notice pursuant to clause
(A) or (B) of this Section 9(a)(ii), it shall be deemed to have
given such clause (B) notice as of the 180th day following such
Event of Loss), then the provisions of Section 9(c) or 9(e), as
appropriate, shall apply. Notwithstanding the foregoing, the Lessee
may not, without the Owner Participant's, the Lessor's and the
Indenture Trustee's prior written consent, elect to reconstruct the
Project if such Event of Loss occurs within 2 years of the
then-scheduled Lease Termination Date (taking into account any
Renewal Term referred to in Section 12(h)) and if for any reason
whatsoever such consent is not given, this Lease shall terminate as
of the one hundred eightieth day following such Event of Loss in
accordance with Section 9(c) or 9(e), as applicable. If an Event of
Loss due to Condemnation occurs during the Interim Term, Basic Term
or any Renewal Term, the Lessee shall give the Lessor and the
Indenture Trustee an Event of Loss Notice (or, if the Lessee fails
to give such notice, the Lessee shall be deemed to have given such
Event of Loss Notice as of the 30th day following such Event of
Loss) electing to terminate this Lease in accordance with Section
9(c) or 9(e), as applicable.
(b) Repair. Should damage, loss, condemnation, confiscation or
seizure occur that does not constitute an Event of Loss, (i) the Lessee shall
make or cause to be made such repairs as
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are necessary to ensure that the Project is repaired and restored to the
quality, value, utility and useful life prior to such occurrence (assuming the
Project was in the condition required hereunder), in compliance with Section
8(a); provided, however, that in no event shall the contemplated completion date
for such reconstruction extend past the then-current Lease Termination Date; and
(ii) this Lease shall continue, and each and every obligation of the Lessee
hereunder, including, without limitation, the obligation to pay Rent, and under
each Transaction Document shall remain in full force and effect until completion
of repair of the Project.
(c) Event of Loss During the Interim Term and Basic Term. If an
Event of Loss occurs during the Interim Term or the Basic Term and the Lessee
shall have delivered (or shall be deemed to have delivered) an Event of Loss
Notice electing to terminate this Lease, it shall make (or shall be deemed to
have made), by written notice to the Lessor and the Indenture Trustee
contemporaneously with such Event of Loss Notice, a Rejectable Offer pursuant to
Section 21 hereof to purchase the Project from the Lessor for a cash purchase
price (the "Event of Loss Purchase Price") equal to the sum of the Stipulated
Loss Value (determined as of the Loss Determination Date), plus Basic Rent due
and owing on or prior to such Loss Determination Date (other than Basic Rent
payable in advance on such Loss Determination Date), plus the Make Whole Amount
and all other amounts then due and owing under the Transaction Documents.
(d) Termination of Lease Term. Upon (i) in the event any Rejectable
Offer relating to an Event of Loss is accepted, a Transfer by the Lessor to the
Lessee pursuant to Section 21(d)(i) and the payment on or prior to the date of
such Transfer of the Event of Loss Purchase Price to the Indenture Trustee for
the account of the Lessor for application in accordance with the Indenture
(unless the Lien of the Security Documents shall have been discharged pursuant
to Section 10.1 of the Indenture, in which case such payment shall be paid to
and applied by the Corporate Owner Trustee on behalf of the Lessor), or (ii) in
the event any such Rejectable Offer is rejected, the payment on or prior to the
date on which this Lease is to terminate as herein provided by the Lessor and
the Lessee (for the Lessor's account) of the amounts described in Sections
21(c)(i) and 21(c)(ii), respectively, to the Indenture Trustee for application
in accordance with the Indenture (unless the Lien of the Security Documents
shall have been discharged pursuant to Section 10.1 of the Indenture, in which
case such payment shall be paid to and applied by the Corporate Owner Trustee on
behalf of the Lessor), the Lease Term shall end without further act on the part
of the Lessor or the Lessee and all of the Lessee's obligations hereunder (other
than any obligation expressed herein or in any other Transaction Document as
surviving termination of this Lease) shall cease.
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(e) Event of Loss During any Renewal Term. Subject to the right of
the Lessee to elect to reconstruct the Project as provided in Section
9(a)(ii)(A), if an Event of Loss occurs during any Renewal Term, the Lessee
shall have the option to terminate this Lease on any Basic Rent Payment Date
that is specified by the Lessee (a "Renewal Termination Date") in any Event of
Loss Notice given pursuant to Section 9(a), which proposed Renewal Termination
Date shall not be earlier than 90 days following such notice or later than the
second Basic Rent Payment Date following such notice. On the Renewal Termination
Date, the Lessee shall pay to the Corporate Owner Trustee on behalf of the
Lessor (or, in the case of Supplemental Rent, to the Person or Persons entitled
thereto) the sum of (i) any Basic Rent due on such Renewal Termination Date
(other than Basic Rent, if any, payable in advance on such Renewal Termination
Date), (ii) all Supplemental Rent (provided, however, that it is understood and
agreed that Stipulated Loss Value shall not be due or payable as a result of the
occurrence of an Event of Loss during any Renewal Term) due on such Renewal
Termination Date, (iii) any insurance or condemnation proceeds received by the
Lessee with respect to the Event of Loss (and to the extent the Lessee may be
entitled to such insurance or condemnation proceeds in the future, it shall
assign the rights to such proceeds to the Lessor) and the amount of any payments
which would have been due from any insurer but for the Lessee's self-insurance
and policy deductibles, and (iv) all other amounts then due under the
Transaction Documents, and upon such payment and upon compliance with Section 5,
the Lease Term shall end and all of the Lessee's obligations hereunder (other
than any obligation expressed herein or in any other Transaction Document as
surviving termination of this Lease) shall thereupon cease.
(f) Application of Payments on an Event of Loss. Payments received
by the Owner Trustees or the Lessor (other than proceeds of insurance carried by
the Owner Trustees, the Lessor or the Owner Participant pursuant to Section
10(b)), the Lessee (other than proceeds of insurance carried by or on behalf of
the Lessee pursuant to and within the limitations of Section 8(f) or Section
10(b), as the case may be) or the Indenture Trustee from any Governmental
Authority, insurer or other Person (plus the amount of any payments which would
have been due from an insurer but for the Lessee's self-insurance or policy
deductibles) as a result of an Event of Loss shall be applied (with any proceeds
received prior to the acceptance or rejection of any Rejectable Offer being held
by the Indenture Trustee (or after release of the Lien of the Security Documents
on the Indenture Estate in accordance with Section 10.1 of the Indenture, by the
Lessor), and invested in Permitted Investments at the direction of the Lessee,
until such Rejectable Offer is accepted (or deemed accepted) or rejected) as
follows:
(i) if the Lessor shall, in accordance with the provisions of
Sections 9(c) and 21, accept the Lessee's Rejectable Offer in
connection with an Event of Loss: (x) so much of such
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payments as shall not exceed the amount of Stipulated Loss Value and
the other amounts required to be paid by the Lessee pursuant to
Sections 9(c) and 21 shall be paid to and applied by the Indenture
Trustee in accordance with the Indenture (unless the Lien of the
Security Documents shall have been discharged pursuant to Section
10.1 of the Indenture, in which case such payment shall be paid to
and applied by the Corporate Owner Trustee on behalf of the Lessor)
in reduction of the Lessee's obligation to pay such amounts if not
already paid by the Lessee or, if already paid by the Lessee, shall
be paid to and applied by the Indenture Trustee in accordance with
the Indenture (unless the Lien of the Security Documents shall have
been discharged pursuant to Section 10.1 of the Indenture, in which
case such payment shall be paid to, and applied by, the Corporate
Owner Trustee on behalf of the Lessor) to reimburse the Lessee for
its payment of such amounts, and (y) any such payments that shall
exceed the aggregate of the amounts payable pursuant to clause (x)
above shall, in the case of insurance maintained by the Lessee
pursuant to Section 10(a) or payments received from any other Person
with respect to a Casualty Event, Requisition of Title or
Requisition of Use, be paid to, or retained by, and shall become the
unencumbered property of, the Lessee; or
(ii) if the Lessor shall, in accordance with the provisions of
Sections 9(c) and 21, reject the Lessee's Rejectable Offer in
connection with an Event of Loss: (x) the Indenture Trustee (unless
the Lien of the Security Documents shall have been discharged
pursuant to Section 10.1 of the Indenture, in which case such
payments shall be paid to and applied by the Corporate Owner Trustee
on behalf of the Lessor) shall be entitled to all such insurance
payments with respect to the Project and the Lessee shall pay to the
Indenture Trustee for application in accordance with the Indenture
(unless the Lien of the Security Documents shall have been
discharged pursuant to Section 10.1 of the Indenture, in which case
such payment shall be paid to and applied by the Corporate Owner
Trustee on behalf of the Lessor) any payments which would have been
due from an insurer but for the Lessee's self-insurance and policy
deductibles; and (y) in the case of amounts received with respect to
any Requisition of Title or Requisition of Use, all such amounts
shall, subject to the discharge of the Lien of the Security
Documents, be paid to the Lessee and the Corporate Owner Trustee on
behalf of the Lessor as the respective interests of the Lessee and
the Lessor may appear.
(g) Application of Payments Not Relating to an Event of Loss.
Payments received by the Lessor or by the Owner Trustees on behalf of the Lessor
(other than proceeds of insurance carried by the Owner Trustees, the Lessor or
the Owner Participant pursuant to Section l0(b)), by the Lessee (other than
proceeds of insurance
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carried by or on behalf of the Lessee pursuant to and within the limitations of
Section 8(f) or Section 10(b), as the case may be) or by the Indenture Trustee
from any Governmental Authority, insurer or other Person, plus any amounts
recovered by the Lessee as contemplated by the last sentence of Section 6(c)(ii)
(plus the amount of any payments which would have been due from an insurer but
for the Lessee's self-insurance or policy deductibles) with respect to any
destruction, damage, loss, condemnation, confiscation, theft, seizure of or
requisition of title not constituting an Event of Loss, shall be applied as
follows:
(i) all such payments from Governmental Authorities on account
of a Partial Taking which cannot be repaired, shall be paid over to,
held and applied by the Indenture Trustee in accordance with the
Indenture (unless the Lien of the Security Documents shall have been
discharged in accordance with Section 10.1 of the Indenture, in
which case such payments shall be paid over to, and retained by, the
Corporate Owner Trustee on behalf of the Lessor);
(ii) in all other cases, all such payments from insurers or
from other Persons, including Governmental Authorities, shall be
held by the Corporate Owner Trustee on behalf of the Lessor or (so
long as the Lien of the Security Documents shall not have been
discharged in accordance with Section 10.1 of the Indenture) the
Indenture Trustee as security for the obligations of the Lessee
under this Lease and invested in Permitted Investments at the
direction of the Lessee, but any amounts (including earnings on
Permitted Investments) so held shall be released and paid over to
the Lessee from time to time, in each case upon presentation to the
Corporate Owner Trustee and the Lessor or to the Indenture Trustee,
as the case may be, of a Lessee Request specifying the amount so to
be released, and annexing invoices (not previously used as a basis
for any release of funds pursuant to this Section 9(g))
demonstrating expenditures made or to be made by the Lessee upon
receipt of such funds for repair, rebuilding and restoration of the
Project, and certifying that (x) the funds requested will, to the
extent not applied to reimburse the Lessee for such expenditures
already made, be applied to the payment of such expenditures
incurred, (y) there exist no Liens (other than Permitted Liens) with
respect to such repair, rebuilding or restoration and (z) the
amounts remaining to be disbursed are fully sufficient to complete
such repair, rebuilding and restoration; provided, however, that if
the Lessee's unsecured senior debt rating is lower than the Approved
Rating (A) the Corporate Owner Trustee on behalf of the Lessor or
the Indenture Trustee, as applicable, shall release and pay over
such funds for the Lessor's account directly to the Person
performing such work or providing such services (or shall release
such funds by check payable jointly to the Lessee and such Person)
and (B) to the extent any such
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payments from insurers or from other Persons received by the
Corporate Owner Trustee on behalf of the Lessor or by the Indenture
Trustee, as applicable, shall be insufficient to pay the entire cost
of the repair, rebuilding or restoration as estimated by a qualified
engineer selected by the Person holding such funds (being the
Corporate Owner Trustee or the Indenture Trustee, as the case may
be), the Lessee shall be responsible for the amount of any such
deficiency by depositing such amount with the Person holding such
funds (being the Corporate Owner Trustee or the Indenture Trustee,
as the case may be) prior to the commencement of such repair,
rebuilding or restoration);
(iii) the balance, if any, remaining after completion of such
repair, rebuilding and restoration and payment therefor of such
payments representing proceeds of such insurance shall be paid over
to, or retained by, and shall become the unencumbered property of,
the Lessee; and
(iv) except in the case of clause (i) of this Section 9(g),
the balance, if any, remaining after completion of such repair,
rebuilding and restoration and payment therefor of such payments
representing condemnation proceeds or like proceeds shall be paid to
the Corporate Owner Trustee on behalf of the Lessor and the Lessee
as the respective interests of the Lessor and the Lessee may appear.
(h) Application During Lease Event of Default. Notwithstanding the
provisions of Section 6(d)(ii), the foregoing provisions of this Section 9 or
the provisions of Section 10, if a Material Lease Default or Lease Event of
Default shall have occurred and be continuing, any amount that would otherwise
be payable to or for the account of, or that would otherwise be retained by, the
Lessee pursuant to the last sentence of Section 6(c), Section 6(d)(ii), this
Section 9 or Section 10 shall be held, and invested by the Indenture Trustee (or
after discharge of the Lien of the Security Documents in accordance with Section
10.1 of the Indenture, by the Lessor) in Permitted Investments selected from
time to time by the Lessee, as security for the obligations of the Lessee under
this Lease until such time thereafter as no Material Lease Default or Lease
Event of Default shall be continuing, unless this Lease theretofore shall have
been declared in default pursuant to Section 16, in which event such amount may
be applied in accordance with the provisions of such Section 16 and (unless the
lien of the Security Documents shall have been discharged in accordance with
Section 10.1 of the Indenture) Section 6.10 of the Indenture; provided, however,
that if a Rejectable Offer is made (or deemed made) by the Lessee pursuant to
Sections 9(c) and 21 and such offer is accepted in accordance with the
provisions of Sections 9(c) and 21 and the Transfer in connection therewith is
consummated and the outstanding Notes and other amounts secured by the Lien of
the Security Documents are
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paid in full, then contemporaneously with such Transfer, the Lessee shall be
entitled to receive from the Indenture Trustee (or from the Lessor or the
Corporate Owner Trustee on behalf of the Lessor, as applicable) all such amounts
not previously applied to the Lessee's obligations unencumbered by any interest
of the Lessor.
SECTION 10. Insurance.
(a) Required Insurance.
(i) Subject to the provisions of Section 10(c), the Lessee
shall carry and maintain, or cause to be carried and maintained with
respect to the Project, at least the following insurance coverage,
in each case with insurers of recognized responsibility selected by
Lessee, having at least the Minimum Approved A.M. Best Rating
(except in the case of the Existing Insurers, each of whose ratings
are acknowledged by the Lessor and, by its acceptance of its Note,
the initial Lender to be acceptable to it as of the Closing Date),
subject to the last sentence of this Section 10(a)(i), or otherwise
reasonably acceptable to the Lessor and the Indenture Trustee, in
each case on terms and conditions that are consistent with the
Lessee's then current practices and with prudent practices then in
effect among companies owning property comparable to the Project:
(A) (i) "all risk" (including fire and extended
coverage, flood and earthquake property insurance covering
physical loss with respect to the Improvements for full
replacement value (but in no event less than the applicable
Stipulated Loss Value, exclusive of architectural and
engineering fees, excavation footings and foundations, and
(ii) comprehensive boiler coverage in an amount not less than
$2,000,000, each with such other terms as are in accordance
with general insurance standards prevalent in the ownership of
commercial office buildings of comparable size and quality in
the Atlanta, Georgia, metropolitan area, each endorsed to
provide that (1) losses shall be adjusted as provided in
Section 10(a)(iii), (2) the Corporate Owner Trustee, the
Lessor, the Owner Participant and, so long as any Notes are
outstanding, the Indenture Trustee and the Noteholders
(collectively, the "Loss Payees") are included as the loss
payees, as their interests may appear, but shall not be liable
for the payment of premiums, (3) the insurer thereunder waives
all rights to subrogation against the Loss Payees with respect
to their respective interests in the Improvements, (4) such
insurance shall be primary without right of contribution of
any other insurance carried by or on behalf of any Loss Payee
with respect to its interest in the Improvements, and (5) no
cancellation or material adverse change that would affect the
interests
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of any Loss Payee with respect to the Project shall be
effective as to any Loss Payee until at least 30 days after
receipt by such Loss Payee of written notice thereof (or until
at least 10 days after receipt if such notice states that
cancellation is due to non-payment of any premium);
(B) commercial general liability insurance, including,
but not limited to contractors, independent contractors,
premises/operation and personal injury liability coverage or
endorsements, bodily injury and property damage liability
insurance covering claims arising out of the ownership,
operation, maintenance, condition or use of the Project in
such amounts and having such terms and provisions as are
comparable to the commercial general liability insurance which
is carried by the Lessee with respect to other office
buildings occupied by it (but in no event less than
$15,000,000 per occurrence) and endorsed as provided in
clauses (2), (3), (4) and (5) of Section 10(a)(i)(A), except
that the term "Loss Payees" wherever it appears therein shall
be deemed to refer to such Persons as "Additional Insureds";
(C) workers' compensation insurance covering all
employees of the Lessee in connection with any work done on or
about the Project or any part thereof for which claims for
death, disease or bodily injury may be asserted against the
Lessor, the Lessee, the Project, or any portion thereof, or,
in lieu of such workers' compensation insurance, a program of
self-insurance complying with the rules, regulations and
requirements of the appropriate agency of the State of
Georgia;
(D) during any period in which a Modification at the
Project is being undertaken at a cost of $1,000,000 or more,
the Lessee shall maintain or cause to be maintained builder's
risk insurance covering the total completed value including
any "soft costs" with respect to the Improvements being
altered or repaired, replacement cost of work performed and
equipment, supplies and materials furnished in connection with
such construction or repair of Improvements or Equipment,
including "soft costs" and such other endorsements as the
Lessor may reasonably require and general liability, workers'
compensation and automobile liability insurance with respect
to the Improvements being constructed, altered or repaired;
and
(E) such other insurance relating to the operation and
maintenance of the Project in such amounts and covering such
risks as may be required by Applicable Law.
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Notwithstanding any provision of this Section 10(a)(i) to the
contrary, if (i) the A.M. Best rating of any Existing Insurer
whose rating was less than the Minimum A.M. Best Approved
Rating on the Closing Date declines to and remains at a lower
rating for a period of 30 days or (ii) the A.M. Best rating of
any other insurer declines to and remains at a rating lower
than the Minimum A.M. Best Approved Rating for a period of 30
days, the Lessee in either case shall have the right (without
there having occurred in consequence thereof a Lease Default
or a Lease Event of Default under this Section 10(a)) to
replace such insurer with an insurer having at least the
Minimum A.M. Best Approved Rating by giving written notice to
the Lessor and the Indenture Trustee of such replacement
insurer within 60 days after any such decline in rating
occurred.
(ii) Except with respect to self-insurance, the Lessee
shall provide the Corporate Owner Trustee, the Lessor and the
Indenture Trustee, at least once each applicable policy year
for each of the property insurance and the liability
insurance, with certificates of insurance for the coverage
required to be maintained under this Section 10 substantially
in the forms delivered on the Closing Date. As soon as
practicable after the end of each such policy year of the
Lessee, and in any event within thirty (30) days after the end
of each such policy year of the Lessee, the Lessee shall
deliver to the Corporate Owner Trustee, the Lessor, the Owner
Participant and the Indenture Trustee a certificate of an
independent insurance broker or consultant reasonably
satisfactory to the Lessor and the Indenture Trustee (which
may be the Lessee's regular insurance broker, provided, that
such regular insurance broker is one of the Lessee's regular
insurance brokers existing on the Closing Date or is another
reputable and responsible insurance broker) setting forth the
property or liability insurance (as the case may be) obtained
by the Lessee pursuant to this Section 10 and as then in
effect, stating (i) that such insurance is in full force and
effect and (ii) that all premiums then due thereon have been
paid and (iii) that, in the opinion of such independent
insurance broker or consultant, such insurance policies comply
with the requirements of this Section 10. The Lessee may
provide certificates from different insurance brokers or
consultants for property insurance and liability insurance.
(iii) All losses shall be adjusted with the insurance
companies and all insurance proceeds shall be collected,
including by the filing of appropriate proceedings, by or on
behalf of the Lessee (with the prior written consent of the
Corporate Owner Trustee and (unless the Lien of the Security
Documents shall have been discharged in accordance with
Section 10.1 of the Indenture) the Indenture Trustee if a
Material Lease Default or a Lease Event of Default shall have
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occurred and be continuing), and all insurance proceeds paid
in respect of insurance maintained pursuant to Section 10(a)
shall be paid and be applied as provided in Section 9(f), 9(g)
or 9(h), as the case may be, subject, however, to any priority
allocations of such proceeds as required under Applicable Law.
(iv) Subject to the provisions of Section 10(c), the
Lessee shall obtain endorsements to the insurance policies
carried pursuant to Section 10(a)(i)(A) and Section
10(a)(i)(B) providing that (x) the insurers waive any right of
set-off or counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of the
Lessee or any Loss Payee and (y) the respective interests of
any Loss Payee or Additional Insured shall not be invalidated
by any act or neglect by the Lessee, including breach of any
warranty contained in such policies, foreclosure on the
Project or change in title or ownership thereof.
(b) Other Insurance. Nothing in this Section 10 shall prohibit the
Lessee from maintaining at its expense insurance on or with respect to the
Project, naming the Lessee as insured and/or loss payee for an amount greater
than the insurance required to be maintained under this Section 10, unless such
insurance would conflict with or otherwise limit the availability of insurance
which is required under Section 10(a) or permitted by the next sentence of this
Section 10(b). Nothing in this Section 10 shall prohibit the Corporate Owner
Trustee, the Lessor or the Owner Participant from maintaining at its expense
other insurance on or with respect to the Project or the operation, use and
occupancy of the Project, naming the Lessor or the Owner Participant as insured
and/or loss payee, unless such insurance would conflict with or otherwise limit
the insurance required to be maintained under Section 10(a).
(c) Insurance to be Commercially Available. So long as the Lessee's
senior unsecured debt rating is at least equal to the Approved Rating, in the
event that any insurance required to be maintained by the Lessee pursuant to
this Section 10 is not maintained by owners of buildings of comparable size and
quality in the Atlanta, Georgia metropolitan area and is not available at
commercially reasonable rates, as determined by an Independent Insurance Broker,
then the Lessee shall only be required to maintain such coverages or insurance
at such levels as is maintained by the owners of such buildings, the provisions
of this Section 10 to the contrary notwithstanding.
(d) Self Insurance. So long as the Lessee's unsecured senior debt
rating is at least equal to the Approved Rating, the Lessee may satisfy the
requirements of this Section 10 through self-insurance or deductibles in amounts
not exceeding (i) the first $4,000,000 of insurance required for coverages of
the type described in Sections 10(a)(i)(A) and 10(a)(i)(D) and (ii) the
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first $4,000,000 of insurance required for coverages of the type described in
Sections 10(a)(i)(B), 10(a)(i)(C) and 10(a)(i)(E); provided that such
self-insurance or deductible amounts shall not exceed $1,000,000 in either case
if the Lessee's unsecured senior debt rating is less than the Approved Rating.
SECTION 11. Rights To Assign or Sublease; Assignment as Security;
Attornment.
(a) Sublease by the Lessee. So long as no Material Lease Default or
Lease Event of Default has occurred and is continuing, the Lessee may, without
the prior written consent of the Owner Trustees, the Lessor or the Indenture
Trustee, sublease the Project (or any portion thereof) to any Person, provided,
that (i) such sublease shall be expressly subject and subordinate to this Lease,
(ii) except for the ISSC Lease, any such sublease having a term longer than 12
months shall be assigned (at the Lessee's expense) by the Lessee to the Lessor
as security for the payment and performance of the Lessee's obligations under
this Lease and, if the Lien of the Security Documents has not been discharged in
accordance with Section 10.1 of the Indenture, such sublease shall be further
assigned (at the Lessee's expense) by the Lessor to the Indenture Trustee as
security for the payment and performance of the Lessor's obligations under the
Indenture (provided that rental payments pursuant to any such sublease shall not
be required to be made to or otherwise vest in the Lessor or the Indenture
Trustee, as the case may be, and neither the Lessor nor the Indenture Trustee
shall have any right to exercise any right or remedy under such sublease as
Lessor thereunder (to the exclusion of the Lessee) unless and until, in either
such case, a Material Lease Default or Lease Event of Default shall have
occurred and be continuing); (iii) such sublease shall not release the Lessee
from or impair the liability of the Lessee under any of its obligations as the
Lessee hereunder or in respect of any of its obligations under any of the other
Transaction Documents (and notwithstanding any permitted sublease the liability
and obligations of the Lessee hereunder shall be and remain those of a principal
and not a guarantor or surety); (iv) such Person is not a Tax-Exempt Entity; (v)
the Lessee shall give the Corporate Owner Trustee and the Lessor and (unless the
Security Documents shall have been discharged in accordance with Section 10.1 of
the Indenture) the Indenture Trustee written notice of each such sublease at
least 10 Business Days prior to the execution thereof, together with a copy of
each such sublease and (vi) no such sublease shall be for a period of time
longer than the then-current Lease Term minus one day. The Lessor hereby
irrevocably agrees for the benefit of each subtenant under any sublease made by
the Lessee in accordance with this Section 11, that prior to the Lease
Termination Date, in the case of the ISSC Lease, and (unless otherwise approved
by the Lessor in writing) prior to the earlier of (x) the Lease Termination
Date, and (y) the date on which the Notes are declared to be due and payable
pursuant to the Indenture as a result of an Indenture Event
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of Default which is also a Lease Event of Default, in the case of all other
subleases, the possession and other rights of the subtenant under any such
sublease shall not be disturbed or affected by the Lessor so long as no default
by the subtenant exists under the terms of such sublease (after notice and an
opportunity to cure, if any, as provided in such sublease) as would entitle the
Lessee (as sublandlord) to dispossess the subtenant or terminate such sublease.
Without limiting the foregoing, the Lessor shall deliver to the Lessee for the
benefit of the applicable subtenant under any sublease made by the Lessee in
accordance with this Section 11, within fifteen (15) Business Days after the
Lessee's request therefor, a confirmation of the terms of this Section 11(a) as
applicable to the particular subtenant.
(b) Assignment by the Lessee.
(i) Assignment to an Affiliate. So long as no Material Lease
Default or Lease Event of Default has occurred and is continuing,
the Lessee may, without the prior consent of the Owner Trustees, the
Lessor or the Indenture Trustee, assign all or any of its right,
title and interest in and to this Lease or the Project (or any
portion thereof) to any Affiliate of the Lessee; provided, that such
assignment shall not release the Lessee from any of its obligations
under this Lease or in respect of any of its obligations under any
of the other Transaction Documents (which shall be and remain those
of a principal and not a guarantor or surety).
(ii) Other Assignments. Except as otherwise set forth in
Section 11(b)(i), the Lessee may not, without the prior written
consent of the Corporate Owner Trustee, and Lessor and (unless the
Lien of the Security Documents shall have been discharged in
accordance with Section 10.1 of the Indenture) the Indenture
Trustee, assign any of its right, title and interest in and to this
Lease or the Project (or any portion thereof) to any Person. Any
subsequent transfer of "control" (as defined in the definition of
"Affiliate") of the Affiliate of the Lessee to which the Lessee
previously shall have assigned any interest in the Lease pursuant to
Section 11(b)(i) hereof shall constitute an assignment for purposes
of this Section 11(b)(ii).
(iii) Opinion of Counsel. In connection with any assignment or
subletting pursuant to this Section 11, the instrument of assignment
or the sublease shall be in writing and the Lessee shall, at its
expense, (x) deliver to the Owner Participant an opinion of
nationally recognized tax counsel selected by the Lessee after
consultation with the Owner Participant and reasonably acceptable to
the Owner Participant that the assignment or subleasing entered into
in accordance with this Section 11 does not cause adverse tax
consequences to the Owner Participant (provided that such tax
consequences
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relate to reasonably anticipated federal, state and local leveraged
leasing criteria as currently taken into account in the Pricing
Assumptions and based on the law, regulations and precedents as they
exist at the time of the assignment or subleasing) and (y) deliver to
the Owner Participant, the Corporate Owner Trustee, the Lessor, the
Indenture Trustee and the Noteholders an opinion of nationally
recognized counsel to the effect that the instrument of assignment or
sublease has been duly authorized, executed and delivered and
constitutes the legal, valid and binding obligation of the assignee,
enforceable in accordance with its terms, subject to customary
exceptions for bankruptcy and equitable principles.
(c) Security for Lessor's Obligation to Noteholders. To secure
payment of the indebtedness evidenced by the Notes, together with interest
accrued thereon, the Make Whole Amount, if any, and other sums from time to time
due and owing to the Indenture Trustee and/or the Noteholders pursuant to the
Transaction Documents and to secure performance of the obligations of the Lessor
under the Security Documents, the Lessor, pursuant to the Security Documents,
has on and as of the Closing Date assigned to the Indenture Trustee (i) its
right, title and interest (excluding only any Excepted Rights and Excepted
Payments) in and to this Lease, including the right to receive certain payments
of Rent (excluding only any Excepted Rights and Excepted Payments), upon the
terms and conditions contained in the Security Documents, and (ii) granted a
first mortgage Lien and security interest in and to its right, title and
interest in and to the Indenture Estate. The Lessee hereby (w) consents to such
assignment and grant and to the terms of the Security Documents, (x) agrees to
pay by wire transfer of immediately available funds directly to the Indenture
Trustee at such Indenture Trustee's Office (until the Lien of the Security
Documents shall have been discharged in accordance with Section 10.1 of the
Indenture, and thereafter to the Corporate Owner Trustee on behalf of the
Lessor) on the Lessor's behalf all amounts of Rent (other than Excepted Rights
and Excepted Payments) due or to become due to the Lessor, and (y) agrees that,
except as otherwise expressly restricted in the Security Documents (until the
Lien of the Security Documents shall have been discharged in accordance with
Section 10.1 of the Indenture), the Indenture Trustee shall have or shall share
with the Lessor the rights of the Lessor hereunder (other than Excepted Rights
and the right to receive Excepted Payments).
(d) Assignments by the Lessor. During the Lease Term, the Lessor may
not transfer, sell or convey the Project (or any part thereof) or assign or
delegate its rights and obligations under this Lease, except as contemplated by
Sections 8(e), 9(c), 11(c), 13, 14, 16, 19 and 21 of this Lease and as expressly
permitted pursuant to Sections 11 and (pound)3.9 of the Trust Agreement and
Article VIII of the Participation Agreement. Notwithstanding anything to the
contrary contained herein, this Section 11(d) shall not be
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applicable to the Indenture Trustee or its successor if the Indenture Trustee or
its successor has become the owner of the Project pursuant to Section 6 of the
Indenture.
SECTION 12. Lease Renewal.
(a) Option for Fixed-Rate Renewal. Subject to the notice
requirements set forth in Section 12(d) and to the provisions of Sections 12(e)
and 12(f), so long as no Lease Event of Default shall have occurred and be
continuing Cat the time of the notice referred to in Section 12(d) or at the
time of the exercise of the renewal option hereinafter described), the Lessee
shall have the option to renew the term of this Lease for one period of two
years (the "Fixed-Rate Renewal Term") at the end of the Basic Term. During the
Fixed-Rate Renewal Term, the Lessee shall pay to the Corporate Owner Trustee,
for the account of the Lessor, Basic Rent in semiannual installments in advance
on each Basic Rent Payment Date equal to the Fixed-Rate Renewal Basic Rent.
Except as expressly provided in this Lease, the rights and obligations of the
Lessor and the Lessee hereunder during the Fixed-Rate Renewal Term shall be the
same as for the Basic Term.
(b) Fair Market Renewal Options. Subject to the notice requirements
set forth in Section 12(d) and to the provisions of Sections 12(e) and 12(f), so
long as no Lease Event of Default shall have occurred and be continuing (at the
time of the notice referred to in Section 12(d) or at the time of the exercise
of the renewal option hereinafter described), the Lessee shall have the option
to renew the term of this Lease at the end of the Fixed-Rate Renewal Term or any
Fair Market Renewal Term for an aggregate of five successive periods of five
years each (each such period being herein called a "Fair Market Renewal Term").
During each Fair Market Renewal Term, the Lessee shall pay to the Corporate
Owner Trustee, for the account of the Lessor, Basic Rent in semiannual
installments in advance on each Basic Rent Payment Date during such Renewal Term
equal to forty-two and one-half percent (42.5%) of the annual Fair Market Rental
value of the Project (as determined, with respect to any Fair Market Renewal
Term, pursuant to Section 12(f)). Except as expressly provided in this Lease,
the rights and obligations of the Lessor and the Lessee hereunder during each
Fair Market Renewal Term shall be the same as for the Basic Term.
(c) Short-Term Lease Extensions. Subject to the notice requirements
set forth in Section 12(d) and to the provisions of Sections 12(e) and 12(f), so
long as no Lease Event of Default shall have occurred and be continuing (at the
time of the Notice referred to in Section 12(d) or at the time of the exercise
of the renewal option hereinafter described), the Lessee shall have the option
to renew the term of this Lease at the end of the Basic Term, the Fixed-Rate
Renewal Term or any Fair Market Renewal Term for an aggregate of up to six
successive periods of three months each (each such period being herein called a
"Short-Term Renewal").
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During each Short-Term Renewal, the Lessee shall pay to the Corporate Owner
Trustee, for the account of the Lessor, Basic Rent in quarterly installments in
advance on the first Business Day of each Short-Term Renewal equal to (i) in the
event such Short-Term Renewal immediately follows the Basic Term, one-fourth of
the average of the actual annual Basic Rent paid by Lessee during the Basic
Term, (ii) in the event such Short-Term Renewal immediately follows the
Fixed-Rate Renewal Term, one-fourth of the average of the actual annual Basic
Rent payable during such Fixed-Rate Renewal Term, and (iii) in the event such
Short-Term Renewal immediately follows a Fair Market Renewal Term, one-fourth of
the average of the actual annual Basic Rent payable during such immediately
preceding Fair Market Renewal Term. Except as expressly provided in this Lease,
the rights and obligations of the Lessor and the Lessee hereunder during any
Short-Term Renewal shall be the same as for the Basic Term.
(d) Notice at Expiration off Lease Term. Not later than 365 days
prior to the expiration date of the Basic Term and, if applicable, each Renewal
Term, the Lessee shall notify the Corporate Owner Trustee and the Lessor as to
whether it will renew the term of this Lease pursuant to Section l2(a), 12(b) or
12(c), as applicable, or return the Project to the Lessor pursuant to Section 5
on the Lease Termination Date. Failure of the Lessee to give any such notice
shall mean that the Lessee is deemed to have elected to return the Project. The
Lessee shall not be entitled to give any notice of renewal pursuant to this
Section 12(d) at any time a Lease Event of Default shall have occurred and be
continuing.
(e) Elections Irrevocable. Any election made by the Lessee pursuant
to Section 12(d) shall be irrevocable by the Lessee, and such election shall be
binding on the Lessor unless, on the effective date thereof, a Lease Event of
Default shall have occurred and be continuing.
(f) Determination of Fair Market Rental Value. If the Lessee shall
give to the Corporate Owner Trustee and the Lessor notice of its election to
renew this Lease pursuant to Section 12(b) then, not later than 270 days prior
to the expiration date of the Basic Term or the then-current Renewal Term, as
applicable, the Lessee and the Lessor shall attempt in good faith to agree upon
the Fair Market Rental Value of the Project during such Fair Market Renewal
Term. If the Lessee and the Lessor are unable to agree upon any such amount,
such value shall be determined by the Appraisal Procedure.
(g) Assistance with Disposition. From and after the date of the
Lessee's election to return the Project pursuant to Section 12(d) or the
Lessee's election not to purchase the Project pursuant to Section 19 of this
Lease or the Owner Participant's Interest pursuant to Section 8.02 of the
Participation Agreement or the date
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of the Lessee's irrevocable election to terminate this Lease pursuant to Section
9(d), 9(e), 13(b) or 14(b) of this Lease, the Lessee shall cooperate with the
reasonable requests of the Lessor in its effort to sell or lease the Project to
be returned for a term following the Lease Termination Date including making the
Project available for view upon reasonable advance notice (but not limiting the
right of the Corporate Owner Trustee, the Lessor or the Owner Participant to
show the Project to prospective bona fide buyers) , subject in all events to
reasonable restrictions consistent with Section 8(b) (excluding the proviso
thereto)
(h) Renewal Options After Event of Loss. So long as no Lease Event
of Default has occurred and is continuing, if the Lessee elects to reconstruct
the Project pursuant to clause (A) of Section 9(a)(ii) after any Event of Loss
which occurs within the last two (2) years of the Basic Term or any then-current
Renewal Term, the Lessee shall (as a condition to its right to reconstruct the
Project) also elect to renew the term of this Lease for the next succeeding
Fixed-Rate Renewal Term or Fair Market Renewal Term, as applicable, by giving
irrevocable notice with respect thereto in accordance with Section 12(d)
(whether or not such notice would have been due to have been given by the terms
of Section 12(d) at such time) contemporaneously with the delivery of the Event
of Loss Notice pursuant to clause (A) of Section 9(a)(ii)
SECTION 13. Burdensome Buyout Purchase Right.
(a) Burdensome Buyout Purchase Right. So long as no Material Lease
Default or Lease Event of Default has occurred and is continuing, if the Lessee
determines that a Burdensome Buyout Event has occurred, it shall have the right
to make a Rejectable Offer in accordance with Sections 13(b) and 21 hereof to
purchase the Project for a cash purchase price (the "Burdensome Buyout Purchase
Price") equal to the greater of (i) the sum of (A) the Stipulated Loss Value,
computed in accordance with Schedule 2.1 or 2.3, as applicable, for the
Burdensome Buyout Purchase Date specified in the Lessee's notice delivered
pursuant to Section 13(b), plus (B) Basic Rent due and owing on or prior to the
Burdensome Buyout Purchase Date (other than Basic Rent payable in advance on the
Burdensome Buyout Purchase Date), plus (C) Supplemental Rent in an amount equal
to the Make Whole Amount, if any, then due on the Notes, plus (D) any other
amounts then due and owing under the Transaction Documents, and (ii) the sum of
(A) the Fair Market Sales value of the Project (excluding the value of the
Lease), plus (B) Basic Rent due and owing on or prior to the Burdensome Buyout
Purchase Date (other than Basic Rent payable in advance on the Burdensome Buyout
Purchase Date), plus (C) Supplemental Rent in an amount equal to the Make Whole
Amount, if any, then due on the Notes, plus (D) any other amounts then due and
owing under the Transaction Documents.
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(b) Notice. If the Lessee wishes to exercise its rights set forth in
Section 13(a), it shall give the Lessor, the Corporate Owner Trustee and (unless
the Lien of the Security Documents shall have been discharged in accordance with
Section 10.3. of the Indenture) the Indenture Trustee written notice (which
shall be irrevocable) of such election (the "Burdensome Buyout Notice"), not
later than 180 days prior to any Basic Rent Payment Date that is specified by
the Lessee in such notice (the "Burdensome Buyout Purchase Date"), which notice
shall be accompanied by a true, correct and complete copy of the determination
of the Board of Directors of the Lessee that a Burdensome Buyout Event has
occurred and the certificate of a Responsible Officer of the Lessee certifying
the facts related thereto. Not more than 60 nor less than 30 days prior to such
Burdensome Buyout Purchase Date, the Lessee shall deliver an Officer's
Certificate to the Corporate Owner Trustee and the Lessor and, on behalf of the
Lessor, to the Indenture Trustee and each Noteholder specifying (i) the
Burdensome Buyout Purchase Date, (ii) that the principal amount of the
outstanding Notes will be prepaid by the Lessor on such date, (iii) that a
Make-Whole Amount may be payable by the Lessor, (iv) the date when such
Make-Whole Amount will be calculated, (v) the estimated Make-Whole Amount, (vi)
the estimated accrued interest applicable to such prepayment based upon the Debt
Rate then applicable, and (vii) the sections of this Lease and the Indenture
pursuant to which such prepayment shall be made. Contemporaneously with the
delivery of such Officer's Certificate, the Lessee shall deliver a written
notice to Trust Company Bank (or its successor) requesting that it calculate the
Make Whole Amount so as to permit the Indenture Trustee to give the notice
described in the next sentence. Three Business Days prior to the Burdensome
Buyout Purchase Date, the Indenture Trustee shall provide the Corporate Owner
Trustee and the Lessee written notice of the Make-Whole Amount, if any, payable
by the Lessor in connection with the prepayment of the Notes and the termination
of this Lease and a reasonably detailed computation of the Make-Whole Amount as
of the Burdensome Buyout Purchase Date, determined three Business Days prior to
such date.
(c) Determination of Fair Market Sales Value. If the Lessee makes a
Rejectable Offer pursuant to this Section 13 and Section 21, the Lessee and the
Lessor shall attempt in good faith to agree upon the Fair Market Sales Value. If
the Lessee and the Lessor are unable to agree upon such Fair Market Sales Value
promptly, such value shall be determined by the Appraisal Procedure.
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SECTION 14. Early Termination; Obsolescence or Uneconomic Usefulness
Termination.
(a) Obsolescence or Uneconomic Usefulness Termination.
(i) Obsolescence Termination Notices. If, at any time after the
tenth anniversary of the Closing Date and prior to the Lease Termination
Date, the Board of Directors of the Lessee shall have determined, in good
faith, that the Project has become obsolete, surplus or uneconomic to the
needs of the Lessee, the Lessee shall have the option, so long as no Lease
Event of Default shall have occurred and be continuing at the time of
exercise, to terminate this Lease on any Basic Rent Payment Date that is
specified by the Lessee (an "Obsolescence Termination Date") in a notice
(such notice to be accompanied by an Officer's Certificate confirming the
facts of such obsolescence or such surplus or uneconomic nature and by a
true, correct and complete copy of the determination of the Board of
Directors of the Lessee of such obsolescence or such surplus or uneconomic
nature) to the Corporate Owner Trustee, the Lessor, the Indenture Trustee
and the Noteholders to such effect (an "Obsolescence Termination Notice")
given not later than 180 days prior to the proposed Obsolescence
Termination Date. Not more than 60 nor less 30 days prior to such
Obsolescence Termination Date (if the Obsolescence Termination Notice has
not been revoked), the Lessee shall deliver an Officer's Certificate to
the Corporate Owner Trustee and the Lessor and, on behalf of the Lessor,
to the Indenture Trustee and each Noteholder specifying (i) the
Obsolescence Termination Date, (ii) that the principal amount of the
outstanding Notes will be prepaid by the Lessor on such date, (iii) that a
Make Whole Amount may be payable by the Lessor, (iv) the date when such
Make Whole Amount will be calculated, (v) the estimated Make Whole Amount,
(vi) the estimated accrued interest applicable to such prepayment based
upon the Debt Rate then applicable, and (vii) the sections of this Lease
and the Indenture pursuant to which such prepayment shall be made.
Contemporaneously with the delivery of such Officer's Certificate, the
Lessee shall deliver a written notice to Trust Company Bank (or its
successor) requesting that it calculate the Make Whole Amount so as to
permit the Indenture Trustee to give the notice described in the next
sentence. Three Business Days prior to the Obsolescence Termination Date,
the Indenture Trustee shall provide the Corporate Owner Trustee and the
Lessee written notice of the Make Whole Amount, if any, payable by the
Lessor in connection with the prepayment of the Notes and the termination
of this Lease and a reasonably detailed computation of the Make Whole
Amount as of the Obsolescence Termination Date, determined three Business
Days prior to such date. The Lessee may revoke such Obsolescence
Termination Notice at any time prior to 30 days before the Obsolescence
Termination Date; provided,
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however, that Lessee may not revoke such an Obsolescence Termination
Notice more than two times; and provided, further, that the Lessee shall
pay all reasonable out-of-pocket expenses of the Corporate Owner Trustee,
the Indenture Trustee, the Lessor and the Owner Participant in connection
with such revoked termination option.
(ii) Events Prior to Obsolescence Termination Date.
(A) No later than 90 days after its receipt of an Obsolescence
Termination Notice, the Lessor shall have the right to elect, by
written notice to the Lessee, the Indenture Trustee and the
Noteholders, to retain the Project, in which case it shall (or shall
cause the Corporate Owner Trustee to), as an absolute and
unconditional precondition to its right to retain the Project,
deposit with the Indenture Trustee, (x) no later than the 60th day
prior to the scheduled Obsolescence Termination Date, cash in
Dollars in an amount equal to the aggregate principal amount of the
outstanding Notes, together with estimated accrued and unpaid
interest based upon the Debt Rate then applicable due and owing
through and including the Obsolescence Termination Date (which
deposit shall be returned only if, and promptly after, the Lessee
revokes its Obsolescence Determination Notice) and (y) on the
Obsolescence Termination Date, an amount equal to the excess, if
any, of the actual accrued and unpaid interest due on the
Obsolescence Termination Date on the Notes over the estimated
accrued interest amount previously deposited, and the Lessee shall
deposit, on behalf of the Lessor, not later than the second Business
Day prior to the scheduled Obsolescence Termination Date, with the
Indenture Trustee cash in Dollars in an amount equal to the Make
Whole Amount, if any, due on the Notes as of and on the Obsolescence
Termination Date together with any other sum (exclusive of principal
and interest) payable to the Indenture Trustee or the Noteholders
pursuant to the Transaction Documents; provided that if the Lessor
fails for any reason whatsoever to make (or cause to be made) its
deposit on the date required by this Section 14(a)(ii)(A), the
Lessee shall proceed with the sale of the Project pursuant to
Section 14(a)(ii)(B); and provided further that if the estimated
accrued interest amount previously deposited with the Indenture
Trustee exceeds the accrued interest payable to the Noteholders on
the Obsolescence Termination Date, the Indenture Trustee shall
refund such excess to the Lessor.
(B) Unless Lessor shall have elected to retain ownership
pursuant to Section 14(a)(ii)(A) and shall have complied fully with
such Section, the Lessee, as agent for the Lessor, shall use its
best efforts to obtain cash bids
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for the purchase of the Project. The Lessor also shall have the
right to obtain such cash bids, either directly or through agents
other than the Lessee. The Lessee shall certify to the Corporate
Owner Trustee, the Lessor and the Owner Participant the amount and
terms of each bid received by the Lessee and the name and address of
the Person (who shall not be the Lessee or any Affiliate of the
Lessee) that submitted such bid. The Lessor shall be under no duty
to solicit bids, to inquire into the efforts of the Lessee to obtain
bids or otherwise to take any action in connection with any such
proposed termination of the Lease other than to effect a Transfer to
the Person named in the highest cash bid certified by the Lessee to
the Corporate Owner Trustee and the Lessor or obtained by the Lessor
against receipt on the Obsolescence Termination Date by the Lessor
of an amount equal to at least the greater of the cash purchase
price or the sum of (A) the Stipulated Loss Value calculated as of
the Obsolescence Termination Date, plus (B) an amount equal to the
Make Whole Amount, if any, then due on the Notes, plus (C) Basic
Rent then due and owing (other than Basic Rent payable in advance on
the Obsolescence Termination Date), plus (D) all other amounts then
due and owing by the Lessee under the Transaction Documents. Should
there be no bidder for the Project at least 35 days prior to the
scheduled Obsolescence Termination Date, then, notwithstanding the
first proviso to Section 14(a)(i), the Lessee shall be deemed to
have revoked its Obsolescence Termination Notice (and shall
promptly, and in any event within 5 days, notify the Indenture
Trustee and the Noteholders of such revocation), this Lease shall
continue in full force and effect and the Lessee shall pay on
demand, as Supplemental Rent, all reasonable out-of-pocket expenses
incurred by the Corporate Owner Trustee, the Lessor, the Owner
Participant, the Indenture Trustee and the Noteholders in connection
with such revoked termination option.
(iii) Events on Obsolescence Termination Date.
(A) In the event that the Lessor has elected to retain
ownership of the Project pursuant to, and has otherwise complied
with, Section 14(a)(ii)(A), on the Obsolescence Termination Date,
upon payment by the Lessee to the Indenture Trustee for the account
of the Lessor for application in accordance with the Indenture
(unless the Lien of the Security Documents shall have been
discharged in accordance with Section 10.1 of the Indenture, in
which case such payment shall be paid to, and applied by, the
Corporate Owner Trustee for the account of the Lessor) on the
Obsolescence Termination Date of (l) any Basic Rent due and owing on
the Obsolescence Termination Date (other
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than Basic Rent payable in advance on the Obsolescence Termination
Date), (2) Supplemental Rent in an amount equal to the Make Whole
Amount, if any, then payable on the outstanding Notes and (3) all
other Supplemental Rent (other than Stipulated Loss Value) and other
amounts then due and owing under the Transaction Documents, the
Lease Term shall end on the Obsolescence Termination Date and all of
the Lessee's obligations hereunder (other than any obligation
expressed herein or in any other Transaction Document as surviving
the termination of this Lease) shall thereupon cease.
(B) Unless the Lessor has elected to retain ownership pursuant
to Section 14(a)(ii)(A) and has complied fully with the terms
thereof, the Lessor shall, on the Obsolescence Termination Date (but
only upon receipt of the sale price and all additional payments
specified in the next sentence) effect a Transfer for cash to the
Person that submitted the highest bid prior to such date (should
such a Person exist). The Sale Proceeds shall be paid to the
Indenture Trustee for application in accordance with the Indenture
(unless the Lien of the Security Documents shall have been
discharged in accordance with Section 10.1 of the Indenture, in
which case such payment shall be paid to, and applied by, the
Corporate Owner Trustee for the account of the Lessor) and, in
addition, on such Obsolescence Termination Date the Lessee shall pay
to the Indenture Trustee for application in accordance with the
Indenture (unless the Lien of the Security Documents shall have been
discharged in accordance with Section 10.1 of the Indenture, in
which case such payment shall be paid to, and applied by, the
Corporate Owner Trustee for the account of the Lessor) the sum of
(l) Supplemental Rent in an amount equal to the excess, if any, of
the Stipulated Loss Value determined as of such Obsolescence
Termination Date, over the Sale Proceeds, plus (2) any Basic Rent
due and owing on the Obsolescence Termination Date (other than Basic
Rent payable in advance on the Obsolescence Termination Date), plus
(3) Supplemental Rent in an amount equal to the Make Whole Amount,
if any, payable on the outstanding Notes, plus (4) all other amounts
then due and owing under the Transaction Documents on the
Obsolescence Termination Date. If for any reason no sale of the
Project shall occur on or as of the Obsolescence Termination Date,
then, notwithstanding the first proviso to Section 14(a)(i), the
Lessee shall be deemed to have revoked its Obsolescence Termination
Notice (and shall promptly, and in any event within 5 days, notify
the Indenture Trustee and the Noteholders of such revocation), this
Lease shall continue in full force and effect and the Lessee shall
pay on demand all reasonable costs and expenses of the Corporate
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Owner Trustee, the Lessor, the Owner Participant, the Indenture
Trustee and any Noteholders in connection with such revoked
termination option. Upon payment by the Lessee of all amounts
payable by it under this Section 14(a)(iii) and Transfer of the
Project, the Lease Term shall end and all the Lessee's obligations
hereunder (other than any obligation expressed herein or in any
other Transaction Document as surviving the termination of this
Lease) shall cease.
(iv) Events Following the Obsolescence Termination Date. The
Lessee hereby represents, warrants and covenants that, if the Lease
Term shall end pursuant to the provisions of this Section 14(a),
neither the Lessee nor any Affiliate of the Lessee shall, for a
period of three years thereafter, acquire (by lease or purchase) the
Project or any portion thereof.
(b) Early Termination. The Lessee shall have the right, so long as
no Lease Event of Default shall have occurred and be continuing at the time of
exercise, to terminate this Lease on any Early Termination Date that is
specified by the Lessee in a notice to the Corporate Owner Trustee and the
Lessor (an "Early Termination Notice") given not later than one year prior to
the proposed Early Termination Date by making a Rejectable Offer in accordance
with Section 2l(a)(iii) to purchase the Project for a cash purchase price (the
"Early Termination Purchase Price"), equal to the sum of (A) Stipulated Loss
Value and if the Early Termination Notice is given less than two years prior to
the proposed Early Termination Date, the greater of Fair Market Sales Value and
Stipulated Loss Value, as of the Early Termination Date specified in the
Lessee's Early Termination Notice, plus (B) Basic Rent due and owing on or prior
to such Early Termination Date (other than Basic Rent payable in advance on the
Early Termination Date), plus (C) Supplemental Rent in an amount equal to the
Make Whole Amount, if any, payable on the outstanding Notes, plus (D) all other
amounts then due and owing under the Transaction Documents on the Early
Termination Date; provided, however, that the Lessee may revoke such Early
Termination Notice (and such Rejectable Offer) at any time prior to 35 days
before the Early Termination Date; provided, further, however, that (x) the
Lessee may not revoke such an Early Termination Notice (and such Rejectable
Offer) more than two times, and (y) if the Lessee so revokes, the Lessee shall
promptly, and in any event within 5 days, notify the Indenture Trustee and the
Noteholders of such revocation and shall reimburse the Owner Participant, the
Corporate Owner Trustee, the Lessor, the Indenture Trustee and the Noteholders
for all reasonable costs and expenses incurred by them in connection with such
proposed early termination, including in determining the Fair Market Sales Value
and marketing the Project. Not more than 60 nor less than 30 days prior to such
Early Termination Date, the Lessee shall deliver an Officer's Certificate to the
Corporate Owner Trustee, the Lessor and, on behalf of the Lessor, to the
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Indenture Trustee and each Noteholder specifying (i) the Early Termination Date,
(ii) that the principal amount of the outstanding Notes will be prepaid by the
Lessor on such date, (iii) that a Make Whole Amount may be payable by the
Lessor, (iv) the date when such Make Whole Amount will be calculated, (v) the
estimated Make Whole Amount, (vi) the estimated accrued interest applicable to
such prepayment based upon the Debt Rate then applicable, and (vii) the sections
of this Lease and the Indenture pursuant to which such prepayment shall be made.
Contemporaneously with the delivery of such Officer's Certificate, the Lessee
shall deliver a written notice to Trust Company Bank (or its successor)
requesting that it calculate the Make Whole Amount so as to permit the Indenture
Trustee to give the notice described in the next sentence. Three Business Days
prior to the Early Termination Date, the Indenture Trustee shall provide to the
Corporate Owner Trustee and the Lessee written notice of the Make Whole Amount,
if any, payable by the Lessor in connection with the prepayment of the Notes and
the termination of this Lease and a reasonably detailed computation of the Make
Whole Amount as of the Early Termination Date, determined three Business Days
prior to such date.
SECTION 15. Lease Events of Default. The term "Lease Event of
Default", wherever used herein, shall mean any of the following events (whatever
the reason for such Lease Event of Default and whether it shall be voluntary or
involuntary, or come about or be effected by operation of law, or be pursuant to
or in compliance with any judgement, decree or order of any court or any
Applicable Law or Governmental Action) and any such event shall continue to be a
Lease Event of Default if and for so long as it shall not have been remedied:
(a) the Lessee shall fail to make, or cause to be made, (i) any
payment of Basic Rent, Stipulated Loss Value or Supplemental Rent determined by
reference to the Make Whole Amount, if any, within five days after the same
shall become due, or (ii) any other payment of Supplemental Rent when due and
such default shall continue for five Business Days after written notice therefor
shall have been given to Lessee; or
(b) the Lessee shall fail to carry or maintain any insurance
required under (x) clauses (A), (B), (D) or (E) of Section 10(a)(i) or (y)
clause (C) of Section 10(a)(i) if, in the case of this clause (y), such
failure shall continue for 5 Business Days; or
(c) the Lessee shall fail to perform or observe in any material
respect any covenant or agreement (other than those referred to in clauses (a)
and (b) above or clause (f) below) to be performed or observed by it under this
Lease or any other Transaction Document (other than the Tax Indemnity Agreement)
to which Lessee is a party, and such failure shall continue, after the Lessee
shall have been given a notice specifying such failure and
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requiring it to be remedied, for a period of 30 days; provided, that if such
failure is capable of cure and if the Lessee is diligently proceeding to remedy
such failure, such period shall (except with respect to Sections 6.0l(b),
6.01(c), 6.0l(f), 6.06(a), 7.01, 7.02, 7.03, 7.04, 7.05, 7.06, 9.0l(b) and 9.02
(as it relates to Supplemental Financings) of the Participation Agreement and
Sections 3(g), 7, 8(b), 11(a) and 11(b) of this Lease) be extended for an
additional period of 150 days; or
(d) any representation or warranty made by the Lessee in this Lease
or by Lessee in any other Transaction Document (other than the Tax Indemnity
Agreement) or in any written certificate furnished by the Lessee or any Seller
pursuant to the Transaction Documents (other than the Tax Indemnity Agreement)
shall prove to have been incorrect in any material respect when such
representation or warranty was made and shall remain material and materially
incorrect at the time of discovery, and shall not have been cured within 30 days
after written notice thereof shall have been given by Lessor to Lessee; or
(e)(i) the Lessee shall (l) admit in writing its inability to pay
its debts generally as they become due, (2) commence, file, or consent by answer
or otherwise to the filing against it of a proceeding or a petition for relief
or reorganization or arrangement or any other petition in bankruptcy, for
liquidation or to take advantage of any bankruptcy or insolvency law of any
jurisdiction, (3) make a general assignment for the benefit of its creditors,
(4) consent to the appointment of a custodian, receiver, trustee or other
officer with similar powers with respect to itself or with respect to any
substantial part of its property, or (5) take corporate or comparable action for
the purpose of any of the foregoing; or (ii) a court or Governmental Authority
of competent jurisdiction shall enter an order appointing, without consent of
the Lessee, a custodian, receiver, trustee or other officer with similar powers
with respect to the Project or with respect to any substantial part of the
Lessee's property, or constituting an order for relief or approving a petition
for relief or reorganization or any other petition in bankruptcy or for
liquidation or to take advantage of any bankruptcy or insolvency law of any
jurisdiction, or ordering the dissolution, winding-up or liquidation of the
Project or the Lessee; or (iii) any petition, case or proceeding for any relief
specified in the foregoing clause (ii) hereof shall be filed against the Project
or the Lessee with respect thereto and such petition shall not be dismissed
within 90 days; or
(f) the Lessee shall fail to perform or abide its covenants set
forth in Section 6.01(d) or 6.01(g) of the Participation Agreement.
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SECTION 16. Remedies.
(a) Remedies. Upon the occurrence of any Lease Event of Default and
at any time thereafter so long as the same shall be continuing, the Lessor (or,
if the Lien of the Security Documents has not been discharged in accordance with
Section 10.1 of the Indenture, the Indenture Trustee, it being agreed that,
except with respect to Excepted Rights and Excepted Payments, all references to
the Lessor in this Section 16 shall be deemed to mean the Indenture Trustee so
long as the Lien of the Security Documents has not been so discharged) at its
option may, by written notice to the Lessee (with, in the case of the Lessor's
action, a copy to the Indenture Trustee), declare this Lease to be in default
(provided, however, that this Lease shall automatically be deemed to have been
declared in default to the extent permitted by Applicable Law if there shall
exist a Lease Event of Default of the type described in Section 15(e)) and at
any time thereafter (unless all Lease Events of Default shall have been
remedied), the Lessor may exercise one or more of the following remedies, except
as hereinbelow expressly otherwise set forth, as the Lessor in its sole
discretion shall elect:
(i) the Lessor may (x) demand that the Lessee, and thereupon the
Lessee shall, at the Lessee's expense, return possession of the Project
promptly to the Lessor in the manner and condition required by, and
otherwise in accordance with the provisions of, Section 5, and (y) without
prejudice to any other remedy which the Lessor may have for possession of
the Project or arrearages in rent take all action required to enable the
Lessor to, and thereafter, enter upon the Site and take possession (to the
exclusion of the Lessee) of the Project and expel or remove the Lessee and
any other Person who may be occupying the Project or any part thereof, all
without liability to the Lessee or any other Person for or by reason of
such entry or taking of possession, whether for the restoration of damage
to property caused by such taking or otherwise;
(ii) the Lessor may sell the Project or any part thereof, together
with any interest of the Lessor under the Bills of Sale and the Equifax
Deed, at public or private sale, conducted in accordance with Applicable
Law, as the Lessor may determine, free and clear of any rights of the
Lessee therein and without any duty to account to the Lessee with respect
to such sale or for the proceeds thereof (except to the extent required by
clause (iv) or (v) below if the Lessor shall elect to exercise its rights
thereunder), in which event the Lessee's obligation to pay Basic Rent, for
periods commencing after the date of such sale shall terminate (except to
the extent that Basic Rent is to be included in computations under clause
(iv) or (v) below if the Lessor shall elect to exercise its rights
thereunder);
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(iii) the Lessor may elect to retake possession of the Project and,
if the Lessor desires, relet the same (or any part thereof) for the
benefit of the Lessee without terminating this Lease, in which case the
Lessee will be liable for and will pay to the Lessor all amounts required
to be paid by the Lessee during the remainder of the Lease Term as said
amounts accrue hereunder until the expiration of the Lease Term diminished
by any net sums received by the Lessor through reletting the Project
during said period (after deducting expenses incurred by the Lessor in
connection with such reletting); and in no event shall the Lessee be
entitled to any excess of rent or other amounts obtained by reletting over
and above the amount for which the Lessee would otherwise be liable
hereunder (it being understood and agreed that actions to collect amounts
due by the Lessee as provided in this clause (iii) may be brought from
time to time on one or more occasions, without the necessity of the Lessor
waiting until expiration of the Lease Term);
(iv) the Lessor may elect to retake possession of the Project, in
which case the Lessee will be liable for and will pay to the Lessor
damages in an amount equal to the amount specified in clause (C) of
Section 16(a)(v) below;
(v) the Lessor may, whether or not the Lessor shall have exercised
or shall thereafter at any time exercise its rights under clause (i),
(ii), (iii) or (iv) above (unless this clause (v) provides otherwise), by
notice to the Lessee specifying a payment date, demand that the Lessee pay
to the Corporate Owner Trustee for the account of the Lessor, and the
Lessee shall pay to the Corporate Owner Trustee for the account of the
Lessor, on the date specified in such notice, as damages for loss of a
bargain and not as a penalty (in lieu of the Basic Rent due after the date
specified in such notice), any unpaid Rent due or to become due and/or
accrued or to become accrued as of the Basic Rent Payment Date next
succeeding the date specified in such notice (calculated based upon the
Debt Rate then applicable) plus Supplemental Rent in an amount equal to
the Make Whole Amount if the Security Documents shall not have been
discharged in accordance with Section 10.1 of the Indenture, plus
whichever of the following amounts the Lessor, in its sole discretion,
shall specify in such notice (together with interest on such amount at the
Overdue Rate from the date specified in such notice to the date of actual
payment)
(A) an amount equal to the excess, if any, of (l) Stipulated
Loss Value, computed as of the Basic Rent Payment Date next
succeeding the date specified in such notice, over (2) the Fair
Market Rental Value (determined by the Lessor in its discretion on
the basis of the then actual condition of the Project) for the
remainder of the
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Lease Term after discounting such Fair Market Rental Value
semiannually to present value as of the date specified in such
notice at the Discount Rate; or
(B) an amount equal to the excess, if any, of (l) such
Stipulated Loss Value, computed as of the Basic Rent Payment Date
next succeeding the date specified in such notice over (2) the Fair
Market Sales Value (determined by the Lessor in its discretion on
the basis of the then actual condition of the Project) as of the
date specified in such notice; or
(C) an amount equal to the excess, if any, of (l) the present
value as of the date specified in such notice of all installments of
Basic Rent (calculated based upon the Debt Rate then applicable)
until the end of the Basic Term or the then current Renewal Term, as
the case may be, discounted semiannually at the Discount Rate, over
(2) the present value as of such date of the Fair Market Rental
Value (determined by the Lessor in its discretion on the basis of
the then actual condition of the Project) until the end of the Basic
Term or such Renewal Term, as the case may be, discounted
semiannually at the Discount Rate;
(D) provided that Lessor shall not have sold the Project
pursuant to this Section 16, an amount equal to the higher of such
Stipulated Loss Value or the Fair Market Sales Value of the Project
(determined by the Lessor in its discretion on the basis of the then
actual condition of the Project) as of the date specified in such
notice; and, in this event, upon payment by the Lessee of all
amounts payable by it under this clause (v)(D) and all other amounts
due under the Transaction Documents, the Lessor shall effect a
Transfer to the Lessee (or its designee) and the Lease Term shall
end and all the Lessee's obligations hereunder (other than any
obligation expressed herein or in any other Transaction Document as
surviving the termination of this Lease) shall cease;
(vi) if the Lessor shall have sold the Project pursuant to clause
(ii) above, the Lessor, if it shall so elect (in lieu of exercising its
rights under clause (v) above) by notice to the Lessee, may demand that
the Lessee pay to the Corporate Owner Trustee for the account of the
Lessor, and the Lessee shall pay to the Corporate Owner Trustee for the
account of the Lessor, on the date of such sale, as damages for loss of a
bargain and not as a penalty (in lieu of Basic Rent due for periods
commencing after the next Basic Rent Payment Date following the date of
such sale), any unpaid Rent due or to become due and/or accrued or to
become accrued as of the next Basic Rent Payment Date following the date
of such sale (calculated based upon the Debt Rate then applicable),
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plus Supplemental Rent in an amount equal to the Make Whole Amount if the
Security Documents shall not have been discharged in accordance with
Section 10.1 of the Indenture, plus the amount of any deficiency between
the Sale Proceeds and Stipulated Loss Value, computed as of such Basic
Rent Payment Date, together with interest at the Overdue Rate on the
amount of such Rent and such deficiency from the date of such sale until
the date of actual payment;
(vii) the Lessor may rescind or terminate this Lease; however, (A)
no reentry or taking of possession of the Project by the Lessor will be
construed as an election on the Lessor's part to terminate this Lease
unless a written notice of such intention is given to the Lessee, (B)
notwithstanding any reletting, reentry or taking of possession, the Lessor
may at any time thereafter elect to terminate this Lease for a continuing
Lease Event of Default and (C) no act or thing done by the Lessor or any
of its agents, representatives or employees shall be deemed an acceptance
of a surrender of the Project, and no agreement accepting a surrender of
the Project, shall be valid unless the same be made in writing and
executed by the Lessor;
(viii) in the event that this Lease is terminated, the Lessor shall
be entitled to collect all Rent which is due and owing as of the date of
the termination of the Lease;
(ix) in the event that this Lease is terminated or in the event that
the Lessor elects to exercise its remedies pursuant to clause (iii) or
(iv) above, the Lessor shall not have any obligation to relet or attempt
to relet the Project or any portion thereof, or to collect rent after
reletting; and in the event of relating the Lessor may relet the whole or
any portion of the Project for any period, to any Person, and for any use
and purpose; or
(x) the Lessor may proceed by appropriate court action to enforce
the terms hereof or to recover damages for the breach hereof; or
(xi) the Lessor may exercise any other right or remedy that may be
available to it under Applicable Law.
(b) No Release. No rescission or termination of this Lease, in whole
or in part, or repossession of the Project or exercise of any remedy under
Section 16(a) shall relieve the Lessee of any of its obligations under this
Lease. In addition, except as aforesaid, the Lessee shall be liable for any and
all unpaid Rent due hereunder before, after or during the exercise of any of the
foregoing remedies, including all reasonable legal fees and other reasonable
costs and expenses incurred by the Owner Trustees, the Lessor, the Owner
Participant, the Indenture Trustee or any
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Noteholder by reason of the occurrence of any Lease Event of Default or the
exercise of the Lessor's remedies with respect thereto. At any sale of the
Project or any part thereof pursuant to this Section 16, the Corporate Owner
Trustee, the Individual Owner Trustee, the Lessor, the Owner Participant, the
Lessee, the Indenture Trustee or any Noteholder may bid for and purchase such
property.
(c) Remedies Cumulative. Except as expressly set forth in Section
16(a)(v), no remedy under Section 16(a) is intended to be exclusive, but each
shall be cumulative and in addition to any other remedy provided thereunder or
otherwise available to the Lessor at law or in equity. No express or implied
waiver by the Lessor of any Lease Default or Lease Event of Default hereunder
shall in any way be, or be construed to be, a waiver of any future or subsequent
Lease Default or Lease Event of Default. The failure or delay of the Lessor in
exercising any right granted it hereunder upon any occurrence of any of the
contingencies set forth herein shall not constitute a waiver of any such right
upon the continuation or recurrence of any such contingency or similar
contingencies and any single or partial exercise of any particular right by the
Lessor shall not exhaust the same or constitute a waiver of any other right
provided herein. To the extent permitted by Applicable Law, the Lessee hereby
waives any rights now or hereafter conferred by statute or otherwise that may
require the Lessor to sell, lease or otherwise use the Project in mitigation of
the Lessor's damages as set forth in Section 16(a) or that may otherwise limit
or modify any of the Lessor's rights and remedies provided in this Section 16.
SECTION 17. Notices. All communications, declarations, demands and
notices provided for in this Lease shall be in writing and shall be given in
person or by means of telecopy, or other wire transmission, or mailed by
registered or certified mail, or sent by courier, addressed as provided in the
Participation Agreement. All such communications, declarations, demands and
notices given in such manner shall be effective on the date of receipt.
SECTION 18. Successors and Assigns. This Lease, including all
agreements, covenants, indemnities, representations and warranties contained
herein, shall be binding upon and inure to the benefit of the Lessor and the
Lessee and their respective permitted successors and assigns under the
Transaction Documents.
SECTION 19. Right of First Offer.
(a) Grant of Right of First Offer.
(i) At any time during the Lease Term (so long as no Lease
Event of Default has occurred and is then continuing), before the
Lessor may sell or offer to sell the Project to any Person (except
pursuant to a Portfolio Sale or a sale to an Affiliate of the Owner
Participant) the Lessor shall offer the Project to the Lessee for
purchase at a cash price determined
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by the Lessor (the "Determined Price"). Such offer may be accepted
at any time within 90 days after the date of receipt by the Lessee
of the notice of the offer and the Determined Price by irrevocable
written notice of the acceptance of such offer, and the closing date
for such purchase shall not be more than 180 days after the date of
such written notice.
(ii) If the Lessee shall not give notice of exercise or
rejection of such first offer within the 90-day period for
acceptance described in clause (i) above, the right shall be deemed
waived in respect of such offer and, except as further provided
herein, this right of first offer shall thereupon be terminated and
have no further force and effect.
(iii) The Lessee shall, upon written request, furnish within
the 90-day period for acceptance described in clause (i) above (or
at any time thereafter upon the request of the Corporate Owner
Trustee or the Lessor), a recordable statement certifying any waiver
or rejection of such first offer. Any such statement shall be
binding on the Lessee.
(iv) In the event the Lessee does not elect to purchase the
Project for the Determined Price, the Project may be sold by the
Lessor to any Person (other than a Person who, directly or through
any of such Person's Affiliates, is a Competitor of the Lessee or
any of the Lessee's Affiliates) at a cash price not less than
ninety-five percent (95%) of the Determined Price, provided a letter
of intent is executed by the Lessor and prospective buyer within 180
days following the giving by the Lessee of a notice that it waives
or rejects its first offer right (or following the deemed waiver of
such right) without the need to re-offer the Project to the Lessee.
If such a letter of intent has been executed within the required
time period, the Project shall not be sold at any price lower than
95% of the Determined Price or on terms other than cash or at a time
more than 360 days following the giving by the Lessee of a notice
that it waives or rejects its first offer right (or following the
deemed waiver of such right) without the Lessor again complying with
the requirements of this Section 19.
(v) if the Lessee shall elect to purchase the Project as
herein contemplated, the Lessee shall, at its sole expense and as a
condition to such purchase, on such date of purchase, execute and
deliver such documentation, as shall be reasonably satisfactory to
the Owner Participant, the Indenture Trustee and the Noteholders to
cause the indebtedness represented and evidenced by the Notes and
the Security Documents or such other notes and security documents as
are executed and delivered in connection with such purchase to be a
direct and full recourse obligation of the Lessee secured by a first
priority deed to secure debt and security interest in the Indenture
Estate (as modified by such documentation) and the Lessee shall
deliver,
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or shall cause to be delivered, such certificates, legal opinions,
title insurance policies, and other documentary evidence as shall be
reasonably requested by the Owner Participant, the Indenture Trustee
and the Noteholders as necessary to effect such documentation. The
Lessee shall pay all reasonable costs and expenses in connection
with the transactions contemplated with this Section 19(a)(v).
(b) Savings Clause. Unless terminated sooner by the agreement
of the parties, the right of first offer granted pursuant to this Section 19 and
any other future unvested interest in real property created under the terms of
this Lease shall terminate no later than twenty-one (21) years less one day
after the death of the last survivor of the descendants of the late King George
V of the United Kingdom of Great Britain and Northern Ireland who were living on
the date hereof.
Notwithstanding anything to the contrary contained herein, this
Section 19 shall not be applicable to the Indenture Trustee or its successor if
the Indenture Trustee or its successor has become the owner of the Project
pursuant to Section 6 of the Indenture.
SECTION 20. Right To Perform for Lessee. Subject to the provisions
of the Indenture, if the Lessee shall fail to make any payment to be made by it
hereunder or shall fail to perform or comply with any of its other agreements
contained herein, and such failure constitutes a Lease Default hereunder and the
Lessee shall not be diligently attempting to cure such Lease Default, then
(subject to the requirements of this Section 20) unless and until the Lessee
shall make such payment or perform or comply with such Agreement, the Owner
Participant, the Corporate Owner Trustee, the Lessor, the Indenture Trustee or
any Noteholder may, but shall not be obligated to, to the extent not prohibited
by Applicable Law, itself make any such payment or perform or comply with any
such agreement as the Lessee shall be obligated to pay, perform or comply with
under this Lease, and the amount of such payment and the amount of the
reasonable expenses of the Owner Participant, the Corporate Owner Trustee, the
Lessor or the Indenture Trustee or any Noteholder, as the case may be, incurred
in connection with such payment or the performance or compliance with such
agreement, as the case may be, together with interest thereon at the Overdue
Rate, shall be deemed Supplemental Rent, payable by the Lessee upon demand on an
After-Tax Basis. The Owner Participant, the Corporate Owner Trustee, the Lessor,
the Indenture Trustee or any Noteholder, as the case may be, shall give the
Lessee at least 2 Business Days' notice before taking any action in accordance
with the preceding sentence, provided that the failure to give such notice shall
have no effect upon any of the rights of the Owner Participant, the Corporate
Owner Trustee, the Lessor, the Indenture Trustee or any Noteholder, as the case
may be, thereunder.
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SECTION 21. Rejectable Offers. The following provisions shall apply
in the event the Lessee wishes to make a rejectable offer pursuant to Sections
9(c), 13(b) or l4(b) of the Lease or is required to make a rejectable offer
pursuant to Section 6.01(g) of the Participation Agreement (herein, in each
case, a "Rejectable Offer"):
(a) Rejectable Offer Notices.
(i) Event of Loss. If the Lessee shall have delivered an Event
of Loss Notice electing to terminate this Lease pursuant to Section
9(a)(ii) with respect to an Event of Loss occurring during the
Interim Term or the Basic Term, such Event of Loss Notice shall, as
provided in Section 9(c), be deemed to be a Rejectable Offer Notice
for purposes of this Section 21.
(ii) Burdensome Buyout. If a Burdensome Buyout Event shall
have occurred and the Lessee shall have elected to exercise its
rights with respect thereto pursuant to Section 13(a), the
Burdensome Buyout Notice given pursuant to Section l3(b) shall be
deemed to be a Rejectable Offer Notice for purposes of this Section
21.
(iii) Early Termination. If the Lessee shall have exercised
its option to terminate this Lease pursuant to Section 14(b), the
Early Termination Notice given thereunder shall be deemed to be a
Rejectable Offer notice for purposes of this Section 21.
(iv) Designated Event and Approved Rating Decline. If the
Lessee is required to make separate Rejectable Offers pursuant to
Section 6.01(g) of the Participation Agreement, the Lessee shall:
(A) make, by written notice to the Corporate Owner Trustee, the
Lessor and the Indenture Trustee, with a copy to the Owner
Participant and the Noteholders, a Rejectable Offer to purchase the
Project from the Lessor on a date specified in Schedule 2.2 to this
Lease which is not less than 45 nor more than 75 days after the date
on which the Approved Rating declined in connection with a
Designated Event (the "Lessor Designated Event Purchase Date"); and
(B) make, by written notice to the Owner Participant with copies to
the Corporate Owner Trustee, the Lessor, the Indenture Trustee and
the Noteholders, a separate Rejectable Offer to purchase the Owner
Participant Interest on the same such date (the "OP Designated Event
Purchase Date") in the event the Lessor rejects such offer, which
notice shall be delivered simultaneously with the Rejectable Offer
Notice referred to in clause (A) above.
(b) Notices of Acceptance or Rejection of Rejectable Offers.
(i) By Lessor. The Lessor, at its option, may (subject always
to compliance by the Lessor and the Lessee, as
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applicable with the requirements of Sections 9(c), 13(b) or 14(b) of
this Lease or Section 6.01(g)(A) of the Participation Agreement, as
applicable) accept or (until such time as the Lien of the Security
Documents shall have been discharged in accordance with Section 10.1
of the Indenture, with the prior written consent of the Indenture
Trustee in accordance with the provisions of Section 2.6(b) of the
Indenture) reject any Rejectable Offer made by the Lessee pursuant
to Sections 9(c), 13(b) or 14(b) of this Lease or Section 6.01(g)(A)
of the Participation Agreement and this Section 21 by delivering a
notice to the Lessee, the Owner Participant, the Indenture Trustee
and each Noteholder to such effect not later than (A) 35 days prior
to the Loss Determination Date or the Lessor Designated Event
Purchase Date, as applicable, or (B) 60 days prior to the Burdensome
Buyout Purchase Date or Early Termination Date, as applicable. If
the Lessor fails to give timely notice to the Lessee of its
acceptance or rejection of any Rejectable Offer made pursuant to
Sections 9(c), 13(b) or 14(b) of the Lease or Section 6.01(g)(A) of
the Participation Agreement or if the Lessor, prior to or
simultaneously with the rejection of any such Rejectable Offer,
fails for any reason whatsoever to deposit the amount described in
Section 21(c)(i) below with the Indenture Trustee and to deliver to
the Lessee the written consent to such rejection executed by the
Indenture Trustee (in accordance with Section 21 (b) (iii) hereof),
the Lessor shall automatically and irrevocably be deemed to have
accepted such Rejectable Offer.
(ii) By Owner Participant. If (but only if) the Lessor (acting
with the written consent of the Indenture Trustee in accordance with
Section 2.6(b) of the Indenture) rejects any Rejectable Offer made
to it by the Lessee pursuant to Section 6.01(g)(A) of the
Participation Agreement and Section 21(a)(iv)(A) above, the Owner
Participant may elect to accept or reject the separate Rejectable
Offer made to it under Section 6.01(g)(B) of the Participation
Agreement and Section 21(a)(iv)(B) above by delivering a notice to
the Lessee, with copies to the Corporate Owner Trustee, the Lessor,
the Indenture Trustee and each Noteholder to such effect not later
than 20 days prior to the proposed OP Designated Event Purchase
Date. If the Owner Participant fails to give notice to the Lessee of
its acceptance or rejection of any such Rejectable Offer, it shall
automatically and irrevocably be deemed to have rejected such
Rejectable Offer.
(iii) Consent of Indenture Trustee Required. Notwithstanding
anything in the Transaction Documents to the contrary, the Lessee
and the Lessor acknowledge and agree that, until such time as the
Lien of the Security Documents shall have been discharged in
accordance with Section 10.1 of the Indenture, the Lessor shall not
be authorized or empowered to reject any Rejectable Offer without
the prior written consent
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of the Indenture Trustee (given in accordance with the provisions of
Section 2.6(b) of the Indenture).
(c) Events Upon Rejection of Rejectable Offers.
(i) Lessor Obligations Relating to Event of Loss, Burdensome
Buyout and Early Termination. If the Lessor (in full compliance with
the provisions of Sections 9(c), l3(b), 14(b) and/or 21 of this
Lease, as the case may be), rejects any Rejectable Offer made by the
Lessee pursuant to such Sections 9(c), 13(b) or 14(b), it shall
deposit with the Indenture Trustee for application in accordance
with the provisions of the Indenture, on or prior to the same
Business Day on which it rejects the Rejectable Offer, cash in
Dollars in an amount sufficient to pay the aggregate principal
amount of the outstanding Notes, together with estimated accrued and
unpaid interest thereon (calculated based upon the Debt Rate then
applicable), through and including the Loss Determination Date, the
Burdensome Buyout Purchase Date or the Early Termination Purchase
Date, as applicable. In addition, the Lessor shall deposit with the
Indenture Trustee for application in accordance with the provisions
of the Indenture, two Business Days prior to the Loss Determination
Date, Burdensome Buyout Purchase Date or Early Termination Date, as
applicable, from funds derived from a Supplemental Rent payment by
the Lessee (which the Lessee agrees to pay to the Corporate Owner
Trustee for the account of the Lessor two Business Days prior to
such Loss Determination Date, Burdensome Buyout Purchase Date or
Early Termination Date, as applicable), an amount sufficient to pay
the Make Whole Amount, if any, due on the Notes on such Loss
Determination Date, Burdensome Buyout Purchase Date or Early
Termination Purchase Date together with all other amounts (other
than amounts referred to in the next following sentence) then due
and owing to the Indenture Trustee and/or the Noteholders under the
Transaction Documents as of the applicable date. In addition, the
Lessor shall make an additional payment on the Loss Determination
Date, Burdensome Buyout Date or Early Termination Date, as
applicable, in an amount equal to the excess, if any, of the actual
accrued interest due on such date on the Notes over the estimated
accrued interest amount previously deposited by the Lessor and, to
the extent, if any, such deposited amount exceeds the actual accrued
interest due on such date, the Indenture Trustee shall refund such
excess to the Lessor. If the Lessor fails for any reason whatsoever
to make the deposits described in this Section 21(c)(i) in a timely
manner, it shall automatically and irrevocably be deemed to have
accepted the Rejectable Offer.
(ii) Lessee Obligations Relating to Event of Loss, Burdensome
Buyout and Early Termination. If the Lessor (subject always to
compliance with the requirements of Sections 9(c), l3(b), 14(b)
and/or 21 of the Lease, as applicable),
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rejects any Rejectable Offer made by the Lessee pursuant to such
Sections 9(c), 13(b) or 14(b), the Lessee shall pay to the Indenture
Trustee for the account of the Lessor and for application in
accordance with the provisions of the Indenture (or to the Corporate
Owner Trustee for the account of the Lessor if the Lien of the
Security Documents shall have been discharged in accordance with
Section 10.1 of the Indenture) on the Loss Determination Date, the
Burdensome Buyout Purchase Date or the Early Termination Date, as
applicable, the sum of (A) any and all Rent (other than Stipulated
Loss Value and Basic Rent payable in advance on such date), plus (B)
Supplemental Rent in an amount equal to the Make Whole Amount, if
any, due on any Loss Determination Date, Burdensome Buyout Purchase
Date or Early Termination Date, as applicable, plus (C) all other
amounts due and owing under the Transaction Documents on such date,
whereupon this Lease and the other Transaction Documents (other than
any obligations expressed herein or therein as surviving the
termination of this Lease) shall terminate.
(iii) Lessor and Owner Participant Obligations Relating to
Designated Event and Decline in Approved Rating.
(A) If the Lessor (acting with the written consent of
the Indenture Trustee in accordance with Section 2.6(b) of the
Indenture) rejects any Rejectable Offer made to it pursuant to
Section 6.01(g)(A) of the Participation Agreement and Section
2l(a)(iv)(A), the Lessor shall, upon written request, furnish
a written statement to the Lessee, with copies to the
Indenture Trustee and the Noteholders, confirming the waiver
by the Lessor of all rights against the Lessee under such
Section 6.01(g)(A) and otherwise with respect to such
Designated Event and decline in Approved Rating (without
prejudice to the rights of the Lessor under such Section
6.01(g)(A) upon the occurrence of any subsequent Designated
Event and decline in Approved Rating).
(B) If the Owner Participant rejects (or is deemed to
have rejected) any Rejectable Offer made to it pursuant to
Section 6.01(g)(B) of the Participation Agreement and Section
21(a)(iv)(B), the Owner Participant shall, upon written
request, furnish a written statement to the Lessee, with
copies to the Indenture Trustee and the Noteholders,
confirming the waiver by the Owner Participant of all rights
against the Lessee under such Section 6.01(g)(B) and otherwise
with respect to such Designated Event and decline in Approved
Rating (without prejudice to the rights of the Owner
Participant under such Section 6.01(g)(B) upon the occurrence
of any subsequent Designated Event and decline in Approved
Rating).
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(iv) Lessee Obligations Relating to Designated Event and
Decline in Approved Rating. If both the Lessor (acting with the
written consent of the Indenture Trustee in accordance with Section
2.6(b) of the Indenture) and the Owner Participant shall have
rejected (or be deemed to have rejected) any Rejectable Offers made
to them by the Lessee pursuant to Section 6.01(g) of the
Participation Agreement and Section 2l(a)(iv) above, the obligations
of the Lessee with respect to the related Designated Event and
decline in Approved Rating shall terminate (without prejudice to the
rights of the Lessor and the Owner Participant under Section 6.01(g)
of the Participation Agreement and Section 21(a)(iv) above upon the
occurrence of any subsequent Designated Event and decline in
Approved Rating) and the Lease and all other Transaction Documents
shall remain in effect. If the Lessor (acting with the written
consent of the Indenture Trustee) shall have rejected (or be deemed
to have rejected) any Rejectable Offer made to it by the Lessee
pursuant to Section 6.01(g)(A) of the Participation Agreement and
the Owner Participant shall have accepted the related Rejectable
Offer made to it by the Lessee pursuant to such Section 6.01(g)(B),
then and in such event on or prior to the date on which the Lessee
shall pay to the Owner Participant the OP Designated Purchase Price,
the Lessee shall, at its sole expense and as a condition to such
purchase, execute and deliver such documentation as shall be
reasonably satisfactory to the Owner Participant, the Indenture
Trustee and the Noteholders to cause the indebtedness represented
and evidenced by the Notes and the Security Documents or such other
notes and security documents as are executed and delivered in
connection with such purchase to be a direct and full recourse
obligation of the Lessee secured by a first priority deed to secure
debt and security interest in the Indenture Estate (as modified by
such documentation) and the Lessee shall deliver, or shall cause to
be delivered, such certificates, legal opinions, title insurance
policies, and other documentary evidence as shall be reasonably
required by the Owner Participant, the Indenture Trustee and the
Noteholders as necessary to effect such documentation. The Lessee
shall pay all reasonable costs and expenses in connection with the
transactions contemplated with this Section 21(c)(iv).
(d) Events Upon Acceptance of Rejectable Offers.
(i) Lessor Obligations Relating to Event of Loss, Burdensome
Buyout, Early Termination and Designated Event and Decline in
Approved Rating. In the event the Lessor (subject always to
compliance with the requirements of Sections 9(c), 13(b), 14(b)
and/or 21 of this Lease and/or Section 6.01(g)(A) of the
Participation Agreement, as applicable) shall have accepted (or
shall be deemed to have accepted) a Rejectable Offer made to it by
the Lessee pursuant to Sections 9(c), 13(b) or 14(b) of this Lease
or Section 6.01(g)(A) of the
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Participation Agreement and this Section 21, and the Lessee shall
have paid all amounts payable by it with respect thereto in
accordance with Section 21(e)(i), 21(e)(ii), 21(e)(iii) or
21(e)(iv)(A) below, as applicable, the Lessor shall effect a
Transfer of the Project to the Lessee or its designee on the Loss
Determination Date, the Burdensome Buyout Purchase Date, the Early
Termination Date or the Lessor Designated Event Purchase Date, as
applicable. Upon such Transfer, all of the Lessee's obligations
under this Lease and the other Transaction Documents (other than any
obligations expressed herein or therein as surviving the termination
of the Lease) shall terminate.
(ii) Owner Participant Obligations Relating to Designated
Event and Decline in Approved Rating. In the event the Owner
Participant accepts a Rejectable Offer made to it by the Lessee
pursuant to Section 6.01(g)(B) of the Participation Agreement and
this Section 21 and the Lessee shall have paid all amounts payable
by it with respect thereto in accordance with Section 21(e)(iv)(B)
below, the Owner Participant shall effect a Transfer of the Owner
Participant Interest to the Lessee or its designee on the OP
Designated Event Purchase Date.
(e) Lessee's Payment Obligations.
(i) Event of Loss. If the Lessor accepts (or is deemed to have
accepted) a Rejectable Offer made pursuant to Section 9(c) and this
Section 21, the Lessee shall pay to the Indenture Trustee for the
account of the Lessor on the Loss Determination Date for application
in accordance with the provisions of the Indenture (or to the
Corporate Owner Trustee for the account of the Lessor if the Lien of
the Security Documents shall have been discharged in accordance with
Section 10.1 of the Indenture) an amount equal to the Event of Loss
Purchase Price.
(ii) Burdensome Buyout Event. If the Lessor accepts (or is
deemed to have accepted) a Rejectable Offer pursuant to Section
13(b) and this Section 21, the Lessee shall pay to the Indenture
Trustee for the account of the Lessor on the Burdensome Buyout
Purchase Date for application in accordance with the provisions of
the Indenture (or to the Corporate Owner Trustee for the account of
the Lessor if the Lien of the Security Documents shall have been
discharged in accordance with Section 10.1 of the Indenture), an
amount equal to the Burdensome Buyout Purchase Price.
(iii) Early Termination. If the Lessor accepts (or is deemed
to have accepted) a Rejectable Offer made by the Lessee pursuant to
Section 14(b) and this Section 21, the Lessee shall pay to the
Indenture Trustee for the account of the Lessor on the Early
Termination Date for application in accordance with the provisions
of the Indenture (or to the Corporate Owner
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Trustee on behalf of the Lessor if the Lien of the Security
Documents shall have been discharged in accordance with Section 10.1
of the Indenture), an amount equal to the Early Termination Purchase
Price.
(iv) Designated Event and Approved Rating Decline.
(A) If the Lessor accepts a Rejectable Offer made to it
by the Lessee pursuant to Section 6.01(g)(A) of the
Participation Agreement and Section 21(a)(iv)(A) above, the
Lessee shall pay to the Indenture Trustee for the account of
the Lessor on the Lessor Designated Event Purchase Date for
application in accordance with the provisions of the Indenture
(or to the Corporate Owner Trustee on behalf of the Lessor if
the Lien of the Security Documents shall have been discharged
in accordance with Section 10.1 of the Indenture) an amount
equal to the Lessor Designated Event Price.
(B) If the Owner Participant accepts a Rejectable Offer
made to it by the Lessee pursuant to Section 6.01(g)(B) of
the Participation Agreement and Section 2l(a)(iv)(B) above,
the Lessee shall pay to the Owner Participant on the OP
Designated Event Purchase Date an amount equal to the OP
Designated Event Price.
SECTION 22. Amendments and Miscellaneous.
(a) Amendments in Writing. The provisions of this Lease may not be
waived, altered, modified, amended, supplemented or terminated in any manner
whatsoever except by written instrument signed by the Lessor and the Lessee. It
is understood and agreed by the parties hereto that, until the Lien of the
Security Documents shall have been discharged in accordance with Section 10.1 of
the Indenture, no waiver, alteration, modification, amendment, supplement or
termination of this Lease (other than as to Excepted Payments and Excepted
Rights) shall be effective unless and until the consent of the Indenture Trustee
or the Noteholders shall have been obtained in accordance with the provisions of
the Indenture.
(b) Survival.
(i) All indemnities, representations and warranties contained
or incorporated by reference in this Lease shall survive, and shall
continue in effect following, the execution and delivery of this
Lease and the expiration or termination of this Lease.
(ii) The obligations of the Lessee to pay Supplemental Rent
and the obligations of the Lessee under Sections 5, 16 and 20 of
this Lease (as well as the obligations of the Lessee under Sections
7.01 and 7.02 of the Participation Agreement) shall survive the
expiration or termination of this Lease;
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provided, however, that, after the expiration or termination of this
Lease, the Lessor shall not have any right or be entitled to any
remedy in respect of the Lessee's failure to perform its obligations
under Section 20 except the right to institute an action seeking
recovery of actual damage with respect to claims or events arising
thereunder on or prior to the expiration or termination of the
Lease.
(c) Severability of Provisions. Any provision of this Lease that may
be determined by competent authority to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction only, be ineffective to the extent
of such invalidity, prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such invalidity, prohibition or
unenforceability in any jurisdiction shall not invalidate, prohibit or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by Applicable Law, the Lessee hereby waives any provision of law that renders
any provision hereof prohibited or unenforceable in any respect.
(d) True Lease. This Lease is intended as, and shall constitute, an
agreement of lease, and nothing herein shall be construed as conveying to the
Lessee any right, title or interest in or to the Project except as a lessee.
(e) Original Lease. The single executed original of this Lease
marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART" on the front
cover and containing the receipt of the Indenture Trustee therefor on or
following the signature page thereof shall be the "Original Executed
Counterpart" of this Lease. To the extent that this Lease constitutes chattel
paper, as such term is defined in the Uniform Commercial Code as in effect in
any applicable jurisdiction, no security interest in this Lease may be created
through the transfer or possession of any counterpart other than the "Original
Executed Counterpart".
(f) Governing Law. THIS LEASE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE CONFLICTS LAW) OF THE STATE OF
GEORGIA.
(g) Headings. The division of this Lease into sections, the
provision of a table of contents and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Lease.
(h) Estoppel Certificates.
(i) The Lessee agrees, at any time and from time to time, upon
not less than thirty (30) days' prior written notice from the
Lessor, to execute, acknowledge and deliver to the Lessor a
statement in writing (v) certifying that this Lease is unmodified
and in full force and effect (or if there have, been
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modifications, that this Lease is in full force and effect as
modified and stating the modifications hereto); (w) stating the
dates to which the Basic Rent and other specified charges hereunder
have been paid by the Lessee; (x) stating whether or not the Lessee
has knowledge that the Lessor is in default in the performance of
any covenant, agreement or condition contained in this Lease, and,
if the Lessee has knowledge of such a default, specifying each such
default; (y) stating the address to which notices to the Lessee
shall be sent; and (z) stating such other matters as the Lessor may
reasonably request.
(ii) The Lessor agrees, at any time and from time to time,
upon not less than thirty (30) days' prior written notice from the
Lessee, to execute, acknowledge and deliver to the Lessee, with a
copy to the Indenture Trustee, a statement in writing (v) certifying
that this Lease is unmodified and in full force and effect (or if
there have been modifications, that this Lease is in full force and
effect as modified and stating the modifications hereto) ; (w)
stating the dates to which the Basic Rent and other specified
charges hereunder have been paid by the Lessee; (x) stating whether
or not the Lessor has knowledge that the Lessee is in default in the
performance of any covenant, agreement or condition contained in
this Lease, and, if the Lessor has knowledge of such a default,
specifying each such default; (y) stating the address to which
notices to the Lessor shall be sent; and (z) stating such other
matters as the Lessee may reasonably request.
(i) Concerning the Trust. William J. Wade is entering into this
Lease solely as the Individual Owner Trustee under the Trust Agreement and not
in his individual capacity. Accordingly, except as otherwise expressly set forth
herein or in the other Transaction Documents, each of the representations,
warranties, undertakings and agreements herein made on the part of William J.
Wade as Lessor is made and intended not as a personal representation, warranty,
undertaking or agreement by or for the purpose or with the intention of binding
William J.Wade or the Trust Company personally, but is made and intended for
the purpose of binding only the Trust and the Trust Estate; this Lease is
executed and delivered by William J. Wade solely in the exercise of the powers
expressly conferred upon him as the Individual Owner Trustee under the Trust
Agreement; and no personal liability or responsibility is assumed hereunder by
or shall at any time be enforceable against William J. Wade or the Trust
Company, or any successor in trust on account of any action taken or omitted to
be taken or any representation, warranty, undertaking or agreement hereunder of
William J. Wade, as Lessor, either expressed or implied, all such personal
liability, if any, being expressly waived by the Lessee, except that the Lessee
or any Person acting by, through or under it, making a claim hereunder, may look
to the Trust Estate for satisfaction of the same and William J. Wade or his
successors in trust, and the Trust Company or its
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successors in trust, shall be personally liable for his or its own gross
negligence or willful misconduct (or negligence, in the case of the handling,
holding and transfer of funds) in the performance of its or his or its duties as
trustees of the Trust or otherwise. If any successor trustee is appointed for
William J. Wade or the Trust Company in accordance with the terms of the Trust
Agreement, such successor trustee, without any further act, shall succeed to all
the rights, duties, immunities and obligations of William J. Wade or the Trust
Company, as applicable, hereunder and the predecessor trustee shall be released
from all further duties and obligations hereunder.
(j) Counterpart Execution. This Lease 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.
Although this Lease is dated as of the date first above written for convenience,
the actual date of execution hereof by the parties hereto is the Closing Date,
and this Lease shall be effective on, and shall not be binding on any party
hereto until, the Closing Date.
(k) Time is of the Essence. Time is of the essence in this Lease.
(l) Costs of Transfer. All costs and expenses in connection with any
transfer of the Project (or any portion thereof) to the Lessee by the Lessor
(including, without limitation, taxes, escrow fees, title insurance premiums,
recording charges and reasonable attorneys' fees) pursuant to the provisions of
any Transaction Document other than Section 19 of this Lease (excluding Section
19(a)(v)) shall be paid for by the Lessee.
[SIGNATURES ON THE FOLLOWING PAGE]
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Lease
to be duly executed by a representative or officer thereunto duly authorized as
of the date and year first above written.
Lessor:
/s/ William J. Wade
----------------------------------------
William J. Wade, not in his individual
capacity but solely as the Individual
Owner Trustee of Equifax Business Trust
No. 1994-A, a Delaware business trust
Lessee:
EQUIFAX INC.
By: /s/ Ralph F. Haygood
------------------------------------
Name: Ralph F. Haygood
-----------------------------------
Title: Treasurer
----------------------------------
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EXHIBIT 10.26
MASTER AGREEMENT
FOR
OPERATIONS SUPPORT SERVICES
Version 4.0
This Master Agreement is entered into as of May 11, 1999 (the "Effective
---------
Date"), between
----
1. Electronic Data Systems Corporation, a Delaware corporation ("EDS")
AND
2. Equifax Payment Services, Inc., a Delaware corporation ("Equifax").
The Parties agree to the terms and conditions set forth in this Master
Agreement (including the forms of Exhibits and Schedules referenced in this
Master Agreement), and in each Transaction Document (including the Schedules
referenced in each Transaction Document) executed by the Parties referencing
this Master Agreement. Each Transaction Document is incorporated into this
Master Agreement, and the several Transaction Documents and this Master
Agreement are herein collectively referred to as the Agreement.
Signed for and on behalf of EDS:
Electronic Data Systems Corporation
Signature: /s/ Illegible
-------------------------------------
Title:
-----------------------------------------
Signed for and on behalf of Equifax:
Equifax Payment Services, Inc.
Signature: /s/ Illegible
------------------------------------
Title:
-----------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
1. PURPOSE/STRUCTURE/TERM OF AGREEMENT..................................... 1
1.1. Purpose of Agreement............................................... 1
1.2. Structure of Agreement............................................. 2
1.3. Term of Agreement.................................................. 2
1.4. Extension of Services.............................................. 2
2. DEFINITIONS............................................................. 2
3. THE SERVICES............................................................ 3
3.1. Obligation to Provide Services..................................... 3
3.2. Performance........................................................ 3
3.3. Disaster Recovery Services......................................... 4
3.4. Inspections and Audits............................................. 4
3.5. Resources and Facilities........................................... 5
3.6. Data and Security.................................................. 6
3.7. Technology Refresh................................................. 7
3.8. Software Licenses.................................................. 7
3.9. Software Currency.................................................. 8
3.10. Viruses........................................................... 9
3.11. Software - Substitutions and Additions............................ 9
3.12. Third Party Agreements - Substitutions and Additions.............. 9
3.13. New Services......................................................10
3.14. Affiliates........................................................10
4. WARRANTIES/REPRESENTATIONS/COVENANTS....................................11
4.1. Work Standards.....................................................11
4.2. Noninfringement....................................................11
4.3. Disabling Code.....................................................11
4.4. Authorization and Enforceability...................................11
4.5. Disclaimer.........................................................11
4.6. Regulatory Proceedings and Compliance with Laws....................11
4.7. Year 2000 Warranty.................................................12
4.8. Covenant of Cooperation and Good Faith.............................12
4.9. Compliance with Standards..........................................12
5. TRANSITION..............................................................12
5.1. Transition Plan....................................................12
5.2. [*]................................................................12
6. INTEGRATED PLANNING TEAM/CHANGE CONTROL PROCESS.........................13
6.1. Integrated Planning Team...........................................13
6.2. Projections/Plans..................................................13
6.3. Agreement Change Control Process...................................14
* Information omitted pursuant to Request for Confidential Treatment under Rule
406 of the Securities Act of 1933.
<PAGE>
7. SERVICES STAFFING/MANAGEMENT/ADMINISTRATION.............................15
7.1. Project Executives and Managers....................................15
7.2. Replacement of Personnel...........................................15
7.3. Retention of Experienced Personnel.................................15
7.4. Efficient Use of Resources.........................................16
7.5. Key Positions......................................................16
7.6. Hiring of Employees................................................16
8. RELATIONSHIP PROTOCOLS..................................................16
8.1. Evolving Nature of Relationship....................................16
8.2. Required Consents..................................................17
8.3. Appointment as Attorney In Fact....................................18
8.4. Conflicts of Interests.............................................19
8.5. Alternate Providers................................................19
8.6. Use of Subcontractors..............................................20
8.7. Equifax Approvals and Notification.................................20
9. CHARGES/NEW SERVICES/INVOICES/PAYMENTS..................................21
9.1. Disbursements......................................................21
9.2. Monthly Charges....................................................21
9.3. [*]................................................................21
9.4. Annual Adjustment..................................................21
9.5. Taxes..............................................................22
9.6. New Services.......................................................22
9.7. Invoice Payment....................................................22
9.8. Benchmark Study....................................................23
9.9. Service Credits....................................................23
9.10. Other Credits.....................................................24
9.11. RESERVED..........................................................24
9.12. Disputed Charges/Credits..........................................24
9.13. Reduction of Equifax Work.........................................24
10. INTELLECTUAL PROPERTY RIGHTS.............................................25
10.1. Ownership of Materials............................................25
10.2. Obligations Regarding Materials...................................25
11. CONFIDENTIALITY..........................................................26
11.1. Confidential Information..........................................26
11.2. Obligations.......................................................26
11.3. Exclusions........................................................27
11.4. Loss of Company Information.......................................27
11.5. Limitation........................................................27
12. TERMINATION..............................................................27
12.1. Termination By Equifax............................................27
12.2. Termination by EDS................................................28
12.3. [*]...............................................................28
12.4. Services Transfer Assistance......................................28
* Information omitted pursuant to Request for Confidential Treatment under Rule
406 of the Securities Act of 1933.
<PAGE>
12.5. Other Rights Upon Termination.....................................29
12.6. Effect of Termination/Survival of Selected Provisions.............30
13. LIABILITY................................................................30
13.1. Liability Caps....................................................31
13.2. Exclusions........................................................31
13.3. Direct Damages....................................................31
13.4. Dependencies......................................................31
13.5. Remedies..........................................................32
14. INDEMNITIES..............................................................32
14.1. Indemnity by EDS..................................................32
14.2. Indemnity by Equifax..............................................33
14.3. Employment Actions................................................34
14.4. Exclusive Remedy..................................................34
14.5. Indemnification Procedures........................................35
15. INSURANCE AND RISK OF LOSS...............................................35
15.1. EDS Insurance.....................................................35
15.2. Risk of Property Loss.............................................36
15.3. Mutual Waiver of Subrogation......................................36
16. DISPUTE RESOLUTION.......................................................37
16.1. Dispute Resolution Procedures.....................................37
16.2. Continued Performance.............................................38
17. GENERAL..................................................................39
17.1. Relationship of Parties...........................................39
17.2. Entire Agreement, Updates, Amendments and Modifications...........39
17.3. Force Majeure.....................................................39
17.4. Nonperformance....................................................40
17.5. Waiver............................................................40
17.6. Severability......................................................40
17.7. Counterparts......................................................40
17.8. Governing Law.....................................................40
17.9. Binding Nature and Assignment.....................................40
17.10. Notices..........................................................41
17.11. No Third Party Beneficiaries.....................................41
17.12. Other Documents..................................................41
17.13. Consents and Approvals...........................................42
17.14. Headings.........................................................42
<PAGE>
EXHIBITS TO THE MASTER AGREEMENT
--------------------------------
Exhibit
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1 Master Agreement Structure Diagram and Form of Transaction Document
2 Definitions
3 List of Transaction Document Schedules
4 "Integrated Planning Team Charter and Operating Procedures Guidelines"
<PAGE>
1. PURPOSE/STRUCTURE/TERM OF AGREEMENT
1.1. Purpose of Agreement
(a) EDS is a provider of a broad range of information technology operations and
support services including, without limitation, information technology,
information management, communications and related services, and is
experienced and skilled in the administration, management, provision and
performance of such services and the business functions, responsibilities
and tasks attendant with such services. EDS desires to provide certain of
these operations and support services to the Equifax Group for the Equifax
Business as currently performed by the Equifax Group and as envisioned to
be required for the Equifax Business and the Equifax Group during the Term,
and to perform and assume the functions, responsibilities and tasks
attendant with such operations and support services. Equifax desires that
such operations and support services for the Equifax Business and the
Equifax Group and the attendant functions, responsibilities and tasks, be
performed and assumed by EDS. This Agreement documents the terms and
conditions under which (1) the Equifax Group will obtain such operations
support services from EDS, and (2) EDS will administer, manage, support,
provide and perform such services and the functions, responsibilities and
tasks attendant with such services, for the Equifax Group.
(b) The Parties have identified certain goals and objectives for the EDS
engagement pursuant to the Agreement. These goals and objectives include
the following: (i) engaging EDS (A) to provide, and cause to be provided
through its Affiliates and subcontractors, certain information technology
operations and support services to the Equifax Group as the Equifax
Business evolves over the Term; (B) to efficiently and timely provide such
operations and support services to, and perform and assume the functions,
responsibilities and tasks attendant with such services for, the Equifax
Business and the Equifax Group at levels appropriate to fulfill the
requirements of the Equifax Business and the Equifax Group; and (C) to
proactively define and propose cost effective solutions to improve the
efficiency and functionality of the information management systems
operations of the Equifax Group comprising such services in support of the
Equifax Business; (ii) securing favorable rates for existing resource
consumption and additions to and reductions in resource consumption by the
Equifax Group and increasing flexibility regarding resources chargeable and
available to the Equifax Group from EDS; (iii) taking advantage of new
and/or proven business processes and information technologies to improve
the performance, efficiency and cost to performance ratios experienced by
the Equifax Group and to enable the Equifax Group to respond to market
requirements for the Equifax Business; (iv) enhancing the current
operations functionality of the Equifax Group's processes, systems and
service levels comprising such services; (v) minimizing any potential
operating and financial risks to the Equifax Group; (vi) ensuring the
efficiency, stability and security of existing and future processes,
systems and service levels; (vii) evolving the support services, processes,
systems and service levels to meet the dynamic requirements of the Equifax
Group and Equifax Business; and (viii) providing processes and procedures
to transition such services back to the Equifax Group or to another service
provider from EDS with minimal disruption.
(c) EDS recognizes that the Equifax Group expects to be treated as a valued and
commercially favored customer. EDS agrees that the definition of customer
satisfaction goes beyond EDS's performance against established service
levels and requires that EDS exhibit a customer service attitude focused on
assisting Equifax where commercially reasonable to attain the goals and
objectives described in Section 1.1(b), including, without limitation,
--------------
reducing the operations support costs of and improving service levels to
the Equifax Group and the customers of the Equifax Group.
(d) The provisions of this Section 1.1 are intended to be a statement of the
-----------
purpose of the Agreement and are not intended to alter the plain meaning of
the terms and conditions of the Agreement or to require either Party to
undertake performance obligations not required by the Agreement. To the
extent that the terms and conditions of the Agreement are unclear or
ambiguous, such terms and conditions are to be interpreted and construed
consistent with the purposes set forth in this Section 1.1.
-----------
<PAGE>
1.2. Structure of Agreement
(a) As of the Effective Date, the Services will be grouped around the cluster
of services described in the Schedules to each Transaction Document.
(b) The Agreement is comprised of (i) the provisions set forth in this Master
Agreement and the forms of the Exhibits and Schedules referenced herein;
and (ii) each Transaction Document including the Schedules referenced in
each Transaction Document as illustrated in Exhibit 3.
---------
(c) The Services will be the subject of one or more Transaction Documents.
Each Transaction Document will include Schedules in the forms described in
Exhibit 1, configured as noted on Exhibit 3. The Transaction Documents
--------- ---------
will collectively define the Services provided to the Equifax Group across
multiple Towers and the terms and conditions upon which the Services will
be provided.
(d) Transaction Documents will be executed by the Parties. The terms of
Transaction Documents will be governed by the terms of the Master Agreement
unless the Parties to an individual Transaction Document expressly
specifically note the deviations from the terms of the Master Agreement for
the purposes of such Transaction Document on a Schedule P to the
----------
Transaction Document entitled "Deviations From Terms of Master Agreement."
------------------------------------------
(e) Each Transaction Document will be submitted to and approved by the
Integrated Planning Team prior to execution by the Parties. The approval
will be evidenced by a representative of each of the Parties, who is also a
member of the Integrated Planning Team, noting and attesting to the
approval of the Integrated Planning Team on a cover sheet to such
Transaction Document.
1.3. Term of Agreement
The Term of the Agreement will begin as of the Effective Date and will terminate
upon the tenth (10th) anniversary thereof, unless earlier terminated or extended
in accordance with the provisions of this Agreement. The term of each
Transaction Document will be for the period set forth therein, which period may
not exceed the Term. If the Parties do not agree upon the terms, conditions and
pricing applicable to such renewal period no later than one hundred eighty (180)
days prior to the expiration date of the Term, Equifax may extend the Term of
the Agreement and the term of any Transaction Document for an additional period
of up to one (1) year on the terms, conditions and pricing then in effect.
1.4. Extension of Services
Equifax may request and EDS will once extend the provision of the Services
Transfer Assistance pursuant to any Transaction Document for the Extension
Period upon not less than ninety (90) days prior written notice before the
scheduled termination or expiration of the provision of the Services or Services
Transfer Assistance, or if applicable, notice given within thirty (30) days
after the effective date of a notice of termination for any reason by either
Party. Any such extension shall be on the terms, conditions and pricing then in
effect at the time of the commencement of such extension including, without
limitation, Section 12.4 of the Agreement.
------------
2. DEFINITIONS
In the Agreement (including each Transaction Document and the Schedules thereto)
all capitalized terms shall have the meanings set forth in Exhibit 2.
---------
2
<PAGE>
3. THE SERVICES
3.1. Obligation to Provide Services
(a) Starting on the Commencement Date of each Transaction Document and
continuing during the term of each such Transaction Document, EDS shall
provide the Services to, and perform the Services for, the Equifax Group.
(b) There may be functions, responsibilities, activities and tasks not
specifically described in the Agreement (including the Transaction
Documents) which are required for the proper performance and provision of
the Services and are an inherent part of, or a necessary sub-part included
within, the Services. If such functions, responsibilities, activities and
tasks are determined to be required for the proper performance and
provision of the Services or are an inherent part, or a necessary sub-part
included within, the Services, such functions, responsibilities, activities
and tasks shall be deemed to be implied by and included within the scope of
the Services, to the same extent and in the same manner as if specifically
described in the Agreement (including the Transaction Documents). Each
such determination shall be made by agreement of the Parties or resolved
pursuant to the dispute resolution provisions of Section 16.
----------
(c) EDS is engaged by Equifax on a non-exclusive basis to provide the Services
under the Agreement and each Transaction Document and accordingly, Equifax
may engage a third party to perform, or itself perform, the Services or
any element of the Services, at any time.
3.2. Performance
(a) EDS agrees that the performance of the Services covered by each Transaction
Document will meet or exceed each of the applicable Performance Standards
and Minimum Service Levels set forth in the Schedules to each such
Transaction Document, subject to the limitations and in accordance with the
provisions set forth in the Agreement.
(b) Concurrent with the Business and Operations Support Plan review process
described in Sections 6.1 and 6.2 and more often if requested by Equifax,
------------ ---
Equifax and EDS will review and agree to commercially reasonable changes,
modifications, deletions and replacements of and additions to the
Performance Standards, the Minimum Service Levels and the Service Credits
under each Transaction Document for the purposes of better and more timely
reflecting, facilitating and supporting the continuing development, and
evolving priorities of the Equifax Group and the Equifax Business. Any
such changes will be implemented through the Change Control Process. The
Parties intend that the Performance Standards and the Minimum Service
Levels will not be less favorable to the Equifax Group during the term of
the Transaction Document to which they are applicable than they are at the
initiation of the Services pursuant to such Transaction Document, and will
be improved over time. The Parties agree to cooperate and deal with each
other in good faith to promptly resolve on a reasonable basis in consonance
with the purposes of the review process, any differences between the
Parties regarding appropriate changes to, modifications of, additions to,
deletions of and replacements of the Performance Standards, the Minimum
Service Levels and the Service Credits.
(c) Subject to Equifax's prior approval (which approval shall not be
unreasonably withheld), EDS shall implement the necessary measurement and
monitoring tools and procedures required to set Resource Unit Baseline
measurements and to measure and report EDS's performance of the Services
against the Performance Standards and Minimum Service Levels as such
standards and levels may be developed, modified and changed during the term
of each Transaction Document and as the Services may evolve and be
supplemented and enhanced during each such term. Such measurement and
monitoring shall permit reporting at a reasonable level of detail
sufficient to verify compliance with the Performance Standards and Minimum
Service Levels and application of any attendant Service Credits. EDS shall
prepare and maintain detailed records regarding its compliance with the
Performance Standards and Minimum Service Levels and the determination and
application of attendant Service Credits, and shall permit Equifax and its
designees access to all such records for the purposes of performing
verifying audits, planning and identifying possible process improvements.
Upon request, EDS shall provide
3
<PAGE>
Equifax with information and reasonable access to such tools and
procedures, and the records relating thereto, for purposes of verification
of the reported performance levels.
3.3. Disaster Recovery Services
EDS will provide Disaster Recovery Services under each Transaction Document in
accordance with Schedule G to each Transaction Document. If EDS fails to
----------
provide Disaster Recovery Services to the extent and in accordance with the time
table set forth in such Schedule G for a period set forth therein, Equifax will
----------
be entitled, at its election to terminate such Transaction Document pursuant to
Section 12.1(a) (without giving the notices and observing the cure periods set
- ---------------
forth in Section 12.1(a)) upon written notice to EDS. If Equifax elects to
---------------
terminate such Transaction Document as described in this Section 3.3, Equifax
-----------
shall give notice to EDS of such election within thirty (30) days after the
occurrence of the event on which such termination is based. In the event of a
termination of such Transaction Document is authorized under this Section 3.3,
------------
Equifax shall not be required to pay any Termination Charges or Wind-Down
Expenses to EDS. Such termination shall not constitute the sole and exclusive
remedy of Equifax for such failure of performance by EDS, and Equifax may treat
such termination as a termination for cause pursuant to Section 12.1(a).
---------------
3.4. Inspections and Audits
(a) EDS shall maintain a complete audit trail of all financial and non-
financial transactions resulting from or arising in connection with the
Agreement. EDS shall provide to Equifax, its auditors (including internal
audit staff and external auditors), inspectors, regulators and other
representatives as Equifax may from time to time designate in writing,
access at all reasonable times to any facility or part of a facility at
which either EDS or any of its subcontractors is providing the Services, to
EDS personnel, and to data and records relating to the Services for the
purpose of performing audits and inspections of either EDS or any of its
subcontractors to:
(1) verify the accuracy of Monthly Charges, other charges and invoices;
(2) verify the integrity of Equifax's data and examine the systems that
process, store, support and transmit that data; and
(3) examine EDS's performance of the Services including, to the extent
applicable to the Services performed by EDS and to the Monthly Charges
therefor, performing audits (A) of practices and procedures, (B) of
systems, (C) of general controls and security practices and procedures, (D)
of disaster recovery and back-up procedures, (E) of the efficiency and
costs of EDS in performing the Services (but only to the extent affecting
Monthly Charges for, or timing of, Services hereunder), and (F) any audit
necessary to enable Equifax to meet applicable regulatory requirements.
However, neither Equifax nor its auditors will be allowed access to other
EDS or EDS Affiliates customer's records. Nothing in the Agreement shall
limit or restrict Equifax's or EDS's rights in discovery proceedings
pursuant to any civil litigation.
(b) EDS shall prepare and maintain detailed records regarding its compliance
with the Performance Standards and Minimum Service Levels and the
determination and application of attendant Service Credits, and shall
permit Equifax and its designees access to all such records for the
purposes of performing verifying audits, planning, and identifying possible
process improvements. Upon request, EDS shall provide Equifax with
information and reasonable access to such records and the service
performance measurement tools and procedures relating thereto, for purposes
of verification of the reported performance levels.
(c) EDS shall provide to Equifax's auditors, inspectors, regulators, and
representatives such assistance as they require, including installing and
operating audit software. EDS shall cooperate fully with Equifax or its
designees in connection with audit functions and with regard to
examinations by regulatory authorities.
4
<PAGE>
Equifax's auditors and other representatives shall comply with EDS's
reasonable security requirements. EDS shall maintain financial records for
four (4) years after the performance of the Services.
(d) Such access will require twenty-four (24) hour notice to EDS and will be
provided at reasonable hours. If any audit or examination reveals that
EDS's invoices for the audited period are not correct (other than amounts
in dispute pursuant to Section 9.12), EDS shall promptly reimburse Equifax
------------
for the amount of any overcharges, or Equifax shall promptly pay EDS for
the amount of any undercharges. If any such audit activities interfere to
a material extent with EDS's ability to perform the Services in accordance
with the Performance Standards and Minimum Service Levels under any
Transaction Document, EDS shall be relieved of such performance obligations
under such Transaction Document to the extent caused by such audit
activity. If the assistance required of EDS shall cause EDS to expend
unavoidable substantial resources and incur substantial additional costs
not within the scope of the Services and Resource Unit Baselines to provide
such assistance, Equifax shall reimburse EDS for such reasonable and
necessary costs.
(e) EDS agrees to make any changes and take other actions which are necessary
in order to maintain compliance with laws and/or regulations applicable to
its performance and provision of the Services. Equifax may submit to EDS
findings and recommendations regarding compliance by EDS with applicable
laws and regulations which EDS will analyze and consider in good faith.
EDS shall promptly respond to Equifax regarding EDS's evaluation and
activity plan for such findings and recommendations.
3.5. Resources and Facilities
(a) To enable EDS to provide the Services, Equifax may agree under a
Transaction Document to provide [*] of the Equifax Provided Hardware,
Equifax Provided Office Furnishings, Data Center and other Equifax
facilities and offices services such as reasonable telephone services
already subscribed to by Equifax for the sole purpose of providing and
performing the Services covered by the Transaction Document for the Equifax
Group. Equifax Provided Hardware, Equifax Provided Office Furnishings, Data
Center and other facilities will be provided "AS IS". EDS shall have
inspected such equipment and facilities and determined that the provided
items meet EDS's need. Equifax shall not be responsible to EDS for ensuring
such Equifax Provided Hardware, Equifax Provided Office Furnishings, Data
Center and other facilities provide for a safe working environment,
including compliance with applicable laws and regulations. EDS shall
maintain the Equifax Provided Hardware, Equifax Provided Office Furnishings
and Acquired Customer Hardware. EDS shall take no action that will
compromise the safety of the working environment that includes the Equifax
Provided Hardware, Equifax Provided Office Furnishings, Data Center,
Acquired Customer Hardware and other facilities provided by Equifax to EDS,
or violate the laws and regulations applicable thereto. When the Equifax
Provided Hardware, Equifax Provided Office Furnishings, Data Center and
other Equifax facilities and office services are no longer deemed necessary
to perform the Services, Equifax's obligations set forth in this Section
-------
3.5 and in any Transaction Document with respect to each such item of
---
resources shall terminate.
(b) The use by EDS of the Equifax Provided Hardware, Equifax Provided Office
Furnishings, Data Center and other Equifax facilities described in the
Agreement (including any Transaction Documents) will not constitute or
create any lease, leasehold interest, estate for any period or other
similar interest in EDS, but instead will constitute a license to use such
items for the periods and subject to the terms of the Agreement.
(c) Except as otherwise provided in the Agreement, EDS will have the
responsibility and obligation to provide and administer, manage, support,
maintain and pay for all resources (including, without limitation,
personnel, hardware, software, facilities, services and other items,
however described) necessary or appropriate for EDS to provide, perform and
deliver the Services as described in the Agreement.
(d) In addition to the Affected Employees, if any, EDS will provide and have on
site as set forth in each Transaction Document its Project Manager under
each such Transaction Document prior to the Commencement Date thereunder
and for the duration of the term of each such Transaction Document, and
will timely provide an adequate number of additional trained and qualified
personnel as necessary or appropriate to
* Information omitted pursuant to Request for Confidential Treatment under Rule
406 of the Securities Act of 1933.
5
<PAGE>
facilitate and ensure the timely and proper definition, provision,
performance and delivery of the Services in accordance with the Agreement.
(e) EDS will have the right to change the location of the EDS activities
associated with the Services under any Transaction Document with the prior
written consent of Equifax, which consent shall not be unreasonably
withheld. Among the factors Equifax may consider in determining whether to
grant any such consent, Equifax may consider whether any and all changes in
the location of such EDS activities may result (i) in a reduction of EDS's
ability to perform the Services and the Business and Operations Support
Plan; (ii) in any reduced accessibility to EDS and/or the Services by the
Equifax Group; (iii) in any deterioration of the Services; (iv) in any
decrease in the security or integrity of operations and Company Information
of the Equifax Group; and (v) in any additional cost to Equifax.
(f) EDS will provide reasonable access to the portion of the Facilities used by
EDS to provide and perform the Services (including, without limitation, the
attendant Machines and Software) (i) to the Equifax Group's authorized
employees, agents and representatives as necessary or appropriate for the
performance, delivery and use of the Services by the Equifax Group and for
the operation, maintenance, upgrade, support and use of any other Equifax
hardware, software and other resources located in the Facilities and Data
Center, and (ii) to Third Party Providers and third party vendors and
suppliers of installation, maintenance, support and upgrade services,
technology and hardware for the System and any other Equifax hardware,
software and other resources located in the Facilities and Data Center. To
the extent practical in light of such installation, maintenance, support
and upgrade requirements, Equifax will provide twenty-four (24) hours
notice to EDS prior to any visits by such Third Party Providers and third
party vendors and suppliers.
(g) All access to the portion of the Facilities and Data Center used by EDS to
provide and perform the Services shall be subject to reasonable (i) data
and records protection and physical security measures (including Equifax's
physical security requirements) and (ii) such Equifax Group employees,
agents and representatives and Third Party Providers and third party
vendors and suppliers' undertaking reasonable confidentiality requirements
relating to such visits.
3.6. Data and Security
(a) Equifax will authorize all access to all Software operated by EDS in
support of the Services covered by each Transaction Document and Company
Information and other records of the Equifax Group in the possession of EDS
through the data and records security procedures as described in Schedule L
----------
to such Transaction Document. EDS shall notify Equifax of the identity of
each of the entities and personnel working with EDS to provide and perform
the Services covered by each Transaction Document that are to be authorized
access to the Software utilized in support of the Services covered by such
Transaction Document and the level of security access required by each.
The Parties shall cooperate in administering security procedures regarding
such access, in accordance with such Schedule L. EDS will enable such
----------
access by persons as designated by Equifax and deny such access to all
other persons, in accordance with such Schedule L.
----------
(b) All of Equifax's Company Information (including, without limitation, data,
records and reports related to the Equifax Group, the Equifax Business and
the Services) whether in existence at the Commencement Date of a
Transaction Document or compiled thereafter in the course of performing the
Services, is the exclusive property of Equifax and the furnishing of such
information, data, records and reports to, or access to such items by, EDS
and/or its subcontractors will not grant any express or implied license to
or interest in EDS and/or its subcontractors relating to such information,
data, records and reports except as required to perform the Services
pursuant to the Agreement. Upon request by Equifax at any time and from
time to time and without regard to the default status of the Parties under
the Agreement, EDS and/or its subcontractors shall promptly deliver to
Equifax Equifax's Company Information (including without limitation all
data, records and related reports regarding the Equifax Group, the Equifax
Business and the Services) in electronic (tape) format and in such hard
copy as existing on the date of the request by Equifax.
6
<PAGE>
3.7. Technology Refresh
EDS will refresh the information technologies components of the Services
(including both hardware and software components) as specifically provided in
the Agreement (including each Transaction Document) and as otherwise authorized
by Equifax from time to time. This Section 3.7 shall not affect or limit EDS's
-----------
obligations or authority to perform the repair, replacement, maintenance and
upgrade functions and services as set forth in the Agreement as part of the
Services, including, without limitation, responsibility for the Machines,
Software Maintenance, Maintenance Releases and Versions of the Software.
3.8. Software Licenses
(a) EDS will comply with all license obligations under all licenses and
maintenance agreements for the Software, including, without limitation, the
obligations of nondisclosure and scope of use. However, EDS will only be
obligated under this Section 3.8(a) with regard to the licenses and
--------------
maintenance agreements for Equifax Software to the extent the obligations
thereunder are disclosed to EDS. EDS shall be deemed to have reviewed and
accepted the obligations under the licenses and maintenance agreements for
the Equifax Software (if any) listed on the Schedules A and B to each
----------- -
Transaction Document as of the Commencement Date under each such
Transaction Document.
(b) All EDS Software provided by EDS in connection with the Services and any
Equifax Software licensed under a Third Party Agreement shall be licensed
(and the attendant maintenance arrangements contracted) in the name of the
Equifax Group member designated by Equifax as the licensee with EDS having
the right to access and use such Software in performing the Services,
unless EDS can procure such Software (and/or attendant maintenance
arrangement) on a more cost effective basis licensed in its own name.
(c) EDS shall not direct the Equifax Group to terminate, extend, replace, amend
or add licenses for the Software and/or the maintenance arrangements
attendant therewith, contracted in the name of a member of the Equifax
Group without notifying Equifax in writing of the proposed action by EDS
and without obtaining Equifax's prior written agreement. Moreover, EDS
shall provide to Equifax a written report of the reasons for, and the
impact and ramifications on the Services of, such proposed action
concurrently with such notification. In addition, if such action by EDS
with respect to a license and/or maintenance arrangement for the EDS
Software will have an impact on the Services or the monitoring and/or
evaluation of the Services in a manner that in turn will have an impact on
the operations or costs of the Equifax Group or the ability of EDS or
Equifax to monitor and/or evaluate the performance and delivery of the
Services, EDS will provide or cause to be provided the programs, services,
rights and other benefits and resources that are the subject of such
licenses and maintenance agreements to the Equifax Group on terms no less
favorable than the terms of such license and maintenance agreements and
ensure that there shall be no negative impact on the ability of EDS or
Equifax to monitor and/or evaluate the performance and delivery of the
Services. If Equifax in connection with or resulting from EDS's
termination, replacement, amendment or addition of any license for EDS
Software and/or maintenance arrangement incurs additional expenses or other
costs, including but not limited to personnel costs, EDS shall promptly
reimburse Equifax for such costs.
(d) EDS shall use commercially reasonable efforts to obtain from the applicable
Software vendors a right to assign or transfer to Equifax, without any
payment of any additional fee or charge by Equifax, any licenses (and
attendant maintenance arrangements) for the Software licensed and
contracted in EDS's name as licensee upon termination or expiration of the
Agreement and as applicable, each Transaction Document.
(e) If EDS is unable to obtain from the applicable Software vendor the rights
described in Section 3.8(d) above, and, in any event, prior to (i) the
--------------
addition to the EDS Software of any software which is not listed in
Schedules A or B to a Transaction Document for the Equifax operations
----------- -
covered by such Transaction Document; or (ii) any upgrade, enhancement or
modification of any EDS Software listed in the Schedules A or B to a
----------- -
Transaction Document for the Equifax operations covered by such Transaction
Document, EDS shall (A) obtain Equifax's prior written consent for any such
actions, (B) provide Equifax with information regarding the amount of any
fees and other reasonable requirements Equifax would be required to
undertake in order to obtain a license to and maintenance for such EDS
Software upon the expiration or termination of the Agreement and as
applicable,
7
<PAGE>
each Transaction Document, and (C) use commercially reasonable efforts to
obtain a firm commitment from the providers of such EDS Software to license
and provide maintenance for the EDS Software to Equifax upon the expiration
or termination of the Agreement upon the payment of such fees and
satisfaction by Equifax of such requirements. If Equifax does not respond
to a request for consent from EDS within twenty-one (21) business days
after receipt of such request together with the information and
confirmation of the actions required of EDS in this Section 3.8(e).* EDS
--------------
shall consider and take into account in the negotiation of its licensing
and maintenance arrangements with providers of the EDS Software, Equifax's
reasonable concerns regarding the terms and conditions of such EDS Software
licenses and maintenance agreements and make such licenses, maintenance
agreements and related documentation available to Equifax upon request.
(f) If Equifax in connection with or resulting from EDS's termination,
replacement, amendment or addition of any license for EDS Software and/or
maintenance arrangement incurs additional expenses, costs or Losses,
including but not limited to personnel costs, and EDS has been notified in
writing by Equifax of its estimate of such financial impact prior to EDS's
implementation of such action and EDS elects to proceed, EDS shall promptly
reimburse Equifax for such amounts actually incurred by Equifax. However,
in each instance in this Section 3.8 that Equifax provides EDS an estimate
-----------
of the financial impact of any action by EDS on Equifax, the amounts
recoverable from EDS by Equifax in each such instance shall not exceed the
amount of the written estimate provided by EDS for each such instance.
(g) EDS will provide to Equifax, and update as changes occur, a listing of all
Software by name, Maintenance Release and Version promoted into production
on each Machine at each location of the Machines.
3.9. Software Currency
(a) The Parties agree to maintain reasonable currency for Maintenance Releases
and Versions of Software, unless Equifax requests otherwise. For purposes
of this Section 3.9, "reasonable currency" shall mean that the next
-----------
Maintenance Release or Version (a) is installed not later than the longer
of (i) twelve (12) months after the date the licensor makes such
Maintenance Release or Version commercially available, or (ii) within one
(1) month after the date the licensor makes a subsequent Maintenance
Release or Version commercially available which causes Equifax to be more
than one Maintenance Release or Version behind, unless such Maintenance
Release or Version contains defects, Viruses, Disabling Code or similar
infirmities identified by the Parties, or either of them, that will
adversely affect Equifax's operations, in which case, the previous
Maintenance Release or Version will be deemed "reasonably current."
(b) If Equifax requests EDS to expedite installation of a Maintenance Release
or Version or to delay the installation of a Maintenance Release or Version
of specific Software beyond the period described in Section 3.9(a) or
--------------
requires operation and maintenance of multiple Versions of Software, EDS
shall do so, provided that if EDS reasonably determines that it will incur
any costs as a result of such requests (e.g., Software support costs due to
withdrawal of maintenance by the licensor, multiple version charges, etc.)
for resources not otherwise required to perform the Services under the
applicable Transaction Document or covered under a current Resource Unit
Baseline for such Transaction Document, then EDS will notify Equifax of the
amount of such costs in writing and Equifax, at its option, will either
delay installation of such Maintenance Release or Version or update the
Software to the current level (as applicable) or reimburse EDS for any
demonstrable, reasonable and necessary costs. The installation and
promotion into production of each Maintenance Release and Version shall be
performed in accordance with the Change Control Process.
(c) In addition, Equifax shall relieve EDS from any failure to meet a
Performance Standard or Minimum Service Level to the extent directly
impacted by the delay or acceleration of the next Maintenance Release or
Version until such time as the affected Software is brought to "reasonable
currency" as defined in this Section 3.9.
-----------
- -----------
* Information omitted pursuant to Request for Confidential Treatment under Rule
406 of the Securities Act of 1933.
8
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3.10. Viruses
EDS will take commercially reasonable measures to ensure that no Virus or
similar items are coded or introduced into the System and the operating
environments used to provide the Services. EDS will continue to perform and
maintain the Virus protection and correction procedures and processes in place
at the Equifax Group prior to the Commencement Date of each Transaction
Document, and will continue to review, analyze and implement improvements to and
upgrades of such Virus prevention and correction programs and processes that are
commercially reasonable and consistent with the information technology
industry's standards. If a Virus is found to have been introduced into the
System and the operating environments used to provide the Services, EDS shall
use commercially reasonable efforts and diligently work to eliminate the effects
of the Virus. However, EDS shall take immediate action to remediate the Virus'
proliferation.
3.11. Software - Substitutions and Additions
(a) Equifax may add Software to, or delete Software from, Schedules A and B to
----------- -
any Transaction Document. If Equifax requests a substitution of any
Software under any Transaction Document for which EDS has financial
responsibility, Equifax shall pay or receive a credit in the amount by
which the periodic license or maintenance fees, or EDS surcharge for non-
standard operating systems software, if any, attributable to the
substituted Software exceeds or are less than the then-current license or
maintenance fees being paid by EDS (if any) attributable to the Software
being replaced. If Equifax deletes any Software from the Schedules A and B
----------- -
to a Transaction Document and does not immediately substitute any other new
Software therefor, Equifax may utilize an amount equal to the then-current
applicable license and/or maintenance Monthly Charges attributable to such
deleted Software to offset the Monthly Charges attributable to any new
Software or receive a credit in such amount. EDS will provide Equifax with
the requisite license and/or maintenance fees support documentation to
assist Equifax in evaluating the decision to replace such Software. If
Equifax adds any Software to Schedules A and/or B under any Transaction
----------- -
Document, the Parties will negotiate the financial responsibility terms for
such Software. To the extent EDS is relieved of payment obligations to any
Third Party Provider, Equifax will receive a credit against the monthly
charges in the amount of such reduction.
(b) EDS agrees to promote into or remove from production, use and operation any
Software selected by Equifax. However, any resources (software, hardware,
personnel, etc.) required to install, delete and/or operate such added
Software that is not otherwise required to provide the Services under such
Transaction Document, or covered under a current Resource Unit Baseline for
such Transaction Document, will be provided as New Services pursuant to
Section 3.13. Equifax shall be permitted by EDS to audit, control and
------------
approve all new Software prior to its promotion into production, and EDS
shall provide the cooperation, information and access necessary or
appropriate to permit Equifax to perform such functions. Schedules A, B
----------- -
and F will be amended to reflect any changes to the Software.
-
(c) If EDS timely notifies Equifax that any software requested by Equifax to be
substituted for, deleted from, or added to the Software will have an
adverse impact on the operation of the System before such action is
effected and Equifax directs EDS to effect such action even in view of such
notice, EDS shall be relieved of any failure to satisfy the Performance
Standards and Minimum Service Levels to the extent, and only to the extent,
such action affects EDS's ability to satisfy such Performance Standards and
Minimum Services Levels.
3.12. Third Party Agreements - Substitutions and Additions
(a) Equifax may add Third Party Agreements to, or delete Third Party Agreements
from, the Schedule F to any Transaction Document. If under any Transaction
----------
Document Equifax requests a substitution of any Third Party Agreements
(other than a license or maintenance agreement for software described in
Section 3.11) for which EDS has financial responsibility, Equifax shall pay
------------
or receive a credit in the amount by which the periodic fees attributable
to the substituted Third Party Agreement exceed or are less than the then-
current periodic fees being paid by EDS attributable to the Third Party
Agreements being replaced. If Equifax requests deletion of any Third Party
Agreements for which EDS has financial responsibility from Schedule F to a
----------
Transaction Document and does not immediately substitute any other new
Third Party Agreements therefor, Equifax may utilize an amount
9
<PAGE>
equal to the then-current applicable periodic fees attributable to such
deleted Third Party Agreements to offset the fees attributable to any new
Third Party Agreements or receive a credit in such amount against the
Monthly Charges. EDS will provide Equifax with the requisite fees support
documentation to assist Equifax in evaluating the decision to replace such
Third Party Agreements. If Equifax adds any Third Party Agreement(s) to
Schedule F under any Transaction Document, the Parties will negotiate the
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financial responsibility terms for such Third Party Agreement(s).
(b) If EDS timely notifies Equifax that any Third Party Provider services
requested by Equifax be substituted for, deleted from, or added to,
Schedule F will have an adverse impact on the operation of the System
----------
before such action is effected and Equifax directs EDS to effect such
action even in view of such notice, EDS shall be relieved of any failure to
satisfy the Performance Standards and Minimum Service Levels to the
extent, and only to the extent, such action affects EDS's ability to
satisfy such Performance Standards and Minimum Services Levels.
3.13. New Services
(a) During the Term, Equifax may request EDS to perform one or more New
Services. Further, Equifax's request for a New Service may include a
request for EDS to correspondingly reduce or eliminate one or more existing
elements of the Services then being provided under the applicable
Transaction Document that are being replaced by the New Services. In such
event, EDS shall determine the resources and expenses related to the
element or elements of the Services being reduced or eliminated and those
required for the New Services being added.
(b) Promptly after receiving each request for New Services from Equifax, EDS
will provide a written quote for such New Services to Equifax setting forth
the net increase or decrease in the Monthly Charges and/or other charging
methodologies under the applicable Transaction Document, and as applicable,
increases and decreases in existing Resource Unit Baselines and additional
Resource Unit Baselines (if any) that will be attributable to such New
Services and will concurrently deliver to Equifax as part of such quote a
detailed description of and proposal for the New Services together with a
report regarding the ramifications and impacts of such New Services on the
Services under such Transaction Document and all other Transaction
Documents affected by the New Services request. All changes in the
Monthly Charges and other charging methodologies will be based upon the
required proportional increase in personnel, System and other resources
applicable to the New Services relative to the Monthly Charges and other
existing charging methodologies. Upon receipt of such quote and other
documentation, Equifax may then elect to have EDS perform the New Services,
and the Monthly Charges and other charging methodologies and Resource Unit
Baselines (if applicable) under the affected Transaction Document will be
established and/or adjusted to reflect such New Services in a written
amendment to the Agreement in accordance with Section 17.2.
------------
Notwithstanding the foregoing, nothing herein shall be deemed to obligate
Equifax to obtain New Services from EDS.
(c) The Parties agree that changes during the Term in functions,
responsibilities and tasks that are within the scope of the Services will
not be deemed to be New Services, if such functions, responsibilities and
tasks evolved or were supplemented and enhanced during the Term by EDS in
its sole discretion or pursuant to the provisions of the Agreement.
3.14. Affiliates
If any member of the Equifax Group creates, initiates, or acquires any
additional Affiliates or other operations or assets during the Term and desires
that EDS provide the Services for such Affiliates or other operations or assets,
EDS will provide Equifax and/or such Affiliates or other operations or assets
with Services in accordance with the Agreement, subject to mutually agreed
additional charges if acceptance of such responsibilities by EDS would require
usage of Baseline Resources in excess of the Baseline Resources set forth in the
Agreement, or additional charges, if acceptance of such responsibilities by EDS
would require the performance of New Services as described in Section 3.13, or
------------
additional charges by the vendors of the Software in order to expand the scope
of use of the Software by the Equifax Group.
10
<PAGE>
4. WARRANTIES/REPRESENTATIONS/COVENANTS
4.1. Work Standards
EDS warrants, represents and covenants that (a) it has, and during the Term will
have, and each of the EDS employees and subcontractors that it will use to
provide and perform the Services has and during the Term will have, the
necessary knowledge, skills, experience, qualifications, rights and resources to
provide and perform the Services in accordance with the Agreement; (b) it has
successfully provided and performed the Services or services that are
substantially equivalent to the Services for other customers of EDS; and (c) the
Services will be performed for the Equifax Group in a diligent, workmanlike
manner in accordance with generally accepted, industry standards applicable to
the performance of such services.
4.2. Noninfringement
Each of the Parties covenants that it will perform its responsibilities under
the Agreement in a manner that does not infringe, or constitute an infringement
or misappropriation of, any patent, Trade Secret, copyright or other proprietary
right of any third party. Notwithstanding this provision or any other provision
in the Agreement, Equifax makes no warranty or representation with respect to
any claims for such infringement or misappropriation by virtue of its compliance
with obligations herein to provide EDS access to, use of or benefits of any
Third Party Agreements prior to receiving the necessary Required Consents.
However, this Section 4.2 shall not relieve Equifax from any liability or
-----------
obligation under Sections 8.2 and 14.2.
------------ ----
4.3. Disabling Code
EDS covenants that EDS will take commercially reasonable steps to ensure that no
Disabling Code in the Software will be permitted to be invoked without the prior
written consent of Equifax. EDS further covenants that with respect to any
Disabling Code that may be part of the Software, EDS will not invoke Disabling
Code at any time, including upon expiration or termination of the Master
Agreement or any Transaction Document for any reason, without Equifax's prior
written consent.
4.4. Authorization and Enforceability
Each Party hereby represents and warrants that: (a) it has all requisite
corporate power and authority to enter into, and fully perform pursuant to, the
Agreement; (b) the execution, delivery and performance of the Agreement and the
consummation of the transactions contemplated hereby have been duly and properly
authorized by all requisite corporate action on its part; and (c) the Agreement
has been duly executed and delivered by such Party.
4.5. Disclaimer
(a) Subject to the obligations of EDS to satisfy the Performance Standards and
Minimum Service Levels and provide the Services as set forth in the
Agreement without material denigration or interruption, EDS does not assure
uninterrupted or error-free operation of the Software and Machines.
(b) EXCEPT AS PROVIDED IN THE AGREEMENT, THERE ARE NO OTHER EXPRESS WARRANTIES
OR COVENANTS, AND THERE ARE NO IMPLIED WARRANTIES OR COVENANTS, INCLUDING,
BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OR COVENANTS OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE.
4.6. Regulatory Proceedings and Compliance with Laws
Each Party agrees at its cost and expense to obtain all necessary regulatory
approvals applicable to its business, to obtain any necessary permits for its
business, and to comply with all laws and regulatory requirements applicable to
the performance of its obligations under the Agreement.
11
<PAGE>
4.7. Year 2000 Warranty
EDS warrants to Equifax that the Services will not be adversely affected in any
way by any date data, date setting, date value, date input or other date related
data and any combination thereof (including leap year), whether falling on,
after or before January 1, 1999, September 9, 1999, December 31, 1999, or
January 1, 2000, excluding Services failures and other problems caused by year
2000 defects in the Applications Software - Equifax.
4.8. Covenant of Cooperation and Good Faith
The Parties covenant to timely and diligently cooperate to effect the goals,
objectives and purposes of the Agreement and to facilitate the performance of
their respective duties and obligations under the Agreement in a commercially
reasonable manner. Further, the Parties agree to deal and negotiate with each
other and their respective Affiliates in good faith in the execution and
implementation of their duties and obligations under the Agreement. However,
except as provided in Section 8.3, nothing in this Agreement or any Transaction
-----------
Document shall be construed as creating a relationship in which EDS is the
fiduciary of Equifax.
4.9. Compliance with Standards
EDS warrants, represents and covenants that EDS will comply with, and the EDS
personnel, EDS facilities, systems (hardware, software and network, processes
and procedures) used to provide the Services will meet or exceed, all standards
applicable to the credit card and check processing businesses, including,
without limitation, Visa, MasterCard and FDIC requirements.
5. TRANSITION
5.1. Transition Plan
(a) Prior to the Commencement Date for each Transaction Document or such other
date as the Parties may agree, EDS and Equifax through the Integrated
Planning Team will have developed and agreed upon the Transition Plan set
forth in Schedule H to such Transaction Document, describing (i) the
----------
transition from the Equifax Group to EDS of the Affected Employees (if
any); (ii) the transition of the administration, management, operation
under and financial responsibility for the Third Party Agreements from the
Equifax Group to EDS; and (iii) the transition of the performance of and
responsibility for the other functions, responsibilities and tasks
currently performed by the Equifax Group which comprise the Services
covered by such. Starting on the Commencement Date, the Transition Plan
shall be implemented and completed over a mutually agreed Transition
Period, which period shall in no event extend beyond a date certain set
forth in such Transaction Document, without the prior written agreement of
the Parties. Notwithstanding the foregoing in this Section 5.1(a), EDS's
--------------
and Equifax's responsibilities and obligations with respect to the Affected
Employees, the Third Party Agreements and the other elements of the
Services as set forth in the Agreement shall commence on the dates set
forth in such Transaction Document, but in no event later than the
Commencement Date under such Transaction Document.
(b) During the Transition Period, Equifax will cooperate with EDS in
implementing the Transition Plan by providing Transition Personnel and
performing the tasks described for Equifax in the Transition Plan. During
the Transition Period, EDS will be responsible for the provision of the
Services covered by each Transaction Document (including within those
Services the implementation of the Transition Plan).
5.2. [*]
* Information omitted pursuant to Request for Confidential Treatment under Rule
406 of the Securities Act of 1933.
12
<PAGE>
6. INTEGRATED PLANNING TEAM/CHANGE CONTROL PROCESS
6.1. Integrated Planning Team
(a) The Parties shall form and participate in an Integrated Planning Team in
accordance with the provisions of this Section 6 for the following
---------
purposes: (i) to provide leadership and direction for the relationship
over the Term of the Agreement; (ii) to define and forecast the resources
required to be allocated by EDS to perform and deliver the Services
pursuant to the procedures and processes for the preparation and update of
the Business and Operations Support Plan; (iii) to define and evaluate the
objectives, substance, pricing and performance of the Services and pricing
of new and replacement services; (iv) to periodically evaluate the business
and operating strategies of each Party and recommend modifications to, and
evolution of, the Services (including the Performance Standards and Minimum
Service Levels) to optimize such strategies and determine the effect that
any modifications of the Services may have on the fees chargeable by EDS
under the Agreement; and (v) to report to Equifax and EDS regarding each of
the foregoing areas.
(b) The Integrated Planning Team will be comprised of staffs from both Parties,
representing technology and business management, as provided in Exhibit 4
---------
and each Transaction Document. The Integrated Planning Team will be co-
chaired by Equifax's Robert E. Smith and EDS's Mary Workman through the
first year of the Term and then the Integrated Planning Team shall be co-
chaired as mutually agreed by the Parties thereafter. The "Charter and
-----------
Operating Procedures Guidelines" for the Integrated Planning Team are set
-------------------------------
forth in Exhibit 4 and may be modified by the Parties from time to time
---------
during the Term upon mutual agreement.
6.2. Projections/Plans
(a) Commencing on May 1, 1999 and on January 1 and on June 1 of each year of
the Term thereafter, Equifax will provide to the Integrated Planning Team
its projected business and volume requirements for the Services for the
next twelve (12) and twenty-four (24) calendar months. Further, in the
first week of each calendar quarter, Equifax will provide to the Integrated
Planning Team in the first week of each calendar quarter its forecasted
business and volume requirements for the Services for the following
calendar quarter. The quarterly forecast may be amended by Equifax on
ninety (90) days' prior written notice. Within thirty (30) days after
receipt of each such projection and amendment, EDS will review and respond
to the projections from Equifax with the technical requirements that it
deems necessary to satisfy the business and volume requirements projected
by Equifax. After review and acceptance by the Integrated Planning Team,
the EDS response will be incorporated into the Business and Operations
Support Plan.
(b) Commencing on June 1, 1999 and on February 1 and on July 1 of each year
during the Term thereafter, EDS will provide to the Integrated Planning
Team the then-current Business and Operations Support Plan. The Business
and Operations Support Plan will be composed of a short-term, technical
plan covering twelve (12) months and any long-range, strategic plan
covering twenty-four (24) months, both of which will be driven by the
Equifax Group's business goals and objectives as reflected in the
projections described in Section 6.2(a) above. The short-term plan will
--------------
include an identification of support, processes, systems, resources and
changes required by the Equifax Group, and a projected time schedule for
developing, integrating and implementing the requirements. The long-range
plan will treat the strategic aspects of the support of the business goals
and objectives of the Equifax Group as set forth in the projections
described in Section 6.2(a), including, without limitation, flexible use of
--------------
resources managed by EDS as part of the Services in support of the Equifax
Group's business priorities and strategies.
(c) EDS will draft the Business and Operations Support Plan with Equifax's
active participation, cooperation and advice through the Integrated
Planning Team. EDS will provide input for the plan regarding industry
trends with respect to the Services and proposals with regard to the
Services for process improvements, change management, skill development,
quality improvement, cost per Resource Unit reductions,
* Information omitted pursuant to Request for Confidential Treatment under Rule
406 of the Securities Act of 1933
13
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increased efficiency and flexibility in operations and resource
utilization, and enhanced functionality. The final Business and Operations
Support Plan for each six (6) month period will be provided by EDS based on
the mutual agreement of the Parties, with any disputed matters being
submitted to the dispute resolution process set forth in Section 16. The
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Business and Operations Support Plan will be reviewed and updated at least
semi-annually thereafter. Any changes to the Agreement or the Services
required by the Business and Operations Support Plan will be defined,
approved and implemented in accordance with the Change Control Process set
forth in Section 6.3.
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6.3. Agreement Change Control Process
(a) Within thirty (30) days after the Commencement Date and for the remainder
of the Term, the Parties shall define, establish, implement, document and
maintain a Change Control Process for activities, processes, provisions and
operations under the Agreement (including each Transaction Document) and to
evolve the Services. The purposes and objectives of the Change Control
Process are (i) to review each Change Request to the Agreement (including
any Transaction Document) and the Services to determine whether such change
is appropriate, (ii) to determine whether such change is within the scope
of the Services or constitutes a New Service under the applicable
Transaction Documents, (iii) to prioritize all Change Requests, (iv) to
minimize the risk of exceeding both time and cost estimates associated with
the requested changes by identifying, documenting, quantifying,
controlling, managing and communicating requested changes and their
disposition and as applicable, implementation; and (v) to identify the
different roles, responsibilities and actions that shall be assumed and
taken by the Parties to define and implement the changes to the Services
and to the Agreement (including any Transaction Document). The Project
Executives shall be the focal point for all Change Requests and shall be
responsible for promptly and diligently effecting the activities set forth
above in this Section 6.3 with respect to each Change Request.
-----------
(b) The Change Control Process shall include, at a minimum:
(i) Changes to the Agreement (including any Transaction Document) and Services
may be requested by either Party. Since a change may affect the price,
Schedule J, Performance Standards, Minimum Service Levels, Service Credits
----------
and/or other terms, both the Equifax and EDS Project Executives must review
and approve, in writing, each Change Request before any Change Request is
implemented.
(ii) The Party proposing a Change Request will prepare a Change Request Form,
describing the change, the rationale for the change and the effect that
change will have (if completed) or the impact it will have (if rejected) on
the Agreement, any Transaction Document and/or the Services.
(iii) Equifax's or EDS's Project Executive, as appropriate, will review the
proposed Change Request. If accepted, the Change Request Form will be
submitted to the other Party for review. If rejected, the Change Request
Form will be returned to the originator along with the reason for
rejection.
(iv) All material Change Requests shall be forwarded to the Integrated Planning
Team for review and approval prior to implementation.
(v) Each approved Change Request will be implemented through a written change
authorization. If any Change Request results in a change in scope, price
or terms and conditions, then the Agreement and affected Transaction
Documents (including the Schedules thereto) will be updated to reflect the
changes in scope, price or terms and conditions, as appropriate pursuant to
Section 17.2.
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7. SERVICES STAFFING/MANAGEMENT/ADMINISTRATION
7.1. Project Executives and Managers
(a) Prior to the Effective Date, EDS and Equifax will each designate a Project
Executive to whom all communications regarding the Parties' relationship
under this Agreement may be addressed and who has the authority to act for
the appointing party and its subcontractors in connection with all aspects
of this Agreement.
(b) Prior to the Commencement Date under each Transaction Document, EDS and
Equifax will each designate a Project Manager to whom all communications
regarding such Transaction Document may be addressed and who has the
authority in conjunction with the Project Executive (as applicable) to act
for the appointing Party and its subcontractors in connection with all
aspects of such Transaction Document.
(c) Unless otherwise provided in a Transaction Document, EDS shall cause each
person assigned as a EDS Project Executive or Project Manager under this
Agreement and each Transaction Document (as applicable) to devote
substantially all of his or her working time and effort in the employ of
EDS to his or her responsibilities for the provision of the Services as
required hereunder or by such Transaction Document, subject to EDS's
reasonable holiday, vacation and medical leave policies and subject to
occasional, short-term, non-recurring work on other assignments by EDS
related to the Project Executive's or Project Manager's areas of expertise.
Before the initial and each subsequent assignment of an individual to such
position, EDS shall notify Equifax of the proposed assignment, introduce
the individual to appropriate Equifax representatives, and consistent with
EDS's personnel practices, provide Equifax with a resume and any other
information about the individual reasonably requested by Equifax. EDS
agrees to discuss with Equifax any objections Equifax may have to such
assignment.
(d) EDS will give Equifax at least ninety (90) days advance notice of a change
of the person appointed as the EDS Project Executive and at least sixty
(60) days advance notice of a change of the person appointed as the EDS
Project Manager under each Transaction Document, and will discuss with
Equifax any objections Equifax may have to such change. EDS shall not
reassign or replace any person assigned as the EDS Project Executive or a
EDS Project Manager under any Transaction Document, during the first year
of his or her assignment to the Equifax service team nor shall EDS assign
more than three (3) different individuals to any such position during the
Term of this Agreement including the applicable Transaction Document,
unless Equifax consents to such reassignment or replacement, or the EDS
employee voluntarily resigns from EDS, is terminated by EDS for misconduct
or unsatisfactory performance in respect of his or her duties and
responsibilities to Equifax, or is unable to work due to his or her death
or disability.
7.2. Replacement of Personnel
If Equifax reasonably and in good faith determines that it is not in Equifax's
best interests for any EDS or subcontractor employee to be appointed to perform
or to continue performing any of the Services, Equifax shall give EDS written
notice specifying the reasons for its position and requesting that such employee
not be appointed or be removed from the EDS or subcontractor employee group
servicing Equifax and be replaced with another EDS employee or subcontractor
employee. Promptly after its receipt of such a notice, EDS shall investigate
the matters set forth in the notice, discuss with Equifax the results of the
investigation, and resolve the matter on a basis acceptable to Equifax.
7.3. Retention of Experienced Personnel
If EDS fails under any Transaction Document to meet the Performance Standards or
Minimum Service Levels thereunder persistently or continuously and if Equifax
reasonably believes such failure is attributable in whole or in part to EDS's
reassignment, movement, or other changes in the human resources allocated by EDS
to the performance and delivery of the Services pursuant to such Transaction
Document or the Agreement and/or to the EDS subcontractors assigned to the
Equifax service team, Equifax will notify EDS of such belief and the basis
therefor. Upon receipt of such notice from Equifax, EDS: (a) will promptly
provide to Equifax a report setting forth EDS's position regarding the matters
raised by Equifax in its notice; (b) will meet with Equifax to discuss the
15
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matters raised by Equifax in its notice and EDS's positions with regard to such
matters; and (c) will promptly and diligently take commercially reasonable
action to eliminate any EDS human resource practices or other practices and/or
processes identified by Equifax or EDS as adversely impacting the performance
and delivery of the Services by EDS.
7.4. Efficient Use of Resources
EDS shall take commercially reasonable actions (a) to efficiently administer,
manage, operate and use the resources employed by EDS to provide and perform the
Services that are chargeable to Equifax under the Agreement, and (b) to
diligently and continuously improve the performance and delivery of the Services
by EDS and the elements of the policies, processes, procedures and System that
are used by EDS to perform and deliver the Services, including, without
limitation, re-engineering, tuning, optimizing, balancing or reconfiguring the
processes, procedures and systems used to perform, deliver and track the
Services.
7.5. Key Positions
Each individual appointed to a Key Position will devote substantially all of his
or her full working time and efforts to the performance of the Services. Before
assigning a replacement for any individual appointed to any of the Key
Positions, EDS will give Equifax prior written notice of the proposed
replacement individual for a specified Key Position, will provide Equifax with
the resume and other job/position related information about the individual as
reasonably requested by Equifax, and will provide Equifax with the opportunity
to interview such individual by Equifax representatives. If Equifax does not
object to the assignment of the proposed individual to the Key Position within
ten (10) days after the interview by Equifax representatives, EDS will assign
the individual to the Key Position. Except in the event of a voluntary
resignation, termination for cause, disability, death or the exercise by Equifax
of its rights under Section 7.2, EDS will not change the individual appointed to
-----------
any Key Position more often than once in each two (2) year period.
7.6. Hiring of Employees
Neither the Card Processing Services Division of EDS nor Equifax Payment
Services, Inc., will, directly or indirectly, hire any employee of the other
Party, wherever located, for a period of twelve (12) full calendar months after
an employee has left the employment of the other Party. In each instance in
which a Party violates, or permits this covenant to be violated for its benefit,
the Party violating or permitting the violation will pay the other Party, upon
demand, the sum of [*] per incident in liquidated damages, not as a penalty. The
Parties agree that the damages arising or resulting from such violations are
difficult to determine and have agreed that such liquidated amounts are a fair
and equitable estimate of the damages the aggrieved Party will incur.
8. RELATIONSHIP PROTOCOLS
8.1. Evolving Nature of Relationship
(a) The Exhibits to the Agreement and the Schedules to each Transaction
Document will be updated by the Parties as necessary or appropriate from
time to time during the Term to accurately reflect the evolution of the
Services and components and elements of the Services as described therein.
(b) For [*] following the Commencement Date under each Transaction Document,
EDS and Equifax reserve the right to inventory, validate and update any
information that is reflected in or omitted from the Transaction Document
and attached Schedules. If discrepancies are detected, the Transaction
Document and/or Schedules shall be promptly changed, modified, updated and
adjusted to correct such discrepancies upon mutual agreement, so that the
Transaction Document and/or Schedules will be correct and accurately
reflect the Services and charges provided by EDS to the Equifax Group. If
either Party disputes the existence of a discrepancy identified by the
other Party, the Parties will submit the matter to the Integrated Planning
Team for dispute resolution as specified in Section 16.
----------
* Information omitted pursuant to Request for Confidential Treatment under Rule
406 of the Securities Act of 1933.
16
<PAGE>
(c) Both Equifax and EDS agree that the Services provided may require
adjustments to reflect the evolving business and operations of the Equifax
Group and EDS, that the relationship memorialized by the Agreement
(including the Transaction Documents), is dynamic in nature and will evolve
as the operating and business environment of the Equifax Group changes and
evolves, and that the scope of the Services that will be provided by EDS
during the Term and corresponding Monthly Charges charged by EDS may be
changed and modified with the written agreement of the Parties pursuant to
the Change Control Process. Therefore, the Integrated Planning Team will
periodically evaluate the business and operating strategies in accordance
with Section 6.1(a).
--------------
(d) While the Parties will endeavor to update, modify and amend the Agreement,
including the Transaction Documents and the Schedules thereto, as necessary
or appropriate from time to time to reflect the changing nature of the
Services and the requirements of the Equifax Group and the Equifax
Business, the Parties acknowledge that such activities may not always be
documented with specificity. Therefore, the Parties agree to deal with
each other in a good faith, prompt, diligent and commercially reasonable
manner to resolve all issues presented and any disputes that may arise to
give effect to purposes of the Agreement.
8.2. Required Consents
(a) The Equifax Group shall remain the contracting party of record for the
Third Party Agreements allocable to each Transaction Document and to which
the Equifax Group is a party on the Commencement Date under each such
Transaction Document.
(b) [*] shall have the responsibility for timely obtaining all Required
Consents under the Third Party Agreements (excluding Third Party Agreements
for Applications Software - Equifax) allocable to each Transaction
Document. [*] shall have the responsibility for obtaining and paying all
fees and charges for all Required Consents under the Third Party Agreements
for Applications Software - Equifax, allocable to each Transaction
Document. EDS shall obtain the prior consent of Equifax to the terms of
each Required Consent. Subject to the provisions of Section 8.3, EDS
-----------
will have management and administrative responsibilities for obtaining
all Required Consents under the Third Party Agreements (excluding Third
Party Agreements for Applications Software - Equifax) allocable to each
Transaction Document existing on the Execution Date of each such
Transaction Document. EDS will publish a list each month setting forth the
status of each Required Consent for which it has responsibility until all
Required Consents are obtained. Equifax shall timely cooperate with EDS in
order to facilitate the proper and timely publication of such monthly
Required Consents list. The provisions of this Section 8.2 shall be
-----------
applicable to New Services unless otherwise provided by the Parties in the
documentation governing New Services.
(c) If [*] is unable to obtain the Required Consents for which it has
responsibility within a reasonable time in a form acceptable to,[*]
then the Parties' obligations with respect to the performance of, and
payment for, any Services dependent on such Required Consents shall be
determined in accordance with the provisions of Section 8.2(g).
--------------
(d) Subject to Section 8.2(c), [*] shall bear the costs (if any) of obtaining
--------------
all Required Consents, including without limitation, all charges and fees
related to obtaining the Required Consents, for the Third Party Agreements
(excluding Third Party Agreements for Applications Software - Equifax)
allocable to each Transaction Document existing as of the Execution Date
under each such Transaction Document.
(e) Notwithstanding any other provision of this Agreement, for all Third Party
Agreements allocable to each Transaction Document entered into after the
Execution Date under each such Transaction Document, the Party requesting
the product or service to which the Third Party Agreement relates shall
bear the costs, if any, of obtaining Required Consents.
(f) [*] shall bear the cost, if any, associated with the cancellation and re-
licensing of any Software allocable to a Transaction Document and licensed
by the Equifax Group prior to the Execution Date under such
* Information omitted pursuant to Request for Confidential Treatment under Rule
406 of the Securities Act of 1933.
17
<PAGE>
Transaction Document, if required for EDS to provide the Services after the
Commencement Date under such Transaction Document. The provisions of this
Section shall be applicable to New Services unless otherwise provided by
the Parties in the documentation governing New Services.
(g) Notwithstanding any other provision of the Agreement, no Services requiring
a Required Consent shall commence and no Monthly Charge or other charge
shall commence for such Services until all applicable Required Consents for
such Services are obtained, unless otherwise agreed by the Parties.
However, if any Required Consents for which EDS has responsibility is not
obtained with respect to any of the Third Party Agreements existing as of
the Execution Date under any Transaction Document prior to the Commencement
Date and the Parties agree to commence the provision of Services without
such Required Consents, the Parties shall cooperate with each other in
achieving a reasonable alternative arrangement for Equifax to continue to
process its work with minimum interference to its business operations
unless and until such Required Consents are obtained. The cost of
achieving such reasonable alternative arrangement shall be borne by EDS.
8.3. Appointment as Attorney In Fact
(a) Equifax appoints EDS as the attorney in fact of the members of the Equifax
Group, and EDS accepts such appointment as a part of the Services, for the
limited purposes of administering, managing, supporting, operating under
and paying under the Third Party Agreements to which one or more members of
the Equifax Group is a party, and to obtain the Required Consents as
provided in Section 8.2(b), in connection with the Services as contemplated
--------------
by the Agreement. Equifax does not appoint EDS as the attorney in fact of
the members of the Equifax Group for the purposes of entering into oral or
written agreements with any individual or business entity for or in the
name of members of the Equifax Group, without the prior express written
approval of Equifax.
(b) Equifax agrees to promptly notify all Third Party Providers under the Third
Party Agreements to which one or more members of the Equifax Group is a
party of EDS's appointment. However, EDS must submit written notification
to Equifax and obtain Equifax's written agreement prior to the
cancellation, substitution, termination, change or addition of any Third
Party Agreement to which one or more members of the Equifax Group is or
will be a party. If Equifax does not respond to such notice from EDS
within twenty-one (21) business days after Equifax's receipt of such
notice, Equifax shall be deemed to have agreed to the cancellation,
substitution, termination, change or addition described in the EDS notice.
(c) EDS will perform its obligations and responsibilities as an attorney in
fact pursuant to Section 8.3(a) under all Third Party Agreements to which a
---------------
member of the Equifax Group is a party subject to the provisions of the
Agreement, including, without limitation, Section 3.1 (Obligations to
-----------
Provide Services), Section 3.8 (Software Licenses), Section 8.2 (Required
----------- -----------
Consents), this Section 8.3, Section 9.1 (Disbursements) and Section 11
----------- ----------- ----------
(Confidentiality). Upon Equifax's request, EDS will provide to Equifax all
information and documentation related to its activities as the Equifax
Group's attorney in fact with regard to such Third Party Agreements.
Equifax may terminate or provide additional restrictions on EDS's attorney
in fact appointment with respect to any Third Party Agreement to which one
or more of the members of the Equifax Group is a party if EDS (i) fails to
pay any amount due in a timely manner; (ii) permits an actual default to
occur; or (iii) does not diligently pursue the service and financial
benefits available to the Equifax Group under such Third Party Agreement.
(d) Beginning on the Execution Date of each Transaction Document and for the
term of each such Transaction Document, the Equifax Group will not enter
into any new, or terminate or amend any existing, Third Party Agreement to
which one or more members of the Equifax Group is a party that adversely
impacts EDS's ability to provide the Services covered by such Transaction
Document or increases EDS's cost of providing such Services without the
prior written consent of EDS.
(e) In performing and providing the Services, the relationship of EDS with the
members of the Equifax Group will be as an independent contractor.
However, as a result of its position in providing and performing the
Services, EDS and each of its Affiliates providing portions of the Services
will have a unique knowledge of the operations of the members of the
Equifax Group that no member of the Equifax Group or employee of a member
will have in full, and EDS and each of its Affiliates providing portions of
the Services will be interacting with the employees, executive management,
board of directors and accountants and legal counsel
18
<PAGE>
to the Equifax Group and the members thereof, in a manner and with respect
to matters which will make EDS and each of its Affiliates providing
portions of the Services appear to be the functional equivalent of the
employees of the Equifax Group and each member thereof obtaining any of the
Services from EDS. Accordingly, EDS is appointed as the agent of the
Equifax Group and each member thereof, and EDS accepts such appointments
for the purpose of performing and providing the Services. EDS is not
authorized to enter into oral or written commitments or agreements with any
individual or entity for or in the name of the Equifax Group or any member
thereof, without the further express written direction to and appointment
of EDS by Equifax.
8.4. Conflicts of Interests
(a) Each Party recognizes that EDS personnel providing Services to the Equifax
Group under the Agreement may perform similar services for others and the
Agreement shall not prevent EDS from performing similar services for others
subject to the restrictions set forth in Section 11 (Confidentiality)
----------
and/or the applicable Transaction Document. However, EDS shall not use any
of the Equifax Provided Hardware or Equifax Software or Equifax Provided
Office Furnishings to perform similar services for others (including EDS),
without the prior written consent of Equifax.
(b) Neither Party shall knowingly, directly or indirectly, solicit any employee
of the other Party or their Affiliates during the Term of the Agreement
unless otherwise agreed in writing by the Parties and except as provided in
Section 12.5(e). Equifax or EDS employee's responses to or employment
---------------
resulting from general public solicitations will be exempted from this
provision.
(c) Any specific restrictions related to key employees shall be as specified in
the applicable Transaction Document.
8.5. Alternate Providers
(a) During the Term, Equifax shall have the right to retain third party
suppliers to perform any service, function, responsibility, activity or
task that is within the scope of the Services or would constitute a New
Service pursuant to Section 3.13, or to perform any such services,
------------
functions, responsibilities or tasks (whether all or a part of the Services
or the New Services) internally. EDS shall cooperate with any such third
party supplier and Equifax as requested from time to time. Such
cooperation shall include, without limitation, (i) providing reasonable
physical and electronic access to the Facilities, the Data Center and the
books and records in the possession of EDS regarding the Equifax Business
and/or the Services; (ii) use of any Machines used by EDS to perform
services for the Equifax Group for the Equifax Business; (iii) use of any
of the Software (other than any Software where the underlying license
agreement does not authorize such access and consent permitting such access
and use has not been obtained); (iv) providing such information regarding
the operating environment, System constraints, and other operating
parameters as is reasonably necessary for the work product of the third
party supplier of the Equifax Group to be compatible with the Services or
New Services; and (v) such other reasonable cooperation as may be requested
by Equifax.
(b) EDS's obligations hereunder shall be subject to the third party suppliers'
compliance with reasonable Facilities, data and physical security and other
applicable standards and procedures, execution of appropriate
confidentiality agreements, and reasonable scheduling of computer time and
access to other resources to be furnished by EDS pursuant to the Agreement.
(c) If EDS's cooperation with Equifax or any third party supplier performing
work as described in Section 8.5(a), causes EDS to expend a material amount
--------------
of additional resources that EDS would not otherwise have expended, but
which fall within the scope of activities comprising the Services, such
additional reasonable and necessary resources will be charged to Equifax
under the established charging mechanism and/or Resource Unit Baseline
therefor. The Parties further agree that if in EDS's reasonable, good
faith determination, a third party supplier's activities affect EDS's
ability to meet the Performance Standards or otherwise provide the Services
in accordance with the Agreement, EDS will provide written notice to
Equifax of such determination. The Parties will cooperate to determine and
verify whether such effect is caused by a third party supplier, the extent
of
19
<PAGE>
such effect, and how to ameliorate any such effect. [*]
(d) Equifax's retention of third party suppliers pursuant to this Section 8.5
-----------
to perform services, functions, activities, tasks or responsibilities that
are within the scope of the Services shall not relieve Equifax of its
obligations set forth in the Agreement to pay EDS the Monthly Charges
applicable to such services, functions, activities, tasks or
responsibilities as set forth in the Agreement, unless Equifax is relieved
from such charge pursuant to a provision of the Agreement or by the
agreement of EDS.
8.6. Use of Subcontractors
(a) Within thirty (30) days after the Commencement Date under each Transaction
Document, the Parties will develop and prepare a list of the Listed
Subcontractors under each such Transaction Document that the Parties agree
may be engaged by EDS to perform and deliver the part or portion of the
Services indicated on such list. With respect to subcontractors which are
not Listed Subcontractors, at least fifteen (15) business days prior to the
proposed date of commencement by EDS of such subcontractors' activity with
respect to the Equifax group or the Services, EDS shall notify Equifax in
writing of a decision to delegate or subcontract a function, responsibility
or task to a subcontractor, or to change subcontractors for any function,
responsibility or task, (i) that could have a material affect on the
quality, timing, cost, consistency or performance of the Services under any
Transaction Document or on the operations of any member of the Equifax
Group or on the security of the Equifax Group data, books and records, or
Facilities, or Data Center or on the Equifax Business as conducted by any
member of the Equifax Group, or (ii) where the subcontractor will interface
directly with the members of the Equifax Group. Upon Equifax's request,
EDS shall promptly provide to Equifax information regarding the proposed
new or replacement subcontractors in order to permit Equifax to determine
whether to grant its consent to such delegation or change or subcontract.
Such information shall include the scope of the Services to be delegated,
the experience, financial status and resources of the proposed
subcontractors, and EDS's selection criteria for the proposed subcontractor
and conclusions regarding its selections. Subject to EDS's timely
provision of the foregoing information to Equifax, Equifax shall be deemed
to have accepted such delegation or subcontract or change that is the
subject of the notification by EDS to Equifax, if Equifax has not notified
EDS in writing of its good faith objections to such delegation or
subcontract on or before the twenty-first (21st) day after receipt of such
notice from EDS. EDS shall not delegate or subcontract or change
subcontractors unless and until EDS and Equifax shall have resolved any
objection timely made by Equifax to such proposed action by EDS. In
addition, EDS shall not disclose any Confidential Information of the
Equifax Group to any subcontractor unless and until such subcontractor has
agreed in writing to protect the confidentiality of such Confidential
Information in a manner equivalent to that required of EDS by Section 11.
----------
(b) Each subcontractor engaged by EDS to perform a portion of the Services will
make, execute and deliver to Equifax such disclosures and agreements as
Equifax may from time to time reasonably request in order to comport with
the requirements of the Equifax Business.
(c) EDS shall remain primarily liable and obligated to Equifax for the timely
and proper performance of all of its obligations hereunder even if such
obligations are delegated to third party subcontractors, and for the proper
and timely performance and actions of any person or entity to which it
delegates or subcontracts any such obligation.
8.7. Equifax Approvals and Notification
For those areas of the Services where Equifax (a) has reserved a right-of-
approval, consent or agreement, (b) is required to provide notification, and/or
(c) is to perform a responsibility set forth in the Agreement, and such
approval, consent, notification or performance is delayed or withheld beyond the
period provided in the Agreement (including any Transaction
* Information omitted pursuant to Request for Confidential Treatment under Rule
406 of the Securities Act of 1933.
20
<PAGE>
Document) without authorization or right and, such delay or withholding is not
caused by EDS and affects EDS's ability to provide the Services under the
Agreement (including any Transaction Document) Equifax will relieve EDS of the
responsibility for meeting the Performance Standards and Minimum Service Levels
for that portion of the Services to the extent, but only to the extent, directly
affected by such delay or withholding and only during the period such approval,
consent, notification or performance is delayed or withheld beyond the period
provided in the Agreement (including any Transaction Document). Equifax will
reimburse EDS in accordance with the Agreement for additional necessary and
reasonable resources, if any, incurred during such period as a direct result
thereof. If not specified otherwise in the Agreement, the period for such
approval or notification shall be thirty (30) business days unless another time
period is otherwise agreed by the Parties.
9. CHARGES/NEW SERVICES/INVOICES/PAYMENTS
9.1. Disbursements
Beginning on the Commencement Date of each Transaction Document, as part of the
Services covered by such Transaction Document, EDS will pay the Third Party
Providers under Third Party Agreements as set forth in the applicable
Transaction Document. In addition, EDS will reimburse Equifax in a timely
manner for payments by the Equifax Group to such Third Party Providers under the
Third Party Agreements allocable for amounts allocable to periods on and after
the Commencement Date under each such Transaction Document. Equifax will
promptly reimburse EDS for all payments to such Third Party Providers made by
EDS, if such payments are allocable to the periods prior to any such
Commencement Date and are not otherwise the responsibility of EDS under the
Agreement. If EDS should receive during the Term any refund, credit or other
rebate in respect of such Third Party Agreements which is attributable to a
period prior to the Commencement Date under the applicable Transaction Document,
EDS will promptly notify Equifax of such refund, credit or rebate and will
promptly pay to Equifax the full amount of such refund, credit or rebate. If
Equifax should receive during the Term any refund, credit or other rebate in
respect of such Third Party Agreements which is attributable to a period after
the Commencement Date under the applicable Transaction Document, Equifax will
promptly notify EDS of such refund, credit or rebate and will promptly pay to
EDS the full amount of such refund, credit or rebate.
9.2. Monthly Charges
For each Contract Year under each Transaction Document, Equifax agrees to pay
the Monthly Charges as specified in Schedule J to such Transaction Document,
----------
together with the other amounts as described in this Section 9. All periodic
---------
Monthly Charges under each Transaction Document are to be computed on a calendar
month basis, and will be prorated for any partial month, unless specifically
stated otherwise in the Agreement (including the applicable Transaction
Document). On a monthly basis, EDS will invoice Equifax the proportional amount
of the Monthly Charges under each Transaction Document for that month in
arrears, as specified in Schedule J to each such Transaction Document. The
----------
invoices will separately state applicable taxes owed by Equifax by tax
jurisdiction, and charges for other elements comprising the Monthly Charges as
determined by the Parties pursuant to Section 9.5(b).
--------------
9.3. [*]
9.4. Annual Adjustment
EDS will charge Equifax an Annual Adjustment under each Transaction Document in
accordance with the procedures and timing set forth in Schedule J to each such
----------
Transaction Document.
* Information omitted pursuant to request for Confidential Treatment under Rule
406 of the Securities Act of 1933.
21
<PAGE>
9.5. Taxes
(a) Except as provided in Section 9.5(c), the disbursements described in
--------------
Section 9.1, the Monthly Charges described in Section 9.2, the [*]
----------- -----------
described in Section 9.3 and the Annual Adjustment described in
-----------
Section 9.4, paid by Equifax are inclusive of applicable sales, use,
-----------
excise, personal property or other similar taxes attributable to the period
on or after the Commencement Date under each Transaction Document. EDS
shall be responsible for all taxes based upon or measured by (i) EDS's cost
in acquiring or providing equipment, materials, supplies or third party
services furnished to or used by EDS in providing and performing the
Services, (ii) the value or cost of the EDS Machines, EDS Software and
Acquired Customer Hardware; and (iii) all taxes payable by EDS with respect
to its revenues, income and profit. Each Party shall bear sole
responsibility for all taxes, assessments and other real property-related
levies on its owned or leased real property.
(b) The Parties agree to reasonably cooperate with each other in good faith to
more accurately determine and reflect each Party's tax liability and to
minimize such liability to the extent legally permissible. Each Party
shall provide and make available to the other any resale certificates and
other exemption certificates or information reasonably requested by either
Party. The Parties will also work together to segregate the Monthly
Charges and other charges, reimbursements and amounts payable hereunder,
into separate payment accounts charged under separate invoices, as
appropriate, for Services and the components of the Services (i.e.,
components that are taxable and nontaxable, including those for which a
sales, use or similar tax has already been paid by EDS and for which EDS
functions merely as a paying agent for Equifax in receiving goods, supplies
or services including licensing arrangements that otherwise are nontaxable
or have previously been subjected to tax, components that are capitalized,
and components that are expensed).
(c) Notwithstanding any other provision of the Agreement, if a services or
similar tax is assessed on EDS's provision of the Services (or any New
Services) to Equifax or on EDS's charges to Equifax under the Agreement,
Equifax will be responsible for and pay the amount of any such tax.
9.6. New Services
(a) The charges for New Services will be integrated into the Schedule J to the
--------
affected Transaction Document in accordance with Sections 3.13 and 17.2.
------------- ----
(b) If the Parties cannot agree whether a function, responsibility or task
falls within the definition of a New Service, EDS shall nevertheless
perform the disputed function, responsibility or task if requested by
Equifax. The determination of whether any function, responsibility or task
is a New Service to be paid by Equifax will be determined pursuant to the
dispute resolution provisions in Section 16. Equifax shall pay [*]
----------
of any Monthly Charges for the disputed function, responsibility or task
under this Section 9.6 to EDS and [*] of any Monthly Charges shall be
-----------
held by Equifax or paid into an interest bearing escrow account in
accordance with Section 9.12, if requested by EDS, pending a resolution of
------------
the dispute in accordance with Section 16. Any payment to Equifax of any
----------
such disputed charge paid by Equifax to EDS and into escrow pursuant to
this Section 9.6 after resolution of the applicable dispute, shall be
-----------
paid first from the amount in escrow with respect to such dispute and then
by EDS. All amounts payable directly by either Party to the other Party
upon resolution of the dispute with respect to which amounts are payable
shall be paid promptly upon resolution of the disputed amounts together
with interest at the rate of [*] per month from the date that the other[*]
payment was made into an escrow account pursuant to Section 9.6 and 9.12
-----------
through the date of payment by EDS to Equifax.
9.7. Invoice Payment
(a) At its election, Equifax will pay each invoice for charges under the
Agreement either by wire funds transfer to an account specified by EDS or
other means acceptable to EDS, within [*] days after the date of Equifax's
receipt of the invoice. In the event that any invoice payment is not
received by EDS within ten (10) business days following such [*] day
period, a late payment fee of [*] per month of
* Information omitted pursuant to Request for Confidential Treatment under
Rule 406 of the Securities Act of 1933.
22
<PAGE>
the unpaid, late invoice payment will be due and payable by Equifax to EDS
from the date such payment became overdue through the date of payment to
EDS.
(b) No invoice for charges for any of the Services shall be delivered to
Equifax until after the Services which are the subject of such invoice have
been provided to the Equifax Group. However, any Services that are
expressly stated in the Agreement as prepaid or paid in advance shall be
excluded from the limitation of this provision to the extent, but only to
the extent, expressly set forth in the Agreement.
9.8. Benchmark Study
(a) Not less than once in each [*] period of the term of each Transaction
Document commencing on the Commencement Date of each Transaction Document,
Equifax may elect to have a benchmark study performed for the Services
provided pursuant to each such Transaction Document or for any subset of
such Services. The cost payable to a third party benchmark organization for
the benchmark activity will be split equally by the Parties. The Parties
will jointly designate and engage the third party benchmark organization.
The benchmark study will focus on outsourcing services providers that
regularly provide the full range of Services provided by EDS to the Equifax
Group under the applicable Transaction Document and on the outsourcing
engagements of those providers for substantially similar services in
substantially similar quantities.
(b) Each Transaction Document will set forth a price/performance value for the
Services (including subset of the Services) provided under such Transaction
Document and the scale or System against which such price/performance value
was determined (the "Performance Value"). The Performance Value will be
-----------------
either the Norm or an agreed deviation from the Norm, and the Parties shall
exercise the rights and obligations described herein if EDS's overall
performance rating with respect to the Services is not as good as the
agreed upon Performance Value. For purposes of the Agreement, the "Norm"
----
shall be the average price/performance of all customers (both outsourced
and non-outsourced customers) being compared during the benchmark study
against the scale or system pursuant to which such customers were measured.
(c) The result of each benchmark study will be submitted to the Integrated
Planning Team. In the event that the benchmark study indicates that EDS's
overall performance rating as compared to the applicable Performance Value
rating for the benchmarked Services, or subset of the Services, under a
Transaction Document is not as good as the Performance Value for such
Services set forth in such Transaction Document, EDS will adjust its
pricing on a prospective basis for the Services, or such subset of the
Services, to meet the agreed Performance Value; provided, however, such
adjustment will not forgive, compromise release or modify EDS's obligation
to perform the Services in accordance with the Performance Standards and
Minimum Service Levels. The benchmark study results may reduce but not
increase the fees and charges for the Services set forth in the Agreement.
(d) No Annual Adjustment as described in Section 9.4 of this Master Agreement
-----------
will be applied to any element(s) of the pricing adjusted pursuant to this
Section 9.8 for the year in which the pricing of such elements were so
-----------
adjusted.
9.9. Service Credits
If EDS fails to provide the Services in accordance with the Minimum Service
Levels set forth in any Transaction Document, EDS shall incur Service Credits
against the Monthly Charges owed to EDS for the second month following the month
in which the Service Credits were incurred. The Parties agree that the Service
Credits are a fair estimate of the damages that the Equifax Group will incur for
each event for which a Service Credit is granted in the Agreement, that the
actual damages incurred by the Equifax Group in each such event would be
difficult and costly to determine, and that the Service Credits are liquidated
damages awarded in lieu of actual damages incurred by the Equifax Group. The
Parties agree that the Service Credits are not penalties and are the sole and
exclusive remedy of Equifax with respect to the incident or event with respect
to which such Service Credits are paid or credited by EDS to Equifax subject to
and as limited by the provisions of Sections 12 and 13.
----------- --
* Information omitted pursuant to request for Confidential Treatment under Rule
406 of the Securities Act of 1933.
23
<PAGE>
9.10. Other Credits
Except as otherwise set forth in the Agreement, with respect to any amount to be
paid or reimbursed to Equifax by EDS at the time any such amount is due and
payable to Equifax, EDS may pay that amount to Equifax by applying a credit for
the month such amount is due and payable against the charges otherwise payable
to EDS under the Agreement, at EDS's option. Notwithstanding the foregoing, if
the amount to be so paid or reimbursed by EDS in any specific month, exceeds the
charges to Equifax for such month, EDS shall promptly pay any difference to
Equifax by check or wire transfer during such month. If EDS fails to pay any
amount due and payable to Equifax or fails to apply a credit during the month
such amount is due and payable, EDS shall pay or credit such amount together
with interest thereon payable at a rate of [*] per month, or the maximum amount
permissible by law, whichever is less, of the unpaid, late monies will be due
and payable by EDS to Equifax from the date such monies became due to Equifax
through the date of payment or credit to Equifax.
9.11. RESERVED
9.12. Disputed Charges/Credits
In the event Equifax disputes the accuracy or applicability of a charge or
credit or other financial arrangement described in the Agreement (i.e., Monthly
Charges, Annual Adjustment, Service Credits, pass-through billings, etc.),
Equifax shall notify EDS of such dispute as soon as practicable after the
discrepancy has been discovered. The Parties will investigate and resolve the
dispute using the dispute resolution processes provided under Section 16 of the
----------
Agreement. Any undisputed amounts contained in or applicable to an invoice will
be paid by Equifax and any undisputed credit amounts will be promptly credited
by EDS. Upon the request of either Party Equifax in the case of a disputed
charge, or EDS in the case of a disputed credit, shall place the disputed amount
in an escrow account established for the benefit of the Parties, until such
dispute is resolved. Upon resolution of the dispute, the Parties shall be paid
any interest having accrued on the disputed amounts held in the escrow account
in connection with such dispute in proportion to the amount received by each
Party with respect to such dispute, and the Parties shall each pay a portion of
the escrow fees attributable to the disputed amount in an inverse proportion to
the percentage of the disputed amount paid to each Party. Unpaid and uncredited
monies that are in dispute and placed in escrow will not be considered a basis
for monetary default under the Agreement or any Transaction Document.
9.13. Reduction of Equifax Work
(a) If, during the Term, Equifax experiences significant changes in the scope
or nature of its business which have or are reasonably expected to have the
effect of causing a substantive and sustained decrease in the amount of EDS
resources used in performing the Services such changes shall be governed by
this Section 9.13, provided such decreases are not due to Equifax's
------------
resuming the provision of such Services by itself or Equifax transferring
the provision of such Services to another vendor. Examples of the kinds of
events that might cause such substantial decreases are: (i) changes in
Equifax's products or markets; (ii) mergers, acquisitions or divestitures;
or (iii) changes in market priorities.
(b) Equifax will notify EDS of any event or discrete set of events which
Equifax believes qualifies under this Section 9.13, and EDS will identify,
------------
any changes that can be made to accommodate such decrease of resource
requirements in a cost-effective manner without disruption to Equifax's
ongoing operations, and the cost savings that will result therefrom in a
plan that will be submitted to Equifax for review and acceptance.
(c) Upon acceptance by Equifax, EDS will make any applicable adjustments to the
Annual Service Charge and the related Resource Baselines to reflect the
foregoing and distribute an amended Schedule J to the Parties.
----------
(d) Equifax may, at its option and expense, employ an accredited and
independent auditor to verify EDS's methodology for calculating the savings
referenced above conforms to accepted accounting practices.
* Information omitted pursuant to request for Confidential Treatment under Rule
406 of the Securities Act of 1933.
24
<PAGE>
10. INTELLECTUAL PROPERTY RIGHTS
10.1. Ownership of Materials
EDS, the members of the Equifax Group and their respective contractors and
subcontractors may Develop certain Code and documentation in order to perform
the Services. The provisions of this Section 10.1 sets forth the respective
------------
rights of the Parties, their Affiliates and the Equifax Group and their
respective contractors and subcontractors in such Code and documentation.
(a) Equifax Code, Equifax Derivative Code and Equifax Works shall be owned by
Equifax or another member of the Equifax Group, as applicable. During the
Term, EDS shall have an irrevocable, nonexclusive, worldwide, paid-up
license to use, execute, reproduce, display, perform, operate, distribute,
modify, develop, personalize and create Derivative Works from such
Materials internally, and the right to sublicense third parties to do any
of the foregoing, for the sole purpose of performing the Services. All
patentable inventions embodied in the Equifax Code and Equifax Derivative
Code, and patents issued with respect thereto, shall be jointly owned by
Equifax and EDS with an undivided interest and an unrestricted right to
use, license, distribute, practice, enforce or otherwise improve or
commercialize such patentable inventions and the patents issued with
respect thereto without an obligation to account to the other Party with
respect thereto.
(b) EDS Code, EDS Derivative Code, EDS Works and EDS Interfaces shall be owned
by EDS. During the Term, the Equifax Group shall have an irrevocable,
nonexclusive, worldwide, paid-up license to use in the Equifax Business,
execute, operate, reproduce, display, perform, distribute, modify, Develop,
personalize and create Derivative Works from such Materials internally, and
the right to sublicense third parties to do any of the foregoing for the
Equifax Group.
(c) With respect to any of the Materials whether or not Developed under the
Agreement, which are or have been Developed solely by the Equifax Group
and/or their contractors, such Materials shall be owned by Equifax. At
Equifax's sole option, EDS shall have an irrevocable, nonexclusive,
worldwide, paid-up license to use, execute, operate, reproduce, display,
perform, distribute, modify, Develop, personalize and create Derivative
Works from such Materials internally and the right to sublicense third
parties to do any of the foregoing, for the sole purpose of performing the
Services during the Term.
(d) Subject to EDS's fulfilling its obligations under Section 4, any ownership
---------
or license rights herein granted to either Party or another member of the
Equifax Group or any other Authorized Users are limited by and subject to
any patents and copyrights held by, and terms and conditions of any license
agreements with, applicable Third Party Providers.
(e) To the extent that by operation of law any of the Materials may not be
owned by EDS or the Equifax Group to which ownership has been allocated
under this Section 10, each Party agrees to promptly assign, or cause to be
----------
assigned, and take such actions and execute and deliver such documents as
shall be necessary or appropriate to effect such assignment without further
consideration. Each Party hereby assigns, without further consideration,
the ownership of all right, title and interest in all U.S. and foreign
copyrights, mask work rights and patents in the Materials to the other
Party in accordance with the ownership allocation provisions set forth in
this Section 10. Such assignee shall have the right to obtain and hold in
----------
its own name or transfer patents and copyrights, applications,
registrations, renewals and all other rights relating or pertinent thereto.
10.2. Obligations Regarding Materials
(a) The Parties agree to reproduce copyright, patent and other legends which
appear on any portion of the Materials which may be owned by the Parties
and any and all third parties.
(b) Except as set forth in Section 11, the Agreement shall not preclude either
----------
Party from Developing materials or providing services which are competitive
to the Materials or Services which might be
25
<PAGE>
delivered pursuant to the Agreement, except to the extent any of the same
may infringe any of the other Party's patent rights, copyrights, Trade
Secrets or mask work rights.
(c) Neither the Agreement nor any disclosure made hereunder grants any license
to either Party under any patents rights, copyrights, mask work rights or
Trade Secrets of the other Party, except for the licenses expressly granted
under this Section 10 and Section 12.5 hereof.
---------- ------------
11. CONFIDENTIALITY
11.1. Confidential Information
EDS and Equifax each acknowledge that the other Party possesses and will
continue to possess information, which has commercial value in such other
Party's business and is not in the public domain. Such information has been
created, discovered, developed by such other Party or provided to it by a third
party, and such other Party holds property rights in such information by
assignment, license or otherwise.
11.2. Obligations
(a) Equifax and EDS will each refrain from disclosing, will hold as
confidential and will use the same level of care to prevent disclosing to
third parties, the Company Information of the other Party as it employs to
avoid disclosure, publication or dissemination of its own information of a
similar nature, but in no event less than a reasonable standard of care.
Notwithstanding the foregoing, the Parties may disclose Company Information
in the case of Equifax to members of the Equifax Group, and in the case of
both Parties contractors and subcontractors involved in providing and using
the Services under the Agreement where: (i) such disclosure is necessary
to permit the members of the Equifax Group and the contractor or
subcontractor to perform its duties hereunder or use the Services; (ii)
members of the Equifax Group and the contractor or subcontractor agree in
writing to observe the confidentiality and restricted use and disclosure
covenants and standards of care set forth in this Section 11 and EDS and
----------
Equifax are each third party beneficiaries for all purposes; and (iii) EDS
in the case of Equifax Company Information received by EDS and disclosed it
as permitted herein, or Equifax in the case of EDS Company Information
received by Equifax and disclosed by it as permitted herein, assumes full
responsibility for the acts or omissions of the members of the Equifax
Group, contractors and subcontractors no less than if the acts or
omissions were those of EDS and Equifax respectively.
(b) Neither Equifax nor EDS shall use the Company Information of the other
Party except in the case of EDS and its subcontractors, (i) in connection
with the performance of the Services and (ii) as otherwise specifically
permitted in the Agreement, and in the case of Equifax, its contractors and
other members of the Equifax Group, (A) as specifically permitted in the
Agreement and/or (B) in connection with the use of the Services. EDS shall
be responsible to ensure that its subcontractors comply with this Section
-------
11.2(b) and Equifax shall be responsible to ensure that the members of the
-------
Equifax Group and its contractors comply with this Section 11.2(b).
---------------
(c) Without limiting the generality of the foregoing, neither Party will
publicly disclose the terms of the Agreement, except to the extent
permitted by this Section 11 and to enforce the terms of the Agreement,
----------
without the prior written consent of the other. Furthermore except as
contemplated by the Agreement, neither EDS nor Equifax will make any use of
the Company Information of the other Party; acquire any right in or assert
any lien against the other Party's Company Information except as
contemplated by the Agreement; or refuse to promptly return, provide a copy
of or destroy such Company Information upon the request of the disclosing
Party.
(d) Notwithstanding any other provision of the Agreement, neither Party will be
restricted in using, in the development, manufacturing and marketing of its
products and services and in its operations, any data processing, system
operations, applications development or network management ideas, concepts,
know-how and techniques which are retained in the minds of employees who
have had access to the other Party's Company Information (without reference
to any physical or electronic embodiment of such information), unless such
use shall infringe any of such Party's patent rights, copyrights, mask
works rights or Trade Secrets.
26
<PAGE>
11.3. Exclusions
Notwithstanding the foregoing, this Section 11 will not apply to any information
----------
which EDS or Equifax can demonstrate was: (a) at the time of disclosure to it,
in the public domain; (b) after disclosure to it, published or otherwise becomes
part of the public domain through no fault of the receiving party; (c) without a
breach of duty owed to the disclosing party, is in the possession of the
receiving party at the time of disclosure to it; (d) received after disclosure
to it from a third party who had a lawful right to and, without a breach of duty
owed to the disclosing party, did disclose such information to it; or (e)
independently developed by the receiving party without reference to Company
Information of the disclosing party. Further, either Party may disclose the
other Party's Company Information to the extent required by law or order of a
court or governmental agency. However, the recipient of such Company
Information must give the other Party prompt notice and make a reasonable effort
to obtain a protective order or otherwise protect the confidentiality of such
information, all at the discloser's cost and expense. It is understood that the
receipt of Company Information under the Agreement will not limit or restrict
assignment or reassignment of employees of EDS and the Equifax Group within or
between the respective Parties and their Affiliates.
11.4. Loss of Company Information
The receiving Party will immediately notify the disclosing Party, orally or in
writing in the event of any disclosure, loss, or use in violation of the
Agreement of a disclosing Party's Company Information known to the receiving
Party.
11.5. Limitation
The covenants of confidentiality set forth herein (a) will apply after the
Effective Date to any Company Information disclosed to the receiving Party
before and after the Effective Date and (b) will continue and must be maintained
from the Effective Date through the termination of the relationship between the
Parties and (i) with respect to Trade Secrets, until such Trade Secrets no
longer qualify as trade secrets under applicable law; and (ii) with respect to
Confidential Information for a period equal to the shorter of two (2) years
after termination of the Parties' relationship under the Agreement, or until
such Confidential Information no longer qualifies as confidential under
applicable law. Neither Party will be responsible for the security of the
Company Information of the other Party during transmission via public
communications facilities, except to the extent that such breach of security is
caused by the failure of such Party to perform its obligations under the
Agreement, or the negligent acts or omissions of such Party, its contractors,
subcontractors or Affiliates.
12. TERMINATION
12.1. Termination By Equifax
Equifax may terminate any Transaction Document for the following reasons:
(a) A material breach of the Agreement or any Transaction Document by EDS that
remains uncured for [*] after receipt of written notice thereof.
However, if a material breach of the Agreement or any Transaction Document
by EDS (other than a breach of Section 11 hereof) occurs that by its nature
----------
cannot be cured by EDS within such [*] period, but EDS submits a
commercially reasonable written plan to Equifax within such period to cure
such breach after the [*] period (but in no event more than [*] after such
notice of breach) and the plan (including the timing of the cure set forth
in the plan) is accepted by Equifax in writing, the cure period for such
breach shall be extended to the date set forth in the plan; or
(b) There exists a series of non-material or persistent breaches by EDS, that
in the aggregate have a material and significant adverse impact (i) on the
Services support of the administrative, management, planning, financial
reporting or operations functions of the Equifax Group or the portion of
the Equifax Group constituting the user group under any Transaction
Document, or (ii) on the management of the Services or the portion of the
Services covered by such Transaction Document; or
* Information omitted pursuant to Request for Confidential Treatment under
Rule 406 of the Securities Act of 1933.
27
<PAGE>
(c) For convenience upon [*] days prior notice by Equifax to EDS; or
(d) EDS becomes insolvent or is unable to pay its debts or enters into or files
(or has filed or commenced against it) a petition, arrangement,
application, action or other proceeding seeking relief or protection under
the bankruptcy laws of the United States or any similar laws of the United
States or any state of the United States or transfers all or substantially
all of its assets to another person or entity; or
(e) In the event of a Change of Control of the Card Processing Division of
EDS, or EDS acquires a competitor of Equifax, Inc., or there is a Change of
Control of EDS with a competitor of Equifax, Inc. acquiring Control of EDS,
Equifax, or its successor entity in the case of a merger or the entity
purchasing the assets of Equifax, may terminate the Agreement with [*]
prior written notice to EDS given not later than [*] after the occurrence
of such Change of Control; or
(f) EDS incurs Direct Damages to Equifax in excess of the EDS Direct Damages
Cap under the circumstances and resulting from the events described in
Section 13.1(a); or
---------------
(g) Under the circumstances set forth in Sections 3.3 or 17.3.
------------ ----
12.2. Termination by EDS
EDS may terminate any Transaction Document for a material default by Equifax
thereunder other than a payment default that remains uncured for a period of [*]
after written notice thereof to Equifax from EDS. EDS may terminate any
Transaction Document for a material payment default by Equifax thereunder that
remains uncured for a period of fifteen (15) days after written notice thereof
to Equifax from EDS.
12.3. [*]
(a) In the event of a termination by Equifax pursuant to Section 12.1(c) for
---------------
convenience, [*]. In the event of a termination by Equifax pursuant to
Section 12.1(e) for Change of Control, [*]. In the event of a termination
--------------
by Equifax pursuant to Section 17.3 for a Force Majeure Event, [*]. In the
------------
event of a termination by Equifax pursuant to Sections 12.1(a) for cause
----------------
or (b) for persistent breaches or (d) for bankruptcy or (f) for exceeding
--- --- ---
the EDS Direct Damages Cap or Section 3.3 for failing to provide disaster
-----------
recovery services, [*]. In the instance of a termination by Equifax
pursuant to Section 12.1(b) for persistent non-material breaches, Equifax
---------------
may not recover any damages from EDS for the defaults and breaches by EDS
giving rise to such termination; provided that nothing in this sentence
shall preclude any recovery by Equifax pursuant to other provisions of the
Agreement including, without limitation, Section 8.4(b), Section 9, Section
------- ------ ---------
10, Section 11, Section 12, Section 13, Section 14, Section 15, or Section
-- ---------- ---------- ---------- ------- -- ---------- -------
17.3 of this Master Agreement.
----
(b) Except as set forth in Section 12.3(a) and (c), Equifax shall not be
--------------- ---
obligated to pay any charges that would otherwise accrue and be payable by
Equifax pursuant to the Agreement or any Transaction Document after the
effective date of the expiration or termination of the Agreement or any
such Transaction Document.
(c) In the event of a termination by EDS pursuant to Section 12.2, Equifax will
------------
be required to pay Wind-Down Expenses.
12.4. Services Transfer Assistance
(a) The Parties agree that EDS will cooperate with the Equifax Group to assist
in the orderly transfer of the services, functions, responsibilities, tasks
and operations comprising the Services under each
* Information omitted pursuant to Request for Confidential Treatment under
Rule 406 of the Securities Act of 1933.
28
<PAGE>
Transaction Document provided by EDS thereunder to one or more members of
the Equifax Group itself or another services provider in connection with
the expiration or earlier termination of the Agreement and/or each
Transaction Document for any reason, however described. "Services Transfer
Assistance" shall include, but not be limited to, providing the Equifax
Group and their respective agents, contractors and consultants, as
necessary, with services described in Schedule R to each Transaction
----------
Document. Neither the Term of the Agreement nor the term of any Transaction
Document shall be deemed to have expired or terminated until the Services
Transfer Assistance thereunder is completed.
(b) Upon Equifax's request EDS shall provide Services Transfer Assistance in
connection with migrating the work of the Equifax Group to the Equifax
Group itself or another services provider commencing up to [*] prior to
expiration, or upon any notice of termination or of non-renewal of the
Agreement or any Transaction Document. In no event will Equifax's
holding of or escrow of monies in compliance with Section 9.12 be
------------
considered a failure by Equifax to pay amounts due and payable hereunder.
Further, EDS shall provide the Services Transfer Assistance in accordance
with this Section 12.4 even in the event of Equifax's material breach
------------
(other than an uncured payment default) with or without an attendant
termination for cause by EDS.
(c) Services Transfer Assistance shall be provided through the effective date
of the expiration or termination of the Services under the Transaction
Documents being terminated. Upon request by Equifax, the effective date of
such expiration or termination shall be extended for up to [*] thereafter
as set forth in Section 1.4 pursuant to the terms and conditions of the
-----------
Agreement and applicable Transaction Document(s) and such period shall be
considered an extension of the Term and the term of such Transaction
Documents.
(d) If any Services Transfer Assistance provided by EDS requires the
utilization of additional resources that EDS would not otherwise use in the
performance of the Agreement and applicable Transaction Documents, but for
which there is a current Resource Unit Baseline, Equifax will pay EDS for
such usage at the then-current applicable Transaction Document(s) charges
and in the manner set forth in the applicable Transaction Document(s). If
the Services Transfer Assistance requires EDS to incur costs that EDS would
not otherwise incur in the performance of the Services under the Agreement
and applicable Transaction Document(s), then EDS shall notify Equifax of
the identity and scope of the activities requiring that EDS incur such
costs and the projected amount of the charges that will be payable by
Equifax for the performance of such assistance. Upon Equifax's
authorization, EDS shall perform the assistance and invoice Equifax for
such charges. Within thirty (30) business days after the date of the
invoice Equifax shall pay EDS for authorized, additional charges incurred
to provide such assistance to Equifax.
12.5. Other Rights Upon Termination
At the expiration or earlier termination of the Agreement and/or any Transaction
Document for any reason, however described, EDS agrees in each such instance, as
applicable:
(a) Upon Equifax's request, EDS agrees to sell to Equifax or its designee for
the fair market value thereof, the EDS Machines owned by EDS then currently
being used by EDS to perform the Services or the portion of the Services
covered by the Transaction Document, as applicable. In the case of EDS
Machines that EDS is leasing, EDS agrees to permit Equifax or its designee
to either buy-out the lease on the EDS Machines and purchase the EDS
Machines from the lessor or assume the lease(s) and secure the release of
EDS thereon. Equifax shall be responsible for any sales, use or similar
taxes associated with such purchase of such EDS Machines or the assumption
of such leases.
(b) EDS will grant to the members of the Equifax Group and their Affiliates an
irrevocable, nonexclusive, worldwide, perpetual, paid-up source and object
code license to use, execute, operate, reproduce, display, perform,
distribute, modify, Develop and personalize, and create Derivative Works
from, the EDS Derivative Code, EDS Code, EDS Works and EDS Interfaces as a
part of and in connection with the Equifax Business, and the right to
sublicense third parties to do any of the foregoing for the members of the
Equifax Group.
* Information omitted pursuant to Request for Confidential Treatment under Rule
406 of the Securities Act of 1933.
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<PAGE>
(c) EDS will provide to the Equifax Group a source code and an object code
license for EDS Software proprietary to EDS and not otherwise owned by or
licensed to Equifax in accordance with Section 12.5(b) and not generally
---------------
commercially available, for use by the Equifax Group as a part of and in
connection with the Equifax Business, upon terms and prices to be mutually
agreed upon by the Parties (which prices shall not be greater than those
offered to third parties). At Equifax's option, EDS will recommend a
mutually agreeable commercially available substitute, if available, to
perform the same function.
(d) If EDS has licensed or purchased and is using any generally commercially
available EDS Software to provide the Services to the Equifax Group at the
date of expiration or termination of the Agreement and/or any Transaction
Document, Equifax may elect to take a transfer or an assignment of any and
all of the licenses for such software and any attendant maintenance
agreement, which licenses and maintenance agreements shall in all cases be
kept current and fully paid by EDS through the date of transfer to Equifax.
To the extent any such licenses for EDS Software and the attendant current
maintenance agreements are not transferable by EDS to Equifax, EDS shall
provide to Equifax, in Equifax's name, a current fully paid license for
such EDS Software and a current fully paid maintenance agreement for such
EDS Software. In both of the instances described in the preceding two
sentences such license and maintenance agreements shall be for a scope of
use and hardware level appropriate for Equifax's operations at the time of
transfer and/or delivery to Equifax.
(e) Upon the date of expiration or termination of the Agreement or any
Transaction Document for any reason, the Equifax Group shall have the right
to make offers of employment to any or all Service employees performing
Services hereunder or under such Transaction Document. Promptly after
either Party sends the other Party written notice of termination or
expiration with the prior consent of each Services Employee (each of whom
EDS will notify of Equifax's interest), subject to the agreement of the
Service employee(s) EDS agrees to supply Equifax with the names and resumes
requested by Equifax for the purpose of exercising its rights under this
Section 12.5, at no charge. Equifax's rights under this Section 12.5 will
------------ ------------
take precedence over any EDS/employee employment contract or covenant that
may otherwise limit an employee's right to accept employment with the
Equifax Group.
(f) Upon Equifax's request, EDS will transfer or assign to Equifax or its
designee, on mutually acceptable terms and conditions, any Third Party
Agreements not otherwise treated in this Section 12.5, applicable solely to
------------
services being provided to Equifax, including, without limitation, Third
Party Agreements for maintenance, Disaster Recovery Services and other
necessary third party services then being used by EDS to perform the
Services subject to the payment by Equifax of any transfer fee or charge
imposed by the applicable vendors.
12.6. Effect of Termination/Survival of Selected Provisions
(a) In the event of the bankruptcy of EDS pursuant to the Bankruptcy Act and an
attendant rejection of this Agreement or any license or assignment granted
hereunder pursuant to Section 365 thereof, the parties intend that the
provisions of the Bankruptcy Act shall apply and Equifax shall be entitled
to retain possession of all Embodiments of Intellectual Property delivered
to it by EDS under this Agreement and to the extent permitted by law,
retain the license rights granted thereunder, subject to the obligations to
pay royalties and fees hereunder.
(b) Notwithstanding the expiration or earlier termination of the Services, the
Agreement or any Transaction Document for any reason however described, the
following Sections of the Agreement shall survive any such expiration or
termination: Section 8.4(b), Section 10, Section 11, Section 12.4, Section
-------------- ---------- ---------- ------------ -------
12.5, Section 12.6, Section 13, Section 14, Section 15, Section 16.1 and
---- ------------ ---------- ---------- ---------- ------------
Section 17. Upon termination or expiration of the Master Agreement, all
----------
rights and obligations of the Parties under this Master Agreement and the
Transaction Documents will immediately cease and terminate (except for the
rights and obligations under those Sections specifically designated to
survive in this Section 12.6).
-------------
13. LIABILITY
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<PAGE>
13.1. Liability Caps
(a) Except as provided in Section 13.2, the liability of EDS to Equifax arising
------------
out of or resulting from the performance or non-performance by EDS and its
subcontractors of the Services and its obligations under the Agreement
shall be limited to "Direct Damages" incurred by Equifax for each event
which is the subject matter of a claim or cause of action. Except as
provided in Section 13.2, each Transaction Document shall contain a
------------
provision setting the cap on the aggregate liability of EDS for Direct
Damages pursuant to such Transaction Document (the "EDS Direct Damages
Cap"). The sum of the EDS Direct Damages Caps set forth in the Transaction
Documents shall constitute the "EDS Aggregate Direct Damages Cap."
--------------------------------
(b) Except as provided in Section 13.2, the liability of Equifax to EDS arising
------------
out of or resulting from the performance and non-performance of its
obligations under the Agreement (including the Transaction Documents) shall
be limited in all cases to Direct Damages which in the aggregate shall not
exceed the amounts payable by Equifax upon a termination for convenience
under Section 12.1(c) including Wind-Down Expenses (the "Equifax Direct
--------------- --------------
Damages Cap"). The EDS Direct Damages Cap and the Equifax Direct Damages
-----------
Cap are herein collectively called the "Direct Damages Caps".
-------------------
13.2. Exclusions
Notwithstanding Section 13.1, the Direct Damages Caps (the limitations on the
------------
types and amounts of damages set forth in Section 13.1) will not apply to (a)
------------
failure to pay charges for the Services that are due and payable under the
Transaction Documents up to the effective date of the early termination of such
Transaction Documents (but the Direct Damages Cap will apply to payments due and
payable by Equifax upon a termination by Equifax for convenience under Section
-------
12.1(c) or upon a termination by EDS pursuant to Section 12.2); (b) Losses
- ------- ------------
covered under the Party's indemnification obligations to others pursuant to
Section 14; (c) Losses arising from a violation of the confidentiality
- ----------
provisions of Section 11; (d) Losses incurred by Equifax caused by or arising
----------
out of the intentional misconduct or gross negligence of the other Party in the
performance or failure of performance of its obligations under the Agreement;
(e) amounts payable by EDS under the force majeure provisions of Section 17.3 of
------------
the Agreement; and (f) amounts payable to Equifax under Section 9.10 (Other
------------
Credits).
13.3. Direct Damages
Unless specifically provided to the contrary in the Agreement (including,
without limitation, Section 13.2), neither party shall have any liability
------------
whether based on contract, tort (including, without limitation, negligence),
warranty, guarantee or any other legal or equitable grounds to the other party
for any damages other than Direct Damages. "Direct Damages" mean actual, direct
--------------
damages incurred by the claiming Party which include, by way of example but
without limitation, (a) the costs of cover incurred by the Equifax Group to
obtain services which are the same as or substantially similar to the Services,
(b) the costs to correct any deficiencies in the Services rendered by EDS, (c)
the costs incurred by the Equifax Group to transition to another provider of
information management and communication services and/or to take some or all of
such functions and responsibilities in-house, (d) the difference in the amounts
to be paid to EDS hereunder and the charges to be paid to such other provider
and/or the costs of providing such functions, responsibilities and tasks in-
house, (e) the Service Credits, and (f) similar damages, but "Direct Damages"
shall not include (i) loss of interest, profit or revenue of the claiming Party
or (ii) incidental, consequential, special, exemplary, punitive, multiple or
indirect damages suffered by the claiming Party (except as the damages described
in (i) and (ii) are included as a part of the Termination Charge, Change of
Control Termination Charge and the Service Credits or as otherwise provided for
in the Agreement), even if such Party has been advised of the possibility of
such losses or damages.
13.4. Dependencies
In no event will EDS or its subcontractors be liable for any damages if and to
the extent caused by the failure of Equifax and/or its contractors to perform
its responsibilities hereunder. However, for the purposes of this Section 13.4,
------------
neither EDS nor its subcontractors nor the Third Party Providers shall be
considered a contractor of
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Equifax. Further, neither Equifax nor its contractors shall be liable for any
damages if and to the extent caused by any failure to perform by EDS or its
subcontractors.
13.5. Remedies
At its option, Equifax may seek all remedies available to it under law and in
equity including, without limitation, injunctive relief in the form of specific
performance to enforce the Agreement and/or actions for damages, or recover as
liquidated damages the Service Credits, subject to the limitations and
provisions specified in this Section 13. If EDS's provision of the Services is
----------
such that EDS would otherwise owe Equifax a Service Credit and Equifax elects to
recover Service Credits, Equifax's recovery of Service Credits shall constitute
acknowledgment by Equifax of full satisfaction and release of any claim by
Equifax that EDS has breached its obligations under the Agreement with respect
to any such event(s) giving rise to the Service Credits. However, within nine
(9) calendar months of the receipt of any Service Credits Equifax received with
respect to any action or inaction by EDS upon which Equifax is basing
termination for cause under Section 12.1(a) or termination for persistent
---------------
breaches under Section 12.1(b), Equifax may return such Service Credits and
---------------
pursue a damage claim against EDS, if any such claim exists.
14. INDEMNITIES
14.1. Indemnity by EDS
EDS will indemnify and hold each Equifax Indemnitee harmless from and against
any and all Losses incurred by any of them arising from or in connection with:
(a) any Claims of infringement of any patent or any copyright, trademark,
service mark, trade name, trade secret, or similar property right conferred
by contract or by common law or by any law of any country or any state
alleged to have been incurred because of or arising out of any aspect of
the Services (including without limitation any information technology,
information management and communications services, equipment, software or
other resources) provided by EDS and/or its subcontractors in its
performance of the Services. However, EDS will have no obligation with
respect to any Losses to the extent arising from or in connection with
Claims for copyright infringement and/or breach of software licenses
related to the Services committed by an Equifax Indemnitee or any employee
of an Equifax Indemnitee that is not the result of EDS failing to perform
its obligations under the Agreement including, without limitation,
obtaining any Required Consent for which it has responsibility. Further,
EDS will have no obligation with respect to any Losses to the extent
arising out of or in connection with an Equifax Indemnitee's modification
of a program or a machine provided by EDS and/or its subcontractors, or an
Equifax Indemnitee's combination, operation or use of the services,
equipment, software or other resources provided by EDS and/or its
subcontractors with devices, data, programs or other resources not
furnished by, through or at the specification of EDS or its subcontractors;
(b) any Claims, however described, accruing on or after the Commencement Date
of a Transaction Document (i.e., not arising or resulting from a breach by
the Equifax Group before such Commencement Date) regarding any Third Party
Agreements, (including without limitation, failure to obtain Required
Consents or arising from EDS's exercise of its rights to terminate, modify
or change the Third Party Agreements pursuant to Section 8.3(b)) allocable
---------------
to such Transaction Document. However, EDS will have no obligation with
respect to any Losses to the extent arising out of or in connection with
Claims for copyright infringement and/or breach of software licenses
related to the Services (i) committed by any Equifax Indemnitee or any
employee of an Equifax Indemnitee that is not the result of EDS's failing
to perform its obligations under the Agreement including, without
limitation, obtaining any Required Consent for which it has responsibility
or (ii) to the extent arising out of or resulting from Equifax's failing to
perform its obligations under the Agreement;
(c) any Claims for personal injuries, death or damage to tangible personal or
real property of third parties including employees of EDS, and its
subcontractors caused by the negligence or willful misconduct of EDS, its
employees, Affiliates or subcontractors. However, EDS will have no
obligation under this part, to the
32
<PAGE>
extent the same arise out of or in connection with the negligence or
willful misconduct of a member of the Equifax Group;
(d) any Claims for violation of any environmental laws or regulations arising
out of the Agreement or as a result of the Services performed at the
Facilities, the Data Center or the Equifax sites or locations to the extent
EDS or its subcontractors has caused the environmental damage or violation
of the environmental laws or regulations from which the Claim arises;
(e) any Claims directly attributable to EDS's decision to request that Equifax
cancel, substitute, terminate, change, add or breach any Third Party
Agreement and Equifax's assent to and compliance with such decision and any
Losses incurred by Equifax associated with such decision by EDS and
compliance by Equifax;
(f) any Claims for any amounts, including, without limitation, taxes, interest
and penalties assessed against Equifax which are obligations of EDS under
the Agreement;
(g) any Claims for penalties, interest and other charges imposed by a taxing
authority (except the actual taxes payable by Equifax under the terms of
the Agreement) arising out of or resulting from EDS's issuing an incorrect
invoice or other information provided to Equifax in writing regarding its
charges to Equifax for the Services to Equifax; and
(h) any Claims by any Affected Employees arising out of or resulting from their
employment, or the termination of their employment, with EDS or its
Affiliates and subcontractors, except to the extent any such claim arises
from a wrongful act of the Equifax group or its contractors.
In the event and to the extent that a Claim is made against an Equifax
Indemnitee by an employee of EDS and/or its subcontractors providing services,
products and/or software hereunder, the Parties agree that EDS shall indemnify
and hold harmless the Equifax Indemnitee to the same extent as if the Claim was
made by a non-employee of EDS and/or its subcontractors. EDS's indemnification
obligations hereunder shall be primary and immediate. Accordingly, in addition
to other provisions herein, and in order to render the Parties' intent and this
indemnification agreement fully enforceable, EDS, in an indemnification claim
hereunder, expressly and without reservation waives any defense or immunity it
may have under any applicable workers' compensation law(s) or any other statute
or judicial decision disallowing or limiting such indemnification and consents
to a cause of action for indemnity. This waiver and consent to indemnification
is made irrespective of and specifically waiving any defense or immunity under
any statute or judicial decision.
14.2. Indemnity by Equifax
Equifax will indemnify and hold harmless each EDS Indemnitee from and against
any and all Losses incurred by EDS arising from or in connection with:
(a) any Claims of infringement of any patent or any copyright, trademark,
service mark, trade name, trade secret, or similar property right conferred
by contract or by common law or by any law of any country or any state
alleged to have been incurred because of or arising out of any equipment,
materials and other resources (including without limitation information
technology, information management and communications services equipment,
software or other resources) provided to EDS by the Equifax Group in
connection with the performance of the Services. However, Equifax will have
no obligation with respect to any Losses to the extent arising out of or in
connection with Claims for copyright infringement and/or breach of software
licenses related to the Services, committed by a EDS Indemnitee or any
employee of a EDS Indemnitee that is not the result of the Equifax Group's
failing to perform its obligations under the Agreement. Further, Equifax
will have no obligation with respect to any Losses to the extent arising
out of or in connection with a EDS Indemnitee's modification of a program
or a machine provided by a member of the Equifax Group, or a EDS
Indemnitee's combination, operation or use of the equipment, software or
other resources provided by the Equifax Group with devices, data, programs
or other resources not furnished by the Equifax Group;
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<PAGE>
(b) any Claims accruing before the effective date or after the termination date
of a Transaction Document regarding any Third Party Agreements between
members of the Equifax Group and a third party covered by such Transaction
Document, but not including Claims arising or resulting from EDS failing to
perform its obligations under the Agreement, including without limitation,
obtaining any Required Consent for which it has responsibility;
(c) any Claims for amounts, including, without limitation, taxes, interest and
penalties assessed or claimed against EDS which are obligations of Equifax
under the Agreement;
(d) any Claims for personal injuries, death or damage to tangible personal or
real property of third parties including employees of the Equifax Group
caused by the negligence or willful misconduct of the Equifax Group or
their employees; provided that Equifax will have no obligation, under this
part, to the extent the same arise out of or in connection with the
negligence or willful misconduct of EDS or its Affiliates or
subcontractors;
(e) any Claims arising out of or resulting from the operations of the Equifax
Group to the extent such Claims do not arise out of a breach of the
Agreement by EDS and are not the subject of a specific indemnity provided
to Equifax by EDS in Section 14.1. However, Equifax will have no
------------
obligation under this item, to the extent the Claims arise out of or result
from the negligence or willful misconduct of EDS or its Affiliates or
subcontractors;
(f) any Claims for any violation of environmental laws or regulations arising
out of the Services performed at the Facilities or Data Center or other
Equifax Group sites or locations, except to the extent that EDS or its
Affiliates or subcontractors has caused the environmental damage or
violation of the environmental laws or regulations from which the Claim
arises; and
(g) any Claims by any Affected Employees arising out of or resulting from their
employment, or the termination of their employment, with Equifax except to
the extent any such Claim arises from a wrongful act of EDS or its
Affiliates or subcontractors.
In the event and to the extent that a Claim is made by an employee of a member
of the Equifax Group against a EDS Indemnitee, the Parties agree that Equifax
shall indemnify and hold harmless the EDS Indemnitee to the same extent as if
the Claim was made by a non-employee of the members of the Equifax Group.
Equifax's indemnification obligations hereunder shall be primary and immediate.
Accordingly, in addition to other provisions herein, and in order to render the
Parties' intent and this indemnification agreement fully enforceable, Equifax,
in an indemnification Claim hereunder, expressly and without reservation waives
any defense or immunity it may have under any applicable workers' compensation
law(s) or any other statute or judicial decision disallowing or limiting such
indemnification and consents to a cause of action for indemnity. This waiver
and consent to indemnification is made irrespective of and specifically waiving
any defense or immunity under any statute or judicial decision.
14.3. Employment Actions
It is agreed that EDS shall be solely and exclusively responsible for personnel
decisions affecting EDS's employees, subcontractors and agents (including,
without limitation, hiring, promotions, training, compensation, evaluation,
discipline, and discharge). Equifax shall be solely and exclusively responsible
for personnel decisions affecting employees, contractors, and agents of the
members of the Equifax Group (including, without limitation, hiring, promotion,
training, compensation, evaluation, discipline and discharge).
14.4. Exclusive Remedy
The indemnification rights of each Indemnified Party for third party Claims
pursuant to Sections 14.1 and 14.2, shall be the sole and exclusive remedy of
------------- ----
such Indemnified Party with respect to each such third party Claim to which such
indemnification relates.
34
<PAGE>
14.5. Indemnification Procedures
(a) Written notice shall be given to the Indemnifying Party if any Claim is
commenced or threatened against any Indemnified Party. Such notice shall
be given as promptly as practicable but in all events, within a period that
will not prejudice the rights of the Indemnified Party under the Agreement
to defend the Claim. After such notice, if the Indemnifying Party
acknowledges in writing to the Indemnified Party that the Agreement applies
with respect to such Claim, then the Indemnifying Party shall be entitled
to take control of the defense and investigation of such Claim and to
employ and engage attorneys of its sole choice to handle and defend the
same, at the Indemnifying Party's sole cost and expense. The Indemnifying
Party must deliver written notice of its election of taking such control of
the Claim to the Indemnified Party not fewer than ten (10) days prior to
the date on which a response to such Claim is due or such lesser period as
is reasonable given the nature of the Claim and the notice and response
time permitted by law or the facts and circumstances. The Indemnified
Party shall cooperate in all reasonable respects with the Indemnifying
Party and its attorneys in the investigation, trial, defense and settlement
of such Claim and any appeal arising therefrom. The Indemnified Party may
participate in such investigation, trial, defense and settlement of such
Claim and any appeal arising therefrom, through its attorneys or otherwise,
at its own cost and expense. No settlement of a Claim that involves a
remedy other than the payment of money by the Indemnifying Party shall be
entered into without the consent of the Indemnified Party, which consent
will not be unreasonably withheld.
(b) After notice to the Indemnified Party of the Indemnifying Party's election
to assume full control of the defense of any such Claim, the Indemnifying
Party shall not be liable for any legal expenses incurred thereafter in
connection with the defense of that Claim by the Indemnified Party. If the
Indemnifying Party does not promptly assume full control over and
diligently pursue the defense of a Claim as provided in this Section 14.5,
------------
the Indemnified Party shall have the right to defend, settle or otherwise
resolve the Claim in such manner as it may deem appropriate, at the cost
and expense of the Indemnifying Party, and the Indemnifying Party may
participate in such defense, at its sole cost and expense. In no event
shall any settlement of the Claim pursuant to this Section 14.5(b) require
---------------
the consent of the Indemnifying Party.
15. INSURANCE AND RISK OF LOSS
15.1. EDS Insurance
During the Term of the Agreement, EDS and each EDS subcontractor that provides
or performs any of the Services shall maintain and keep in force, at its own
expense, the following minimum insurance coverages and minimum limits:
(a) workers' compensation insurance, with statutory limits as required by the
various laws and regulations applicable to the employees of EDS and any EDS
subcontractor that provides or performs any of the Services;
(b) employer's liability insurance, for employee bodily injuries and deaths,
with a limit of [*] each accident;
(c) comprehensive or commercial general liability insurance, covering claims
for bodily injury, death and property damage, including premises and
operations, independent contractors, products, services and completed
operations (as applicable to the Services), personal injury, contractual,
and broad-form property damage liability coverages, with limits as follows:
(1) occurrence/aggregate limit of [*] for bodily injury, death and property
damage per occurrence and [*] combined aggregate; or (2) split liability,
without aggregate limits, of (i) [*] injury per person; (ii) [*] for bodily
injury per occurrence; and (iii) [*] per occurrence for property damage;
(d) comprehensive automobile liability insurance, covering owned, non-owned and
hired vehicles, with limits as follows: (1) combined single limit of
[*] for bodily injury, death and property
* Information omitted pursuant to Request for Confidential Treatment under Rule
406 of the Securities Act of 1933.
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<PAGE>
damage per occurrence; or (2) split liability limits of (i) [*] for
bodily injury per person; (ii) [*] for bodily injury per occurrence;
and (iii) [*] for property damage;
(e) all-risk property insurance, on a replacement cost basis, covering the real
and personal property of EDS which EDS is obligated to insure by the
Agreement. Such real and personal property may include buildings,
equipment, furniture, fixtures and supply inventory; and
(f) errors and omissions insurance, with a limit of [*] per occurrence.
All such policies of insurance of EDS and its contractors and subcontractors
shall provide that the same shall not be canceled nor the coverage materially
modified without first giving thirty (30) days prior written notice thereof to
Equifax. No such cancellation or material modification shall affect EDS's
obligation to maintain the insurance coverages required by the Agreement.
Equifax shall be named as an additional insured on the policies described in (c)
and (d) above. All liability insurance policies shall be written on an
"occurrence" policy form except for the policies described in (f) above which
shall be on a "claims made" basis. Equifax shall be named as loss payee as its
interest may appear on the property insurance policies of EDS. EDS shall be
responsible for payment of any and all deductibles from insured claims under its
policies of insurance. The coverage afforded under any insurance policy
obtained by EDS pursuant to the Agreement shall be primary coverage regardless
of whether or not Equifax has similar coverage. EDS and its subcontractors
shall not perform under the Agreement without the prerequisite insurance. Upon
Equifax's request, EDS shall provide Equifax with certificates of such insurance
including renewals thereof. Unless previously agreed to in writing by Equifax,
EDS and its subcontractors shall comply with the insurance requirements herein.
The minimum limits of coverage required by the Agreement may be satisfied by a
combination of primary and excess or umbrella insurance policies. If EDS or its
subcontractors fail to comply with any of the insurance requirements herein,
upon written notice to EDS by Equifax and a [*] cure period, Equifax may,
without any obligation to do so, procure such insurance and EDS shall pay
Equifax the cost thereof plus a reasonable administrative fee as designated by
Equifax. The maintenance of the insurance coverages required under the Agreement
shall in no way operate to limit the liability of EDS to Equifax under the
provisions of the Agreement.
The Parties do not intend to shift all risk of loss to insurance. The naming of
Equifax as additional insured is not intended to be a limitation of EDS's
liability and shall in no event be deemed to, or serve to, limit EDS's liability
to Equifax to available insurance coverage or to the policy limits specified in
this Section 15,1 nor to limit Equifax's rights to exercise any and all remedies
------------
available to Equifax under contract, at law or in equity.
15.2. Risk of Property Loss
EDS and Equifax each shall be responsible for damages to their respective
tangible personal or real property (whether owned or leased), and each Party
agrees to look only to their own insuring arrangements (if any) with respect to
such damages.
15.3. Mutual Waiver of Subrogation
EDS and Equifax waive all rights to recover against each other for any loss or
damage to their respective tangible personal property (whether owned or leased)
from any cause covered by insurance maintained by each of them, including their
respective deductibles or self-insured retentions. EDS and Equifax will cause
their respective insurers to issue appropriate waivers of subrogation rights
endorsements to all property insurance policies maintained by each Party;
provided, however, Equifax shall give EDS written notice if a waiver of
subrogation is unobtainable, or obtainable only at additional expense. If EDS
upon receipt of such notice agrees to reimburse Equifax for such additional
expense, Equifax shall obtain such waiver of subrogation. If a waiver is
unobtainable or EDS elects not to pay the additional expense of a waiver, then
neither Equifax nor its insurers shall waive such subrogation rights.
* Information omitted pursuant to Request for Confidential Treatment under Rule
406 of the Securities Act of 1933.
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<PAGE>
16. DISPUTE RESOLUTION
16.1. Dispute Resolution Procedures
(a) Any dispute between the Parties either with respect to the interpretation
of any provision of the Agreement or with respect to the performance by EDS
or by Equifax hereunder shall be resolved as specified in this Section
-------
16.1.
(i) Upon the written request of either Party to the other Party, a dispute
shall be submitted to the Integrated Planning Team for resolution.
(ii) The Integrated Planning Team shall meet as often as necessary to gather and
furnish to each Party all information with respect to the matter in issue
which is appropriate and germane in connection with its resolution.
(iii) The Integrated Planning Team shall discuss the problem and negotiate in
good faith in an effort to resolve the dispute without the necessity of
any formal proceeding relating thereto.
(iv) During the course of such negotiation, all reasonable requests made by one
Party to the other for nonprivileged information reasonably related to the
Agreement, will be honored in order that each Party may be fully advised of
the other Party's position.
(v) The specific format for such discussions will be left to the discretion of
the Integrated Planning Team, but may include the preparation of agreed
upon statements of fact or written statements of position furnished by each
Party to the other Party.
(b) If the Integrated Planning Team does not resolve the dispute within fifteen
(15) days after the date of receipt by the other Party of a request to
submit the dispute to the Integrated Planning Team as described in Section
-------
16.1(a)(i) (the "Notice"), then the dispute shall be escalated to an
----------
officer of Equifax and an officer of the EDS Electronic Business Unit, for
their review and resolution within thirty (30) days after the receipt of
the Notice.
(c) If the officers referred to in Section 16.1(b) do not resolve the dispute
---------------
within thirty (30) days after the receipt of the Notice, then the dispute
shall be escalated to the President of Equifax and the President of the EDS
Electronic Business Unit for their review and resolution within forty-five
(45) days after the original receipt of the Notice.
(d) If the dispute is not resolved by the Parties' Presidents within forty-five
(45) days after the receipt of the Notice, the dispute will be finally
settled by binding arbitration conducted in accordance with the Commercial
Arbitration Rules (the "Rules") of the American Arbitration Association
then in effect. Either Party may give the other Party notice, in
accordance with Section 17.10, of its submission of such dispute to
-------------
arbitration. Such notice shall also be given in accordance with the Rules,
to the extent that the Rules are inconsistent with or supplement this
notice requirement. Such arbitration shall take place in Tampa, Florida,
United States of America, before a single arbitrator. The Parties will
agree upon the selection of a particular arbitrator as soon as reasonably
practical after the notice described in this Section 16.1(d) is given, but
---------------
failing such agreement within thirty (30) days of such notices, the
arbitrator will be selected in accordance with the Rules. All issues in
the arbitration will be decided in accordance with Florida law and any
applicable federal law.
The determinations of the arbitrator will be final and binding upon
the Parties to the arbitration, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction, or application may
be made to such court for a judicial acceptance of the award and an order of
enforcement, as the case may be. The arbitrator shall be requested to set forth
the grounds for his or her decision in the award.
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<PAGE>
All proceedings before the arbitrator shall be conducted in the
English language. All documents and papers submitted to the arbitrator shall be
in the English language or accompanied by a competent English language
translation thereof.
With the exception of applications to courts of competent jurisdiction
for injunctive relief, the Parties stipulate that the submission of disputes to
arbitration as provided in this Section 16.1, and arbitration pursuant thereto,
shall be a condition precedent to any suit, action or proceeding instituted in
any court or before any administrative tribunal with respect to such dispute.
The arbitration provisions hereof shall, with respect to any dispute arising out
of the Agreement or any Transaction Document, survive the termination or
expiration of the Agreement and any Transaction Document.
Both Parties agree to continue performing their respective obligations
under the Agreement and each Transaction Document while any dispute is being
resolved unless and until such obligations are terminated or expire in
accordance with the provisions hereof, or unless otherwise directed by Equifax.
The Parties shall use their best commercial efforts to set the date of
the arbitration within sixty (60) days after selection of the arbitrator but in
no event shall the arbitration be set more than ninety (90) days after selection
of the arbitrator. Discovery as permitted by the Federal Rules of Civil
Procedure then in effect will be allowed in connection with the arbitration to
the extent consistent with the purpose of the arbitration and as allowed by the
arbitrator.
The decision or award of the arbitrator shall be rendered within
fifteen (15) days after the conclusion of the presentation to and hearing by the
arbitrator. The decision or award of the arbitrator shall be final, binding and
non-appealable by the Parties.
Each Party shall bear its own arbitration costs and expenses and all
other costs and expenses of the arbitration shall be divided equally between the
Parties; provided, however, the arbitrator may modify the allocation of fees,
costs and expenses in the award in those cases where fairness dictates.
Notwithstanding anything to the contrary in this Section 16.1(d), the Integrated
---------------
Planning Team shall have the authority to stay the time periods set forth in
this Section 16.1 upon unanimous vote of its members to take such action.
------------
(e) Notwithstanding any other provision of this Section 16.1, either Party may
------------
resort to court action for injunctive relief at any time if the dispute
resolution processes set forth in this Section 16.1 would permit or cause
------------
irreparable injury to such Party or any third party claiming against such
Party, due to delay arising out of the dispute resolution process.
16.2. Continued Performance
The Parties agree to continue performing their respective obligations under the
Agreement (including the Transaction Documents) while the dispute is being
resolved unless and until such obligations are terminated or expire in
accordance with the provisions of the Agreement.
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17. GENERAL
17.1. Relationship of Parties
(a) The Agreement (including the Transaction Documents) shall not be construed
as constituting either Party as partner of the other Party or to create any
other form of legal association that would impose liability upon one Party
for the act or failure to act of the other Party, or as providing either
Party with the right, power or authority (express or implied) to create any
duty or obligation of the other Party, except as provided in Section 8.3.
-----------
Each Party shall be responsible for the management, direction and control
of the employees of such Party and such employees shall not be employees of
the other Party.
(b) Each Party will submit to the other Party all advertising, written sales
promotion, press releases and other publicity matters relating to the
Agreement in which the other Party's name or mark is mentioned or language
from which the connection of said name or mark may be inferred or implied,
and will not publish or use such advertising, sales promotion, press
releases, or publicity matters without prior written approval of the other
Party.
17.2. Entire Agreement, Updates, Amendments and Modifications
The Agreement (including the Transaction Documents) constitutes the entire
agreement of the Parties with regard to the Services and matters addressed
therein, and all prior agreements, letters, proposals, discussions and other
documents regarding the Services and the matters addressed in the Agreement
(including the Transaction Documents) are superseded and merged into the
Agreement (including the Transaction Documents). Updates, amendments and
modifications to the Agreement including the Transaction Documents may not be
made orally, but shall only be made by a written document signed by both
Parties. Any terms and conditions varying from the Agreement (including the
Transaction Documents) on any order or written notification from either Party
shall not be effective or binding on the other Party.
17.3. Force Majeure
(a) Neither Party shall be liable for any default or delay in the performance
of its obligations hereunder if and to the extent and while such default or
delay is caused, directly or indirectly, by a Force Majeure Event.
(b) If a Force Majeure Event occurs, the nonperforming Party will be excused
from any further performance or observance of the obligation(s) so affected
for as long as such circumstances prevail and such Party continues to use
commercially reasonable efforts to recommence performance or observance
whenever and to whatever extent possible without delay. Any Party so
delayed in its performance will immediately notify the other by telephone
and describe at a reasonable level of detail the circumstances causing such
delay (to be confirmed in writing within twenty-four (24) hours after the
inception of such delay).
(c) If any Force Majeure Event substantially prevents, hinders, or delays
performance of the Services under any Transaction Document necessary for
the performance of the critical functions of the Equifax users of such
Services for more than [*] consecutive days, then at Equifax's option:
(i) Equifax may procure such Services from an alternate source. EDS will
directly and timely pay the alternate source the full amount charged by
such alternate source for the provision of such Services to Equifax until
such time as EDS is able to restore the Services and meet the Performance
Standards, but in no event for more than [*] days; and
(ii) Until such time as EDS has restored the Services in full, Equifax may
terminate the Transaction Document as of a date specified by Equifax in a
written notice of termination to EDS, and Equifax will pay all Monthly
Charges due and
* Information omitted pursuant to Request for Confidential Treatment under Rule
406 of the Securities Act of 1933.
39
<PAGE>
payable through the termination date. If Equifax elects such termination,
Equifax shall not be obligated to pay any other termination or other fees,
however described, to EDS, except charges for Services Transfer Assistance
(but Equifax will not be liable for Termination Charges or Wind-down
Expenses).
(d) This Section 17.3 does not limit or otherwise affect EDS's obligation to
------------
provide Disaster Recovery Services in accordance with Section 3.3 and the
-----------
Schedules to each Transaction Document In the event of a Force Majeure
Event affecting Equifax, this Section 17.3 will not limit or otherwise
------------
relieve Equifax's obligation to pay any monies due EDS under the terms of
the Agreement, except as provided in Section 17.3(c)(ii) and Section 3.3.
------------------- -----------
17.4. Nonperformance
Except as otherwise provided in the Agreement, to the extent any nonperformance
by either Party of its nonmonetary obligations under the Agreement results from
or is caused by the other Party's failure to perform its obligations under the
Agreement, such nonperformance shall be excused.
17.5. Waiver
No waiver of any breach of any provision of the Agreement shall constitute a
waiver of any prior, concurrent or subsequent breach of the same or any other
provisions hereof.
17.6. Severability
If any provision of the Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby, and such
provision shall be deemed to be restated to reflect the Parties' original
intentions as nearly as possible in accordance with applicable law(s).
17.7. Counterparts
The Agreement shall be executed in counterparts. Each such counterpart shall be
an original and together shall constitute but one and the same document.
17.8. Governing Law
The Agreement and any and all claims and disputes arising out of or in
connection with or related to the relationships and arrangements between the
Equifax Group and EDS described in the Agreement will be governed by and
construed in accordance with the laws of the State of Florida.
17.9. Binding Nature and Assignment
The Agreement will be binding on the Parties and their respective successors and
permitted assigns. Except as provided in this Section 17.9, neither Party may,
------------
or will have the power to, assign the Agreement without the prior written
consent of the other, which consent shall not be unreasonably withheld, except
that Equifax may assign its rights and obligations under the Agreement to an
Affiliate which expressly assumes its obligations and responsibilities
hereunder, without the approval of EDS. The assigning Party shall remain fully
liable for and shall not be relieved from the full performance of all
obligations under the Agreement. Any attempted assignment that does not comply
with the terms of this Section 17.9 shall be null and void. If Equifax assigns
------------
its rights or obligations to an Affiliate in accordance with the Agreement,
Equifax shall provide written notice thereof to EDS together with a copy of the
assignment document, within three (3) business days after such assignment.
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17.10. Notices
(a) Whenever one Party is required or permitted to give notice to the other
Party under the Agreement, such notice will be in writing unless otherwise
specifically provided herein and will be deemed given when delivered by
hand, one (1) day after being given to an express courier with a reliable
system for tracking delivery, or five (5) days after the day of mailing,
when mailed by United States mail, registered or certified mail, return
receipt requested, postage prepaid, or when sent if delivered by facsimile,
with confirmation of delivery by the sending machine.
(b) Notifications will be addressed as follows:
For termination, breach or default under a Transaction Document,
notify:
<TABLE>
<CAPTION>
<S> <C>
In the case of EDS: with a copy to:
EDS Project Executive EDS Co-Chairman of the
Integrated Planning Team,
Electronic Business - Card Processing Electronic Business - Card
Services Processing Services
5400 Legacy Drive, Mail B1-1A-46 5400 Legacy Drive, Mail B1-1A-46
Plano, TX 75024 Plano, TX 75024
Facsimile: (972) 604-3180 Facsimile: (972) 604-3180
In the case of Equifax: with a copy to:
Equifax Project Executive Equifax Co-Chairman of the
Integrated Planning Team
Equifax Payment Services, Inc. Equifax Payment Services, Inc.
11601 North Roosevelt Blvd. 11601 North Roosevelt Blvd.
St. Petersburg, FL 33716 St. Petersburg, FL 33716
Facsimile: (727) 570-4991 Facsimile: (727) 570-4991
</TABLE>
Either Party hereto may from time to time change its address for notification
purposes by giving the other prior written notice of the new address and the
date upon which it will become effective.
17.11. No Third Party Beneficiaries
The Parties do not intend, nor will any Section hereof be interpreted, to create
for any third party beneficiary rights with respect to either of the Parties,
except each member of the Equifax Group shall be a third party beneficiary under
the Agreement, and the third parties identified in Section 14 will have the
----------
rights and benefits described in that Section.
17.12. Other Documents
Upon request of the other Party, on or after the Effective Date and the
Commencement Date(s) of any Transaction Documents and the effective dates of any
amendments or revisions to any of the foregoing, each Party shall furnish to the
other such certificate of its Secretary as shall evidence that the Agreement or
any amendment or revision hereto has been duly executed and delivered on behalf
of such Party.
41
<PAGE>
17.13. Consents and Approvals
The Parties agree that in any instance where a consent, approval or agreement is
required of a Party in order for the other Party to perform under or comply with
the terms and conditions of the Agreement, then such Party will not unreasonably
withhold or delay such consent, approval or agreement and where consent,
approval or agreement cannot be provided, the Party shall notify the other Party
in a timely manner.
17.14. Headings
All headings herein and the table of contents are not to be considered in the
construction or interpretation of any provision of the Agreement. The Agreement
was drafted with the joint participation of both Parties and shall be construed
neither against nor in favor of either, but rather in accordance with the fair
meaning thereof. In the event of any apparent conflicts or inconsistencies
between the provisions of the Master Agreement, the Exhibits, the Transaction
Documents, the Schedules or other attachments to the Master Agreement and
Transaction Documents, such provisions shall be interpreted so as to make them
consistent to the extent possible, and if such is not possible, the provisions
of the Master Agreement shall prevail.
42
<PAGE>
Exhibit 2
---------
Definitions
<TABLE>
<CAPTION>
<S> <C>
Acquired Customer Hardware means the equipment purchased by EDS from Equifax, if any, listed on Schedule U
to each Transaction Document for such Transaction Document.
Action means any legal proceeding initiated by one Party against the other Party
whether in contract, tort, or any other form of action.
AD/M means both Applications Development and Applications Maintenance.
AD/M Projects means the Applications Development and Applications Maintenance performed during
the Term through the production cutover date for the scheduled Projects and/or
each New Service added during the Term requiring the performance of Applications
Development and Applications Maintenance by EDS.
Affected Employees means the individuals set forth on Schedule N to a Transaction Document.
Affiliates means, with respect to a Party, any entity at any time Controlling, Controlled
by or under common Control with such Party.
Agreement means this Master Agreement for Operations Support Services Agreement and the
forms of Exhibits and Schedules referenced herein and each Transaction Document
referencing the Master Agreement for Operations Support Services and the Pricing
Supplement and Schedules referenced therein.
Annual Adjustment has the meaning set forth in Schedule J to each Transaction Document for such
Transaction Document.
Annual Adjustment Factor has the meaning set forth in Schedule J to each Transaction Document for such
Transaction Document.
Applications Development means the programming of any new applications software, and changes or
enhancements to existing Applications Software. Programming effort shall
include the pre and post development analysis, planning, design, coding,
testing, installation, provision of a single set of program and training
documentation per Applications Software program and training necessary to
complete the task.
Applications Development means the pre and post development analysis, planning, design, coding, testing,
Methodology installation, provision of a single set of program and training documentation
per Application Software program and training necessary to complete the task.
Applications Maintenance means defect identification and provision of fixes, and installation of those
fixes and updates for the Applications Software provided by the Applications
Software vendors as part of normal maintenance service for the Applications
Software for which there is no charge by such vendors in addition to periodic
maintenance charges (if any) and defect identification, provision of fixes and
installation of those fixes and updates for Applications Software for which
there is no generally commercially available maintenance support.
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Applications Software means those programs and programming, including all supporting documentation and
media, that perform specific user related data processing, data management and
telecommunications tasks, including updates, enhancements, modifications,
releases and Derivative Works thereof. Applications Software as of the
Commencement Date is listed in Schedule A to each Transaction Document for such
Transaction Document, which Schedule shall be updated pursuant to Section 8.1
during the term of each Transaction Document to reflect the then-current
Applications Software.
Applications Software - means the Applications Software listed on Schedule A to each Transaction
EDS Document for such Transaction Document under such heading, provided or to be
provided by EDS.
Applications Software - means the Applications Software listed on Schedule A to each Transaction
Equifax Document for such Transaction Document under such heading, provided or to be
provided by Equifax.
Authorized User means an person or entity authorized by Equifax to use the Services, including
without limitation the System.
Business and Operations means a written plan describing Equifax's Services requirements in support of
Support Plan Equifax Business.
Cable or Cabling means the wires or cables that interconnect Machines and/or connect a Machine to
a facility connection point.
Change Control Process means a written process for controlling all changes to the activities,
processes, and operations comprising the Services and to the Agreement
(including the Transaction Documents).
Change of Control means the transfer of the Control of a Party from the persons or persons who
hold such control on the Effective Date to another person or persons, but shall
not include a transfer of the Control of a Party to an Affiliate of such Party.
Change of Control Termination means the fee to be paid by Equifax upon a termination of a Transaction Document
Charge pursuant to Section 12.1(e) as set forth in Schedule J to each Transaction
Document for such Transaction Document.
Change Request means a written request to make a change to the Agreement (including the
Transaction Document).
Change Request Form means the written document supporting a Change Request and that describes the
change, the rationale for the change, and the effect that the change will have,
as described further in Section 6.3.
Claim means any civil, criminal, administrative, or investigative action or proceeding
commenced or threatened by a third party.
Code means computer programming code, including source and object code.
Commencement Date means the date set forth in each Transaction Document for the start of the
Services covered by such Transaction Document.
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Company Information means collectively the Confidential Information and Trade Secrets of a Party.
Company Information also includes information which has been disclosed to such
Party by a third party, which Party is obligated to treat as confidential or
secret.
Confidential Information means with respect to a Party, any and all proprietary business information of
the disclosing Party and/or of third parties in the possession of the disclosing
Party treated as secret by the disclosing Party (that is, it is the subject of
efforts by the disclosing Party that are reasonable under the circumstances to
maintain its secrecy) that does not constitute a Trade Secret (defined below),
including, without limitation, any and all proprietary information in the
possession of such disclosing Party of which the receiving Party becomes aware
as a result of its access to and presence at the other Party's facilities.
Contract Year means each twelve (12) calendar month period beginning January 1 of each
calendar year during the Term.
Controlling, Controlled or means possessing, directly or indirectly, the power to direct or cause the
Control direction of the management and policies of an entity, whether through ownership
of voting securities, by contract or otherwise.
Data Center means the data center from which the Services are provided located in the
Facilities as set forth in each Transaction Document.
Derivative Work means a work based on one or more pre-existing works, including without
limitation, a condensation, transformation, expansion or adaptation, which would
constitute a copyright infringement if prepared without authorization of the
owner of the copyright of such pre-existing work.
Develop means develop, create, modify or personalize.
Direct Damages has the meaning given in Section 13.3.
Direct Damages Caps has the meaning given in Section 13.1.
Disabling Code means Code which could have the effect of disabling or otherwise shutting down
one or more software programs or systems and/or hardware or hardware systems.
Disaster Recovery Services means the Disaster Recovery services described in Schedule G to each Transaction
Document for such Transaction Document.
EDS Code means Code Developed by EDS and/or its subcontractors but not as part of the
Services, but used to provide the Services, which code does not constitute a
Derivative Work of any software owned by the Equifax Group, EDS or their
respective Affiliates, contractors or subcontractors.
EDS Derivative Code means Code Developed by EDS and/or its subcontractors which constitutes
Derivative Works of software for which the copyright is owned by EDS, its
Affiliates or its subcontractors.
EDS Indemnitee means EDS and its Affiliates that are a party to a Transaction Document and
their respective officers, directors, employees, agents, successors, and assigns.
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
EDS Interfaces means Code and/or literary works of authorship created by EDS and/or its
subcontractors but not as part of the Services, but used to provide the
Services, and interface or describe and instruct regarding the interface,
between and among Applications Software and the Systems Software, which does not
constitute a Derivative Work of any software or literary works of authorship
owned by the Equifax Group, EDS, or their respective Affiliates, contractors or
subcontractors, including without limitation, user manuals, charts, graphs and
other written documentation, and machine-readable text and files.
EDS Machines means the computer equipment, peripheral devices, storage media, Cabling,
connectors, extenders and other equipment (however described) including without
limitation, the Acquired Customer Hardware upon consummation of the sale of such
hardware and any modems, routers and termination boxes for the Network located
in the Facilities and other Equifax Group sites, including without limitation
Data Center and at the Network Locations, used from time to time by EDS to
perform and deliver the Services and fulfill its obligations under the
Agreement. The EDS Machines as of the Commencement Date are listed on Schedule
D to each Transaction Document for such Transaction Document, which Schedule
shall be updated pursuant to Section 8.1 during the term of each Transaction
Document to reflect the then-current EDS Machines.
EDS Software means the Applications Software-EDS, Systems Software-EDS and any and all other
computer software specifically identified during the term of each Transaction
Document in each such Transaction Document as being provided for Equifax's use
in connection with the Services.
EDS Works means literary works of authorship (other than Code) Developed by EDS, its
Affiliates and/or its subcontractors but not as part of the Services, but used
to provide the Services, including without limitation user manuals, charts,
graphs and other written documentation and machine-readable text and files.
Effective Date means the date set forth on the initial page of the Master Agreement.
End User Machines means all work stations, terminals, printers, fax machines, and associated
peripheral equipment used by end users and described in a Schedule to each
Transaction Document for such Transaction Document, whether stationary or mobile
equipment used by end users, but does not include the work stations being used
by EDS personnel in connection with the scheduled Projects or the Equifax
Provided Hardware located in the Equifax data center.
Equifax Business means the businesses engaged in by the Equifax Group.
Equifax Code means Code Developed by EDS and/or its subcontractors independently or jointly
with the Equifax Group and/or their contractors, as part of the Services.
Equifax Derivative Code means Developed Code which constitutes Derivative Work of software for which the
copyright is owned by the Equifax Group and/or their contractors, excluding EDS.
Equifax Group means individually and collectively Equifax and its existing and future
Affiliates that are using and/or receiving any portion of the Services.
Equifax Indemnitee means each member of the Equifax Group and its respective officers, directors,
employees, agents, successors, contractors, and assigns.
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Equifax In-Scope means all functions, responsibilities, tasks and activities that are described
Operations in the Agreement and each Transaction Document (including the Schedules thereto)
that are currently performed by and/or are to be performed by EDS, including,
without limitation, those performed for the Equifax Group by the Affected
Employees under each Transaction Document before they entered the employ of EDS.
Equifax Provided means the computer equipment peripheral devices, storage media, Cabling,
Hardware connectors, the Data Network, the LAN, telephone equipment and other equipment
(however described) provided from time to time by the Equifax Group for use by
EDS to perform and deliver the Services and fulfill its obligations under the
Agreement. The Equifax Provided Hardware as of the Commencement Date is listed
on and/or referred to in Schedule C to each Transaction Document for such
Transaction Document, which schedule shall be updated pursuant to Section 8.1
during the term of each Transaction Document to reflect the then-current Equifax
Provided Hardware.
Equifax Provided Office means the desks, chairs, filing cabinets, office cube partitions and other
Furnishings office furniture (however, described) provided from time to time by the Equifax
Group for use by EDS to perform and deliver the Services and fulfill its
obligations under the Agreement. The Equifax Provided Office Furnishings as of
the Commencement Date are listed on and/or referred to in a Schedule to each
Transaction Document for such Transaction Document, which schedule shall be
updated pursuant to Section 8.1 during the term of each Transaction Document to
reflect the then-current Equifax Provided Office Furnishings.
Equifax Server shall have the meaning given in a Schedule to each Transaction Document for such
Configurations Transaction Document.
Equifax Software means Applications Software-Equifax, Systems Software-Equifax and any and all
other computer software specifically identified during the term of each
Transaction Document in each such Transaction Document as being provided for
EDS' use in connection with the Services.
Equifax Works means literary works of authorship (other than Code) Developed by EDS and/or its
subcontractors independently or jointly with the Equifax Group and/or its
contractors, as part of the Services, including without limitation user manuals,
charts, graphs and other written documentation, and machine-readable text and
files.
Execution Date means the date of execution of a Transaction Document as set forth on the
initial page thereof.
Extension Period means a period of up to one (1) year for which the Services and/or Services
Transfer Assistance may be extended as described in Section 1.4.
Facilities has the meaning given in Schedule E to each Transaction Document for such
Transaction Document.
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Force Majeure Event means, individually, fire, flood, earthquake, elements of nature or acts of God,
acts of war, terrorism, riots, civil disorders, rebellions or revolutions in the
United States, strikes, lockouts, or labor difficulties or any other similar
cause beyond the reasonable control of such Party, other than strikes, lockouts,
or labor difficulties initiated by such Party's or its subcontractor's
employees; and provided such default or delay could not have been prevented by
reasonable precautions and cannot reasonably be circumvented by the
nonperforming Party through the use of alternate sources, work-around plans or
other means.
Help Desk means the EDS help desk which is staffed by EDS to provide support to Equifax as
described in Schedule E to each Transaction Document for such Transaction
Document.
Indemnified Party means the Party having a right to be indemnified by the other Party under
Sections 14.1 and 14.2.
Indemnifying Party means the Party that is obligated to provide indemnification under Sections 14.1
and 14.2.
Installations, Moves, Adds means the installation of circuits, network hardware and software and network
and Changes (IMACs) end-user equipment at any Authorized User location, including testing to ensure
network connectivity and proper operation. "Move" means the physical
disconnection of network equipment and services and, in some cases, the
relocation to another site. In most cases, this activity is coordinated with
outside vendors, such as telephone company representatives, to ensure that all
necessary components of the network are properly moved, and if appropriate
reinstalled. Recording of assets by decal and serial number is critical to the
integrity of the move. "Add" means the process of adding, expanding and
possibly reconfiguring network systems. This may involve circuits, circuit
speeds or network equipment. In some cases, network software would be affected.
After the process is complete, testing occurs to ensure that the final system is
fully operational. "Change" means the process of altering an existing network
system or environment and could include network software upgrades and system or
technology enhancements. The change could be implemented by IBM or a
third-party vendor, with testing occurring after the change to ensure network
and systems integrity.
Integrated Planning Team means a group of representatives designated by each Party to conduct the
activities described in Sections 6.1 and 16.1.
Key Positions means the positions within the EDS account team under each Transaction Document,
listed on Schedule T to each Transaction Document.
LAN Software - EDS means the LAN Software listed on Schedule A under such heading, provided or to
be provided by EDS.
LAN Software - Equifax means the LAN Software listed on Schedule A to each Transaction Document for
such Transaction Document under such heading, provided or to be provided by
Equifax.
Level One Support has the meaning given in a Schedule to each Transaction Document for such
Transaction Document.
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Level Three Support has the meaning given in a Schedule to each Transaction Document for such
Transaction Document.
Level Two Support has the meaning given in a Schedule to each Transaction Document for such
Transaction Document.
Listed Subcontractors means EDS subcontractors approved by the Parties for engagement to provide a
portion of the Services under a Transaction Document.
Local Area Network (LAN) means all communications facilities and components that are used to transmit
voice, image and data signals within a local area network and which initially
consist of the communications facilities and components in use by Equifax
immediately prior to the Commencement Date to provide local area network
communications facilities to the Equifax Group as described in Schedule I to
each Transaction Document for such Transaction Document, including without
limitation the associated attachments, peripherals, features, software and
accessories, communications lines and Cabling, including the wiring systems, at
the locations specified in such Schedule.
Losses means all losses, liabilities, damages, penalties and claims (including taxes
and all related interest and penalties incurred directly with respect thereto),
and all related costs, expenses and other charges (including all reasonable
attorneys' fees and reasonable costs of investigation, litigation, settlement,
judgment, interest and penalties).
Machines means the EDS Machines and Equifax Provided Hardware.
Maintenance Release means those Software fixes and updates provided by the Software vendors as part
of normal maintenance service for the Software for which there is no charge by
such vendors in addition to periodic maintenance charges, if any.
Materials means the Equifax Code, the Equifax Derivative Code, the Equifax Works, the EDS
Code, the EDS Derivative Code, the EDS Works and the EDS Interfaces.
Minimum Service Levels means the minimum level of performance of the Services by EDS, performance below
which will trigger the Service Credit and other mechanisms described in Schedule
O to each Transaction Document for such Transaction Document.
Monthly Charges has the meaning given in Schedule J to each Transaction Document for such
Transaction Document.
Network means the Data Network.
Network Locations has the meaning given in Schedule I to each Transaction Document for such
Transaction Document.
Network Vendors means any third parties providing information communication services to Equifax
which are accessed or will be accessed through the Network.
New Services means an additional function, responsibility or task under any Transaction
Document that requires resources for which there is no current Resource Unit
Baseline or charging methodology under such Transaction Document; that is, such
function, responsibility, or task is not included in the Monthly Charges and is
not charged separately under another methodology other than the New Services
provision at Section 3.13.
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Norm has the meaning given in Section 9.8(b).
Notice means a request to submit a dispute to the Integrated Planning Team as described
in Section 16.1(a).
Parties means EDS and Equifax as detailed on the initial page of the Agreement.
Party means EDS or Equifax as detailed on the initial page of the Agreement.
[*] [*]
Performance Standards means the service levels and performance responsibilities under which the
Services will be provided. The Performance Standards are described in Schedule
O to each Transaction Document for such Transaction Document.
Performance Value has the meaning given in Section 9.8(d).
Poll means to connect the Facilities to the other Equifax Group sites to retrieve
data, perform downloads/updates and/or execute remote diagnostics.
Project Executive means the individual designated by each Party as having overall management
responsibility for the appointing Party's performance of the Agreement.
Project Manager means the individual designated by each Party as having primary management
responsibility for the appointing Party's performance under a Transaction
Document.
Project(s) means the portion of the Services described in Schedule M to each Transaction
Document.
Required Consents means any consents or approvals required to be obtained (a) to allow EDS to
assume financial and/or support, operational, management and administrative
responsibility for the Equifax Software, the Equifax Provided Hardware and the
Equifax Provided Office Furnishings in connection with the Services; (b) for the
licensing, transfer and/or grant of the right to the Equifax Group to use the
EDS Software and EDS Machines as contemplated by the Agreement; and (c) for the
Equifax Group and EDS to have access to and use of the space, equipment,
software and/or third party services provided under the Third Party Agreements
in connection with the Services as contemplated by the Agreement.
Resource Unit has the meaning given in Schedule J to each Transaction Document for such
Transaction Document.
Resource Unit Baseline means the baseline amount of certain resources utilized in providing the
Services as described in Schedule J to each Transaction Document for such
Transaction Document.
Service Credits means the amounts set forth in a Schedule to each Transaction Document to be
credited to Equifax for EDS's failure to provide the Services in accordance with
the Minimum Service Levels.
Service Employees means EDS employees performing Services under the Agreement.
</TABLE>
* Information omitted pursuant to Request for Confidential Treatment under Rule
406 of the Securities Act of 1933.
50
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Services means (i) the migration of the Equifax In-Scope Operations from the Equifax
Group to EDS pursuant to each Transaction Document, (ii) the performance of the
Equifax In-Scope Operations in accordance with each Transaction Document
including the Schedules thereto, (iii) the performance of the Equifax In-Scope
Operations, including the functions, responsibilities, activities and tasks
comprising the Equifax In-Scope Operations, as they may evolve and be
supplemented and enhanced during the Term, and (iv) the providing transfer
assistance to migrate the Equifax In-Scope Operations from EDS to Equifax or a
third party services provider designated by Equifax.
Services Transfer means assistance to transfer the Services from EDS to Equifax or its designee as
Assistance described in Section 12.5.
Similarly Situated means EDS's customers with substantially the same mix and type of processing
Customers applications and systems resources utilization at similar or lesser volumes.
Software means EDS Software and Equifax Software.
Software Maintenance means defect identification and fixes, and installation of those fixes and
updates provided by software vendors as part of normal maintenance service for
the Software including, without limitation, regulatory/statutory changes and
version upgrades to Software.
System means the Machines, Software and Network provided under each Transaction
Document and the operating environment therefore.
Systems Software means those programs and programming (including all supporting documentation and
media) that perform tasks related to the functioning of the data processing, and
telecommunication equipment which is used to operate the Applications Software
or otherwise to support the provision of the Services by EDS under each
Transaction Document, whether or not licensed to EDS. Systems Software
includes, but is not limited to, operating systems, software utilities, data
security software, data network software, communications monitors and data base
managers. Systems Software as of the Commencement Date is listed in Schedule B
to each Transaction Document for such Transaction Document, which schedule shall
be updated pursuant to Section 8.1 during the term of each Transaction Document
to reflect the then current Systems Software.
Systems Software-EDS means Systems Software listed in Schedule B to each Transaction Document for
such Transaction Document under the heading "Systems Software-EDS", provided or
to be provided by EDS.
Systems Software-Equifax means the systems software and general purpose software such as the database
creation and management software, utility software and applications development
tools software listed in Schedule B to each Transaction Document for such
Transaction Document under such heading provided or to be provided by Equifax.
Term means the ten year period described in Section 1.3 and any extension and renewal
term described therein.
[*] [*]
</TABLE>
* Information omitted pursuant to Request for Confidential Treatment under Rule
406 of the Securities Act of 1933.
51
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Third Party Agreements means those contractual, leasing and licensing arrangements for which EDS has
undertaken financial, management and/or administrative responsibility and
pursuant to which a member of the Equifax Group receives any third party
products, software and/or services in connection with the provision of the
Services. Third Party Agreements to which one or more members of the Equifax
Group is a party are listed on Schedule F to each Transaction Document for such
Transaction Document, which schedule shall be updated pursuant to Section 8.1
during the term of each Transaction Document to reflect the then-current Third
Party Agreements.
Third Party Provider means a business or entity other than a member of the Equifax Group or EDS that
provides products, software and/or services under a Third Party Agreement, in
support of the provision of the Services by EDS.
Trade Secrets mean with respect to a Party, information related to the services and/or
business of the disclosing Party and/or of a third party which (a) derives
economic value, actual or potential, from not being generally known to or
readily ascertainable by other persons who can obtain economic value from its
disclosure or use; and (b) is the subject of efforts by the disclosing Party
that are reasonable under the circumstances to maintain its secrecy, including
without limitation (i) marking any information clearly and conspicuously with a
legend identifying its confidential or proprietary nature; (ii) identifying any
oral presentation or communication as confidential immediately before, during or
after such oral presentation or communication; or (iii) otherwise, treating such
information as confidential or secret. Assuming the criteria in sections (a)
and (b) above are met, Trade Secrets include, but are not limited to, technical
and nontechnical data, formulas, patterns, compilations, computer programs and
software, devices, drawings, processes, methods, techniques, designs, programs,
financial plans, product plans, and lists of actual or potential Equifax's
customers and suppliers.
Transaction Document means each document executed by EDS with Equifax pursuant to the Master
Agreement, providing for the performance and delivery of a portion of the
Services to a specific site or group of sites. The Schedules to each such
document are listed in Exhibit 3.
Transition Period means the mutually agreed period of time set forth in a Transition Plan.
Transition Personnel means the personnel (or portions of time of the personnel) set forth in the
Transition Plan.
Transition Plan means a written plan setting forth the activities to be conducted by EDS during
the transition of personnel and/or operations responsibilities as more fully
described in Section 5.1(a).
Unit Rates has the meaning set forth in Schedule J to each Transaction Document for such
Transaction Document.
Version means those Software updates that generally add function to the existing
Software and may be provided by the Software vendors at a fee over and above the
standard software maintenance costs.
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Virus or Viruses means computer instructions (i) that adversely affect the operation, security or
integrity of a computing, telecommunications or other digital operating or
processing system or environment, including without limitation, other programs,
data, computer libraries and computer and communications equipment, by altering,
destroying, disrupting or inhibiting such operation, security or integrity; (ii)
that without functional purpose, self-replicate written manual intervention; or
(iii) that purport to perform a useful function but which actually perform
either a destructive or harmful function, or perform no useful function and
utilize substantial computer, telecommunications or memory resources.
Wind-Down Expenses means the net amount, after EDS takes commercially reasonable action to mitigate
the adverse financial impact on EDS, that will reimburse EDS for the actual
reasonable costs that EDS incurs in the disposition and/or reallocation of EDS
Machines, EDS Software and the portion of the Facilities dedicated to the
performance of the Services, the placement of EDS personnel allocated to the
delivery of the Services, and the termination, if appropriate, of the Third
Party Agreements, in the event of a termination occurring prior to the
expiration of the Term or the term of any Transaction Document; provided,
however, Equifax shall have the right to mitigate such costs by purchase of, or
assumption of the leases for, the EDS Machines, assumption of the licenses and
maintenance agreements for the EDS Software, hiring the EDS personnel and
assuming Third Party Agreements used by EDS to perform and deliver the Services
and taking similar actions.
</TABLE>
53
<PAGE>
Exhibit 3
---------
List of Schedules to each Transaction Document
----------------------------------------------
<TABLE>
<CAPTION>
Schedule Title
<S> <C>
A "Applications Software"
- "Applications Software - Equifax"
- "Applications Software - EDS"
B "Systems Software"
- "Systems Software - Equifax"
- "Systems Software - EDS"
C "Equifax Provided Hardware"
D "EDS Machines"
E "Services, Location of Facilities, and Operational and
Financial Responsibilities"
F "Leases, Licenses and Other Third Party Agreements"
G "Disaster Recovery"
H "Transition Plan"
I "Network Locations"
J "Pricing Supplement and Charging Methodologies"
K "Applications Installation Standards" (Operating
Environment IT Standards)
L "Security Procedures and Responsibilities - Data and
Physical"
M "Projects"
N "Affected Employees"
O "Service Levels and Service Credits"
P "Deviations From Terms of the Master Agreement"
Q "Year 2000"
R "Services Transfer Assistance"
S "Equifax Provided Office Furnishings and Facilities"
T "Key Positions"
U "Acquired Customer Hardware"
</TABLE>
54
<PAGE>
Exhibit 4
---------
Integrated Planning Team Charter and Operating Procedures
Mission
The Integrated Planning Team ("IPT") will manage the Equifax/EDS relationship
for the Services as set forth in Section 6 of the Master Agreement and this
---------
Exhibit 4. The focus of this group is the coordination and communication of
activities under the Master Agreement (not day-to-day operations). The IPT will
be the focal point for interpretation, consultation and recommendations of the
Master Agreement for both Equifax and EDS globally.
Scope
Coordination of
. Master Agreement
. Software purchases
. Non-standard service/product requests
Maintain a schedule of all changes for Equifax
. Retain copy of capacity projections by site and device
. Retain capacity actuals monthly, by site and device
. Retain copy of hardware and software inventory
Check and Balance
. Hardware and software inventory
. I/T resource
Reporting to data center CIOs, data center managers and business unit interfaces
. Capacity projections
. Hardware projections
. Requests for Service (RFS) status
. Rollup of businesses plans and budges
Deliverables
. Recommendations on where applications run, globally
. Quarterly: rollup of capacity actuals and projections
. Summary of requirements and projections
Team Members
The IPT will be comprised of two groups, each with Equifax and EDS members. The
first group will be a full-time team with operational responsibility to carry
out the mission and scope of the IPT. The second will be an advisory group
consisting of Equifax and EDS data center managers from each unit. This group
will provide policy and priority direction to the operational team.
55
<PAGE>
. Operational Group
__ total full-time staff (__ Equifax and ___ EDS) to be assigned by the
chair Person for each of Equifax and EDS
<TABLE>
<CAPTION>
Function/Role Equifax EDS
- --------------------------------------------------------------------------------------------------------------------
Sponsor (Chair person) Senior VP Senior PE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Administrative Assistant
- --------------------------------------------------------------------------------------------------------------------
Technical Consultants:
- --------------------------------------------------------------------------------------------------------------------
Mainframe
- --------------------------------------------------------------------------------------------------------------------
Network
- --------------------------------------------------------------------------------------------------------------------
Financial Consultant
- --------------------------------------------------------------------------------------------------------------------
Contract Specialist
- --------------------------------------------------------------------------------------------------------------------
Capacity Planner
- --------------------------------------------------------------------------------------------------------------------
Functional Manager
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
. Advisory group
Equifax and EDS data center managers representing each Equifax unit. If
this advisory group were in place today the organization member grid
would be:
<TABLE>
<CAPTION>
Function/Role Equifax EDS
- --------------------------------------------------------------------------------------------------------------------
Chair person Senior VP Senior PE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Data Center Managers
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Staff Job Functions
Administrative Assistant
This AA will provide administrative support for the team. This includes
document processing, calendar/meeting management and travel planning
support.
Technical Consultant - Mainframe
This consultant is responsible for all technical aspects of the agreement
as it relates to the Mainframe environment. This includes capacity
status, capacity projections, hardware and software inventory and
requests for services recommendations.
Technical Consultant - Network
This consultant is responsible for all technical aspects of the agreement
as it relates to the Network environment. This includes capacity status,
capacity projections, hardware and software inventory and requests for
services recommendations.
Financial Consultant
This consultant is responsible for analysis of business plans and budgets
for future or additional requirements.
Contract Specialist
This function would be responsible for agreement content understanding
and interpretation.
Capacity Planning Consultant
This consultant is responsible for maintaining, reporting and analysis of
monthly global capacity status and projections for current and future
operations.
56
<PAGE>
Functional Manager
Overall department and personnel management of the Integrated Planning
Team.
Critical Success Factors
Proper Staffing
To be able to handle the workload the staffing levels must be maintained.
The Contracts Administrator and Administrative Assistant are critical
functions that allow the technical consultants to work on the issues that
result in meeting our mission objections.
Technology Consultants
The Technology Consultants must be full time members of the team. The
Technology Consultants cannot have operational responsibilities. For the
team to be successful, the Technology Consultants must be focused on
capacity status, capacity projections, hardware and software inventory
and requests for services recommendations.
Funding
For this team to be successful, it must be funded. This critical
function be fully funded for personnel, space, equipment, travel and
training.
Executive Sponsorship
This team has to have the active, on-going sponsorship of Equifax and EDS
executives (Equifax Senior VP and EDS Senior PE) to maintain the focus on
this organizations mission.
57
<PAGE>
EXHIBIT 10.27
Equifax/EDS
Master Agreement for Operations Support Services
Transaction Document #1
1.0 Introduction
This document ("Transaction Document") and its Schedules set forth the Services
and pricing for Equifax's Mainframe, Network, MicroLan and Help Desk operations
principally located in and around St. Petersburg, Florida. This Transaction
Document, effective May 11, 1999 (the "Execution Date"), is made by Equifax
Payment Services, Inc. ("Equifax") and Electronic Data Systems Corporation
("EDS"). The Parties agree that the Services will be provided under the terms
and conditions of the Master Agreement for Operations Support Services dated
May 11, 1999, between Equifax and EDS ("Master Agreement"), this Transaction
Document and Schedules A through U hereto. Terms and conditions that are
----------- -
specific to this Transaction Document are set forth in Section 4.0 below. Any
-----------
terms and conditions that deviate from or are in conflict with the Master
Agreement are set forth in Schedule P hereto entitled "Deviations from Terms of
----------
the Master Agreement." In the event of a conflict between the provisions of
this Transaction Document and the Master Agreement, the provisions of the Master
Agreement shall be controlling except for the conflicting provisions set forth
in Schedule P hereto, which will control over the provisions of the Master
----------
Agreement.
2.0 Definitions
Terms capitalized herein but not defined herein shall have the meaning set forth
in the Master Agreement and the Schedules attached hereto. Terms capitalized
and defined herein shall have the meaning set forth herein.
a. Commencement Date has the meaning set forth in Section 4.1 hereof.
-----------
b. Execution Date has the meaning set forth in Section 1.0 hereof.
-----------
c. Master Agreement has the meaning set forth in Section 1.0 hereof.
-----------
d. Services has the meaning set forth in Section 3.0 hereof.
-----------
e. Transaction Document has the meaning set forth in Section 1.0 hereof.
-----------
f. Data Center means the Equifax Data Center and the EDSSMC.
g. Disaster Recovery Plan has the meaning set forth in Schedule G to this
----------
Transaction Document.
h. EDSSMC means the Service Management Center of EDS.
i. Equifax Data Center means the Equifax data center located at Equifax's St.
Petersburg, Florida facility.
j. Excusable Downtime has the meaning set forth in Schedule O to this
----------
Transaction Document.
<PAGE>
k. Key Positions means the EDS account team positions listed on Schedule U to
----------
this Transaction Document from time to time initially comprised of the EDS
Account Manager, the EDS Account Operations Manager, the EDS Technical
Infrastructure Manager, the EDS Quality Assurance and Testing Manager and
the EDS Applications Support Manager.
l. Procedures Manual has the meaning set forth in Section 4.8 hereof.
-----------
m. SLC/SC has the meaning set forth in Section 4.7 hereof.
-----------
n. Scheduled Downtime has the meaning given in Schedule O.
----------
o. Year 2000 Compliant means that the hardware, software or firmware product
provided by a Party under this Transaction Document shall, at all times
before during and after January 1, 2000, accurately process and handle date
and time data (including, but not limited to, calculating, comparing and
sequencing) from, into and between the twentieth and twenty-first
centuries, and the years 1999 and 2000, including leap year calculations to
the extent that other information technology used in combination with such
hardware, software or firmware properly exchange date/time data with it.
p. Year 2000 Readiness means that a hardware, software or firmware product has
been tested by a Party and/or the vendor of such hardware, software or
firmware product and that such product, as of the date of such year 2000
test, operates without substantial interruption attributable to the
introduction of date and time related data.
3.0 Services, Charges and Credits
3.1 Services
EDS will provide to Equifax the Services for the following Towers:
. Mainframe
. Network
. MicroLan
. Help Desk
The scope and composition of the Services and the responsibilities of the
Parties with respect to the Services, including without limitation, each Tower,
are detailed in the Master Agreement, this Transaction Document, and Schedules A
-----------
through U for each Tower attached hereto.
-
Any existing and future Projects under this Transaction Document for which any
third party will be responsible will be described in Schedule M. Schedule M
---------- ----------
shall include, but not be limited to, project management, design, testing,
documentation, implementation and training responsibilities for each Project.
The Schedules listed in the "Table of Attachments" are categorized as either
2
<PAGE>
"Standard Schedules" or "Schedules Configured for Each Tower." Each "Standard
Schedule" will be applicable to all Towers under this Transaction Document, and
a separate Schedule for each of the "Schedules Configured for Each Tower" will
be prepared for each Tower.
3.2 Charges and Credits
Schedule J hereto entitled "Pricing and Charging Methodologies," sets forth the
- ----------
pricing and charging methodologies for the Services including, without
limitation, the Baselines of Resource Units to be provided to Equifax hereunder,
the Monthly Charges, Termination Charges, Change of Control Termination Charges,
and charges and credits for additional and reduced resources. Further, Schedule
--------
J and Schedule O hereto entitled "Service Levels and Service Credits" set forth
- - ----------
certain credits to Equifax and/or charges to EDS.
4.0 Transaction Specific Terms
The terms and conditions in this Section 4 are in addition to the terms and
---------
conditions set forth in the Master Agreement and are specific to the Services
arrangement described in this Transaction Document. The terms and conditions in
this Section 4 are not intended to conflict with or deviate from any of the
---------
terms and conditions in the Master Agreement.
4.1 Term/Commencement Date
a. The term of this Transaction Document shall begin July 1, 1999 and end at
midnight on July 1, 2009, subject to Section 12 of the Master Agreement.
----------
For purposes of this Transaction Document, the Commencement Date shall mean
July 1, 1999.
b. Equifax may terminate any Tower under this Transaction Document subject to
payment of the applicable Termination Charge for such Tower specified in
Schedule J to this Transaction Document. No such termination shall relieve
----------
either Party of its obligations under the Agreement with respect to the
Towers that are not terminated, including but not limited to, the Parties'
obligations under Schedule E and Schedule J hereto. Notwithstanding the
---------- ----------
foregoing, the Parties agree that any termination of the Mainframe Tower
shall constitute a termination of this Transaction Document.
4.2 Limitation of Liability
Subject to the terms of the Master Agreement (including without limitation
Section 13.2), the liability of EDS to Equifax arising out of or resulting from
- ------------
the performance or non-performance by EDS and its subcontractors of the Services
and its obligations under this Transaction Document shall be limited to "Direct
Damages" incurred by Equifax in the aggregate for all events which are the
subject matter of claims or causes of action to [*].
4.3 Technology Refresh
3
* Information omitted pursuant to Request for Confidential Treatment under Rule
406 of the Securities Act of 1933.
<PAGE>
EDS will refresh (including, without limitation, upgrade, replace, augment,
enhance, etc.) the hardware, software and other elements that comprise the
System and the facilities used by EDS to provide the Services, at a level and
with a frequency that will enable EDS at all times to perform and provide the
Services in accordance with the Agreement.
4.4 Equipment Purchase Transaction
On the Commencement Date, Equifax shall sell to EDS, and EDS shall purchase from
Equifax, the "Acquired Customer Hardware" set forth on Schedule U hereto for a
----------
purchase price equal to the net book value of such Acquired Customer Hardware on
the Commencement Date. The purchase price shall be paid in full at the time of
the sale and purchase, and Equifax shall provide to EDS a bill of sale
evidencing such sale.
4.5 Migration to EDSSMC
EDS shall use the Equifax Data Center for a period to last no longer than July
31, 2001, for the purpose of providing the Services under this Transaction
Document to Equifax. EDS will not use the Equifax Data Center, the Acquired
Customer Hardware, the Equifax Provided Hardware or Equifax Software to provide
any services for or to other EDS customers; provided however, this restriction
will not apply to the Acquired Customer Hardware after EDS migrates the data
center operations that comprise a part of the Services from the Equifax Data
Center to the EDSSMC as described in this Section 4.5. EDS will migrate the
-----------
data center operations that comprise a part of the Services from the Equifax
Data Center to the EDSSMC as soon as reasonably practicable, but in no event
earlier than April 30, 2000 or later than July 31, 2001 or as otherwise agreed
by the Parties. Except as expressly set forth herein or to the extent required
by a Force Majeure Event or other event causing the Disaster Recovery services
described in Schedule G to be provided by EDS to Equifax, EDS will not relocate
----------
the Data Center without the prior written consent of Equifax. In the event that
EDS decides to provide the Services from a data center other than the EDSSMC or
the Equifax Data Center, Equifax shall continue to be responsible only for the
charges set forth in the Master Agreement, this Transaction Document and the
Schedules hereto and EDS shall be responsible for added costs, if any, due to
the provision of Services from such data center.
4.6 Compliance With Law
a. EDS, in providing the goods and/or Services hereunder, expressly agrees to
comply with and abide by all applicable laws, ordinances, codes and
regulations which are applicable to its performance under this Transaction
Document, including but not limited to:
1. the Occupational Safety and Health Act of 1970 (29 U.S.C. 651 et
seq.),
2. the Civil Rights Act of 1866, 42 U.S.C. Section 1981, as amended,
3. Title VII of the Civil Rights Act of 1964, 42 U.S.C. Section 2000(e)
et seq., as amended,
4
<PAGE>
4. Age Discrimination in Employment Act of 1967, 29 U.S.C. Section 621 et
seq., and
5. the Americans with Disabilities Act, 42 U.S.C. Section 12101 et seq.
b. EDS agrees that it will not knowingly assign any individual to perform work
under this Transaction Document who is an unauthorized alien under the
Immigration Reform and Control Act of 1986 or it implementing regulations.
In the event any employee of EDS working under this Transaction Document is
discovered to be an unauthorized alien, EDS will immediately remove that
individual and replace that individual with one who is not an unauthorized
alien. EDS shall indemnify and hold Equifax, its parent, subsidiary and
affiliated companies harmless from and against any and all liabilities,
damages, losses or expenses (including attorneys' fees) arising out of any
breach by EDS of this Section.
4.7 Systems Controls
EDS and Equifax will jointly review the EDS System Life Cycle (SLC) procedures
used by EDS and the System Control (SC) procedures used by Equifax, and EDS will
adopt with the approval of Equifax the more appropriate and effective elements
of the two methodologies as the standard set of disciplines for managing the
information systems used to provide the Services. This methodology will be
applied to all the Services provided under this Transaction Document and shall
be implemented as appropriate to the individual elements of the Service being
provided and shall be included in the Procedures Manual.
4.8 Procedures Manual
In addition to the procedures required by Section 4.7 above, EDS and Equifax
-----------
will jointly develop and EDS shall prepare, within one hundred and eighty (180)
days from the Execution Date, a "Procedures Manual" approved by Equifax that
will govern the performance of each element of the Services and that will
establish appropriate operating procedures including, without limitation,
escalation and problem resolution procedures for the Services. During the term
of this Transaction Document, the Parties may incorporate New Services into the
Services provided pursuant to this Transaction Document and will amend the
Procedures Manual in writing accordingly. EDS shall perform all Services in
accordance with the Procedures Manual and the Agreement.
4.9 Geographic Scope
The Machines and Software provided by EDS under this Transaction Document are
for use within the United States.
The Machines and Software provided by Equifax under this Transaction Document
are for use within the United States.
4.10 Benchmark Study Performance Value
Pursuant to Section 9.8 of the Master Agreement, the Performance Value for each
-----------
of the Mainframe Tower, the Network Tower, the Help Desk Tower and the
5
<PAGE>
MicroLan Tower is [*] as indicated by the NOW Index established by the Gartner
Group as part of its benchmark study methodology. The Parties will retain the
Gartner Group or such other mutually agreed benchmarking firm to conduct a
benchmark study of each of the Towers that will be completed by October 1 of the
year immediately preceding [*], in accordance with Section 9.8 of the Master
-----------
Agreement. In the event that a different group and/or benchmark study
methodology is used to conduct the Benchmark Study of the Services described in
Section 9.8 of the Master Agreement, the Parties will normalize the Performance
- -----------
Value to account for the differences between the Gartner Group's NOW Index
benchmark study methodology and such different group methodology. The
adjustment, if any, to the charges to Equifax for the Services or any subset of
the Services (e.g., a Tower) as a result of a benchmark study shall be effective
as of January 1 of [*], as applicable.
Table of Attachments
<TABLE>
<CAPTION>
Schedules
Configured for
Each Tower Standard
Schedule Schedule Title Schedules Applicability
<S> <C> <C> <C> <C>
A Applications Software X Each Tower
B Systems Software X Each Tower
C Equifax Provided Hardware X Blank
D EDS Machines X Each Tower
E Services, Measures of Utilization and X Each Tower
Operational and Financial
Responsibilities
F Leases, Licenses and other Contracts X Each Tower
G Disaster Recovery Services X Each Tower
H Transition Plan X Blank
I Network Locations X Blank
J Pricing and Charging Methodologies X Common
K Applications Installation Standards X Each Tower
(Operating Environment IT Standards)
L Security Procedures and X Each Tower
Responsibilities - Data and Physical
M Projects X Blank
N Affected Employees X Common
O Service Levels and Service Credits X Each Tower
</TABLE>
6
* Information omitted pursuant to Request for Confidential Treatment under Rule
405 of the Securities Act of 1933.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
P Deviations from Terms of Master X Common
Agreement
Q Year 2000 X Common
R Services Transfer Assistance X Common
S Equifax Provided Office Furnishings and X Each Tower
Facilities
T Key Positions X Common
U Acquired Customer Hardware X Common
</TABLE>
THE PARTIES ACKNOWLEDGE THAT THEY HAVE READ THIS TRANSACTION DOCUMENT,
UNDERSTAND IT, AND AGREE TO BE BOUND BY ITS TERMS AND CONDITIONS. FURTHER, THE
PARTIES AGREE THAT THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN
THE PARTIES RELATING TO THIS SUBJECT SHALL CONSIST OF 1) THIS TRANSACTION
DOCUMENT, 2) ITS SCHEDULES, AND 3) THE MASTER AGREEMENT, INCLUDING THOSE
AMENDMENTS MADE EFFECTIVE BY THE PARTIES IN THE FUTURE. THIS STATEMENT OF THE
AGREEMENT BETWEEN THE PARTIES SUPERSEDES ALL PROPOSALS OR OTHER PRIOR
AGREEMENTS, ORAL OR WRITTEN, AND ALL OTHER COMMUNICATIONS BETWEEN THE PARTIES
RELATING TO THE SUBJECT DESCRIBED HEREIN.
Accepted by: Accepted by:
Equifax Payment Services, Inc. Electronic Data Systems Corporation
By: /s/ Illegible By: /s/ Illegible
----------------------------- --------------------------------
Authorized Signature Authorized Signature
- -------------------------------- ----------------------------------
Name (Type or Print) Date Name (Type or Print) Date
7
<PAGE>
Schedules omitted intentionally and will be provided upon request.
<PAGE>
EXHIBIT 10.28
HUMAN RESOURCES BUSINESS PROCESS AND SUPPORT SERVICES AGREEMENT
This HUMAN RESOURCES BUSINESS PROCESS AND SUPPORT SERVICES AGREEMENT (the
"Agreement"), dated as of June 4, 1999, is made by and between PwCES LLC, a
Delaware limited liability company with an office at 50 Hurt Plaza, Suite 1700,
Atlanta, Georgia 30303 ("PwCES") and PricewaterhouseCoopers LLP, a Delaware
limited liability partnership with an office at 1301 Avenue of the Americas, New
York, NY 10019 ("PwC") on the one hand, and Equifax Inc., a Georgia corporation
with an office at 1600 Peachtree Street, Atlanta, Georgia 30309 ("Equifax") on
the other hand.
RECITALS
WHEREAS, Equifax and PwCES desire to enter into an agreement for the provision
and use of certain business process and support services, including business
process design, improvement, operation, management and support, as well as
related ancillary services;
WHEREAS, PwCES desires to provide to Equifax such business process and support
services;
WHEREAS, Equifax desires to purchase from PwCES such business process and
support services, under the terms and conditions set forth below; and
WHEREAS, the parties intend for PwCES to increase the efficiency and
cost-effectiveness of such business process and support services, to improve the
performance and delivery of such business process and support services and to
identify and apply techniques, tools and technologies that would improve the
provision of such business process and support services.
NOW, THEREFORE, in consideration of the covenants contained in this Agreement
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows.
ARTICLE 1. DEFINITIONS
The following terms, when used in this Agreement with initial capital letters,
shall have the respective meanings set forth in this Article.
1.01 Account Executive. The term "Account Executive" means the individual
appointed by each party to act (i) as the primary point of contact with
the other party in dealing with each party's obligations under this
Agreement and (ii) in the case of PwCES, as the executive in charge of
overseeing the provision of the Services.
1.02 Additional Services. The term "Additional Services" means the tasks,
functions and projects outside the scope of the Continuing Services
that PwCES may provide to Equifax on terms to be mutually agreed upon
and set forth in a Change Order.
1.03 Affiliate. The term "Affiliate" means, with respect to a party, any
entity at any tier that controls, is controlled by, or is under common
control with that party, and with respect to PwCES, any entity (whether
or not incorporated) that carries on business under a name that
includes all or part of the PricewaterhouseCoopers name or is otherwise
within (or connected or associated with an entity within), or is a
correspondent firm of, the worldwide network of PricewaterhouseCoopers
firms. For purposes of this definition, the term "control" (including
with correlative meanings, the terms "controlled by" and "under common
control with") means the possession directly or indirectly of the power
to direct or cause the direction of the management and policies of an
entity, whether through the ownership of voting securities, by trust,
management agreement, contract or otherwise.
1.04 Agreement. The term "Agreement" means this Human Resources Business
Process and Support Services Agreement and all Exhibits attached hereto
and incorporated herein by this reference.
1.05 Ancillary Services. The term "Ancillary Services" means the tasks,
functions and projects that (i) are outside the scope of the Continuing
Services, (ii) relate to the Services and affect PwCES's provision of
Services (including, for example, services provided by a Third Party
Provider whose relationship with Equifax is managed by PwCES pursuant
to this Agreement) and (iii) may be provided to Equifax by PwCES on
terms to be mutually agreed upon and set forth in a Change Order.
<PAGE>
1.06 Assumptions. The term "Assumptions" means the circumstances, metrics,
principles, financial data, standards, computer systems, platforms and
general information disclosed by Equifax or used by PwCES as a basis
for determining the scope of Services, Service Levels and Charges, as
set forth in Exhibit 16.
1.07 Base Charge. The term "Base Charge" means the amount PwCES shall charge
to Equifax for the provision of Continuing Services at the Baseline
levels, excluding any (i) Incremental Charge or Incremental Credit
relating to such Services and (ii) Charges for Additional Services,
Ancillary Services or Termination Services, as set forth in Exhibit 1.
1.08 Baseline. The term "Baseline" means the base amount of a Service to be
provided by PwCES to Equifax with respect to the Continuing Services as
set forth in Exhibit 1, excluding (i) any incremental Service
generating Incremental Charges or Incremental Credits or (ii)
Additional Services, Ancillary Services or Termination Services.
1.09 Change Control Procedure. The term "Change Control Procedure" means the
procedure set forth in Section 3.10 for (i) increasing, decreasing or
amending (a) a Service beyond the Threshold Limits, (b) a Service Level
or (c) the Charges or (ii) adding Additional Services or Ancillary
Services.
1.10 Change of Control. The term "Change of Control" with respect to a party
means any (i) consolidation or merger of such party or any entity that
possesses directly or indirectly the power to direct or cause the
direction of the management and policies of such party, whether through
the ownership of voting securities, by trust, management, agreement,
contract or otherwise (each, a "Party Company") with or into another
entity or entities (whether or not such Party Company is the surviving
entity), excluding any such consolidation or merger with or into an
Affiliate of such party, (ii) any sale or transfer by any Party Company
of all or substantially all of its assets (excluding any such sale to
an Affiliate), (iii) any sale, transfer or issuance or series of sales,
transfers or issuances of shares or other equity interests of any Party
Company by such Party Company or the equity holders thereof, as a
result of which one equity holder, or a group of equity holders acting
in concert, possess the voting power (under ordinary circumstances) to
elect a majority of such Party Company's board of directors (or other
equivalent managing group) or (iv) the bankruptcy, liquidation or
dissolution of a Party Company. Notwithstanding the foregoing, no
transaction of the type described in clauses (i), (ii) or (iii) of this
Section shall constitute a Change of Control if, as of immediately
following such transaction, the equity holders of a party that possess
the voting power (under ordinary circumstances) to elect a majority of
such party's board of directors (or other equivalent managing group) as
of immediately prior to such transaction continue to own (directly or
indirectly through one or more Party Companies) a sufficient amount of
the outstanding capital stock or equity interests of each Party Company
possessing the voting power (under ordinary circumstances) to elect a
majority of such Party Company's board of directors (or other
equivalent managing group).
1.11 Change Order. The term "Change Order" means a document (i) increasing,
decreasing or amending (a) a Service beyond the Threshold Limits, (b) a
Service Level or (c) the Charges or (ii) adding Additional Services or
Ancillary Services, as executed pursuant to the Change Control
Procedure, in substantially the form set forth in Exhibit 15.
1.12 Charges. The term "Charges" means, collectively, the (i) Base Charges,
(ii) Incremental Charges, (iii) charges for Additional Services,
Ancillary Services and Termination Services and (iv) any other charges
provided under this Agreement, as set forth in Exhibit 1 and Change
Orders.
1.13 Commencement Date. The term "Commencement Date" means the date on which
PwCES begins to provide Services to Equifax or its Affiliates, as
agreed upon by the parties, and as set forth in Exhibit 7. There may be
a separate Commencement Date for each of Equifax or its Affiliates, for
a particular Service or set of Services. Except where the context
dictates otherwise, the Commencement Date shall be the applicable
Commencement Date for Equifax or its Affiliates.
1.14 Continuing Services. The term "Continuing Services" means (i) a task,
function or project or (ii) a set of related tasks, functions or
projects, to be performed by PwCES on a continuing basis, as set forth
in Exhibit 2, and tasks and functions not specifically described in
Exhibit 2 that were being performed by a Transitioned Employee prior to
the Commencement Date (and not by a Third Party Provider) and that are
required for and are incidental and directly related to the proper
performance of such Continuing Services.
1.15 Critical Service Level. The term "Critical Service Level" means any
Service Level identified in Exhibit 2 or a Change
<PAGE>
Order as a Critical Service Level.
1.16 Dispute. The term "Dispute" means any dispute, controversy or claim,
including, without limitation, situations or circumstances in which the
parties are required to mutually agree on additions, deletions or
changes to terms, conditions or Charges, arising out of, or relating
to, this Agreement.
1.17 Dispute Resolution Process. The term "Dispute Resolution Process" means
the process for resolving Disputes set forth in Articles 12 and 13.
1.18 Equifax. The term "Equifax" means Equifax Inc. and, unless context
dictates otherwise, its Affiliates receiving Services under this
Agreement. Exhibit 7 sets forth the list of the Affiliates of Equifax,
the operations and the locations for which Services will be provided as
of the Commencement Date.
1.19 Equifax Data. The term "Equifax Data" means (i) all data and
information provided or submitted by Equifax in connection with the
Services and (ii) all such data and information processed or stored,
and/or then provided to Equifax, as part of the Services, including,
without limitation, data contained in forms, reports and other similar
documents provided by PwCES as part of the Services.
1.20 Equifax Selected Employees. The term "Equifax Selected Employees" means
employees of Equifax to whom employment will be offered by PwCES as
listed in Exhibit 6 and pursuant to the terms set forth in the Hiring
Plan.
1.21 Equifax Software. The term "Equifax Software" means any computer
programs (including, without limitation, applications, utilities and
operating systems software) owned or licensed by Equifax that will be
used by PwCES in providing Services under this Agreement, as set forth
in Exhibit 9.
1.22 Exhibit. The term "Exhibit" means an attachment to this Agreement as
such attachment may be amended from time to time, each one of which is
incorporated herein by this reference.
1.23 Hiring Plan. The term "Hiring Plan" means the plan, set forth in
Exhibit 6, containing the terms and conditions by which PwCES will (i)
offer employment to and hire Equifax Selected Employees and (ii) employ
and compensate Transitioned Employees.
1.24 Impairment of Independence. The term "Impairment of Independence" means
the occurrence or existence of any event or circumstance that PwCES or
its Affiliates determines, in its sole but good faith judgment, that,
as a result of the Services provided or to be provided under this
Agreement, is inconsistent with (i) the obligations of PwCES or its
Affiliates under the Code of Professional Ethics of the AICPA, (ii) any
law, rule or regulation, or guideline or policy of any third party,
applicable to PwCES or its Affiliates, including, without limitation,
those of the Securities and Exchange Commission of the United States or
(iii) guidelines and policies of PwCES or its Affiliates that relate to
audit independence or otherwise interpret any such law, rule,
regulation, guideline or policy.
1.25 Incremental Charge. The term "Incremental Charge" means, with respect
to any particular Service, an increase, as set forth in Exhibit 1, to
be applied on a monthly basis to the Base Charge as a result of the
quantity of a particular Service exceeding the applicable Baseline, but
within the Threshold Limits as provided in Section 3.05a.
1.26 Incremental Credit. The term "Incremental Credit" means, with respect
to any particular Service, a decrease, as set forth in Exhibit 1, to be
applied on a monthly basis, to the Base Charge as a result of the
quantity of a particular Service falling below the applicable Baseline,
but within the Threshold Limits as provided in Section 3.05a.
1.27 Inflation Adjustment Index. The term "Inflation Adjustment Index" means
the inflation index set forth in Exhibit 1.
1.28 Information System. The term "Information System" means the information
system described in Exhibit 3.
1.29 Information System Implementation Plan. The term "Information System
Implementation Plan" means the implementation plan for the Information
System, as set forth in Exhibit 3, that describes the milestones,
estimated time line, responsibilities and processes for analysis,
design, development and implementation of the Information System.
1.30 Initial Commencement Date. The term "Initial Commencement Date" means
the first Commencement Date set forth in Exhibit 7.
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1.31 Key Personnel. The term "Key Personnel" means those Equifax Selected
Employees and contractors identified as such in Exhibit 6.
1.32 Key PwCES Employees. The term "Key PwCES Employees" means the PwCES
employees set forth in Exhibit 6.
1.33 Operating Level Agreements. The term "Operating Level Agreement" means
that level of service that Equifax shall provide in performing certain
of its responsibilities upon which PwCES is reliant in providing
Services, as set forth in Exhibit 10.
1.34 Performance Bonuses. The term "Performance Bonuses" means those bonuses
to be given to PwCES as set forth in Exhibit 1.
1.35 Performance Credits. The term "Performance Credits" means those credits
to be given to Equifax as set forth in Exhibit 1.
1.36 Pool of Resources. The term "Pool of Resources" means the number of
full-time equivalents set forth in Exhibit 1.
1.37 PwCES. The term "PwCES" means PwCES LLC.
1.38 PwCES Products. The term "PwCES Products" means PwCES Software and any
hardware, software or firmware that PwCES uses to provide the Services,
except for any hardware, software or firmware that is a Transferred
Asset, Equifax Software or the subject of a Transferred Agreement.
1.39 PwCES Software. The term "PwCES Software" means any computer programs
(including, without limitation, applications, utilities and operating
systems software) or databases developed or owned by PwCES and used by
PwCES in providing the Services, as set forth in Exhibit 8.
1.40 Service. The term "Service" means (i) a task, function or project or
(ii) a set of related tasks, functions or projects to be performed by
PwCES, as set forth in Exhibit 2, including Continuing Services,
Additional Services, Ancillary Services and Termination Services.
1.41 Service Level. The term "Service Level" means, with respect to any
Service, the minimum quality and level of service required for that
Service, as set forth in Exhibit 2.
1.42 Services Oversight Committee. The term "Services Oversight Committee"
means the committee, comprised of management personnel of both PwCES
and Equifax assigned under the terms of Article 6 that shall be
authorized and responsible for (i) generally overseeing the performance
of this Agreement, (ii) making strategic and tactical decisions in
respect of the establishment, budgeting and implementation of
priorities and plans with respect to the Services and (iii) monitoring
and resolving Disputes in accordance with Article 12.
1.43 Set of Exhibits. The term "Set of Exhibits" means a set of Exhibits
entered into contemporaneously for a particular set of Services.
1.44 Termination Charge. The term "Termination Charge" means the charge
payable by Equifax to PwCES as set forth in Exhibit 1.
1.45 Termination Provisions. The term "Termination Provisions" means those
provisions relating to the termination of this Agreement, as set forth
in Exhibit 11.
1.46 Termination Services. The term "Termination Services" means the tasks
and functions PwCES is to perform in anticipation of and following the
termination or expiration of this Agreement in order to achieve an
orderly transfer of Services from PwCES to Equifax or to Equifax's
designee, as set forth in Exhibit 11.
1.47 Territory. The term "Territory" means the geographic locations set
forth in Exhibit 2.
1.48 Third Party Agreement. The term "Third Party Agreement" means an
agreement set forth in Exhibit 19 pursuant to which a Third Party
Provider provides services to Equifax.
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1.49 Third Party Provider. The term "Third Party Provider" means any of
Equifax's third party providers of services.
1.50 Third Party Software. The term "Third Party Software" means any
computer programs (including, without limitation, applications,
utilities and operating systems software) or databases, along with
their supporting documentation, that are used under a license by PwCES
from a third party to provide the Services, as set forth in Exhibit 18.
1.51 Threshold Limit. The term "Threshold Limit" means, with respect to a
Service, the maximum increase or decrease in the quantity of a Service
provided to Equifax from the Baseline that PwCES shall undertake
without the need for a Change Order, as set forth in Exhibit 1.
1.52 Transferred Agreements. The term "Transferred Agreements" means those
licenses of software and all other agreements between Equifax and a
third party set forth in Exhibit 4 that Equifax is to assign to PwCES
and that PwCES is to assume under this Agreement.
1.53 Transferred Assets. The term "Transferred Assets" means the equipment,
furnishings and other assets set forth in Exhibit 4 to be transferred
by Equifax to PwCES for the provision of the Services.
1.54 Transitioned Employees. The term "Transitioned Employees" means those
Equifax Selected Employees who accept PwCES's offer of employment and
are hired by PwCES, as set forth in Exhibit 6.
1.55 Transition Period. The term "Transition Period" means the period
beginning on the Commencement Date and continuing as set forth in the
Transition Plan.
1.56 Transition Plan. The term "Transition Plan" means the document setting
forth anticipated time lines and general activities of each of PwCES
and Equifax during the transition of the tasks, functions and projects
addressed by the Services from Equifax to PwCES, as set forth in
Exhibit 5.
1.57 WARN Act. The term "WARN Act" means the Worker Adjustment and
Retraining Notification Act of 1988, as amended, and any similar
foreign, state or local law, regulation or ordinance.
ARTICLE 2. TERM
This Agreement shall be effective as of the execution of this Agreement
by both parties and shall continue until the tenth (10th) anniversary
of the Initial Commencement Date, unless terminated earlier in
accordance with the terms of this Agreement. This Agreement shall
automatically be renewed for two (2) year periods under the
then-current terms and conditions, unless either party shall have
provided written notice to the other party at least one (1) year before
the expiration of the then-current term of its intention not to renew.
ARTICLE 3. SERVICES
3.01 In General.
a. Subject to Section 3.01b, PwCES shall be the exclusive
provider in the Territory to Equifax and its Affiliates of
Equifax's and its Affiliates' requirements for the services
described as Continuing Services in Exhibit 2 for a particular
Set of Exhibits. In addition, subject to Section 3.01b, for a
particular Set of Exhibits, PwCES shall be the exclusive third
party provider of such services for the requirements of any
entity that becomes an Affiliate of Equifax in the Territory
after the Initial Commencement Date (except to the extent such
Affiliate was under contract (including any extensions
thereof) with a third party with respect to such services
prior to the date such entity became an Affiliate of Equifax),
provided (i) PwCES is in substantial compliance with the
Service Levels at the time such entity becomes an Affiliate of
Equifax and (ii) that the transition of such services to PwCES
is commercially reasonable and feasible for Equifax and such
Affiliate. Subject to Section 3.01b, if the parties are unable
to agree upon the pricing and other terms and conditions
regarding the provision of Services to such Affiliate of
Equifax, such Affiliate of Equifax may seek to negotiate with
another service provider; provided, however, PwCES shall have
a right of first refusal with respect to the offer made by
such other service provider.
b. Notwithstanding any other provision of this Agreement, PwCES's
right to be the exclusive provider or third
<PAGE>
party provider for services described in Exhibit 2 as
Continuing Services as provided in Section 3.01a, and PwCES's
right of first refusal as specified in Section 3.01a, shall be
applicable only to such services related to the first Set of
Exhibits (Human Resource functions) hereunder, unless Exhibit
2 of a subsequent Set of Exhibits for other such services
specifically provides that PwCES is the exclusive provider or
third party provider, as applicable, of such services
thereunder.
3.02 Services. Beginning on the Commencement Date, PwCES shall provide the
Services as set forth in Exhibit 2 or any Change Order. The
responsibilities of PwCES and Equifax with respect to the Services are
set forth in Exhibit 2 or the applicable Change Order.
3.03 Transition Period.
During the Transition Period, the parties shall:
(i) Work together to implement the Transition Plan; and
(ii) Develop and refine Baselines, Services, Service Levels,
Threshold Limits, Operating Level Agreements and Charges
to be applicable after the Transition Period and
negotiate in good faith Change Orders reflecting such
changes; provided, however, except as otherwise mutually
agreed upon by the parties in writing, any increases in
Charges, and any reductions in Baselines and Threshold
Limits, as a result of such development and refinement
during the Transition Period, shall be made only if and
to the extent they relate to (a) an incorrect Assumption
that arises out of inaccurate information provided by
Equifax or a failure of Equifax to provide to PwCES
information Equifax has and that is requested by PwCES
or (b) a mutual mistake by the parties. In the event
that the parties are unable to agree on such Change
Orders during the Transition Period, the matter shall be
resolved through the Dispute Resolution Process.
3.04 Service Levels.
a. Existing Services. During the Transition Period, PwCES shall
provide the Services consistent with the manner in which the
tasks, functions or projects addressed by the Services were
delivered by Equifax prior to the Commencement Date or as
mutually agreed upon and set forth in Exhibit 2. In those
instances where there is neither sufficient nor historical
data available to establish Service Levels, the parties shall
mutually agree and establish such Service Levels during the
Transition Period. After the Transition Period, PwCES shall
provide the Services consistent with the Service Levels as
mutually agreed upon and as set forth in Exhibit 2, which in
no event shall be less than the manner in which the services
were provided by Equifax prior to the Commencement Date.
b. Future Services. With respect to Additional Services and
Ancillary Services provided by PwCES during the term of this
Agreement, PwCES shall provide such Services in accordance
with the Service Levels to be set forth in Exhibit 2, or in
accordance with other mutually agreed standards.
c. Review. Beginning the earlier of (i) two (2) years from the
Initial Commencement Date and (ii) the date that the
Information System is in day-to-day operation, and every two
(2) years thereafter, during the term of this Agreement, the
parties shall meet and evaluate the Service Levels and the
need to revise them.
d. Reporting. PwCES shall report to Equifax regarding the
performance of the Services relative to the Service Levels
according to the guidelines set forth in Exhibit 2.
e. Performance Credits. If PwCES fails to meet a Critical Service
Level for any one (1) month period, or if PwCES fails to meet
any other Service Level for three (3) consecutive months,
Equifax shall be entitled to the Performance Credits set forth
in Exhibit 1.
f. Performance Bonuses. After the first benchmarking pursuant to
Section 3.04h, the parties shall negotiate in good faith
regarding the use and amount of Performance Bonuses if PwCES
exceeds certain Critical Service Levels as set forth in
Exhibit 1.
g. Service Level Analysis and Resolution. Upon notice from
Equifax of PwCES's failure to meet a Service Level,
<PAGE>
PwCES shall as soon as reasonably practicable (i) perform an
analysis to identify the cause of such failure, (ii) provide
Equifax with a report thereon and the procedure for correcting
the failure and (iii) provide reasonable assurances to Equifax
that the failure shall not recur.
h. Benchmarking. PwCES shall improve the quality of the Services
during the term of this Agreement. Beginning two (2) years
after the Initial Commencement Date, and every two (2) years
thereafter, the parties shall cause an independent third party
(the "Benchmarker") to conduct a benchmark study of the
primary Services, as determined by the Services Oversight
Committee, to assess the quality of the Services. The
Benchmarker may not be any entity listed on Exhibit 17. If
there is any Dispute regarding the Services to be benchmarked,
the parties shall focus the benchmark study on the Services
related to the Critical Service Levels. The fees of the
Benchmarker shall be shared equally by the parties. Using
consistent methodologies and, to the extent reasonably
possible, objective measurements, the Benchmarker shall
evaluate each specified Service with regard to Charges and
performance (including quality of service) and shall compare
the same to similar services provided to other companies in
the Territory of a size similar to that of Equifax by service
providers that have made investments similar to those made by
PwCES with respect to the Services (or, if the service
providers included in the study have not made investments
similar to those made by PwCES, appropriate adjustments shall
be made by the Benchmarker to account for the difference in
investments). If the benchmark study shows that the level of
performance being achieved by PwCES in relation to the Charges
(the "Performance/Price Ratio") for each of the Services is
not above the average Performance/Price Ratio of the other
companies in the study, then the Services Oversight Committee
shall determine, within forty-five (45) days after release of
the benchmark study, what changes, if any, should be made to
the Services or Charges and by when such changes should be
made. If the Services Oversight Committee is unable to agree
on the changes, if any, to be made to the Services or Charges
or when such changes should be made, the matter shall be
submitted to the Dispute Resolution Process. The cost of
implementing such changes shall be borne by PwCES, except to
the extent that the parties agree that PwCES will employ
significant new technologies to implement such changes, in
which case, the parties shall negotiate in good faith a Change
Order that reflects the parties' agreement to share in the
cost of the employment of those significant new technologies.
If Equifax fails to implement a reengineering project as
described in Section 3.13, which project is commercially
reasonable in light of the circumstances, and such failure is
the cause of PwCES's Performance/Price Ratio falling below the
average described above for a particular Service, then this
Section 3.04h shall not apply to such Service.
3.05 Changes in Services. Following the Transition Period:
a. Within Threshold. If the increase, decrease or change from the
Baseline is within the Threshold Limits for the specific
Service in question, then PwCES shall increase or decrease the
Charges for that Service by the Incremental Charge or
Incremental Credit, as the case may be, as specified in
Exhibit 1, or in an appropriate Change Order.
b. Beyond Threshold. If the increase, decrease or change from the
Baseline exceeds the Threshold Limits, then the parties shall
promptly negotiate in good faith the terms of a Change Order,
subject to Section 4.07a and Exhibit 1. The Change Order shall
specify, among other things, the adjustment to the Base Charge
for the Service in question.
c. Requirements. If either party reasonably determines that the
quantity of a Continuing Service has materially increased,
decreased or otherwise changed beyond the Baseline, such party
shall notify the other party.
d. Change Order. The parties shall negotiate in good faith a
Change Order reflecting the changes described in this Section.
In the event that the parties are unable to mutually agree on
the appropriate modification, adjustment or addition to the
Charges, the matter shall be submitted to the Dispute
Resolution Process.
3.06 Additional Services and Ancillary Services. At Equifax's request, PwCES
may provide Additional Services and Ancillary Services. The parties
shall negotiate in good faith to establish and mutually agree upon the
terms of a Change Order, including, without limitation, the scope of
Services, Service Levels and Threshold Limits (if applicable), and
Charges pertaining to the Additional Services and Ancillary Services.
Equifax acknowledges that PwCES may be able to increase the efficiency
and cost-effectiveness of the Services and to improve the performance
and delivery of the Services by providing Ancillary Services to
Equifax. With respect to any proposed Ancillary Services that Equifax
or any Affiliate of Equifax seeks to have provided by a third party,
PwCES shall have the right to bid on the provision of such Ancillary
Services.
<PAGE>
3.07 Third Party Agreements. PwCES shall administer and coordinate the Third
Party Agreements in accordance with their terms. PwCES shall provide
Equifax with reasonable notice of any renewal, termination or
cancellation dates and fees in respect of the Third Party Agreements.
Upon the mutual written agreement of PwCES and Equifax, Equifax shall,
to the extent permitted by a Third Party Agreement, modify, terminate
or cancel any such agreement, and PwCES shall not renew, terminate or
cancel any Third Party Agreement without the prior written consent of
Equifax. Any modification, termination or cancellation fees or charges
imposed upon Equifax in connection with any such modification,
termination or cancellation shall be paid by Equifax, unless otherwise
agreed upon by the parties in writing. Except with respect to those
Third Party Agreements identified as "restricted" on Exhibit 19, if
PwCES requests that certain Third Party Agreements be modified,
terminated or cancelled and offers to pay any modification, termination
or cancellation fees or charges imposed upon Equifax in connection with
any such modification, termination or cancellation and Equifax fails to
so modify, terminate or cancel, then the parties shall negotiate in
good faith a Change Order reflecting appropriate adjustments in
Charges, Service Levels and other performance obligations under this
Agreement; provided, however, this sentence shall not apply if PwCES
requires Equifax to use a Third Party Provider and Equifax is unable to
obtain from such Third Party Provider commercially reasonable terms and
conditions. Equifax, and not PwCES, shall be responsible for Equifax's
performance under the Third Party Agreements and liable to Third Party
Providers under the Third Party Agreements for any breach thereof by
Equifax, except to the extent PwCES causes such breach. Each of PwCES
and Equifax shall promptly inform the other of any breach in connection
with any Third Party Agreement that would give rise to a termination
right or liability, and any misuse or fraud in connection with any
Third Party Agreement of which a party becomes aware, and the parties
shall cooperate with each other to prevent or stay any such breach,
misuse or fraud. Subject to Article 15, any penalties or charges
(including amounts due to a third party as a result of a party's
failure to promptly notify the other party pursuant to the preceding
sentence), associated taxes, legal expenses and other incidental
expenses incurred by a party as a result of the other party's
non-performance of its obligations under this Section with respect to a
Third Party Agreement shall be paid by the nonperforming party. Subject
to Article 15, any damages incurred by Equifax as a result of PwCES's
non-performance of its obligations under this Section with respect to a
Third Party Agreement shall be paid by PwCES, except to the extent such
damages arise out of commercially unreasonable terms and conditions in
such Third Party Agreement. To the extent permitted by a Third Party
Agreement, and as requested by PwCES, Equifax shall appoint PwCES as
its agent for all matters pertaining to the Third Party Agreements and
promptly notify the appropriate Third Party Providers of such
appointment. If a written agreement between Equifax and a Third Party
Provider that provides services relating to the Services during the
term of this Agreement is located or created, PwCES shall have the
right to add to Exhibit 19 any such agreements.
3.08 Disbursements. Beginning on the Commencement Date, PwCES shall (i)
receive all invoices submitted by the Third Party Providers pursuant to
the Third Party Agreements, (ii) review and correct any errors in any
such invoices, (iii) submit such invoices to Equifax for final
authorization, (iv) pay such invoices within a reasonable period of
time after receiving such authorization and prior to the due date and
(v) be responsible for any late fees with respect to such third party
invoices (except to the extent such late fees are incurred because of
an action or failure to act by Equifax that affects PwCES's ability to
pay such invoices on a timely basis). Equifax shall be responsible for
any amounts due or payable before the Commencement Date for or in
connection with the Third Party Agreements; provided however, that if
PwCES receives an invoice relating to such amounts and fails to submit
such invoice to Equifax in a timely manner, then PwCES shall be
responsible for any late fees in respect of such invoice (except to the
extent such late fees are incurred because of an action or failure to
act by Equifax that affects PwCES's ability to submit such invoices on
a timely basis).
3.09 Termination Services. PwCES shall make available to Equifax the
Termination Services under the terms and conditions set forth in
Exhibit 11. If Equifax elects to engage a third party to provide
services after termination or expiration of this Agreement, then
Equifax shall include in its contract with such third party that such
third party (i) shall execute a confidentiality agreement in substance
the same as is set forth in the form attached in Exhibit 15, to protect
PwCES's and its Affiliates' and contractors' proprietary and
confidential information and (ii) shall agree in writing not to
solicit, for a period of two (2) years, any of PwCES's or its
Affiliates' partners, employees or agents that become known to such
third party as a result of the transition of the Services from PwCES to
such third party.
3.10 Change Control Procedures. In the event that either party wishes (i) a
change within the scope of the Services, Baselines, Service Levels or
priorities or (ii) a change to the Charges or Exhibits, such requesting
party's Account Executive or his or her designee shall submit a written
proposal to the other party's Account Executive describing such desired
change. Such party's Account Executive shall review the proposal and
reject or accept the proposal in writing within
<PAGE>
a reasonable period of time, but in no event more than thirty (30) days
after receipt of the proposal. In the event that the proposal is
rejected, the writing shall include the reason for rejection. In the
event that the proposal is accepted, the parties shall mutually agree
on the changes to be made to this Agreement. The additional or modified
Charges, terms and conditions (if any) shall be made only in a written
Change Order signed by the Account Executive of each of the parties or
his designee (authorized in writing by the applicable party).
Notwithstanding the foregoing, if the need for an emergency change
arises, either party's Account Executive or his or her designee shall
submit a request for such change to the other party's Account Executive
and PwCES shall, subject to the other terms and conditions of this
Agreement, use commercially reasonable efforts to implement such change
promptly and the parties shall thereafter agree upon a Change Order
within two (2) business days of such submission.
3.11 PwCES's Responsibilities. In addition to any specific tasks, functions
or projects for which PwCES is given responsibility as Services in this
Agreement and relevant Exhibits, PwCES shall perform the following
responsibilities during the term of this Agreement.
a. Employees, Agents and Contractors. In the event that Equifax
reasonably and in good faith determines that it is not in the
best interests of Equifax for any PwCES employee, agent or
contractor to continue in his/her capacity in the provision of
the Services, then Equifax shall give PwCES written notice
specifying the reasons for its position and requesting that
such employee, agent or contractor be replaced. PwCES shall
immediately investigate the matters stated in such notice and,
if it determines that Equifax's concerns are reasonable and
not unlawful, PwCES shall replace such employee, agent or
contractor. In addition, upon written notice from Equifax,
PwCES shall use reasonable efforts to replace any PwCES
employee, agent or contractor who Equifax reasonably believes
represents a material risk to Equifax's business, property or
personnel.
b. Facilities. PwCES shall provide those employees, agents and
contractors of Equifax who are reasonably required to be
located on PwCES's premises with access to and use of space,
office furnishings, janitorial service, telecommunications
service, data processing services, utilities (including
heating) and office-related equipment, supplies, and
duplicating services in connection with the performance of the
Services (all such space, furnishings, equipment, supplies,
utilities and services to be consistent with those that PwCES
provides its own comparable employees). Equifax shall, and
shall cause its agents and contractors to, abide by PwCES's
policies and guidelines while on PwCES's premises.
c. Operating Level Agreements. PwCES shall provide notice to
Equifax of (i) a failure by Equifax or any third party
retained by, or under control of, Equifax, to provide
hardware, software, services, data or materials that Equifax
or such third party is required to provide to PwCES under this
Agreement and that PwCES requires to perform the Services or
(ii) a failure by Equifax to timely and accurately perform its
responsibilities as set forth in this Agreement, including,
without limitation a failure to comply with an Operating Level
Agreement, in each case within ten (10) days of becoming aware
that such failure is adversely affecting its ability to
perform in accordance with the terms of this Agreement. If
PwCES fails to provide such notice, then such failure shall
not relieve PwCES of its obligations to perform the Services
in accordance with this Agreement until such notice is
provided to Equifax.
d. Consent. Unless otherwise specified herein, PwCES shall not
unreasonably withhold or delay any consent, approval or
response requested by Equifax under this Agreement.
e. Improvements. PwCES acknowledges Equifax's desire for PwCES to
increase the efficiency and cost-effectiveness of the
Services, and to improve the performance and delivery of the
Services, throughout the term of this Agreement.
f. Records. PwCES shall (i) maintain tools and procedures
necessary to accurately monitor compliance with the Service
Levels and (ii) prepare and maintain detailed records
regarding its compliance with the Service Levels and the
determination and application of Performance Bonuses and
Performance Credits. Upon reasonable request, PwCES shall
provide Equifax with information and reasonable access to such
tools and procedures and the records relating thereto for
purposes of verification of the Service Levels. Equifax
acknowledges that certain tools, procedures and records do not
exist as of the Commencement Date, but will be developed
during the Transition Period.
g. Correction of Errors. At PwCES's expense, PwCES shall promptly
correct any errors or inaccuracies in the Equifax Data,
reports, payments and other output produced by PwCES as result
of providing the Services, to
<PAGE>
the extent such errors or inaccuracies were caused by Services
provided by PwCES, its Affiliates or its or their respective
agents or contractors under this Agreement.
h. Agreements and Assets. Subject to Equifax obtaining any
required consents or approvals, PwCES shall assume all
Transferred Agreements and shall purchase and acquire all
Transferred Assets on the dates and for the purchase price set
forth on Exhibit 4.
i. Licenses. PwCES shall use commercially reasonable efforts to
negotiate licenses for Third Party Software that include a
right to assign or transfer to Equifax, without additional
payments by Equifax (or to minimize additional payments), such
licenses (and related maintenance agreements) upon expiration
or termination of this Agreement.
j. Internal Controls. During the term of this Agreement, PwCES
shall maintain an appropriate level of internal controls to
timely, completely and accurately record transactions and to
reasonably safeguard Equifax assets. At such time as PwCES
provides services to any other customer using the same systems
and processes as are used to provide the Services, PwCES shall
have an independent public accounting firm perform, at no cost
to Equifax, an annual third party review, as defined in
accordance with SAS # 70, of the facility from which the
Services are provided. The control objectives of the SAS # 70
review shall be mutually agreed by the parties.
k. Compliance. PwCES shall perform the Services in compliance
with the provisions of the documents governing the benefit
plans covered by Exhibit 2 and applicable laws, rules and
regulations.
3.12 Equifax's Responsibilities. In addition to any specific tasks,
functions or projects for which Equifax is given responsibility in this
Agreement and relevant Exhibits, Equifax shall perform the following
responsibilities during the term of this Agreement.
a. Affiliates of Equifax. Equifax shall cause its Affiliates,
although not signatories hereto, to be bound by the terms and
conditions of this Agreement. Any breach of this Agreement by
an Affiliate of Equifax shall be deemed a breach by Equifax.
b. Agreements, Assets and Software. Equifax shall (i), subject to
obtaining any required consents or approvals, assign all
Transferred Agreements and sell, assign and convey all
Transferred Assets free of any liens or other encumbrances to
PwCES on the dates and for the purchase prices set forth on
Exhibit 4, (ii) obtain all consents or approvals necessary to
allow PwCES and its employees, agents and contractors to use
the Equifax Software owned by Equifax and (iii) obtain all
consents or approvals necessary to allow PwCES to use Equifax
Software licensed by Equifax that is not the subject of a
Transferred Agreement. Equifax, with PwCES's reasonable
cooperation, shall obtain, at Equifax's cost and expense, all
required consents and approvals to permit such assignments,
transfers and use. If, however, any required consent or
approval is not obtained, unless and until such required
consent or approval is obtained, then, as PwCES's sole remedy,
the parties shall cooperate with each other in achieving a
reasonable alternative arrangement under which PwCES may
perform the Services without causing a breach or violation of
any Transferred Agreement or any agreement relating to Equifax
Software for which a required consent is to be obtained. Such
reasonable alternative arrangements may include (i) Equifax's
retention of certain third party agreements that would
otherwise be transferred hereunder or (ii) PwCES's agreement
to administer and coordinate such agreements pursuant to
Sections 3.07 and 3.08. In addition, it is the parties' intent
that such reasonable alternative arrangements shall provide
that PwCES and its employees, agents and contractors are able
to exercise the rights, including, without limitation, rights
with respect to the licensor's maintenance obligations and
warranties, PwCES would have had if such Transferred Agreement
were assigned to PwCES or if such consents or approvals had
been obtained. If such arrangements do not provide such
rights, notwithstanding the foregoing, PwCES shall be
entitled, as its sole remedy (other than its rights under
Sections 17.02(i) and (iii)) for Equifax's failure to obtain
such consents or approvals, to appropriate relief in Charges,
Services, Service Levels and other obligations under this
Agreement; provided, however, that PwCES shall use diligent
efforts to mitigate the effects resulting from such events.
All required consents and approvals shall provide for (i) the
use by PwCES and its employees of the rights under the
Transferred Agreements in performing the Services and (ii) if
necessary, the continued use by Equifax of the rights under
the Transferred Agreements to perform its responsibilities
pursuant to this Agreement. Equifax and PwCES shall cooperate
in approving the terms and conditions relating to all of the
foregoing consents and approvals. Equifax shall be liable for
the expenses incurred in obtaining all of the foregoing
consents and approvals. PwCES's use of Equifax Software
licensed by Equifax will be subject to the restrictions of the
third
<PAGE>
party license agreements with the licensors of such Equifax
Software, except to the extent such restrictions prohibit
PwCES from using such Equifax Software.
c. Facilities. As set forth in Exhibit 12, Equifax shall provide
PwCES access to and use of office facilities and operational
support services, and access to and use of data processing and
telecommunications capabilities, that Equifax currently uses
to perform the tasks, functions and projects addressed by the
Services. In addition, Equifax shall provide those employees,
agents and contractors of PwCES who are reasonably required to
be located on Equifax's premises with access to and use of
space, office furnishings, janitorial service,
telecommunications service, data processing services,
utilities (including heating and air conditioning) and
office-related equipment, supplies, and duplicating services
in connection with the performance of the Services (all such
space, furnishings, equipment, supplies, utilities and
services to be consistent with those that Equifax provides its
own comparable employees). PwCES shall, and shall cause its
agents and contractors to, abide by Equifax's policies and
guidelines while on Equifax's premises.
d. Relocation. If Equifax relocates its current office space or
otherwise causes employees, agents or contractors of PwCES to
relocate in order to provide any Services, Equifax shall
continue to provide the same access, use and support services
as referenced above. In the event of such relocation, Equifax
shall be responsible at its cost and expense (i) for moving
all of the office furnishings of such PwCES personnel to the
new location and (ii) for all of PwCES's reasonably necessary
costs and expenses of relocating such PwCES personnel to the
extent consistent with Equifax's policies regarding the
relocation of its own employees.
e. Projects. Equifax shall complete the development and
implementation of all organizational projects, software
projects, technical projects and other implementation projects
in progress as of the Commencement Date in a manner consistent
with Equifax's pre-existing implementation plans, and as set
forth in Exhibit 13. Equifax and PwCES shall cooperate with
each other in providing access to personnel and facilities,
and in providing the resources necessary to complete such
projects. Completion of such projects shall be at Equifax's
sole expense. Except in connection with such pre-existing
implementation plans, any new technology or material changes
to existing technology that may affect the provision of
Services shall not be implemented by Equifax without PwCES's
prior written approval.
f. Retained Equifax Employees, Consultants and Contractors.
Except as provided in Section 17.01, Equifax shall be
responsible in all respects to and for any Equifax employee,
consultant or contractor who (i) is not a Transitioned
Employee or a consultant or contractor for whom PwCES has
expressly assumed responsibility or otherwise engaged pursuant
to the terms of this Agreement, (ii) serves as Equifax's
Account Executive, (iii) serves on the Services Oversight
Committee or (iv) serves as a liaison with PwCES.
g. Data and Errors. Equifax shall cooperate with PwCES to address
the resolution of any errors, omissions or deficiencies in any
output produced by PwCES as a result of providing the Services
and provide PwCES the opportunity to correct such errors,
omissions or deficiencies. Upon successful resolution of such
errors, omissions or deficiencies, Equifax shall accept the
output as completed.
h. Permits and Approvals. Equifax shall be responsible for (i)
obtaining all consents and approvals under agreements to which
it is a party or may be bound as necessary for PwCES to
perform the Services while on Equifax's premises and (ii)
obtaining all permits and approvals from any third party
(including, without limitation, government agencies) relating
to Equifax's premises and necessary for PwCES to perform the
Services while on Equifax's premises.
i. Consent. Unless otherwise specified herein, Equifax shall not
unreasonably withhold or delay any consent, approval or
response requested by PwCES under this Agreement.
j. Operating Level Agreements. Equifax shall perform its
obligations consistent with the Operating Level Agreements set
forth in Exhibit 10.
k. Equifax Data. During the course of providing the Services,
PwCES may find missing values, incorrect values or
inconsistencies within the Equifax Data or other problems with
Equifax Data. In the event PwCES finds any of the foregoing
and provides notice to Equifax thereof, Equifax shall be
responsible for providing to PwCES for input by PwCES the
correct information with respect to the foregoing; provided,
however, this provision shall not apply to the extent the
foregoing were created by PwCES. If PwCES requires more than
<PAGE>
a minor additional amount of resources to correct any of the
foregoing, the parties shall negotiate in good faith a Change
Order.
l. PwCES Assumptions. To the extent they affect the provision of
Services, the timely and correct performance by Equifax of
each of the foregoing responsibilities is one of the
Assumptions under this Agreement.
3.13 Re-engineering. PwCES may from time to time, including, without
limitation, during the Transition Period, review the operations
required to support Equifax and may recommend to Equifax certain
re-engineering procedures, processes and tools. When the re-engineering
opportunity requires Equifax to modify its methods, practices or
policies, PwCES shall (i) present the changes to Equifax, (ii) discuss
with Equifax the requirements of implementation and (iii) identify the
projected benefits to both Equifax and PwCES. Equifax shall have the
opportunity to discuss the proposed changes and to request appropriate
modifications prior to granting approval. The parties shall work in
good faith to determine the costs, benefits and proper level of
commitment by both PwCES and Equifax for implementing such
re-engineering projects, and to mutually agree on such terms and
conditions to be set forth in a Change Order. Equifax may only refuse
or delay implementation of such projects if such projects require
significant additional expenditures by Equifax or are inconsistent with
Equifax's business strategies. If Equifax fails to approve or
adequately implement re-engineering project opportunities (other than
those that require significant additional capital expenditures by
Equifax), the parties shall negotiate in good faith a Change Order
reflecting appropriate adjustments in Charges, Service Levels and other
performance obligations under this Agreement; provided, however, this
sentence shall not apply if, as part of the re-engineering project,
PwCES requires Equifax to use third party software and Equifax is
unable to obtain from the vendor of such software commercially
reasonable warranties.
3.14 Dependencies. PwCES and Equifax anticipate that the provision of
Services shall have dependencies on the contracts between Equifax and
Third Party Providers.
3.15 PwCES's Use of Contractors. PwCES may engage consultants, agents or
contractors (including any of its Affiliates) to perform any Service or
any task or subtask within the Services; provided, however, that each
such consultant, agent and contractor shall agree to be bound (i) by
the confidentiality provisions, and (ii) the non-solicitation
provisions (to the extent such consultant, agent or contractor provides
any material Service or any material task or subtask), set forth in
this Agreement. PwCES shall not use any consultant, agent or contractor
set forth on Exhibit 17 without Equifax's consent. To the extent that
PwCES incurs any incremental costs as a result of Equifax's refusal to
consent to PwCES's selection of a particular consultant, agent or
contractor, Equifax shall pay such costs to PwCES as set forth in a
Change Order; provided, however, PwCES shall use commercially
reasonable efforts to mitigate the amount of the incremental costs. In
the event any problems arise in the provision of the Services, PwCES
and its employees, rather than PwCES contractors and agents, shall be
the principal points of contact for Equifax with respect to the
resolution of such problems.
3.16 No Obligation. Except as set forth in Exhibit 11, in no event shall
PwCES be obligated to provide any Service, and PwCES shall not be
liable for the failure to provide any such Service, that would result
in an Impairment of Independence. PwCES is not providing any attest
function or service under this Agreement. PwCES shall apply to Equifax
and this Agreement its interpretations of laws, rules, regulations,
guidelines and policies regarding audit independence in a manner
consistent with PwCES's application of such interpretations to
situations similar to those set forth in this Agreement.
3.17 Business Recovery and Disaster Recovery. The parties' responsibilities
for business recovery and disaster recovery and associated costs are
set forth in Exhibit 14.
3.18 Regulatory Changes. PwCES shall make any changes to the Services and
take any actions necessary in order to maintain compliance with laws
and regulations applicable to the provision of the Services. To the
extent that regulatory or statutory changes, or changes in Equifax's
policies or practices, that directly relate to the Services and require
a modification to the Services shall require PwCES to incur costs and
expenses to provide the Continuing Services beyond those required in
fulfilling its then-current responsibilities under this Agreement, the
parties shall negotiate in good faith a Change Order reflecting the
additional costs to PwCES.
3.19 Pool of Resources. To the extent a task or function related to the
Continuing Services was being performed by a Transitioned Employee
prior to the Commencement Date (and not by a Third Party Provider) and
such task or function is not specifically described in Exhibit 2 or
Exhibit 13 or within the definition of Continuing Services, PwCES shall
use the Pool of Resources to perform such task or function and such
task or function shall thereafter be deemed a Continuing Service.
<PAGE>
ARTICLE 4. CHARGES AND PAYMENTS
4.01 Charges. In consideration of PwCES providing the Services, Equifax
shall pay to PwCES the Charges as set forth in Exhibit 1.
4.02 Incremental Charges or Credits. In consideration of an increase in the
quantity of any Continuing Service, which increase is within the
Threshold Limits, Equifax shall pay to PwCES the Incremental Charges,
as set forth in Exhibit 1. In consideration of a decrease in the
quantity of any Continuing Service, which decrease is within the
Threshold Limits, PwCES shall credit or reimburse Equifax the
Incremental Credits, as set forth in Exhibit 1.
4.03 Annual Inflation Index Adjustment. PwCES shall apply an inflation
adjustment, based on the Inflation Adjustment Index, to the Charges, as
set forth in Exhibit 1.
4.04 Payment Terms.
a. Invoice in Advance. PwCES shall issue an invoice to Equifax no
more than ten (10) business days in advance of the beginning
of each month during the term of this Agreement for the amount
of the Base Charge for that month and other Charges for that
month relating to the recurring Services.
b. Invoice in Arrears. PwCES shall issue an invoice to Equifax
within ten (10) business days after the end of each month
during the term of this Agreement for the amount of all
Incremental Charges, charges for Additional Services and
Ancillary Services (except for those Charges paid in advance
pursuant to Section 4.04a), Performance Bonuses due PwCES and
any other charges incurred during the previous month, which
invoice shall also include all Incremental Credits,
Performance Credits and any other credits due Equifax during
the previous month.
c. Payments. All invoices submitted by PwCES to Equifax are due
and payable within thirty (30) days of the receipt of the
invoice, subject to Equifax's right to withhold payment in the
event of a good faith dispute pursuant to Section 4.04e. Late
payments shall accrue interest from the invoice date at the
lesser of (i) one-and-one-half percent (1 1/2%) per month and
(ii) the highest rate allowed by law. Subject to Section
4.04e, if Equifax fails to pay any invoice within thirty (30)
days after the invoice date, and thereafter fails to make such
payment within fifteen (15) days after written notice from
PwCES of such failure, PwCES may, in addition to any other
remedies available to it under this Agreement, suspend
performance of Services.
d. Credits. With respect to any amounts to be paid or reimbursed
by PwCES to Equifax pursuant to this Agreement, including,
without limitation, Incremental Credits and Performance
Credits, PwCES may, at its option, pay that amount to Equifax
by giving Equifax a credit against Charges otherwise payable
to PwCES.
e. Disputed Amounts. If Equifax, in good faith, disputes any
Charges regarding the Services, it may withhold any such
disputed amounts (except for applicable taxes) from the
invoice in the second month following the month in which the
dispute arose if the problem giving rise to the dispute has
not been resolved to Equifax's reasonable satisfaction by the
time payment on such invoice is due. Upon request, Equifax
shall pay the withheld amounts into an interest-bearing escrow
account. In accordance with the resolution of the Dispute,
Equifax shall pay to PwCES withheld amounts, plus interest
accrued on such withheld amounts, and the escrow agent shall
release the withheld amounts to the parties. Regardless of any
Dispute, Equifax shall remit to PwCES the invoiced amount
minus the disputed amount.
4.05 Taxes.
a. Inclusive Taxes. The Charges are inclusive of any sales, use,
gross receipts or value added, withholding, ad valorem or
other taxes based on or measured by PwCES's cost in acquiring
equipment, materials, supplies or services used by PwCES in
providing the Services. Further, each party shall bear sole
responsibility for any real or personal property taxes on any
property it owns or leases, for franchise or similar taxes on
its business, for employment taxes on its employees and for
taxes on its net income.
b. Additional. Except as set forth in Section 4.05a, if a sales,
use, privilege, value added, excise, services or
<PAGE>
similar tax is assessed on the provision of the Services by
PwCES to Equifax on PwCES's Charges to Equifax under this
Agreement, however levied or assessed, Equifax shall be
responsible for and pay the amount of any such tax. There will
be added to any Charges hereunder, and Equifax shall pay to
PwCES, amounts equal to any such taxes, however designated or
levied, based upon such Charges, or upon this Agreement or any
Services or items provided hereunder, or their use, and any
such taxes or amounts in lieu thereof paid or payable by PwCES
in respect of the foregoing. PwCES shall set forth in invoices
provided to Equifax those Services that are subject to tax.
c. Cooperation. The parties shall cooperate reasonably with each
other to determine accurately each party's tax liability and
to minimize such liability to the extent legally permissible.
To substantiate any claimed exemptions, Equifax shall supply
to PwCES the appropriate exemption or resale certificates.
4.06 Verification of Assumptions. The Charges, Services and Service Levels
are based on Assumptions derived in part from information provided by
Equifax to PwCES. Equifax shall be responsible for the accuracy of any
representations it made as part of the due diligence and negotiation
process and on which the Assumptions are based. In the event of any
material deviation from these representations during the Transition
Period, or during the first twelve (12) months after the Commencement
Date with respect to those Services or components of Services not
delivered during the Transition Period, the parties shall negotiate in
good faith to define and mutually agree upon adjustments that shall be
consistent with the intent of the parties. Any such agreed adjustment
shall be set forth in a Change Order.
4.07 Significant Business Changes and Additional Business Units.
a. Business Changes. Subject to any minimum revenue commitments
set forth in Exhibit 1, in the event that the Continuing
Services fall outside of the Threshold Limits for the period
of time set forth in Exhibit 1, Equifax and PwCES shall
negotiate and mutually agree upon an appropriate adjustment to
the Charges, pursuant to Exhibit 1.
b. Changes in Business Units. The parties may agree to add new
Affiliates of Equifax to this Agreement. Equifax shall share
information with PwCES to allow PwCES to determine the level
of resources that will be required to meet Equifax's needs
with respect to such new Affiliates. PwCES and Equifax shall
negotiate (i) a Change Order to accommodate the addition of
any new Affiliates to this Agreement or (ii) a Change Order to
accommodate the removal of an Affiliate from this Agreement.
If Equifax sells an Affiliate to a third party, Equifax may
remove such Affiliate from this Agreement, subject to an
appropriate reduction of the minimum revenue commitments set
forth in Exhibit 1; provided, however, such reduction shall
not be made if such Affiliate continues to purchase the
Services from PwCES after its removal. If Equifax sells an
Affiliate to a third party that desires to have PwCES continue
to provide services similar to the Services, PwCES shall
negotiate in good faith to provide services similar to the
Services to such Affiliate on a basis substantially comparable
to the basis on which PwCES provides Services to Equifax,
provided there would be (x) in PwCES's reasonable discretion
based on PwCES's due diligence review of such Affiliate, no
potential material adverse risk to PwCES in providing such
services or (y) no Impairment of Independence. If such
Affiliate continues to purchase the Services from PwCES after
its removal, the Charges paid by such Affiliate shall count
towards the minimum revenue commitments set forth in Exhibit
1.
4.08 Insecurity and Adequate Assurances. If Equifax fails to make payments
due hereunder in a timely manner, PwCES may demand adequate assurances
in writing of Equifax's ability to meet its payment obligations under
this Agreement. Unless Equifax provides the assurances within thirty
(30) days and in a manner acceptable to PwCES, Equifax shall pay to
PwCES a security deposit equal to three (3) months' aggregate Charges.
4.09 Most Favored Customer. If PwCES or any of its Affiliates provides any
services in the Territory to a third party from the same facilities as
Services are provided to Equifax that are comparable to the Services in
scope and complexity, for a similar or shorter duration and for similar
or lesser volumes (collectively, "Comparable Services"), on terms and
conditions in the aggregate that would be more favorable to Equifax
than those contained herein, then PwCES shall give prompt written
notice thereof to Equifax and Equifax shall have the option to replace
all of the terms and conditions of this Agreement with all such more
favorable terms. On each anniversary of the Initial Commencement Date
and at such other times as Equifax may request (based on Equifax's
reasonable belief that PwCES has an obligation under this Section),
PwCES shall deliver to Equifax a certificate duly executed by an
appropriate executive of PwCES, certifying that, as of the date of such
certificate, and at all times since the date of the last certification
pursuant to this Section (or since the Initial Commencement Date if
there has been no prior certification), stating that PwCES is and has
been in
<PAGE>
compliance with this Section. If the parties are unable to agree as to
PwCES's compliance with the requirements of this Section or, as to the
appropriate means to effectuate this Section, then such issue shall be
determined pursuant to the Dispute Resolution Process. The parties
acknowledge and agree that the provisions of this Section have been
included in this Agreement to induce Equifax to agree to the
exclusivity provisions of this Agreement, and that they are intended to
ensure that the Services are provided to Equifax on terms and
conditions granted by PwCES and its Affiliates to its most favored
customers obtaining Comparable Services in the Territory.
ARTICLE 5. AUDITS
5.01 Audit of Charges. Upon not less than thirty (30) days prior written
notice, and no more than one (1) time during any calendar year during
the term of this Agreement, PwCES shall provide to Equifax access to
PwCES's financial records and supporting documentation necessary to
verify PwCES's invoices to Equifax (including, without limitation,
expenses). Equifax shall bear the costs of any such audit. In the event
the audit results in a determination that PwCES has undercharged
Equifax, then the amount of such undercharge shall be treated, for
invoicing and payment purposes, as an adjustment in arrears for the
month in which the undercharge is discovered or in the month in which
the final resolution occurs. In the event the audit results in a
determination that PwCES has overcharged Equifax, then the amount of
such overcharge (plus interest) shall be treated, for invoicing and
payment purposes, as a credit in arrears for the month in which the
overcharge is discovered or in the month in which the final resolution
occurs. If the amount of the overcharge is equal to or exceeds five
percent (5%) of the total amount of the Charges for the calendar year
in which the audit occurs, PwCES shall reimburse Equifax for the
reasonable costs of the audit.
5.02 Audit of Services. Upon not less than thirty (30) days prior written
notice, or such notice as may be reasonable under the circumstances,
and during regular business hours, PwCES will make available to
Equifax's financial management, external auditors, examiners and
regulators and their designees such books, records, information and
documentation of internal controls relating to Equifax and maintained
by PwCES in the normal course of processing Equifax's transactions.
Copies of requested information shall not be unreasonably withheld but
at all times are subject to the approval of Equifax's representatives
having authority to release such information to interested parties.
Analyses, documentation and other information not maintained by PwCES
in the normal course of providing Services will be prepared by PwCES
for use in the audit or examination process as an Additional Service.
5.03 Equifax Internal Audit. Equifax's internal auditors shall have the
right, without notice, and during regular business hours, to request
access to Equifax books, records, information and documentation of
internal controls relating to Equifax and maintained by PwCES in the
normal course of processing Equifax's transactions and access to all
personnel providing the Services. Equifax shall use reasonable judgment
in requesting such books, records, information and documentation and
shall not unduly disrupt the operation of PwCES's business. PwCES shall
cooperate reasonably and in good faith with (i) Equifax's review of the
administration of the benefit plans covered by Exhibit 2, including
compliance with the documents governing such plans and compliance with
applicable laws, rules and regulations and (ii) remedial actions
determined by Equifax to be required in connection therewith. Analyses,
documentation and other information not maintained by PwCES in the
normal course of providing Services will be prepared by PwCES for use
in the audit, examination process, review and remediation as an
Additional Service.
5.04 PwCES Internal Audit. If, as a result of an internal audit conducted by
PwCES, at its own expense, PwCES determines that it has undercharged
Equifax (including, without limitation, Base Charges, Incremental
Charges and expenses), then the amount of such undercharge shall be
treated, for invoicing and payment purposes, as an adjustment in
arrears for the month in which the undercharge is discovered or the
month in which the final resolution occurs. In the event the audit
results in a determination that PwCES has overcharged Equifax, then the
amount of such overcharge shall be treated, for invoicing and payment
purposes, as a credit in arrears for the month in which the overcharge
is discovered or in the month in which the final resolution occurs.
5.05 PwCES Audit of Equifax. Upon not less than thirty (30) days prior
written notice, and no more than one (1) time during any calendar year
during the term of this Agreement, Equifax shall provide to PwCES
access to Equifax's financial records and supporting documentation
necessary to verify the credits or reimbursements given to Equifax by
PwCES. PwCES shall bear the costs for any such audit. In the event the
audit results in a determination that such credits or reimbursements
were incorrect, then such incorrect amount shall be corrected
appropriately in arrears for the month in which such incorrect amount
is discovered or in the month in which the final resolution occurs.
5.06 Equifax Security Audit of PwCES. During the term of this Agreement,
PwCES shall provide to Equifax access to PwCES's facilities so that
Equifax can ensure PwCES's compliance with the confidentiality
provisions set forth in
<PAGE>
Article 9. In the event the audit results in a determination that PwCES
is not in full compliance with such provisions, the parties will meet
and agree upon the steps PwCES must take to bring it into full
compliance and PwCES shall promptly take such steps. For each audit
after the second such audit in a calendar year during the term of this
Agreement, Equifax shall reimburse PwCES for the reasonable costs, if
any, PwCES incurs in providing such access. Any audit pursuant to this
Section that reveals a material non-compliance with Article 9 shall be
deemed not to have occurred for purposes of the preceding sentence of
this Section.
ARTICLE 6. MANAGEMENT AND HUMAN RESOURCES
6.01 PwCES Account Executive. PwCES shall designate, prior to the Initial
Commencement Date, a PwCES Account Executive to whom all of Equifax's
communications shall be addressed and who has the authority to act for
and bind PwCES and its contractors in connection with all aspects of
this Agreement.
a. Selection. Before assigning an individual to the position of
Account Executive, whether the person is initially assigned or
subsequently assigned, PwCES shall:
(i) notify Equifax of the proposed assignment for Equifax's
approval;
(ii) introduce the individual to appropriate Equifax
representatives; and
(iii) consistent with law and PwCES's reasonable personnel
practices, provide Equifax with any other information
about the individual that is reasonably requested.
b. Term. PwCES shall cause the person assigned to the position of
Account Executive to devote substantial time and effort to the
provision of the Services under this Agreement. PwCES shall
use commercially reasonable efforts to maintain the PwCES
Account Executive at PwCES for the minimum term of twenty four
(24) months during the first twenty four (24) months after the
Initial Commencement Date and twelve (12) months thereafter,
unless such Account Executive (i) voluntarily resigns from
PwCES, (ii) is dismissed by PwCES for (a) misconduct or (b)
unsatisfactory performance in respect of his or her duties and
responsibilities to Equifax or PwCES, (iii) is unable to work
due to his or her death, injury or disability or (iv) is
reassigned because of personal requirements. PwCES shall not
reassign the Account Executive during the foregoing minimum
terms except for personal requirements not related to career
development. Whenever possible, PwCES shall give Equifax at
least sixty (60) days advance notice of a change of the
Account Executive or if such sixty (60) days notice is not
possible, the longest notice otherwise possible.
c. Removal. In the event that Equifax reasonably and in good
faith determines that it is not in the best interests of
Equifax for the PwCES Account Executive to continue in his or
her capacity, then Equifax shall give PwCES written notice
specifying the reasons for its position and requesting that
the Account Executive be replaced. PwCES shall immediately
investigate the matters stated in such notice and, if it
determines that Equifax's concerns are reasonable and not
unlawful, PwCES shall replace the Account Executive in
accordance with Section 6.01a.
6.02 Equifax Account Executive. Equifax shall designate, prior to the
Initial Commencement Date, an Equifax Account Executive to whom all of
PwCES's communications shall be addressed and who has the authority to
act for and bind Equifax and its contractors in connection with all
aspects of this Agreement.
a. Selection. Before assigning an individual to the position of
Account Executive, whether the person is initially assigned or
subsequently assigned, Equifax shall:
(i) notify PwCES of the proposed assignment for PwCES's
approval;
(ii) introduce the individual to appropriate PwCES
representatives; and
(iii) consistent with law and Equifax's reasonable personnel
practices, provide PwCES with any other information
about the individual that is reasonably requested.
b. Term. Equifax shall cause the person assigned to the position
of Account Executive to devote substantial time
<PAGE>
and effort to the management of Equifax's responsibilities
under this Agreement. Equifax shall use commercially
reasonable efforts to maintain the Equifax Account Executive
at Equifax for the minimum term of twenty four (24) months
during the first twenty four (24) months after the Initial
Commencement Date and twelve (12) months thereafter, unless
such Account Executive (i) voluntarily resigns from Equifax,
(ii) is dismissed by Equifax for (a) misconduct or (b)
unsatisfactory performance in respect of his or her duties and
responsibilities to Equifax or PwCES, (iii) is unable to work
due to his or her death, injury or disability or (iv) is
reassigned because of personal requirements. Equifax shall not
reassign the Account Executive during the foregoing minimum
terms except for personal requirements not related to career
development. Whenever possible, Equifax shall give PwCES at
least sixty (60) days advance notice of a change of the
Account Executive or if such sixty (60) days notice is not
possible, the longest notice otherwise possible.
c. Removal. In the event that PwCES reasonably and in good faith
determines that it is not in the best interests of PwCES for
the Equifax Account Executive to continue in his or her
capacity, then PwCES shall give Equifax written notice
specifying the reasons for its position and requesting that
the Account Executive be replaced. Equifax shall immediately
investigate the matters stated in such notice and, if it
determines that PwCES's concerns are reasonable and not
unlawful, Equifax shall replace the Account Executive in
accordance with Section 6.02a.
6.03 Services Oversight Committee. Within fifteen (15) days after the
Initial Commencement Date, Equifax shall appoint three (3) members of
Equifax's management staff, including the Equifax Account Executive,
and PwCES shall appoint three (3) members of PwCES's management staff,
including the PwCES Account Executive, to serve on the Services
Oversight Committee. For the first twelve (12) months after the Initial
Commencement Date, one of the PwCES members shall act as the chairman
of the Services Oversight Committee; each twelve (12) months thereafter
the parties shall alternate selecting the chairman. The Services
Oversight Committee shall be authorized and responsible for (i)
generally overseeing the performance of this Agreement and (ii)
monitoring and resolving Disputes in accordance with Article 12.
6.04 Equifax Selected Employees' Employment with PwCES. PwCES shall offer to
hire those Equifax Selected Employees who (i) are actively employed by
Equifax as of the Commencement Date and (ii) meet such other reasonable
hiring requirements of PwCES to the satisfaction of PwCES. PwCES shall
be solely responsible for making such offers of employment to such
Equifax Selected Employees. PwCES's plan regarding (a) Equifax Selected
Employees, (b) offers of employment to such Equifax Selected Employees
and (c) Transitioned Employee benefits is described in the Hiring Plan.
6.05 Right to Terminate and Transfer. PwCES shall have the right, in its
sole discretion, (i) to terminate any Transitioned Employee or (ii) to
transfer any Transitioned Employee to an Affiliate of PwCES, subject to
Section 6.08.
6.06 Employment with PwCES. Equifax shall use reasonable efforts to ensure
that all of the Equifax Selected Employees to whom PwCES offers
employment accept such positions with PwCES. In the event that a
significant number of Equifax Selected Employees offered employment by
PwCES fail to accept such employment offer, the parties shall negotiate
in good faith appropriate relief in Charges, Services, Service Levels
and other obligations under this Agreement pursuant to the Change
Control Procedures; provided, however, that PwCES shall use diligent
efforts to mitigate the effects resulting from such event.
6.07 Key Personnel. In the event that the number of Key Personnel set forth
in Exhibit 6 fail to accept PwCES's employment offer or fail to enter
into an independent contractor agreement with PwCES, the parties shall
negotiate in good faith appropriate relief in Charges, Services,
Service Levels and other obligations under this Agreement pursuant to
the Change Control Procedures. PwCES shall use diligent efforts to
mitigate the effects resulting from such event.
6.08 Key PwCES Employees. PwCES shall use reasonable efforts to assign each
Key PwCES Employee to provide the Services for a minimum term of twelve
(12) months, unless (i) Equifax consents to the reassignment or
replacement of such Key PwCES Employee, (ii) reassignment or
replacement of such Key PwCES Employee will not have a more than minor
adverse effect on the Services or (iii) such Key PwCES Employee (a)
voluntarily resigns from PwCES, (b) is dismissed by PwCES for (x)
misconduct or (y) unsatisfactory performance in respect of his or her
duties and responsibilities to Equifax or PwCES, (c) is unable to work
due to his or her death, injury or disability or (d) is reassigned
because of personal requirements. PwCES shall not reassign Key
Employees during the foregoing minimum terms except for personal
requirements not related to career development.
<PAGE>
ARTICLE 7. TRADEMARKS AND MARKETING
7.01 Use of Trademarks. For so long as PwCES is in substantial compliance
with the Service Levels, PwCES shall be permitted to use Equifax's name
and logos as necessary to market PwCES's services that are similar to
some or all of the Services, subject to Equifax's right to approve such
use; provided, however, no approval shall be necessary to the extent
PwCES is merely using Equifax's name or logos in a list of customers.
Equifax shall have no rights to use PwCES's or its Affiliate's
trademarks, service marks or trade names for any purpose without the
prior approval of PwCES.
7.02 Marketing Cooperation. For so long as PwCES is in substantial
compliance with the Service Levels, Equifax shall cooperate with PwCES,
at PwCES's reasonable request and at no charge to PwCES, in marketing
functions, tasks and projects addressed by the Services to third
parties. Equifax's cooperation shall be subject to reasonable notice by
PwCES, Equifax's availability and a lack of more than a minor impact of
such cooperation on Equifax's business operations. By way of example
and not limitation, and subject to the foregoing limitations, Equifax
shall (i) allow and participate in reasonable on-site visits by
prospective customers (who have entered into appropriate
confidentiality agreements with Equifax) and (ii) cooperate with PwCES
in preparing and publishing articles on PwCES's services. Equifax shall
refer to PwCES all inquiries and opportunities directed to Equifax,
about which Equifax becomes aware, for PwCES to provide functions,
tasks and projects addressed by the Services to any third party.
ARTICLE 8. PROPRIETARY RIGHTS
8.01 Definitions.
a. The term "Materials" means literary works or other works of
authorship, such as computer programs, computer program
listings, program tools, documentation, reports and drawings,
as well as user manuals, charts, graphs and other written
documentation and machine-readable text and files, including,
without limitation, computer programming code (including
source code and object code), in each case used in or
initially developed in connection with the Services.
b. The term "Derivative Work" means a work based on one or more
preexisting works, including, without limitation, a
condensation, transformation, expansion or adaptation, that,
if prepared without authorization of the owner of the
copyright of such preexisting work, would constitute a
copyright infringement.
8.02 PwCES Materials. All copyright, patent, trademark and other
intellectual property rights in the PwCES Software and preexisting
Materials of PwCES or its Affiliates shall be the property of PwCES or
its Affiliates, as the case may be. With respect to any Materials
developed solely by PwCES, its Affiliates or its or their contractors,
or jointly by Equifax personnel and PwCES, its Affiliates or its or
their contractors, under this Agreement or in the performance of
Services, except as otherwise expressly set forth in this Agreement
(e.g., Additional Services), ownership will be as follows:
a. Materials that constitute a Derivative Work for which the
preexisting copyright is owned by Equifax, shall be owned by
Equifax, and PwCES shall have (i) an irrevocable,
nonexclusive, worldwide, paid-up license to access, use,
execute, reproduce, display, perform, prepare derivative works
of and distribute such Materials only in connection with (a)
the Services or (b) services provided to third parties from
the facility from which the Services are provided and (ii) the
right to sublicense third parties to do any of the foregoing.
Such license shall include the Materials of Equifax for which
the preexisting copyright is owned by Equifax and upon which
such Derivative Work is based, but only to the extent such
Materials are embodied in, or necessary for the exercise of
the license to, such Derivative Work.
b. Materials that constitute a Derivative Work for which the
preexisting copyright is owned by PwCES, its contractors or a
third party shall, as between PwCES and Equifax, be owned by
PwCES, and during the term of this Agreement Equifax shall
have (i) an irrevocable, nonexclusive, worldwide, paid-up
license to access, use, execute, reproduce, display, perform,
prepare derivative works of and distribute such Materials
internally within Equifax and its Affiliates solely in
connection with the Services and (ii) the right to sublicense
third parties to do any of the foregoing.
c. Materials that do not constitute a Derivative Work of any
Materials owned by Equifax, PwCES or any third party shall be
owned by PwCES, and during the term of this Agreement Equifax
shall have (i) an irrevocable, nonexclusive, worldwide,
paid-up license to access, use, execute, reproduce, display,
perform, prepare
<PAGE>
derivative works of and distribute such Materials internally
within Equifax and its Affiliates solely in connection with
the Services and (ii) the right to sublicense third parties to
do any of the foregoing; provided, however, with respect to
any such Materials developed jointly by Equifax personnel and
PwCES, its Affiliates or its or their contractors, PwCES shall
not use, for any entity other than Equifax or its Affiliates,
any portion of such Materials specific to Equifax operations,
procedures or management processes that are Confidential
Information of Equifax.
d. If, pursuant to a Change Order, Materials are developed by
PwCES for use in connection with the Services, at an
additional cost to Equifax, then prior to such development,
the parties shall mutually agree in writing on the ownership
and use of such Materials.
8.03 Equifax Materials. With respect to any Materials that are or have been
developed (i) solely by Equifax, whether or not developed under this
Agreement or (ii) for Equifax prior to this Agreement, such Materials
shall be owned by Equifax, and during the term of this Agreement PwCES
shall have (a) an irrevocable, nonexclusive, worldwide, paid-up license
to access, use, execute, reproduce, display, perform, prepare
derivative works of and distribute such Materials internally within
PwCES solely in connection with the Services and (b) the right to
sublicense third parties to do any of the foregoing. With respect to
those items of Equifax Software designated as "for use by PwCES for
third parties" on Exhibit 9, the license set forth in the preceding
sentence shall also include the right to access, use, execute,
reproduce, display, perform, prepare derivative works of and distribute
such Equifax Software internally within PwCES in connection with
services provided to third parties from the facility from which the
Services are provided and the right to sublicense third parties to do
any of the foregoing. Each party waives any claims for indemnification
against the other party with respect to any third party claims that may
arise from PwCES's use of Equifax Software for third parties pursuant
to the preceding sentence.
8.04 Derivative Works of PwCES Materials. With respect to any Materials that
are developed solely by Equifax and that constitute a Derivative Work
of any Materials for which the preexisting copyright is owned by PwCES
or its Affiliates, such Materials shall be owned by PwCES or its
Affiliates, and during the term of this Agreement Equifax shall have
(i) an irrevocable, nonexclusive, worldwide, paid-up license to access,
use, execute, reproduce, display, perform, prepare derivative works of
and distribute such Materials internally within Equifax and its
Affiliates solely in connection with the Services and (ii) the right to
sublicense third parties to do any of the foregoing.
8.05 Limitation. Any ownership or license rights herein granted to either
party are limited by and subject to any intellectual property rights
(including, without limitation, patents and copyrights) held by, and
terms and conditions of any license agreements with, applicable vendor
software providers, excluding PwCES and its Affiliates.
8.06 Assignment. To the extent any of the Materials may not, by operation of
law, be owned by the party to which ownership has been granted (as
described in this Article), each party agrees to assign and hereby
assigns, without further consideration, the ownership of all right,
title and interest in all United States of America and foreign
copyrights in such Materials to the other party, and such assignee
party shall have the right to obtain and hold in its own name
copyrights, registrations, renewals and all other rights relating or
pertinent thereto.
8.07 Inventions. The term "Invention" means any idea, concept, know-how or
technique that either party first conceives or reduces to practice in
connection with performance of the Services during this Agreement and
for which a patent application is or could be filed. Inventions will be
treated as follows:
(i) if made by Equifax personnel, it shall be Equifax
property and Equifax grants PwCES a nonexclusive,
perpetual, irrevocable, worldwide and paid-up license
under such Invention, and under any patent application
and patents issued thereon;
(ii) if made by PwCES personnel, it shall be PwCES's property
and PwCES grants Equifax a nonexclusive, perpetual,
irrevocable, worldwide and paid-up license under such
Invention, and under any patent application and patents
issued thereon;
(iii) if made by PwCES and Equifax personnel jointly (a) it
shall be PwCES's property, (b) PwCES grants Equifax a
nonexclusive, perpetual irrevocable, worldwide and
paid-up license under such Invention, and under any
patent application and patents issued thereon, (c) if
PwCES intentionally decides not to pay any or all of the
required maintenance fees for the patent for such
Invention, it shall promptly notify Equifax of its
decision and if Equifax elects to pay any such fee,
PwCES shall assign such
<PAGE>
patent to Equifax and PwCES shall retain a license
equivalent to that granted to Equifax pursuant to
subsection (b) above, (d) Equifax shall have the right
to file for and obtain ownership of patent and other
intellectual property rights with respect to such
Invention in any territory where Equifax plans to use
such Invention if PwCES has not so filed or fails to so
file within sixty (60) days of written notice to PwCES
and PwCES shall retain a license equivalent to that
granted to PwCES pursuant to subsection (c) above and
(e) the owner of a patent in a territory shall reimburse
the other party with respect to any enforcement or other
actions with respect to such patent and shall retain all
damages awarded thereon;
(iv) all licenses granted to either party include the right
to make, have made, use, have used, import, offer to
sell, sell, lease or otherwise transfer any apparatus,
or practice and have practiced any method and shall
include the right to grant, directly or indirectly,
revocable or irrevocable sublicenses to Affiliates of
such party; and
(v) nothing contained in this Agreement shall be deemed to
grant any license under any patents or patent
applications arising out of any other inventions of
either party.
8.08 Licenses. To the extent that either PwCES or Equifax licenses any
Materials of the other party to a third party, each such license shall
be in writing and shall contain provisions that protect the owning
party's intellectual property rights in such Materials, including,
without limitation, confidentiality provisions and provisions that
appropriately limit the use and number of copies of the Materials.
8.09 Sale of an Affiliate. Equifax may extend to (i) an Affiliate sold or
otherwise transferred to a third party, (ii) a business unit of Equifax
or an Affiliate that is sold or otherwise transferred to a third party,
or (iii) a business unit of Equifax or an Affiliate of Equifax that is
distributed via a stock dividend or other distribution to the
stockholders of Equifax (collectively a "Transferred Affiliate"), in
each case for such Transferred Affiliate's own internal use only, the
rights in Materials granted to Equifax pursuant to this Article 8;
provided, however, such Transferred Affiliate must agree in writing to
be bound by the obligations set forth in this Article 8 and by
provisions that protect PwCES's intellectual property rights in such
Materials, including, without limitation, confidentiality provisions
and provisions that appropriately limit the use (by or for such
Transferred Affiliate only) and number of copies of such Materials and
provided further that PwCES had provided Services to such Affiliate or
business unit.
ARTICLE 9. CONFIDENTIALITY AND DATA
9.01 Confidential Information. The term "Confidential Information" means the
terms and conditions of this Agreement and all information, data,
knowledge and know-how (in whatever form and however communicated)
relating directly or indirectly to the disclosing party (or to its
Affiliates or contractors, or to its or their businesses, operations,
properties, products, markets or financial positions) that is delivered
or disclosed by such party or any of its officers, directors, partners,
members, employees, agents, Affiliates or shareholders to the other
party in writing, electronically, orally or through visual means, or
that such party learns or obtains aurally, through observation or
analyses, interpretations, compilations, studies or evaluations of such
information, data, knowledge or know-how. All information that
qualified as Confidential Information pursuant to the Confidentiality
Agreement dated June 25, 1998 by and between PwCES and Equifax shall be
deemed Confidential Information under this Agreement.
9.02 Ownership. All Equifax Data shall be owned by Equifax. Without limiting
the foregoing, Equifax may use the Equifax Data in any manner, and may
provide the Equifax Data to third parties. PwCES shall not use the
Equifax Data except in connection with the provision of the Services,
and shall not disclose, sell, assign, lease or otherwise provide the
Equifax Data to third parties, except as specifically permitted by
Equifax in writing or as necessary to perform the Services. Upon
request of Equifax, and at any time during the term of this Agreement,
and upon expiration or termination of this Agreement for any reason,
PwCES shall promptly provide copies of all or any part of the Equifax
Data to Equifax, in the form or format and on the media requested by
Equifax; provided, however, that Equifax shall reimburse PwCES for its
costs to provide the Equifax Data in a form or format not then being
currently used by PwCES to provide the Services. Upon expiration or
termination of this Agreement, and completion of all Termination
Services, PwCES shall destroy, and cause all of its contractors, agents
and Affiliates to destroy, all copies of the Equifax Data, and the
Account Executive of PwCES shall certify the same to Equifax in
writing.
9.03 Loss of Status. Confidential Information shall not include information,
data, knowledge and know-how, as shown by written records, that (i) is
known to the receiving party prior to disclosure to such party, (ii) is
in the public domain prior
<PAGE>
to disclosure to such party, (iii) enters the public domain through no
violation of this Agreement after disclosure to such party, (iv) such
party receives from a third party not under obligation of
confidentiality to the disclosing party or (v) the receiving party
independently develops without reliance on Confidential Information.
9.04 Limited Use and Access. Each party shall keep in confidence and prevent
the unauthorized duplication, use and disclosure of Confidential
Information. Confidential Information may only be used for furthering
the purposes of this Agreement and providing the Services hereunder.
Each party shall, upon expiration or termination of this Agreement or
otherwise upon demand, at the other party's option, either return to
the other party or destroy and certify in writing to the other party
the destruction of any and all documents (the term "document," as used
in this Article, shall include, without limitation, any writing,
instrument, agreement, letter, memorandum, chart, graph, blueprint,
photograph, financial statement or data, telex, facsimile, cable, tape,
disk or other electronic, digital, magnetic, laser or other recording
or image in whatever form or medium), papers and materials and notes
thereon in each party's possession, including copies or reproductions
thereof, to the extent they contain Confidential Information of the
party; provided, however, the foregoing shall not apply to Confidential
Information to the extent it is a part of any license or other ongoing
agreement between the parties following termination or expiration of
this Agreement or that survives the termination or expiration of this
Agreement. In addition, each party shall be entitled to retain one copy
of the other party's Confidential Information in such party's legal
files solely for purposes of resolving Disputes. Each party agrees that
it will protect the confidentiality of Confidential Information through
the exercise of the same procedures that it uses in preserving and
safeguarding its own proprietary information, which procedures shall at
a minimum constitute reasonable care. Each party will limit access to
Confidential Information to only those of its employees, agents and
contractors having a need-to-know in connection with this Agreement.
When a party discloses Confidential Information to any of its
employees, agents or contractors, such party will inform them of the
restrictions on duplication, use and disclosure to third parties.
9.05 Proper Disclosures. Subject to Section 9.04, each party shall keep the
Confidential Information confidential and shall not disclose such
information to any third party without the prior written approval of
the other party, except that (i) PwCES may disclose general information
relating to the scope of Services and the duration of this Agreement to
potential buyers of PwCES and persons or entities engaged in the
valuation of PwCES and may disclose information as agreed upon by the
parties to potential clients, (ii) Equifax may disclose general
information relating to the scope of Services and the duration of this
Agreement to potential buyers of Equifax or any one or more Affiliates
of Equifax, (iii) PwCES may disclose the terms and conditions of this
Agreement as necessary to comply with most favored customer provisions
in agreements with other customers of services similar to the Services,
(iv) either party may disclose the provisions of this Agreement to
bankers and other financial institutions in the ordinary course of
business and (v) either party may disclose the provisions of this
Agreement to the extent required by any applicable law, regulation or
rules of any stock exchange. The party disclosing the other party's
Confidential Information (except pursuant to (v)) to a third party
shall require the third party to enter into a confidentiality agreement
protecting such Confidential Information.
9.06 Injunctive Relief. Each party acknowledges that the other party may
suffer irreparable damage in the event of a breach or threatened breach
of any provision of this Article. Accordingly, in such an event,
notwithstanding Articles 12 and 13, such party shall be entitled to
preliminary and final injunctive relief, as well as any and all other
applicable remedies at law or equity, including the recovery of
damages.
9.07 No License. The parties acknowledge and agree that (i) each party
maintains that the Confidential Information contains valuable trade
secrets and (ii) all rights to Confidential Information are reserved by
the disclosing party. No license, express or implied, by estoppel or
otherwise, under any trade secret right, trademark, patent, copyright
or other proprietary right or applications that are now or may
hereafter be owned by a party, is granted by the disclosure of
Confidential Information under this Agreement.
9.08 Residual Information. The receiving party and its Affiliates shall be
free to use the residuals of such Confidential Information provided by
the disclosing party for any purpose, including, without limitation,
use in the development, manufacturing, marketing and maintenance of its
products and services subject only to its obligations with respect to
disclosure set forth herein and any copyrights and patents of the
disclosing party. The term "residuals" means information in
non-tangible form that may be retained in the unaided memories of those
employees who have had access to the Confidential Information of the
other party during the term of this Agreement. The receiving party and
its Affiliates may use the documents and other tangible materials
containing the Confidential Information of the disclosing party only
for the purposes of this Agreement. It is understood that receipt of
Confidential Information under this Agreement shall not create any
obligation in any way limiting or restricting the assignment or
reassignment of PwCES's
<PAGE>
employees within PwCES or its Affiliates and Equifax's employees within
Equifax or its Affiliates.
ARTICLE 10. COVENANTS
10.01 Non-Solicitation. Except as otherwise expressly provided in this
Agreement, including, without limitation on Exhibit 11, or with PwCES's
written consent, during the term of this Agreement and for two (2)
years after the later of the cessation of Termination Services and the
date of termination or expiration, Equifax agrees not to solicit or
hire any of PwCES's, or its Affiliates' and contractors', partners,
employees and agents that become known to Equifax as a result of
Services provided under this Agreement. Except as otherwise expressly
provided in this Agreement or with Equifax's written consent, during
the term of this Agreement and for two (2) years after termination or
expiration of this Agreement, PwCES agrees not to solicit or hire any
of Equifax's, or its Affiliates' and contractors', partners, employees
and agents that become known to PwCES as a result of providing Services
under this Agreement. Notwithstanding the foregoing, either party may
at any time hire any contractor, partner, employee or agent of the
other party that responds to a general solicitation to the public.
10.02 Cooperation. During the term of this Agreement, each party shall
provide to the other party reasonable cooperation and assistance in
connection with its performance of its obligations under this
Agreement.
ARTICLE 11. REPRESENTATIONS AND WARRANTIES
11.01 By Equifax. Equifax represents and warrants to PwCES as follows:
a. Authority. Equifax (i) is a corporation duly incorporated,
validly existing and in good standing under the laws of
Georgia, (ii) has full corporate power to own, lease, license
and operate its properties and assets, to conduct its business
as currently conducted and to enter into this Agreement and to
consummate the transactions contemplated hereby and (iii) has
the ability and authority to cause its Affiliates to be bound
by the terms and conditions of this Agreement.
b. Authorized Agreement. This Agreement has been duly authorized,
executed and delivered by Equifax and constitutes a valid and
binding agreement of Equifax, enforceable against Equifax in
accordance with the terms of this Agreement.
c. No Default. Neither the execution and delivery of this
Agreement by Equifax, nor the consummation of the transactions
contemplated hereby, shall result in the breach of any term or
provision of, or constitute a default under, any charter
provision or bylaw, agreement (subject to any applicable
consent), order, law, rule or regulation to which Equifax is a
party or which is otherwise applicable to Equifax, except for
a breach or default under any agreement, order, law, rule or
regulation that would not have a more than minor adverse
effect upon Equifax's ability to perform its obligations under
this Agreement.
d. Agreements and Software. Subject to the receipt of any
required consents or approvals, (i) the Equifax Software and
the rights PwCES shall obtain under the Transferred Agreements
constitute all the software and rights that Equifax used prior
to the Commencement Date to perform for itself the tasks,
functions and projects addressed by the Services (except for
software and rights that PwCES has elected not to acquire from
Equifax) and (ii) Equifax has the right and authority to
assign, license or sublicense the Equifax Software and
Transferred Agreements to PwCES, except where any failure of
the foregoing will not prevent PwCES from performing
substantially in accordance with this Agreement or will
increase PwCES's cost to provide the Services.
e. Assets. The Transferred Assets shall be free of liens and
encumbrances.
f. No Infringement. The Equifax Software owned by Equifax and
Equifax-created modifications or derivative works of Equifax
Software licensed by Equifax do not infringe, violate or
misappropriate any patent, copyright, trademark, trade secret
or other proprietary right of any third party.
g. Third Party Agreements. All of Equifax's obligations with
respect to the Third Party Agreements accruing prior to or
attributable to periods prior to the Commencement Date have
been or will be satisfied in accordance with their terms.
<PAGE>
11.02 By PwCES. PwCES represents and warrants to Equifax as follows:
a. Authority. PwCES (i) is a limited liability company, duly
organized, validly existing and in good standing under the
laws of Delaware, (ii) has full power to own, lease, license
and operate its properties and assets, to conduct its business
as currently conducted and to enter into this Agreement and to
consummate the transactions contemplated hereby and (iii) has
the ability and authority to cause its Affiliates to be bound
by the terms and conditions of this Agreement.
b. Authorized Agreement. This Agreement has been duly authorized,
executed and delivered by PwCES and constitutes a valid and
binding agreement of PwCES, enforceable against PwCES in
accordance with the terms of this Agreement.
c. No Default. Neither the execution and delivery of this
Agreement by PwCES, nor the consummation of the transactions
contemplated hereby, shall result in the breach of any term or
provision of, or constitute a default under, any charter
provision or bylaw, agreement (subject to any applicable
consent), order, law, rule or regulation to which PwCES is a
party or that is otherwise applicable to PwCES, except for a
breach or default under any agreement, order, law, rule or
regulation that would not have a more than minor adverse
effect upon PwCES's ability to perform its obligations under
this Agreement.
d. No Infringement. The PwCES Software does not infringe, violate
or misappropriate any patent, copyright, trademark, trade
secret or other proprietary right of any third party.
e. Services. PwCES shall render Services using personnel that are
qualified and shall render Services consistent with good
commercial practice in PwCES's industry.
11.03 By PwC. PwC represents and warrants to Equifax as follows:
a. Authority. PwC (i) is a limited liability partnership, duly
organized, validly existing and in good standing under the
laws of Delaware, (ii) has full power to own, lease, license
and operate its properties and assets, to conduct its business
as currently conducted and to enter into this Agreement and to
consummate the transactions contemplated hereby and (iii) has
the ability and authority to cause its Affiliates to be bound
by the terms and conditions of this Agreement.
b. Authorized Agreement. This Agreement has been duly authorized,
executed and delivered by PwC and constitutes a valid and
binding agreement of PwC, enforceable against PwC in
accordance with the terms of this Agreement.
c. No Default. Neither the execution and delivery of this
Agreement by PwC, nor the consummation of the transactions
contemplated hereby, shall result in the breach of any term or
provision of, or constitute a default under, any charter
provision or bylaw, agreement (subject to any applicable
consent), order, law, rule or regulation to which PwC is a
party or that is otherwise applicable to PwC, except for a
breach or default under any agreement, order, law, rule or
regulation that would not have a more than minor adverse
effect upon PwC's ability to perform its obligations under
this Agreement.
11.04 DISCLAIMER OF WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY WARRANTIES AND SPECIFICALLY
DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
ARTICLE 12. DISPUTE RESOLUTION
12.01 Account Executives. All Disputes shall be referred to the Account
Executives prior to escalation to the Services Oversight Committee. If
the Account Executives are unable to resolve, or do not anticipate
resolving, the Dispute within ten (10) days after referral of the
Dispute to them, the parties shall submit the Dispute to the Services
Oversight Committee.
12.02 Services Oversight Committee. The Services Oversight Committee shall
meet at least once every sixty (60) days during the term of this
Agreement or at such other time as either party may designate upon
notice to the other party for the
<PAGE>
purposes of monitoring the parties' performance under this Agreement
and of resolving Disputes that may arise under this Agreement. The
Services Oversight Committee shall consider Disputes in the order such
Disputes are brought before it. In the event the Services Oversight
Committee is unable to resolve a Dispute within fifteen (15) days of
the date of the first meeting during which such Dispute was considered,
the Services Oversight Committee shall notify the senior executive
selected by each party pursuant to Section 12.03. No Dispute under this
Agreement shall be the subject of arbitration or other formal
proceedings between Equifax and PwCES before being considered by the
Services Oversight Committee and senior management, pursuant to Section
12.03, except for an action to seek injunctive relief to stay a breach
of this Agreement.
12.03 Senior Management. Either party may, upon receipt of a notice from the
Services Oversight Committee pursuant to Section 12.02, elect to
utilize a non-binding dispute resolution procedure whereby each
presents its case at a hearing before a panel consisting of one (1)
senior executive of each of the parties. If a party elects to use the
procedure set forth in this Section, the other party shall participate.
The hearing shall occur within ten (10) business days after a party
serves notice to use the procedure set forth in this Section. Each
party may be represented at the hearing by lawyers. If the matter
cannot be resolved at the hearing, each party's only recourse shall be
binding arbitration as provided in Article 13 and the proceedings
occurring pursuant to this Section shall be without prejudice to the
legal position of either party. Except as provided in Section 12.04, no
arbitration may commence concerning the Dispute until thirty (30)
business days have elapsed from the first day of the hearing under this
Section. Each party shall bear its respective costs incurred in
connection with the procedure set forth in this Section, except that
the parties shall share equally in the cost of the facility for the
hearing.
12.04 Expedited Resolution. If a Dispute arises because Equifax believes that
Critical Service Levels are not being met or that such Dispute relates
to (i) matters that materially and adversely impact its business
operations or (ii) compliance with applicable laws, and either party
initiates the dispute resolution provisions set forth in Articles 12
and 13 for such Dispute, the time period set forth in Section 12.01
shall be changed to twenty-four (24) hours and either party may elect
to bypass the Services Oversight Committee as provided in Section 12.02
and refer the Dispute directly from the Account Executives to senior
management as provided in Section 12.03, and the thirty (30) business
day period in Section 12.03 shall be reduced to fifteen (15) days.
Except as expressly modified by this Section 12.04, all other
provisions of Articles 12 and 13 shall apply to a Dispute.
ARTICLE 13. ARBITRATION
13.01 Panel. The arbitration shall be heard and determined by a panel of
three (3) persons. Each party shall have the right to designate one (1)
member of the panel. Such members shall select a third member of the
panel. The party demanding arbitration shall communicate its demand
therefore in writing, identifying the nature of the Dispute and the
name of its arbitrator, to the other party. The other party shall then
be bound to name, in writing, its arbitrator within twenty (20) days
after receipt of such demand. Failure or refusal of the other party to
name its arbitrator within the twenty (20) day time period shall
empower the demanding party to name the second arbitrator as well. If
the two (2) arbitrators are unable to agree upon a third arbitrator
within twenty (20) days after the second arbitrator is named, the
American Arbitration Association ("AAA") shall appoint a third
arbitrator from candidates submitted by both parties.
13.02 AAA. The commercial rules of the AAA shall apply to any arbitration
under this Agreement, except to the extent the provisions of this
Article vary therefrom.
13.03 Decisions. Decisions of the panel shall be made by majority vote. The
panel is empowered to render awards enjoining a party from performing
any act prohibited or compelling a party to perform any act directed by
this Agreement. The panel may not award punitive damages.
13.04 Interim Orders. The panel may issue such interim orders in accord with
principles of equity as may be necessary to protect any party from
irreparable harm during the pendency of any arbitration before it. Any
such order shall be without prejudice to the final determination of the
controversy.
13.05 Location. The proceeding before the panel shall be held in Atlanta,
Georgia, or as otherwise agreed upon by the parties.
13.06 Expedited Schedule. The arbitration shall be conducted on an expedited
schedule. Unless otherwise agreed by the parties, the parties shall
make their initial submissions to the panel and the hearing shall
commence within thirty (30) days of the initiation of proceedings. The
hearing shall be completed within twenty (20) days thereafter.
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13.07 Prompt Award. The award shall be made promptly by the panel, and,
unless agreed by the parties, no later than thirty (30) days from the
closing of the hearing. Any failure to render the award within the
foregoing time period shall not affect the validity of such award.
13.08 Discovery. The parties shall be entitled to discovery of all documents
and information reasonably necessary for a full understanding of any
Dispute raised in the arbitration relating to this Agreement. The
parties may use all methods of discovery available under the Federal
Rules of Civil Procedure, including, without limitation, depositions,
requests for admission and requests for production of documents. The
time periods applied to these discovery methods shall be set by the
panel so as to permit compliance with the scheduling provisions of this
Article.
13.09 Binding Decisions. The decision or award rendered or made in connection
with the arbitration shall be final and binding upon the parties
thereto. The prevailing party may present the decision or award to any
court of competent jurisdiction for confirmation pursuant to the
provisions of the Federal Arbitration Act, 9 U.S.C.ss.ss.1-14, and such
court shall enter forthwith an order confirming such decision or award.
ARTICLE 14. YEAR 2000 AND EURO
14.01 Year 2000 Background. Equifax acknowledges that, because of programming
assumptions previously made in the computer industry, certain existing
and future computer programs (including, without limitation,
applications, utilities and operating systems software), databases and
documentation for such programs and databases may not perform as
originally designed with respect to date data processing as the Year
2000 draws closer and beyond.
14.02 Year 2000 Disclaimer. Equifax recognizes that it is responsible for the
resolution of any Year 2000 problem that is the result of software,
systems, equipment or other items or materials made available to PwCES
to provide the Services. Except as expressly provided in this Agreement
or in a Change Order, PwCES is not providing any Year 2000 services
(for example, Year 2000 assessment, conversion or testing) under this
Agreement. PwCES shall not be responsible for a failure to perform the
Services under this Agreement, if such failure is the result, directly
or indirectly, of (i) the inability of any products (for example,
hardware, software or firmware) other than the PwCES Products ("Other
Products") to correctly process, provide or receive date data (i.e.,
representations for month, day and year) and to properly exchange date
data with the PwCES Products or deliverables provided by PwCES under
this Agreement or (ii) modifications made by Equifax, its employees or
any third party (excluding any PwCES employees, agents or contractors)
to any PwCES Products or such deliverables. PwCES assumes no
responsibilities or obligations to cause products or deliverables
provided by PwCES to accurately exchange date data with Other Products
or to cause Other Products to accurately exchange date data with
products or deliverables provided by PwCES; unless, such Other Products
can properly exchange accurate date data with products or deliverables
provided by PwCES under this Agreement. If Equifax requests PwCES to
undertake to remedy any such problem, such an undertaking shall be an
Additional Service, subject to a Change Order.
14.03 NO WARRANTY. EQUIFAX RECOGNIZES THAT NEITHER PWCES NOR ITS AFFILIATES
WILL WARRANT THAT ANY YEAR 2000 WORK PERFORMED BY PWCES OR ITS
AFFILIATES ON THE TRANSFERRED ASSETS OR EQUIFAX SOFTWARE WILL SUCCEED
IN RESOLVING SATISFACTORILY ALL OR ANY SPECIFIC YEAR 2000 PROBLEM.
SUBJECT TO THE FOREGOING, PWCES WILL PERFORM, WITHOUT ANY WARRANTIES
(EXPRESS OR IMPLIED), THE YEAR 2000 WORK THAT IS SPECIFICALLY SET FORTH
HEREIN AS PART OF THE SERVICES.
14.04 Euro Disclaimer. PwCES shall not be responsible for a failure to
perform the Services under this Agreement, if such failure is the
result, directly or indirectly, of the inability of any Other Products
(i) to perform all functions set out in the specification for more than
one currency and for any common currency adopted by one or more members
of the European Union (the "Euro"), (ii) to comply with all legal
requirements applicable to the Euro in any jurisdiction, including,
without limitation, the rules on conversion and rounding set out in the
EC Regulation number 1103/97, (iii) to display and print all symbols
and codes adopted by any government or any other European Union body in
relation to the Euro or (iv) to properly exchange Euro data with the
PwCES Products or deliverables provided by PwCES under this Agreement.
ARTICLE 15. BREACH; REMEDIES
15.01 Limitation of Remedy. PwCES shall not be liable for its failure to
perform to the extent PwCES's failure is due to (i)
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a failure by Equifax or any third party retained by, or under the
control of, Equifax to provide hardware, software, services, data or
materials that Equifax or such third party is required to provide to
PwCES under this Agreement and that PwCES requires to perform the
Services, (ii) a failure by Equifax to timely and accurately perform
its responsibilities as set forth in this Agreement, (iii) an audit
conducted pursuant to Article 5, (iv) a failure by Equifax to obtain
consents or approvals for PwCES's agents and contractors to use the
Equifax Software or exercise rights under the Transferred Agreements,
(v) a failure by Equifax to timely and accurately provide input data or
review output produced by PwCES as a result of the Services or (vi) a
problem associated with the Year 2000 or Euro, to the extent provided
in Article 14.
15.02 Equifax's Failure to Perform Responsibilities. In the event Equifax or
any of its licensors or contractors fail to perform any of its or their
responsibilities in connection with any Services, then PwCES may, in
its sole discretion, after providing notice to Equifax of such failure
by Equifax or any of Equifax's licensors or contractors, perform
Equifax's responsibility and charge Equifax for all reasonable costs
and expenses incurred as a result of performing Equifax's
responsibility. PwCES may not charge Equifax in excess of twenty-five
thousand dollars ($25,000.00) per failure pursuant to this Section
without Equifax's consent.
15.03 Force Majeure. Neither party shall be liable for any default or delay
in the performance of its obligations hereunder (except for the payment
of money) if and to the extent such default or delay is caused,
directly or indirectly, by acts of God, governmental acts, accidents,
wars, terrorism, riots or civil unrest, labor disputes, fires, storms,
earthquakes, floods or elements of nature, or any other cause beyond
the reasonable control of such party, provided such default or delay
could not have been prevented by reasonable precautions and cannot
reasonably be circumvented by the nonperforming party through the use
of commercially reasonable alternative sources, workaround plans or
other means (individually, a "Force Majeure Event"). Upon the
occurrence of a Force Majeure Event, the nonperforming party will be
excused from any further performance or observance of the obligations
so affected for as long as such circumstances prevail and such party
continues to use commercially reasonable efforts to recommence
performance or observance whenever and to whatever extent possible
without delay. Any party so delayed in its performance will immediately
notify the other by telephone (to be confirmed in writing within five
(5) days of the inception of such delay) and describe at a reasonable
level of detail the circumstances causing such delay. If any Force
Majeure Event substantially prevents, hinders, or delays performance of
the Services necessary for the performance of a critical business
function of Equifax for more than fifteen (15) consecutive days, then
Equifax may procure such Services from an alternate source (whereupon
the Charges hereunder shall be reduced accordingly irrespective of any
minimum revenue commitment set forth in Exhibit 1). If any Force
Majeure Event continues for more than sixty (60) consecutive days, then
Equifax may terminate this Agreement as of a date specified by Equifax
in a written notice of termination to PwCES pursuant to Section 16.01h.
This Section does not limit or otherwise affect the parties'
obligations regarding disaster recovery services as set forth in
Exhibit 14.
15.04 Limitation of Liability. Each party's, its Affiliates' and its and
their contractors' and licensors' liability for damages (whether a
claim therefor is based on warranty, contract, tort (including
negligence or strict liability), statute or otherwise) arising out of
or relating to any performance or nonperformance of Services under this
Agreement shall be limited in the aggregate for all claims to an amount
equal to the payments made by Equifax to PwCES for recurring Services
under a Set of Exhibits during the twelve (12) months prior to the
occurrence of the first event that is the subject of the first claim
(or if twelve (12) months have not yet elapsed since the Initial
Commencement Date for a Set of Exhibits, then twelve (12) times the
average monthly payments made by Equifax to PwCES for recurring
Services since the Initial Commencement Date for such Set of Exhibits)
(the "Cap"). Both parties acknowledge and agree that any such payment
by the other party shall be the final remedy in the event of an
exhaustion of all other remedies hereunder and shall not be deemed or
alleged by the other party to have failed of its essential purpose. If
a party's liability under this Agreement does not exceed four million
dollars ($4,000,000) in any consecutive three (3) year period for a Set
of Exhibits, then the Cap for such party shall be reduced from the
amount set forth above to an amount equal to the payments made by
Equifax to PwCES for recurring Services under a Set of Exhibits during
the nine (9) months prior to the occurrence of the first event that is
the subject of the first claim. Notwithstanding the foregoing, for (i)
a breach of Article 9 and (ii) indemnification claims set forth in
Sections 17.01(vi), 17.01(ix) and 17.02(viii), an amount equal to the
payments made by Equifax to PwCES for recurring Services under a Set of
Exhibits during the (y) six (6) months preceding the period set forth
above if such period is twelve (12) months and (z) nine (9) months
preceding the period set forth above if such period has been reduced to
nine (9) months, shall be added to the Cap. The Cap for indemnification
claims set forth in Section 17.01(x) with respect to Transitioned
Employees for the first twelve (12) months after the Initial
Commencement Date shall be equal to the amount of insurance set forth
in Section 19.06(iv). For purposes of this Section 15.04, if, after an
event giving rise to a claim there is a subsequent event giving rise to
a claim that is related to the prior claim, then the time periods
described above shall be measured from the date of the subsequent
event.
<PAGE>
15.05 CONSEQUENTIAL DAMAGES. IN NO EVENT SHALL EITHER PARTY, ITS AFFILIATES
OR ITS CONTRACTORS BE LIABLE FOR ANY SPECIAL, INDIRECT, EXEMPLARY,
INCIDENTAL OR CONSEQUENTIAL DAMAGES WHATSOEVER, INCLUDING, WITHOUT
LIMITATION, ANY LOSS OF PROFITS OR SAVINGS INCURRED BY THE OTHER PARTY,
ITS CONTRACTORS OR ANY THIRD PARTY, EVEN IF SUCH PARTY HAS BEEN
ADVISED, KNOWS OR SHOULD KNOW OF THE POSSIBILITY OF SAME.
15.06 Exclusions. The limitations or exculpation of liability set forth in
Sections 15.04 and 15.05 are not applicable to (i) the failure of
Equifax to make payments due under this Agreement, (ii) indemnification
claims as set forth in Sections 17.01(i), 17.02(i), 17.01(v) and
17.02(vii), (iii) damages caused by the intentional misconduct of the
breaching party, (iv) any Termination Charges, (v) Performance Credits
or Performance Bonuses or (vi) payments made pursuant to Exhibit 11.
The limitations set forth in Section 15.04 are not applicable to
indemnification claims as set forth in Sections 17.01(vii), 17.02(ix),
17.01(x), 17.01(xii), 17.02(iii), 17.02(v), 17.02(vi), 17.02(xi) and
17.02(xii). The exculpation of liability set forth in Section 15.05 is
not applicable to a breach of Article 9 or indemnification for third
party claims pursuant to Article 17.
15.07 Affiliates of PwCES. Except as set forth in Article 18, with regard to
any claim or action against PwCES or its Affiliates, Equifax shall look
solely to PwCES and the assets of PwCES in satisfaction of any claim or
action relating to PwCES's obligations under this Agreement and in no
event shall (i) any Affiliate of PwCES be liable for any obligation
under or in connection with this Agreement or (ii) any member or
partner of PwCES or any Affiliate of PwCES be personally liable for any
obligation of PwCES under or in connection with this Agreement, and no
recourse may be had or sought against the assets of any Affiliate of
PwCES or the assets of any member or partner of PwCES or any Affiliate
of PwCES in satisfaction of any such obligation. Nothing in this
Section shall be deemed to relieve PwCES of any liability under this
Agreement.
15.08 Limitation. Neither party shall make any claim against the other party
more than two (2) years after such party knew or should have known of
the breach or other event giving rise to such claim.
ARTICLE 16. TERMINATION
16.01 Conditions of Termination. In addition to expiration at the end of the
term specified in Article 2, this Agreement may be terminated under the
following circumstances, subject to any Charges that may be applicable
as set forth below and in Exhibits 1 and 11.
a. Convenience. At any time (i) after the third anniversary of
the Initial Commencement Date or (ii) before such third
anniversary if there is a Change of Control of Equifax,
Equifax may deliver to PwCES written notice of its intent to
terminate this Agreement for convenience. The termination
notice shall specify a termination date no sooner than six (6)
months after the date of the notice.
b. Equifax for Cause. Equifax may terminate this Agreement in the
event of PwCES's material breach (in the form of a single
event or series of events) of its obligations or warranties,
if such material breach is not cured within fifteen (15) days
after Equifax notifies PwCES in writing of such material
breach; provided, however, that if after using commercially
reasonable efforts such breach could not be cured by PwCES
within such fifteen (15) day period, the cure period for such
breach shall be extended for an additional thirty (30) days
(provided that such breach is capable of cure and PwCES
continues to diligently pursue such cure), unless otherwise
agreed in writing.
c. Partial Termination by Equifax for Cause. Equifax may
terminate a Service, in whole or in part, if PwCES
consistently fails to (i) substantially perform such Service
or (ii) meet a Service Level with respect to such Service.
Equifax shall provide PwCES with written notice of its intent
to so terminate, which notice shall specify a termination date
no less than ninety (90) days after the date of the notice,
and the minimum revenue commitment set forth in Exhibit 1
shall be appropriately adjusted.
d. PwCES for Cause. Subject to Equifax's right as set forth in
Section 4.04e to withhold disputed payment amounts, PwCES may
terminate this Agreement in the event of Equifax's material
breach (in the form of a single event or series of events) of
its obligations or warranties, if such material breach is not
cured within fifteen (15) days after PwCES notifies Equifax in
writing of such material breach; provided, however, that if
<PAGE>
after using commercially reasonable efforts such breach (other
than one relating to the payment of money) could not be cured
by Equifax within such fifteen (15) day period, the cure
period for such breach shall be extended for an additional
thirty (30) days (provided that such breach is capable of cure
and Equifax continues to diligently pursue such cure), unless
otherwise agreed in writing.
e. Change of Control of Equifax. PwCES shall have the right to
terminate this Agreement immediately upon a Change of Control
of Equifax that results in control of Equifax by any entity
set forth in Exhibit 17.
f. PwCES for Impairment of Independence. Each of PwCES and
Equifax shall promptly notify the other regarding potential
Impairment of Independence situations about which it becomes
aware. In the event of any potential Impairment of
Independence, PwCES and Equifax shall consider all reasonable
alternatives to reconcile such potential Impairment of
Independence in order to maintain the relationship between the
parties, including, without limitation:
(i) obtaining a favorable resolution from the SEC and the
AICPA;
(ii) changes within PwCES or its Affiliates as to how it or
they organize its or their outsourcing business; and
(iii) changes in scope of the Services.
If the potential Impairment of Independence is not resolved to
the satisfaction of PwCES and Equifax within thirty (30) days
of the notice given above or the time period required by the
applicable regulations, then PwCES shall have the right to
terminate this Agreement, in whole or in part; provided,
however, that if PwCES terminates this Agreement in part, the
minimum revenue commitment set forth in Exhibit 1 shall be
reduced appropriately, and Equifax may, within thirty (30)
days of receipt of notice of such partial termination,
terminate this Agreement with respect to the affected Set of
Exhibits if the portion of this Agreement terminated in part
by PwCES represents a material portion of the Services under
such Set of Exhibits such that continuing to receive the
remaining Services under such Set of Exhibits does not present
a viable business case to Equifax, as determined by Equifax in
its reasonable discretion. If Equifax exercises its right
pursuant to the preceding sentence (x) the Set of Exhibits
shall, for purposes of Exhibit 11, have been deemed to have
been terminated by PwCES for the event that created the
Impairment of Independence that led to the termination in part
by PwCES or (y) if the Set of Exhibits terminated is the only
Set of Exhibits, this Agreement shall, for purposes of Exhibit
11, have been deemed to have been terminated in whole by PwCES
for the event that created the Impairment of Independence that
led to the termination in part by PwCES.
g. Equifax for Change of Control of PwC or PwCES. Equifax shall
have the right to terminate this Agreement immediately upon
the sale of a controlling interest of PwC or PwCES to any
entity set forth in Exhibit 17.
h. Equifax for Force Majeure. Equifax shall have the right to
terminate this Agreement pursuant to Section 15.03.
i. Equifax for Additional Charges. If the Base Charges for
Services provided on the Initial Commencement Date are
increased pursuant to Section 3.03(ii) by more than eleven
percent (11%) from the amount set forth on Exhibit 1, then
Equifax may, on not less than six (6) months prior written
notice, terminate this Agreement. This right to terminate may
only be exercised by Equifax within thirty (30) days after the
end of the twelve (12) month period referred to in Section
4.06.
j. Maximum Liability. If a party is liable for damages in excess
of the applicable Cap, the other party may terminate this
Agreement upon not less than six (6) months notice, unless the
party that exceeded its Cap agrees, within thirty (30) days
after receiving notice of the other party's intention to
terminate this Agreement, to reset such Cap to an amount equal
to the payments made by Equifax to PwCES for recurring
Services under a Set of Exhibits during the three (3) months
prior to the occurrence of the first event that is the subject
of the first claim with respect to any liability arising after
receipt of such notice.
16.02 Effects of Termination or Expiration. Exhibit 11 sets forth the
parties' respective obligations and rights under each possible
circumstance of termination or expiration; provided, however,
termination pursuant to Sections 16.01b, c and d shall not constitute a
party's exclusive remedy for a breach of this Agreement, and neither
party shall be deemed to have waived any of its rights accruing
hereunder prior to such termination.
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16.03 Termination Charge. If applicable, Equifax shall pay PwCES the
Termination Charge specified in Exhibit 1 (i) on the date PwCES ceases
to provide the Continuing Services if this Agreement is terminated
pursuant to Section 16.01a or (ii) the earlier of thirty (30) days from
the date of notice of termination and the date PwCES ceases to provide
the Continuing Services if this Agreement is terminated pursuant to any
other Section. The Termination Charge for any partial termination
(e.g., termination of a Service or reduction in the list of Affiliates
of Equifax) shall be calculated by applying the percentage of charges
attributable to the reduction in Services pro rata against the
Termination Charge for termination of the entire Agreement. With
respect to those termination events for which the Termination Charge
applies, Equifax acknowledges that the Termination Charge plus the
costs to be paid by Equifax pursuant to Exhibit 11 constitute
liquidated damages for the loss of the bargain, are not a penalty and
are a reasonable approximation of PwCES's damages under the
circumstances as can best be determined as of the date of this
Agreement. In consideration for payment of the applicable Termination
Charge and such costs, Equifax shall have no liability, and PwCES shall
not allege that Equifax has any liability, for claims relating solely
to the termination of this Agreement.
16.04 Critical Services. The parties acknowledge that the performance of the
Services will be critical to the operations of Equifax and its
Affiliates. Accordingly, notwithstanding any other provision in this
Agreement to the contrary, except Sections 3.16 and 4.04c and except
for an intentional breach of Article 9, PwCES shall not voluntarily
withhold the provision of the Services under any circumstances.
ARTICLE 17. INDEMNIFICATION
17.01 PwCES Indemnification of Equifax. PwCES shall indemnify and hold
harmless Equifax and its Affiliates and their respective officers,
directors, employees, members, partners, agents, successors and assigns
from, and shall defend Equifax against, any costs, liabilities, fines,
penalties, damages or expenses (including reasonable attorneys' fees
and amounts paid in settlement) arising out of or relating to:
(i) any claim by a third party that the Services, the PwCES
Products, or any work performed by PwCES, or work
performed by PwCES's agents, consultants or contractors
with respect to the PwCES Products, under this
Agreement infringes the proprietary rights of any third
party;
(ii) any alleged act or omission by PwCES or any of its
employees giving rise to potential liability arising
out of or relating to (a) any unlawful discrimination
or harassment, (b) PwCES employee benefits or (c) any
other aspect of the employment relationship or the
termination of the employment relationship relating to
a Transitioned Employee, arising on or after such
Transitioned Employee's starting date with PwCES
(including claims for breach of an express or implied
contract of employment), except to the extent any such
claim arises from the wrongful act of Equifax;
(iii) any unlawful discrimination by PwCES in selecting the
Equifax Selected Employees;
(iv) materials prepared by PwCES pursuant to Section 7.01;
(v) claims for personal injuries, death or damage to
tangible personal or real property to the extent caused
by acts or omissions of PwCES or its Affiliates,
contractors and agents, including negligence;
(vi) claims arising from a violation of any federal, state,
local or foreign law, rule or regulation or failure to
comply with the provisions of the documents governing
the benefit plans covered by Exhibit 2 to the extent
caused by acts or omissions of PwCES;
(vii) claims arising out of any Transferred Agreement after
the date such Transferred Agreement is transferred to
PwCES, except to the extent any such claim arises from
the failure of Equifax to obtain the appropriate
consents or approvals;
(viii) claims arising from PwCES's provision of any services
to any third party from the same facilities from which
the Services are provided to Equifax;
(ix) claims arising out of PwCES's use (in providing the
Services to Equifax) of any Equifax Software licensed
by Equifax from a third party, to the extent due to
PwCES's (or any of its agents' or subcontractors')
breach of the third party's license agreement with
Equifax, excluding, however, any claim arising from the
failure of Equifax to obtain the appropriate consents
or approvals for such use, or any claims arising under
Section 17.02 below;
(x) claims arising from fraud committed by a PwCES employee
(this obligation with respect to a Transitioned
Employee during the first twelve (12) months after the
Initial Commencement Date is
<PAGE>
limited as set forth in Section 15.04);
(xi) claims or suits attributable to breaches of PwCES's
express representations and warranties contained in
this Agreement; and
(xii) PwCES's tax liabilities arising from PwCES's provision
of Services, as set forth in Section 4.05.
17.02 Equifax Indemnification of PwCES. Equifax shall indemnify and hold
harmless PwCES and its Affiliates and their respective officers,
directors, employees, members, partners, agents, successors and assigns
from, and shall defend PwCES against, any costs, liabilities, damages
or expenses (including reasonable attorneys' fees and amounts paid in
settlement) arising out of or relating to:
(i) any claim by a third party that the use by PwCES, in
the performance of the Services to Equifax and its
Affiliates in accordance with this Agreement, of any
Equifax Software or other software owned or licensed by
Equifax accessed by, used by or assigned by Equifax to
PwCES infringes the proprietary rights of any third
party, but excluding any claims relating to any changes
or modifications to the Equifax Software or such other
software made by PwCES or its Affiliates or
contractors;
(ii) any alleged act or omission by Equifax or its employees
giving rise to potential liability arising out of or
relating to (a) any unlawful discrimination or
harassment, (b) Equifax employee benefits not expressly
assumed by PwCES, (c) any representations, oral or
written, made by Equifax to Transitioned Employees or
(d) any other aspect of the employment relationship or
the termination of the employment relationship relating
to a Transitioned Employee, arising prior to such
Transitioned Employee's starting date with PwCES,
including, without limitation, claims that Equifax has
violated the WARN Act or other claims arising as a
result of the transition, claims for breach of an
express or implied contract of employment, Equifax
employee benefits plans, policies or programs or with
respect to any claims by Equifax Selected Employees
under such plans, policies or programs or otherwise
with respect to services rendered or events or
incidents that occur prior to a Transitioned Employee's
starting date with PwCES;
(iii) the failure of Equifax to obtain any consent or
approval as required under Section 3.12b;
(iv) claims or suits attributable to breaches of Equifax's
express representations and warranties contained in
this Agreement;
(v) Equifax tax liabilities accruing prior to the
Commencement Date;
(vi) Equifax's tax liabilities arising from PwCES's
provision of Services, as set forth in Section 4.05;
(vii) claims for personal injuries, death or damage to
tangible personal or real property to the extent caused
by acts or omissions of Equifax or its Affiliates,
contractors or agents, including negligence;
(viii) claims arising from a violation of any federal, state,
local or foreign law, rule, regulation or order to the
extent caused by acts or omissions of Equifax;
(ix) claims arising out of any Transferred Agreement before
the date such Transferred Agreement is transferred to
PwCES;
(x) shareholder derivative suits against Equifax;
(xi) claims made by Affiliates of Equifax related to
Services provided under this Agreement; and
(xii) claims (a) by Julian Carr arising from events that
occur while he is an employee of Equifax except to the
extent caused by the wrongful act of PwCES, and (b)
arising out of his acts or omissions that occur while
he is an employee of Equifax performing a portion of
the Services.
17.03 General Equifax Indemnity. Without limiting PwCES's liability to
Equifax under this Agreement related to meeting PwCES's obligations to
perform the Services in accordance with the terms of this Agreement,
Equifax agrees to indemnify and defend PwCES and its Affiliates and
hold PwCES and its Affiliates harmless from any and all third party
claims, actions, damages, liabilities, costs and expenses, including,
without limitation, reasonable attorneys' fees and expenses, arising
out of or relating to the use by Equifax of the Services in the
operation of Equifax's business. The indemnification set forth in this
Section shall not apply to claims arising out of or related to PwCES's
negligence, willful misconduct or breach of this Agreement, or
violation of any law, rule, regulation or order, to the extent such
negligence, willful misconduct, breach or violation is the cause of
such claim.
<PAGE>
17.04 Indemnification Procedure.
a. In General. The indemnified party shall notify the
indemnifying party of any claim under this Article within
thirty (30) days (or such shorter period as may be required to
respond to a third party claim) after receipt of notice. A
party required to indemnify the other party under this
Agreement shall have no obligation for any claim under this
Article if:
(i) the indemnified party fails to notify the indemnifying
party of such claim as provided above, but only to the
extent that the defense of such claim is prejudiced by
such failure;
(ii) the indemnified party fails to tender control of the
defense of such claim to the indemnifying party; or
(iii) the indemnified party fails to provide the indemnifying
party with all reasonable cooperation in the defense of
such claim (the cost thereof to be borne by the
indemnifying party).
b. Consent. The indemnifying party shall have no obligation for
any claim under this Agreement if the indemnified party makes
any admission or settlement regarding such claim without the
prior written consent of the indemnifying party, which consent
shall not be unreasonably withheld.
c. Participation. The indemnified party shall have the right (but
not the obligation) to participate in such defense or
settlement, in which event each party shall pay its respective
attorneys' fees.
ARTICLE 18. PWC
PwC shall be jointly and severally liable for the obligations of PwCES
under this Agreement. For the avoidance of doubt, the joint and several
liability of PwC and PwCES under this Agreement shall not entitle
Equifax to double recovery for any one claim. PwC shall not be deemed
the employer of any Transitioned Employee.
ARTICLE 19. MISCELLANEOUS
19.01 Independent Contractors. Each of PwCES and Equifax is an independent
contractor. Neither party shall have any authority to bind the other
party unless expressly agreed in writing. Nothing in this Agreement
shall be construed to create a partnership, agency or employer-employee
relationship between PwCES and Equifax, and in no event shall PwCES and
Equifax be deemed joint employers. The rights, obligations and
liabilities of the parties shall be several and not joint or
collective.
19.02 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, and all of which taken together
shall constitute a single instrument.
19.03 Entire Agreement. Except as otherwise provided herein, this Agreement,
including the Exhibits hereto, represents the entire understanding and
agreement between the parties, and supersedes any prior agreement,
understanding or communication between the parties, with respect to the
subject matter hereof. This Agreement may only be amended by a writing
executed by both parties.
19.04 Construction. The parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question
of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.
19.05 Assignment. Neither party may assign or transfer this Agreement, or any
of its rights and obligations under it, without the prior written
consent of the other party. Notwithstanding the foregoing, (i) either
party may assign or transfer this Agreement, and its rights and
obligations under it, to one of its Affiliates, provided (a) the
Affiliate agrees in writing to the obligations of the assigning or
transferring party set forth in this Agreement, (b) such party
guarantees the obligations of such Affiliate and (c) such assignment or
transfer does not create an Impairment of Independence and (ii) subject
to Section 16.01e, Equifax may assign this Agreement in connection with
the sale of all or substantially all of its assets.
<PAGE>
19.06 Insurance. During the term of this Agreement, PwCES shall maintain and
keep in full force and effect, at its sole cost and expense, insurance
as set forth below with an insurance company licensed to do business in
the location where the Services are to be performed.
(i) Commercial General Liability insurance including,
without limitation, contractual liability coverage that
indicates this Agreement is a "covered contract,"
premises, completed operations, broad-form property
damage, independent contractors and personal injury
liability in an amount not less than two million
dollars ($2,000,000.00) each occurrence and two million
dollars ($2,000,000.00) aggregate;
(ii) Workers Compensation insurance in accordance with
statutory requirements as well as Employer's Liability
insurance with limits not less than
$1,000,000.00/$1,000,000.00/$1,000,000.00 and such
insurance shall cover all individuals who will be used
in any capacity by PwCES in performing Services;
(iii) Automobile Liability insurance (including owned,
non-owned, hired and loaned vehicles) with a combined
single limit of not less than one million dollars
($1,000,000.00) for bodily injury and property damage;
(iv) Fidelity Bond/Commercial Crime insurance covering
employee dishonesty, including, without limitation,
dishonest acts of PwCES and its employees, agents or
subcontractors and such insurance shall also include
third party liability coverage and be written for
limits not less than ten million dollars
($10,000,000.00);
(v) Professional Liability insurance for operations
performed for Equifax and its employees or customers
with limits of liability not less than fifty million
dollars ($50,000,000.00) each claim and fifty million
dollars ($50,000,000.00) aggregate; and
(vi) Umbrella/Excess Liability insurance on a follow form
basis with a limit of not less than twenty million
dollars ($20,000,000.00) for each occurrence and twenty
million dollars ($20,000,000.00) aggregate and such
umbrella insurance shall name as underlying policies
the Commercial General Liability, Employer's Liability
and Auto Liability insurance coverage required above.
19.07 Order of Precedence. In the event of a Dispute, the terms of this
Agreement, the Exhibits and any Change Orders shall be interpreted in
the following order of precedence: (i) the terms of a Change Order
shall take precedence, (ii) followed by the terms of an Exhibit and
(iii) followed by the terms in this Agreement. Notwithstanding the
foregoing sentence, a Change Order may only amend an Exhibit or this
Agreement by express reference to the term or condition of the Exhibit
or this Agreement that is to be amended.
19.08 Remedy. Nothing in this Agreement shall prevent any disputing or
allegedly aggrieved party from pursuing a temporary restraining order,
injunctive relief or other equitable relief from a court of competent
jurisdiction against the other party at any time if the disputing or
allegedly aggrieved party believes in good faith that a breach or
threatened breach of any of the provisions of this Agreement would
cause it irreparable harm.
19.09 Survival. To the extent a provision of this Agreement, including,
without limitation, Articles entitled Breach; Remedies,
Indemnification, Confidentiality and Data, Dispute Resolution,
Arbitration and Miscellaneous, provides for rights, interests, duties,
claims, undertakings and obligations subsequent to the termination or
expiration of this Agreement, such provision of this Agreement shall
survive such termination or expiration.
19.10 Required Approvals. Each party shall obtain all necessary licenses,
permits and approvals of this Agreement required by any governmental
agency, at its sole cost and expense.
19.11 Compliance with Laws. Each party shall comply with all applicable laws,
rules and regulations.
19.12 Waiver. Except as set forth in Section 3.11c, the failure of either
party to insist upon the strict and punctual performance of any
provision hereof shall not constitute a waiver of, or estoppel against
asserting the right to require such performance, nor should a waiver or
estoppel in one case constitute a waiver or estoppel with respect to a
later breach whether of a similar nature or otherwise.
19.13 Unenforceable Terms. In the event any term or provision of this
Agreement shall for any reason be declared or held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction or by
the arbitrators contemplated
<PAGE>
by Article 13, each party shall agree that (i) such invalidity,
illegality or unenforceability shall not affect any other term or
provision of this Agreement and (ii) such term or provision shall be
(a) reformed to the extent necessary to render such term or provision
valid and enforceable and to reflect the intent of the parties to the
maximum extent possible under applicable law or (b) interpreted and
construed as if such term or provision, to the extent unenforceable,
had never been contained herein.
19.14 Further Assurances. During the term of this Agreement and at all times
thereafter, each party shall provide to the other party, at its
request, reasonable cooperation and assistance (including, without
limitation, the execution and delivery of affidavits, declarations,
oaths, assignments, samples, exhibits, specimens and any other
documentation) as necessary to effect the terms of this Agreement.
19.15 References to Articles, Sections and Exhibits. Unless otherwise
specified herein, all references herein to an Article, Section, or
Exhibit shall be deemed to be references to the corresponding Article,
Section or Exhibit of this Agreement.
19.16 Governing Law, Submission to Jurisdiction and Service of Process. All
rights and obligations of the parties relating to this Agreement shall
be governed by and construed in accordance with the law of the State of
New York, without giving effect to any choice-of-law provision or rule
(whether of the State of New York or any other jurisdiction) that would
cause the application of the laws of any other jurisdiction. Each party
shall bring any suit, action or other proceeding to enforce the
obligation of the other party hereto to resolve a Dispute in accordance
with Article 13 in a court of competent jurisdiction sitting in the
State of Georgia, and each party hereby irrevocably waives, to the
fullest extent permitted by law, any objection that it may have,
whether now or in the future, to the laying of venue in, or to the
jurisdiction of, any and each of such courts for the purpose of any
such suit, action, proceeding or judgment and further waives any claim
that any such suit, action proceeding or judgment has been brought in
an inconvenient forum, and each party hereto hereby submits to such
jurisdiction. Each party hereto hereby agrees that service of process
may be completed in any such suit, action or proceeding by any
reasonable means calculated to assure actual notice, including, without
limitation delivery by Federal Express or other courier service,
certified mail or postage prepaid first class mail.
19.17 Notices. All notices, requests, demands and other communications given
or made in accordance with the provisions of this Agreement shall be
deemed to have been given (i) five (5) days after mailing when mailed
(by registered or certified mail, postage prepaid, only), (ii) on the
second day after delivery to a national express courier service
(including, without limitation, DHL and Federal Express), (iii) on the
date sent when made by facsimile transmission with confirmation of
receipt (with hard copy to follow by registered or certified mail,
postage prepaid, only or by a national express courier service) and
(iv) on the date received when delivered in person or by hand courier,
to the address set forth below or such other place or places as such
party may from time to time designate in writing. Any party may alter
its address set forth above by notice in writing to the other party in
the manner set forth herein.
<TABLE>
<CAPTION>
<S> <C>
if to PwCES: if to Equifax:
PwCES LLC Equifax Inc.
50 Hurt Plaza, Suite 1700 1600 Peachtree Street
Atlanta, GA 30303 Atlanta, GA 30309
Attention: Karl Sachsenmaier Attention: John T. Chandler
Telephone: 404-658-8740 Telephone: 404-888-5047
Facsimile: 404-658-8899 Facsimile: 404-885-8988
With a copy (which shall not constitute notice) to: with a copy (which shall not constitute notice) to:
PricewaterhouseCoopers LLP
1301 Avenue of the Americas Equifax Inc.
New York, NY 10019 1600 Peachtree Street
Attention: Office of General Counsel Atlanta, GA 30309
Telephone: 212-707-6754 Attention: General Counsel
Facsimile: 212-259-5142 Telephone: 404-888-5093
Facsimile: 404-885-8682
if to PwC:
<PAGE>
PricewaterhouseCoopers LLP
50 Hurt Plaza, Suite 1700
Atlanta, GA 30303
Attention: Karl Sachsenmaier
Telephone: 404-658-8740
Facsimile: 404-658-8899
With a copy (which shall not constitute notice) to:
PricewaterhouseCoopers LLP
1301 Avenue of the Americas
New York, NY 10019
Attention: Office of General Counsel
Telephone: 212-707-6754
Facsimile: 212-259-5142
</TABLE>
19.18 No Third Party Beneficiary Status. Except as expressly stated herein
with respect to each party's Affiliates and contractors, the terms and
provisions of this Agreement are intended solely for the benefit of
each party hereto and their respective successors or permitted assigns,
and it is not the intention of the parties to confer third party
beneficiary rights upon any other party.
19.19 Headings. Headings and captions contained in this Agreement are for
convenience only and do not substantively affect the terms of this
Agreement.
19.20 Expenses. Each party shall be responsible for the costs and expenses
associated with the preparation or completion of this Agreement and the
transactions contemplated hereby.
19.21 Equifax Most Favored Vendor Provision. If PwCES provides any services
to a third party from the same facilities from which the Services are
provided to Equifax, which services include or utilize any internet,
intranet or other network security, verification or authentication
product or service then offered by Equifax (including, without
limitation, digital signature, certification or authentication products
or services), (collectively, "Equifax Products"), Equifax shall have a
right of first refusal to provide the Equifax Products to PwCES in
connection with such third party services.
* * * * *
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto, by its duly authorized
representative, has hereby executed this Human Resources Business Process and
Support Services Agreement.
Agreed to by:
PWCES LLC EQUIFAX INC.
By: /s/ Larry B. Quimby By: /s/ John T. Chardler
Name: Larry B. Quimby Name: John T. Chardler
Title: V.P. Title: Corporate V.P.
PRICEWATERHOUSECOOPERS LLP
By: /s/ Larry B. Quimby
Name: Larry B. Quimby
Title: Partner
<PAGE>
FIRST AMENDMENT TO
HUMAN RESOURCES BUSINESS PROCESS AND SUPPORT SERVICES AGREEMENT
This First Amendment ("Amendment"), dated as of June 11, 1999, is made
by and between PwCES LLC, a Delaware limited liability company ("PwCES") and
PricewaterhouseCoopers LLP, a Delaware limited liability partnership ("PwC") on
the one hand, and Equifax Inc., a Georgia corporation ("Equifax") on the other
hand.
RECITALS
WHEREAS, the parties have entered into that certain Human Resources
Business Process and Support Services Agreement, dated as of June 4, 1999 (the
"Agreement"); and
WHEREAS, the parties desire to amend the Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Section 3.12(b) of the Agreement is amended by deleting the last
sentence thereof and substituting in lieu thereof the following:
"PwCES's use of the Equifax Software licensed by Equifax will be subject
to the restrictions of the third party license agreements with the
licensors of such Equifax Software (except to the extent such
restriction prohibit PwCES from using such Equifax Software), and
Equifax appoints PwCES as Equifax's agent for the limited purpose of
using such Equifax Software to provide the Services, subject to the
restrictions of such third party license agreements, but not for the
purpose of entering into any oral or written agreements for or on behalf
of Equifax with respect to such Equifax Software."
This Amendment shall be construed in connection with and as part of the
Agreement, and except as modified and expressly amended by this Amendment, all
terms, conditions and covenants contained in the Agreement shall be and remain
in full force and effect. Any and all notices, requests, orders and other
instruments executed and delivered after the execution of this Amendment may
refer to the Agreement without making specific reference to this Amendment, but
nevertheless all such references shall be deemed to include this Amendment
unless the context otherwise requires.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto, by its duly authorized
representatives, has hereunto executed this Amendment.
PwCES LLC EQUIFAX INC.
By: Larry B. Quimby By: John T. Chandler
----------------------------- ---------------------------
Name: Larry B. Quimby Name: John T. Chandler
Title: Vice President Title: Corporate Vice President
PRICEWATERHOUSECOOPERS LLP
By: Larry B. Quimby
------------------------------
Name: Larry B. Quimby
Title: Partner
<PAGE>
EXHIBIT 10.28
SCHEDULE OF OMITTED EXHIBITS
OF THE
HUMAN RESOURCES BUSINESS PROCESS
AND SUPPORT SERVICES AGREEMENT
The following exhibits to the Human Resources Business Process and Support
Services Agreement, dated as of June 4, 1999 (the "HR Agreement"), among PwCES
LLC ("PwCES"), PricewaterhouseCoopers LLP ("PwC"), and Equifax, Inc.
("Equifax"), as amended by the First Amendment to Human Resources Business
Process and Support Services Agreement, dated as of June 11, 1999, among PwCES,
PwC, and Equifax are omitted from this filing. Equifax agrees to provide to the
Commission supplementally upon request copies of all exhibits described below.
Exhibit 1 - is a financial exhibit containing (a) a statement of base charges
- --------- for the ten year term of the HR Agreement; (b) a statement of
baseline services to be provided by PwCES: (c) a statement of
incremental charges for additional costs to Equifax for additional
services provided by PwCES: (d) a statement of incremental credits
to Equifax for sub baseline provision of services by PwCES: (e) an
inflation adjustment index; (f) provisions for the calculation of
performance credits and bonuses; (g) a statement of termination
charges; (h) a statement of threshold limits with respect to
services provided in the HR Agreement; (i) a statement of the
minimum revenue commitment; (j) a statement of the pool of resources
to be made available to Equifax by PwCES; and (k) a statement of
procedures with respect to third party agreements.
Exhibit 2 - (a) sets forth a general description and a detailed description of
- --------- base services to be provided by PwCES to Equifax in the United
States and Canada which include: (i) human resource management, (ii)
staffing services, (iii) benefits services, (iv) compensation /
salary administration services, (v) employee relations services,
(vi) career development services, (vii) payroll services, (viii)
separation services, (ix) miscellaneous human relations process
services, and (x) information technology services; (b) provides that
service levels will be developed and refined after the execution of
the HR Agreement; and (c) sets forth service level reporting
guidelines for PwCES.
Exhibit 3 - has been intentionally left blank.
- ---------
Exhibit 4 - shows that there have been no transferred agreements, and provides a
- --------- reference to determine transferred assets.
<PAGE>
Exhibit 5 - describes the transition plan pursuant to which PwCES will begin
- --------- providing services to Equifax.
Exhibit 6 - sets forth employees that will be affected by the provisions of the
- --------- HR Agreement as follows: (a) employees of Equifax that may be
affected; (b) key Equifax personnel for whom PwCES will attempt to
assist Equifax in documenting services provided by such personnel in
case such personnel fail to enter into independent contractor
agreements with PwCES; (c) it describes the hiring plan of PwCES for
selected Equifax employees; and (d) and (e) will be attached after
execution of the HR Agreement to set forth employees who have made
the transition from being employed by Equifax to being employed by
PwCES and those persons that will be key employees of PwCES,
respectively.
Exhibit 7 - is a list of Equifax affiliates.
- ---------
Exhibit 8 - shows that there is no PwCES software relevant to the HR Agreement.
- ---------
Exhibit 9 - is a list of Equifax owned and licensed software relevant to the HR
- --------- Agreement.
Exhibit 10 - provides for an operating level agreement to be developed and
- ---------- refined after the execution of the HR Agreement, and inserted after
the execution of the HR Agreement.
Exhibit 11 - sets forth termination provisions and services to be provided by
- ---------- PwCES to Equifax upon termination.
Exhibit 12 - describes facilities owned by Equifax to which PwCES will have
- ---------- access to and use of.
Exhibit 13 - sets forth projects on which Equifax employees are currently
- ---------- working, and on which certain employees will continue working as
they transition from being employed by Equifax to being employed by
PwCES, for the purpose of calculating base charges to be paid from
Equifax to PwCES.
Exhibit 14 - sets forth a schedule for implementation of a business recovery
- ---------- plan and a disaster recovery plan for PwCES technology, for Equifax
software and related hardware, and for critical business processes.
Exhibit 15 - sets forth (a) a change of control procedure; (b) a bill of sale,
- ---------- assignment, and power of attorney; and (c) a confidentiality
agreement to be used among Equifax, PwCES, and third parties.
<PAGE>
Exhibit 16 - sets forth certain assumptions to be considered with respect to the
- ---------- HR Agreement.
Exhibit 17 - is (a) a list of Equifax competitors, and (b) a list of PwCES
- ---------- competitors.
Exhibit 18 - shows that there is no third party software with respect to the HR
- ---------- Agreement.
Exhibit 19 - sets forth a list of agreements between Equifax and third parties
- ---------- with respect to the HR Agreement.
<PAGE>
EXHIBIT 10.29
FINANCE AND ACCOUNTING BUSINESS PROCESS AND SUPPORT SERVICES AGREEMENT
This FINANCE AND ACCOUNTING BUSINESS PROCESS AND SUPPORT SERVICES AGREEMENT (the
"Agreement"), dated as of June 4, 1999, is made by and between PwCES LLC, a
Delaware limited liability company with an office at 50 Hurt Plaza, Suite 1700,
Atlanta, Georgia 30303 ("PwCES") and PricewaterhouseCoopers LLP, a Delaware
limited liability partnership with an office at 1301 Avenue of the Americas, New
York, NY 10019 ("PwC") on the one hand, and Equifax Inc., a Georgia corporation
with an office at 1600 Peachtree Street, Atlanta, Georgia 30309 ("Equifax") on
the other hand.
RECITALS
WHEREAS, Equifax and PwCES desire to enter into an agreement for the provision
and use of certain business process and support services, including business
process design, improvement, operation, management and support, as well as
related ancillary services;
WHEREAS, PwCES desires to provide to Equifax such business process and support
services;
WHEREAS, Equifax desires to purchase from PwCES such business process and
support services, under the terms and conditions set forth below; and
WHEREAS, the parties intend for PwCES to increase the efficiency and
cost-effectiveness of such business process and support services, to improve the
performance and delivery of such business process and support services and to
identify and apply techniques, tools and technologies that would improve the
provision of such business process and support services.
NOW, THEREFORE, in consideration of the covenants contained in this Agreement
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows.
ARTICLE 1. DEFINITIONS
The following terms, when used in this Agreement with initial capital letters,
shall have the respective meanings set forth in this Article.
1.01 Account Executive. The term "Account Executive" means the individual
appointed by each party to act (i) as the primary point of contact with
the other party in dealing with each party's obligations under this
Agreement and (ii) in the case of PwCES, as the executive in charge of
overseeing the provision of the Services.
1.02 Additional Services. The term "Additional Services" means the tasks,
functions and projects outside the scope of the Continuing Services
that PwCES may provide to Equifax on terms to be mutually agreed upon
and set forth in a Change Order.
1.03 Affiliate. The term "Affiliate" means, with respect to a party, any
entity at any tier that controls, is controlled by, or is under common
control with that party, and with respect to PwCES, any entity (whether
or not incorporated) that carries on business under a name that
includes all or part of the PricewaterhouseCoopers name or is otherwise
within (or connected or associated with an entity within), or is a
correspondent firm of, the worldwide network of PricewaterhouseCoopers
firms. For purposes of this definition, the term "control" (including
with correlative meanings, the terms "controlled by" and "under common
control with") means the possession directly or indirectly of the power
to direct or cause the direction of the management and policies of an
entity, whether through the ownership of voting securities, by trust,
management agreement, contract or otherwise.
1.04 Agreement. The term "Agreement" means this Finance and Accounting
Business Process and Support Services Agreement and all Exhibits
attached hereto and incorporated herein by this reference.
1.05 Ancillary Services. The term "Ancillary Services" means the tasks,
functions and projects that (i) are outside the scope of the Continuing
Services, (ii) relate to the Services and affect PwCES's provision of
Services (including, for example, services provided by a Third Party
Provider whose relationship with Equifax is managed by PwCES pursuant
to this Agreement) and (iii) may be provided to Equifax by PwCES on
terms to be mutually agreed upon and set forth in a
<PAGE>
Change Order.
1.06 Assumptions. The term "Assumptions" means the circumstances, metrics,
principles, financial data, standards, computer systems, platforms and
general information disclosed by Equifax or used by PwCES as a basis
for determining the scope of Services, Service Levels and Charges, as
set forth in Exhibit 16.
1.07 Base Charge. The term "Base Charge" means the amount PwCES shall charge
to Equifax for the provision of Continuing Services at the Baseline
levels, excluding any (i) Incremental Charge or Incremental Credit
relating to such Services and (ii) Charges for Additional Services,
Ancillary Services or Termination Services, as set forth in Exhibit 1.
1.08 Baseline. The term "Baseline" means the base amount of a Service to be
provided by PwCES to Equifax with respect to the Continuing Services as
set forth in Exhibit 1, excluding (i) any incremental Service
generating Incremental Charges or Incremental Credits or (ii)
Additional Services, Ancillary Services or Termination Services.
1.09 Change Control Procedure. The term "Change Control Procedure" means the
procedure set forth in Section 3.10 for (i) increasing, decreasing or
amending (a) a Service beyond the Threshold Limits, (b) a Service Level
or (c) the Charges or (ii) adding Additional Services or Ancillary
Services.
1.10 Change of Control. The term "Change of Control" with respect to a party
means any (i) consolidation or merger of such party or any entity that
possesses directly or indirectly the power to direct or cause the
direction of the management and policies of such party, whether through
the ownership of voting securities, by trust, management, agreement,
contract or otherwise (each, a "Party Company") with or into another
entity or entities (whether or not such Party Company is the surviving
entity), excluding any such consolidation or merger with or into an
Affiliate of such party, (ii) any sale or transfer by any Party Company
of all or substantially all of its assets (excluding any such sale to
an Affiliate), (iii) any sale, transfer or issuance or series of sales,
transfers or issuances of shares or other equity interests of any Party
Company by such Party Company or the equity holders thereof, as a
result of which one equity holder, or a group of equity holders acting
in concert, possess the voting power (under ordinary circumstances) to
elect a majority of such Party Company's board of directors (or other
equivalent managing group) or (iv) the bankruptcy, liquidation or
dissolution of a Party Company. Notwithstanding the foregoing, no
transaction of the type described in clauses (i), (ii) or (iii) of this
Section shall constitute a Change of Control if, as of immediately
following such transaction, the equity holders of a party that possess
the voting power (under ordinary circumstances) to elect a majority of
such party's board of directors (or other equivalent managing group) as
of immediately prior to such transaction continue to own (directly or
indirectly through one or more Party Companies) a sufficient amount of
the outstanding capital stock or equity interests of each Party Company
possessing the voting power (under ordinary circumstances) to elect a
majority of such Party Company's board of directors (or other
equivalent managing group).
1.11 Change Order. The term "Change Order" means a document (i) increasing,
decreasing or amending (a) a Service beyond the Threshold Limits, (b) a
Service Level or (c) the Charges or (ii) adding Additional Services or
Ancillary Services, as executed pursuant to the Change Control
Procedure, in substantially the form set forth in Exhibit 15.
1.12 Charges. The term "Charges" means, collectively, the (i) Base Charges,
(ii) Incremental Charges, (iii) charges for Additional Services,
Ancillary Services and Termination Services and (iv) any other charges
provided under this Agreement, as set forth in Exhibit 1 and Change
Orders.
1.13 Commencement Date. The term "Commencement Date" means the date on which
PwCES begins to provide Services to Equifax or its Affiliates, as
agreed upon by the parties, and as set forth in Exhibit 7. There may be
a separate Commencement Date for each of Equifax or its Affiliates, for
a particular Service or set of Services. Except where the context
dictates otherwise, the Commencement Date shall be the applicable
Commencement Date for Equifax or its Affiliates.
1.14 Continuing Services. The term "Continuing Services" means (i) a task,
function or project or (ii) a set of related tasks, functions or
projects, to be performed by PwCES on a continuing basis, as set forth
in Exhibit 2, and tasks and functions not specifically described in
Exhibit 2 that are required for and are incidental and directly related
to the proper performance of such Continuing Services and that were
being performed prior to the Commencement Date by a Transitioned
Employee or an employee of Equifax that is not a Transitioned Employee
but whose job responsibilities are described in Exhibit 2 (and not by a
Third Party Provider).
<PAGE>
1.15 Critical Service Level. The term "Critical Service Level" means any
Service Level identified in Exhibit 2 or a Change Order as a Critical
Service Level.
1.16 Dispute. The term "Dispute" means any dispute, controversy or claim,
including, without limitation, situations or circumstances in which the
parties are required to mutually agree on additions, deletions or
changes to terms, conditions or Charges, arising out of, or relating
to, this Agreement.
1.17 Dispute Resolution Process. The term "Dispute Resolution Process" means
the process for resolving Disputes set forth in Articles 12 and 13.
1.18 Equifax. The term "Equifax" means Equifax Inc. and, unless context
dictates otherwise, its Affiliates receiving Services under this
Agreement. Exhibit 7 sets forth the list of the Affiliates of Equifax,
the operations and the locations for which Services will be provided as
of the Commencement Date.
1.19 Equifax Data. The term "Equifax Data" means (i) all data and
information provided or submitted by Equifax in connection with the
Services and (ii) all such data and information processed or stored,
and/or then provided to Equifax, as part of the Services, including,
without limitation, data contained in forms, reports and other similar
documents provided by PwCES as part of the Services.
1.20 Equifax Selected Employees. The term "Equifax Selected Employees" means
employees of Equifax to whom employment will be offered by PwCES as
listed in Exhibit 6 and pursuant to the terms set forth in the Hiring
Plan.
1.21 Equifax Software. The term "Equifax Software" means any computer
programs (including, without limitation, applications, utilities and
operating systems software) owned or licensed by Equifax that will be
used by PwCES in providing Services under this Agreement, as set forth
in Exhibit 9.
1.22 Exhibit. The term "Exhibit" means an attachment to this Agreement as
such attachment may be amended from time to time, each one of which is
incorporated herein by this reference.
1.23 Hiring Plan. The term "Hiring Plan" means the plan, set forth in
Exhibit 6, containing the terms and conditions by which PwCES will (i)
offer employment to and hire Equifax Selected Employees and (ii) employ
and compensate Transitioned Employees.
1.24 Impairment of Independence. The term "Impairment of Independence" means
the occurrence or existence of any event or circumstance that PwCES or
its Affiliates determines, in its sole but good faith judgment, that,
as a result of the Services provided or to be provided under this
Agreement, is inconsistent with (i) the obligations of PwCES or its
Affiliates under the Code of Professional Ethics of the AICPA, (ii) any
law, rule or regulation, or guideline or policy of any third party,
applicable to PwCES or its Affiliates, including, without limitation,
those of the Securities and Exchange Commission of the United States or
(iii) guidelines and policies of PwCES or its Affiliates that relate to
audit independence or otherwise interpret any such law, rule,
regulation, guideline or policy.
1.25 Incremental Charge. The term "Incremental Charge" means, with respect
to any particular Service, an increase, as set forth in Exhibit 1, to
be applied on a monthly basis to the Base Charge as a result of the
quantity of a particular Service exceeding the applicable Baseline, but
within the Threshold Limits as provided in Section 3.05a.
1.26 Incremental Credit. The term "Incremental Credit" means, with respect
to any particular Service, a decrease, as set forth in Exhibit 1, to be
applied on a monthly basis, to the Base Charge as a result of the
quantity of a particular Service falling below the applicable Baseline,
but within the Threshold Limits as provided in Section 3.05a.
1.27 Inflation Adjustment Index. The term "Inflation Adjustment Index" means
the inflation index set forth in Exhibit 1.
1.28 Information System. The term "Information System" means the information
system described in Exhibit 3.
1.29 Information System Implementation Plan. The term "Information System
Implementation Plan" means the implementation plan for the Information
System, as set forth in Exhibit 3, that describes the milestones,
estimated time line, responsibilities and processes for analysis,
design, development and implementation of the Information System.
1.30 Initial Commencement Date. The term "Initial Commencement Date" means
the first Commencement Date set forth in Exhibit 7.
<PAGE>
1.31 Key Personnel. The term "Key Personnel" means those Equifax Selected
Employees and contractors identified as such in Exhibit 6.
1.32 Key PwCES Employees. The term "Key PwCES Employees" means the PwCES
employees set forth in Exhibit 6.
1.33 Operating Level Agreements. The term "Operating Level Agreement" means
that level of service that Equifax shall provide in performing certain
of its responsibilities upon which PwCES is reliant in providing
Services, as set forth in Exhibit 10.
1.34 Performance Bonuses. The term "Performance Bonuses" means those bonuses
to be given to PwCES as set forth in Exhibit 1.
1.35 Performance Credits. The term "Performance Credits" means those credits
to be given to Equifax as set forth in Exhibit 1.
1.36 Pool of Resources. The term "Pool of Resources" means the number of
full-time equivalents set forth in Exhibit 1.
1.37 PwCES. The term "PwCES" means PwCES LLC.
1.38 PwCES Products. The term "PwCES Products" means PwCES Software and any
hardware, software or firmware that PwCES uses to provide the Services,
except for any hardware, software or firmware that is a Transferred
Asset, Equifax Software or the subject of a Transferred Agreement.
1.39 PwCES Software. The term "PwCES Software" means any computer programs
(including, without limitation, applications, utilities and operating
systems software) or databases developed or owned by PwCES and used by
PwCES in providing the Services, as set forth in Exhibit 8.
1.40 Service. The term "Service" means (i) a task, function or project or
(ii) a set of related tasks, functions or projects to be performed by
PwCES, as set forth in Exhibit 2, including Continuing Services,
Additional Services, Ancillary Services and Termination Services.
1.41 Service Level. The term "Service Level" means, with respect to any
Service, the minimum quality and level of service required for that
Service, as set forth in Exhibit 2.
1.42 Services Oversight Committee. The term "Services Oversight Committee"
means the committee, comprised of management personnel of both PwCES
and Equifax assigned under the terms of Article 6 that shall be
authorized and responsible for (i) generally overseeing the performance
of this Agreement, (ii) making strategic and tactical decisions in
respect of the establishment, budgeting and implementation of
priorities and plans with respect to the Services and (iii) monitoring
and resolving Disputes in accordance with Article 12.
1.43 Set of Exhibits. The term "Set of Exhibits" means a set of Exhibits
entered into contemporaneously for a particular set of Services.
1.44 Termination Charge. The term "Termination Charge" means the charge
payable by Equifax to PwCES as set forth in Exhibit 1.
1.45 Termination Provisions. The term "Termination Provisions" means those
provisions relating to the termination of this Agreement, as set forth
in Exhibit 11.
1.46 Termination Services. The term "Termination Services" means the tasks
and functions PwCES is to perform in anticipation of and following the
termination or expiration of this Agreement in order to achieve an
orderly transfer of Services from PwCES to Equifax or to Equifax's
designee, as set forth in Exhibit 11.
1.47 Territory. The term "Territory" means the geographic locations set
forth in Exhibit 2.
1.48 Third Party Agreement. The term "Third Party Agreement" means an
agreement set forth in Exhibit 19 pursuant
<PAGE>
to which a Third Party Provider provides services to Equifax.
1.49 Third Party Provider. The term "Third Party Provider" means any of
Equifax's third party providers of services.
1.50 Third Party Software. The term "Third Party Software" means any
computer programs (including, without limitation, applications,
utilities and operating systems software) or databases, along with
their supporting documentation, that are used under a license by PwCES
from a third party to provide the Services, as set forth in Exhibit 18.
1.51 Threshold Limit. The term "Threshold Limit" means, with respect to a
Service, the maximum increase or decrease in the quantity of a Service
provided to Equifax from the Baseline that PwCES shall undertake
without the need for a Change Order, as set forth in Exhibit 1.
1.52 Transferred Agreements. The term "Transferred Agreements" means those
licenses of software and all other agreements between Equifax and a
third party set forth in Exhibit 4 that Equifax is to assign to PwCES
and that PwCES is to assume under this Agreement.
1.53 Transferred Assets. The term "Transferred Assets" means the equipment,
furnishings and other assets set forth in Exhibit 4 to be transferred
by Equifax to PwCES for the provision of the Services.
1.54 Transitioned Employees. The term "Transitioned Employees" means those
Equifax Selected Employees who accept PwCES's offer of employment and
are hired by PwCES, as set forth in Exhibit 6.
1.55 Transition Period. The term "Transition Period" means the period
beginning on the Commencement Date and continuing as set forth in the
Transition Plan.
1.56 Transition Plan. The term "Transition Plan" means the document setting
forth anticipated time lines and general activities of each of PwCES
and Equifax during the transition of the tasks, functions and projects
addressed by the Services from Equifax to PwCES, as set forth in
Exhibit 5.
1.57 WARN Act. The term "WARN Act" means the Worker Adjustment and
Retraining Notification Act of 1988, as amended, and any similar
foreign, state or local law, regulation or ordinance.
ARTICLE 2. TERM
This Agreement shall be effective as of the execution of this Agreement
by both parties and shall continue until the tenth (10th) anniversary
of the Initial Commencement Date, unless terminated earlier in
accordance with the terms of this Agreement. This Agreement shall
automatically be renewed for two (2) year periods under the
then-current terms and conditions, unless either party shall have
provided written notice to the other party at least one (1) year before
the expiration of the then-current term of its intention not to renew.
ARTICLE 3. SERVICES
3.01 [INTENTIONALLY OMITTED]
3.02 Services. Beginning on the Commencement Date, PwCES shall provide the
Services as set forth in Exhibit 2 or any Change Order. The
responsibilities of PwCES and Equifax with respect to the Services are
set forth in Exhibit 2 or the applicable Change Order.
3.03 Transition Period.
During the Transition Period, the parties shall:
(i) Work together to implement the Transition Plan; and
(ii) Develop and refine Baselines, Services, Service Levels,
Threshold Limits, Operating Level Agreements and Charges
to be applicable after the Transition Period and
negotiate in good faith Change Orders reflecting such
changes; provided, however, except as otherwise mutually
agreed upon by the parties in writing, any increases in
Charges, and any reductions in Baselines and Threshold
<PAGE>
Limits, as a result of such development and refinement
during the Transition Period, shall be made only if and
to the extent they relate to (a) an incorrect Assumption
that arises out of inaccurate information provided by
Equifax or a failure of Equifax to provide to PwCES
information Equifax has and that is requested by PwCES
or (b) a mutual mistake by the parties. In the event
that the parties are unable to agree on such Change
Orders during the Transition Period, the matter shall be
resolved through the Dispute Resolution Process.
3.04 Service Levels.
a. Existing Services. During the Transition Period, PwCES shall
provide the Services consistent with the manner in which the
tasks, functions or projects addressed by the Services were
delivered by Equifax prior to the Commencement Date or as
mutually agreed upon and set forth in Exhibit 2. In those
instances where there is neither sufficient nor historical
data available to establish Service Levels, the parties shall
mutually agree and establish such Service Levels during the
Transition Period. After the Transition Period, PwCES shall
provide the Services consistent with the Service Levels as
mutually agreed upon and as set forth in Exhibit 2, which in
no event shall be less than the manner in which the services
were provided by Equifax prior to the Commencement Date.
b. Future Services. With respect to Additional Services and
Ancillary Services provided by PwCES during the term of this
Agreement, PwCES shall provide such Services in accordance
with the Service Levels to be set forth in Exhibit 2, or in
accordance with other mutually agreed standards.
c. Review. Beginning the earlier of (i) two (2) years from the
Initial Commencement Date and (ii) the date that the
Information System is in day-to-day operation, and every two
(2) years thereafter, during the term of this Agreement, the
parties shall meet and evaluate the Service Levels and the
need to revise them.
d. Reporting. PwCES shall report to Equifax regarding the
performance of the Services relative to the Service Levels
according to the guidelines set forth in Exhibit 2.
e. Performance Credits. If PwCES fails to meet a Critical Service
Level for any one (1) month period, or if PwCES fails to meet
any other Service Level for three (3) consecutive months,
Equifax shall be entitled to the Performance Credits set forth
in Exhibit 1.
f. Performance Bonuses. After the first benchmarking pursuant to
Section 3.04h, the parties shall negotiate in good faith
regarding the use and amount of Performance Bonuses if PwCES
exceeds certain Critical Service Levels as set forth in
Exhibit 1.
g. Service Level Analysis and Resolution. Upon notice from
Equifax of PwCES's failure to meet a Service Level, PwCES
shall as soon as reasonably practicable (i) perform an
analysis to identify the cause of such failure, (ii) provide
Equifax with a report thereon and the procedure for correcting
the failure and (iii) provide reasonable assurances to Equifax
that the failure shall not recur.
h. Benchmarking. PwCES shall improve the quality of the Services
during the term of this Agreement. Beginning two (2) years
after the Initial Commencement Date, and every two (2) years
thereafter, the parties shall cause an independent third party
(the "Benchmarker") to conduct a benchmark study of the
primary Services, as determined by the Services Oversight
Committee, to assess the quality of the Services. The
Benchmarker may not be any entity listed on Exhibit 17. If
there is any Dispute regarding the Services to be benchmarked,
the parties shall focus the benchmark study on the Services
related to the Critical Service Levels. The fees of the
Benchmarker shall be shared equally by the parties. Using
consistent methodologies and, to the extent reasonably
possible, objective measurements, the Benchmarker shall
evaluate each specified Service with regard to Charges and
performance (including quality of service) and shall compare
the same to similar services provided to other companies in
the Territory of a size similar to that of Equifax by service
providers that have made investments similar to those made by
PwCES with respect to the Services (or, if the service
providers included in the study have not made investments
similar to those made by PwCES, appropriate adjustments shall
be made by the Benchmarker to account for the difference in
investments). If the benchmark study shows that the level of
performance being achieved by PwCES in relation to the Charges
(the "Performance/Price Ratio") for each of the Services is
not above the average Performance/Price Ratio of the other
companies in the study, then the Services Oversight Committee
shall determine, within forty-five (45)
<PAGE>
days after release of the benchmark study, what changes, if
any, should be made to the Services or Charges and by when
such changes should be made. If the Services Oversight
Committee is unable to agree on the changes, if any, to be
made to the Services or Charges or when such changes should be
made, the matter shall be submitted to the Dispute Resolution
Process. The cost of implementing such changes shall be borne
by PwCES, except to the extent that the parties agree that
PwCES will employ significant new technologies to implement
such changes, in which case the parties shall negotiate in
good faith a Change Order that reflects the parties' agreement
to share in the cost of the employment of those significant
new technologies. If Equifax fails to implement a
reengineering project as described in Section 3.13, which
project is commercially reasonable in light of the
circumstances, and such failure is the cause of PwCES's
Performance/Price Ratio falling below the average described
above for a particular Service, then this Section 3.04h shall
not apply to such Service.
3.05 Changes in Services. Following the Transition Period:
a. Within Threshold. If the increase, decrease or change from the
Baseline is within the Threshold Limits for the specific
Service in question, then PwCES shall increase or decrease the
Charges for that Service by the Incremental Charge or
Incremental Credit, as the case may be, as specified in
Exhibit 1, or in an appropriate Change Order.
b. Beyond Threshold. If the increase, decrease or change from the
Baseline exceeds the Threshold Limits, then the parties shall
promptly negotiate in good faith the terms of a Change Order,
subject to Section 4.07a and Exhibit 1. The Change Order shall
specify, among other things, the adjustment to the Base Charge
for the Service in question.
c. Requirements. If either party reasonably determines that the
quantity of a Continuing Service has materially increased,
decreased or otherwise changed beyond the Baseline, such party
shall notify the other party.
d. Change Order. The parties shall negotiate in good faith a
Change Order reflecting the changes described in this Section.
In the event that the parties are unable to mutually agree on
the appropriate modification, adjustment or addition to the
Charges, the matter shall be submitted to the Dispute
Resolution Process.
3.06 Additional Services and Ancillary Services. At Equifax's request, PwCES
may provide Additional Services and Ancillary Services. The parties
shall negotiate in good faith to establish and mutually agree upon the
terms of a Change Order, including, without limitation, the scope of
Services, Service Levels and Threshold Limits (if applicable), and
Charges pertaining to the Additional Services and Ancillary Services.
Equifax acknowledges that PwCES may be able to increase the efficiency
and cost-effectiveness of the Services and to improve the performance
and delivery of the Services by providing Ancillary Services to
Equifax. With respect to any proposed Ancillary Services that Equifax
or any Affiliate of Equifax seeks to have provided by a third party,
PwCES shall have the right to bid on the provision of such Ancillary
Services.
3.07 Third Party Agreements. PwCES shall administer and coordinate the Third
Party Agreements in accordance with their terms. PwCES shall provide
Equifax with reasonable notice of any renewal, termination or
cancellation dates and fees in respect of the Third Party Agreements.
Upon the mutual written agreement of PwCES and Equifax, Equifax shall,
to the extent permitted by a Third Party Agreement, modify, terminate
or cancel any such agreement, and PwCES shall not renew, terminate or
cancel any Third Party Agreement without the prior written consent of
Equifax. Any modification, termination or cancellation fees or charges
imposed upon Equifax in connection with any such modification,
termination or cancellation shall be paid by Equifax, unless otherwise
agreed upon by the parties in writing. Except with respect to those
Third Party Agreements identified as "restricted" on Exhibit 19, if
PwCES requests that certain Third Party Agreements be modified,
terminated or cancelled and offers to pay any modification, termination
or cancellation fees or charges imposed upon Equifax in connection with
any such modification, termination or cancellation and Equifax fails to
so modify, terminate or cancel, then the parties shall negotiate in
good faith a Change Order reflecting appropriate adjustments in
Charges, Service Levels and other performance obligations under this
Agreement; provided, however, this sentence shall not apply if PwCES
requires Equifax to use a Third Party Provider and Equifax is unable to
obtain from such Third Party Provider commercially reasonable terms and
conditions. Equifax, and not PwCES, shall be responsible for Equifax's
performance under the Third Party Agreements and liable to Third Party
Providers under the Third Party Agreements for any breach thereof by
Equifax, except to the extent PwCES causes such breach. Each of PwCES
and Equifax shall promptly inform the other of any breach in connection
with any Third Party Agreement that would give rise to a termination
right or liability, and any misuse or fraud in connection with any
<PAGE>
Third Party Agreement of which a party becomes aware, and the parties
shall cooperate with each other to prevent or stay any such breach,
misuse or fraud. Subject to Article 15, any penalties or charges
(including amounts due to a third party as a result of a party's
failure to promptly notify the other party pursuant to the preceding
sentence), associated taxes, legal expenses and other incidental
expenses incurred by a party as a result of the other party's
non-performance of its obligations under this Section with respect to a
Third Party Agreement shall be paid by the nonperforming party. Subject
to Article 15, any damages incurred by Equifax as a result of PwCES's
non-performance of its obligations under this Section with respect to a
Third Party Agreement shall be paid by PwCES, except to the extent such
damages arise out of commercially unreasonable terms and conditions in
such Third Party Agreement. To the extent permitted by a Third Party
Agreement, and as requested by PwCES, Equifax shall appoint PwCES as
its agent for all matters pertaining to the Third Party Agreements and
promptly notify the appropriate Third Party Providers of such
appointment. If a written agreement between Equifax and a Third Party
Provider that provides services relating to the Services during the
term of this Agreement is located or created, PwCES shall have the
right to add to Exhibit 19 any such agreements.
3.08 Disbursements. Beginning on the Commencement Date, PwCES shall (i)
receive all invoices submitted by the Third Party Providers pursuant to
the Third Party Agreements, (ii) review and correct any errors in any
such invoices, (iii) submit such invoices to Equifax for final
authorization, (iv) pay such invoices within a reasonable period of
time after receiving such authorization and prior to the due date and
(v) be responsible for any late fees with respect to such third party
invoices (except to the extent such late fees are incurred because of
an action or failure to act by Equifax that affects PwCES's ability to
pay such invoices on a timely basis). Equifax shall be responsible for
any amounts due or payable before the Commencement Date for or in
connection with the Third Party Agreements; provided however, that if
PwCES receives an invoice relating to such amounts and fails to submit
such invoice to Equifax in a timely manner, then PwCES shall be
responsible for any late fees in respect of such invoice (except to the
extent such late fees are incurred because of an action or failure to
act by Equifax that affects PwCES's ability to submit such invoices on
a timely basis).
3.09 Termination Services. PwCES shall make available to Equifax the
Termination Services under the terms and conditions set forth in
Exhibit 11. If Equifax elects to engage a third party to provide
services after termination or expiration of this Agreement, then
Equifax shall include in its contract with such third party that such
third party (i) shall execute a confidentiality agreement in substance
the same as is set forth in the form attached in Exhibit 15, to protect
PwCES's and its Affiliates' and contractors' proprietary and
confidential information and (ii) shall agree in writing not to
solicit, for a period of two (2) years, any of PwCES's or its
Affiliates' partners, employees or agents that become known to such
third party as a result of the transition of the Services from PwCES to
such third party.
3.10 Change Control Procedures. In the event that either party wishes (i) a
change within the scope of the Services, Baselines, Service Levels or
priorities or (ii) a change to the Charges or Exhibits, such requesting
party's Account Executive or his or her designee shall submit a written
proposal to the other party's Account Executive describing such desired
change. Such party's Account Executive shall review the proposal and
reject or accept the proposal in writing within a reasonable period of
time, but in no event more than thirty (30) days after receipt of the
proposal. In the event that the proposal is rejected, the writing shall
include the reason for rejection. In the event that the proposal is
accepted, the parties shall mutually agree on the changes to be made to
this Agreement. The additional or modified Charges, terms and
conditions (if any) shall be made only in a written Change Order signed
by the Account Executive of each of the parties or his designee
(authorized in writing by the applicable party). Notwithstanding the
foregoing, if the need for an emergency change arises, either party's
Account Executive or his or her designee shall submit a request for
such change to the other party's Account Executive and PwCES shall,
subject to the other terms and conditions of this Agreement, use
commercially reasonable efforts to implement such change promptly and
the parties shall thereafter agree upon a Change Order within two (2)
business days of such submission.
3.11 PwCES's Responsibilities. In addition to any specific tasks, functions
or projects for which PwCES is given responsibility as Services in this
Agreement and relevant Exhibits, PwCES shall perform the following
responsibilities during the term of this Agreement.
a. Employees, Agents and Contractors. In the event that Equifax
reasonably and in good faith determines that it is not in the
best interests of Equifax for any PwCES employee, agent or
contractor to continue in his/her capacity in the provision of
the Services, then Equifax shall give PwCES written notice
specifying the reasons for its position and requesting that
such employee, agent or contractor be replaced. PwCES shall
immediately investigate the matters stated in such notice and,
if it determines that Equifax's concerns are reasonable and
not unlawful, PwCES shall replace such employee, agent or
contractor. In addition, upon written notice from
<PAGE>
Equifax, PwCES shall use reasonable efforts to replace any
PwCES employee, agent or contractor who Equifax reasonably
believes represents a material risk to Equifax's business,
property or personnel.
b. Facilities. PwCES shall provide those employees, agents and
contractors of Equifax who are reasonably required to be
located on PwCES's premises with access to and use of space,
office furnishings, janitorial service, telecommunications
service, data processing services, utilities (including
heating) and office-related equipment, supplies, and
duplicating services in connection with the performance of the
Services (all such space, furnishings, equipment, supplies,
utilities and services to be consistent with those that PwCES
provides its own comparable employees). Equifax shall, and
shall cause its agents and contractors to, abide by PwCES's
policies and guidelines while on PwCES's premises.
c. Operating Level Agreements. PwCES shall provide notice to
Equifax of (i) a failure by Equifax or any third party
retained by, or under control of, Equifax, to provide
hardware, software, services, data or materials that Equifax
or such third party is required to provide to PwCES under this
Agreement and that PwCES requires to perform the Services or
(ii) a failure by Equifax to timely and accurately perform its
responsibilities as set forth in this Agreement, including,
without limitation a failure to comply with an Operating Level
Agreement, in each case within ten (10) days of becoming aware
that such failure is adversely affecting its ability to
perform in accordance with the terms of this Agreement. If
PwCES fails to provide such notice, then such failure shall
not relieve PwCES of its obligations to perform the Services
in accordance with this Agreement until such notice is
provided to Equifax.
d. Consent. Unless otherwise specified herein, PwCES shall not
unreasonably withhold or delay any consent, approval or
response requested by Equifax under this Agreement.
e. Improvements. PwCES acknowledges Equifax's desire for PwCES to
increase the efficiency and cost-effectiveness of the
Services, and to improve the performance and delivery of the
Services, throughout the term of this Agreement.
f. Records. PwCES shall (i) maintain tools and procedures
necessary to accurately monitor compliance with the Service
Levels and (ii) prepare and maintain detailed records
regarding its compliance with the Service Levels and the
determination and application of Performance Bonuses and
Performance Credits. Upon reasonable request, PwCES shall
provide Equifax with information and reasonable access to such
tools and procedures and the records relating thereto for
purposes of verification of the Service Levels. Equifax
acknowledges that certain tools, procedures and records do not
exist as of the Commencement Date, but will be developed
during the Transition Period.
g. Correction of Errors. At PwCES's expense, PwCES shall promptly
correct any errors or inaccuracies in the Equifax Data,
reports, payments and other output produced by PwCES as result
of providing the Services, to the extent such errors or
inaccuracies were caused by Services provided by PwCES, its
Affiliates or its or their respective agents or contractors
under this Agreement.
h. Agreements and Assets. Subject to Equifax obtaining any
required consents or approvals, PwCES shall assume all
Transferred Agreements and shall purchase and acquire all
Transferred Assets on the dates and for the purchase price set
forth on Exhibit 4.
i. Licenses. PwCES shall use commercially reasonable efforts to
negotiate licenses for Third Party Software that include a
right to assign or transfer to Equifax, without additional
payments by Equifax (or to minimize additional payments), such
licenses (and related maintenance agreements) upon expiration
or termination of this Agreement.
j. Internal Controls. During the term of this Agreement, PwCES
shall maintain an appropriate level of internal controls to
timely, completely and accurately record transactions and to
reasonably safeguard Equifax assets. At such time as PwCES
provides services to any other customer using the same systems
and processes as are used to provide the Services, PwCES shall
have an independent public accounting firm perform, at no cost
to Equifax, an annual third party review, as defined in
accordance with SAS # 70, of the facility from which the
Services are provided. The control objectives of the SAS # 70
review shall be mutually agreed by the parties.
k. Compliance. PwCES shall perform the Services in compliance
with applicable laws, rules and regulations.
<PAGE>
l. Projects. PwCES shall complete the development and
implementation of all organizational projects, software
projects, technical projects and other implementation projects
in progress as of the Commencement Date in a manner consistent
with Equifax's pre-existing implementation plans, and as set
forth in Exhibit 13. Equifax and PwCES shall cooperate with
each other in providing access to personnel and facilities,
and in providing the resources necessary to complete such
projects. Any additional costs and expenses associated with
the completion of such projects beyond the use of Transitioned
Employees shall be at Equifax's sole expense. Except in
connection with such pre-existing implementation plans, any
new technology or material changes to existing technology that
may affect the provision of Services shall not be implemented
by Equifax without PwCES's prior written approval.
3.12 Equifax's Responsibilities. In addition to any specific tasks,
functions or projects for which Equifax is given responsibility in this
Agreement and relevant Exhibits, Equifax shall perform the following
responsibilities during the term of this Agreement.
a. Affiliates of Equifax. Equifax shall cause its Affiliates,
although not signatories hereto, to be bound by the terms and
conditions of this Agreement. Any breach of this Agreement by
an Affiliate of Equifax shall be deemed a breach by Equifax.
b. Agreements, Assets and Software. Equifax shall (i), subject to
obtaining any required consents or approvals, assign all
Transferred Agreements and sell, assign and convey all
Transferred Assets free of any liens or other encumbrances to
PwCES on the dates and for the purchase prices set forth on
Exhibit 4, (ii) obtain all consents or approvals necessary to
allow PwCES and its employees, agents and contractors to use
the Equifax Software owned by Equifax and (iii) obtain all
consents or approvals necessary to allow PwCES to use Equifax
Software licensed by Equifax that is not the subject of a
Transferred Agreement. Equifax, with PwCES's reasonable
cooperation, shall obtain, at Equifax's cost and expense, all
required consents and approvals to permit such assignments,
transfers and use. If, however, any required consent or
approval is not obtained, unless and until such required
consent or approval is obtained, then, as PwCES's sole remedy,
the parties shall cooperate with each other in achieving a
reasonable alternative arrangement under which PwCES may
perform the Services without causing a breach or violation of
any Transferred Agreement or any agreement relating to Equifax
Software for which a required consent is to be obtained. Such
reasonable alternative arrangements may include (i) Equifax's
retention of certain third party agreements that would
otherwise be transferred hereunder or (ii) PwCES's agreement
to administer and coordinate such agreements pursuant to
Sections 3.07 and 3.08. In addition, it is the parties' intent
that such reasonable alternative arrangements shall provide
that PwCES and its employees, agents and contractors are able
to exercise the rights, including, without limitation, rights
with respect to the licensor's maintenance obligations and
warranties, PwCES would have had if such Transferred Agreement
were assigned to PwCES or if such consents or approvals had
been obtained. If such arrangements do not provide such
rights, notwithstanding the foregoing, PwCES shall be
entitled, as its sole remedy (other than its rights under
Sections 17.02(i) and (iii)) for Equifax's failure to obtain
such consents or approvals, to appropriate relief in Charges,
Services, Service Levels and other obligations under this
Agreement; provided, however, that PwCES shall use diligent
efforts to mitigate the effects resulting from such events.
All required consents and approvals shall provide for (i) the
use by PwCES and its employees of the rights under the
Transferred Agreements in performing the Services and (ii) if
necessary, the continued use by Equifax of the rights under
the Transferred Agreements to perform its responsibilities
pursuant to this Agreement. Equifax and PwCES shall cooperate
in approving the terms and conditions relating to all of the
foregoing consents and approvals. Equifax shall be liable for
the expenses incurred in obtaining all of the foregoing
consents and approvals. PwCES's use of Equifax Software
licensed by Equifax will be subject to the restrictions of the
third party license agreements with the licensors of such
Equifax Software, except to the extent such restrictions
prohibit PwCES from using such Equifax Software.
c. Facilities. As set forth in Exhibit 12, Equifax shall provide
PwCES access to and use of office facilities and operational
support services, and access to and use of data processing and
telecommunications capabilities, that Equifax currently uses
to perform the tasks, functions and projects addressed by the
Services. In addition, Equifax shall provide those employees,
agents and contractors of PwCES who are reasonably required to
be located on Equifax's premises with access to and use of
space, office furnishings, janitorial service,
telecommunications service, data processing services,
utilities (including heating and air conditioning) and
office-related equipment, supplies, and duplicating services
in connection with the performance of the Services (all such
space, furnishings, equipment, supplies, utilities and
services to be consistent with those that Equifax
<PAGE>
provides its own comparable employees). PwCES shall, and shall
cause its agents and contractors to, abide by Equifax's
policies and guidelines while on Equifax's premises.
d. Relocation. If Equifax relocates its current office space or
otherwise causes employees, agents or contractors of PwCES to
relocate in order to provide any Services, Equifax shall
continue to provide the same access, use and support services
as referenced above. In the event of such relocation, Equifax
shall be responsible at its cost and expense (i) for moving
all of the office furnishings of such PwCES personnel to the
new location and (ii) for all of PwCES's reasonably necessary
costs and expenses of relocating such PwCES personnel to the
extent consistent with Equifax's policies regarding the
relocation of its own employees.
e. Projects. [Intentionally omitted]
f. Retained Equifax Employees, Consultants and Contractors.
Except as provided in Section 17.01, Equifax shall be
responsible in all respects to and for any Equifax employee,
consultant or contractor who (i) is not a Transitioned
Employee or a consultant or contractor for whom PwCES has
expressly assumed responsibility or otherwise engaged pursuant
to the terms of this Agreement, (ii) serves as Equifax's
Account Executive, (iii) serves on the Services Oversight
Committee or (iv) serves as a liaison with PwCES.
g. Data and Errors. Equifax shall cooperate with PwCES to address
the resolution of any errors, omissions or deficiencies in any
output produced by PwCES as a result of providing the Services
and provide PwCES the opportunity to correct such errors,
omissions or deficiencies. Upon successful resolution of such
errors, omissions or deficiencies, Equifax shall accept the
output as completed.
h. Permits and Approvals. Equifax shall be responsible for (i)
obtaining all consents and approvals under agreements to which
it is a party or may be bound as necessary for PwCES to
perform the Services while on Equifax's premises and (ii)
obtaining all permits and approvals from any third party
(including, without limitation, government agencies) relating
to Equifax's premises and necessary for PwCES to perform the
Services while on Equifax's premises.
i. Consent. Unless otherwise specified herein, Equifax shall not
unreasonably withhold or delay any consent, approval or
response requested by PwCES under this Agreement.
j. Operating Level Agreements. Equifax shall perform its
obligations consistent with the Operating Level Agreements set
forth in Exhibit 10.
k. Equifax Data. During the course of providing the Services,
PwCES may find missing values, incorrect values or
inconsistencies within the Equifax Data or other problems with
Equifax Data. In the event PwCES finds any of the foregoing
and provides notice to Equifax thereof, Equifax shall be
responsible for providing to PwCES for input by PwCES the
correct information with respect to the foregoing; provided,
however, this provision shall not apply to the extent the
foregoing were created by PwCES. If PwCES requires more than a
minor additional amount of resources to correct any of the
foregoing, the parties shall negotiate in good faith a Change
Order.
l. PwCES Assumptions. To the extent they affect the provision of
Services, the timely and correct performance by Equifax of
each of the foregoing responsibilities is one of the
Assumptions under this Agreement.
3.13 Re-engineering. PwCES may from time to time, including, without
limitation, during the Transition Period, review the operations
required to support Equifax and may recommend to Equifax certain
re-engineering procedures, processes and tools. When the re-engineering
opportunity requires Equifax to modify its methods, practices or
policies, PwCES shall (i) present the changes to Equifax, (ii) discuss
with Equifax the requirements of implementation and (iii) identify the
projected benefits to both Equifax and PwCES. Equifax shall have the
opportunity to discuss the proposed changes and to request appropriate
modifications prior to granting approval. The parties shall work in
good faith to determine the costs, benefits and proper level of
commitment by both PwCES and Equifax for implementing such
re-engineering projects, and to mutually agree on such terms and
conditions to be set forth in a Change Order. Equifax may only refuse
or delay implementation of such projects if such projects require
significant additional expenditures by Equifax or are inconsistent with
Equifax's business strategies. If Equifax fails to approve or
adequately implement re-engineering project opportunities (other than
those that require significant additional capital expenditures by
Equifax), the parties shall negotiate in good faith a Change Order
reflecting appropriate adjustments in Charges, Service Levels and other
<PAGE>
performance obligations under this Agreement; provided, however, this
sentence shall not apply if, as part of the re-engineering project,
PwCES requires Equifax to use third party software and Equifax is
unable to obtain from the vendor of such software commercially
reasonable warranties.
3.14 Dependencies. PwCES and Equifax anticipate that the provision of
Services shall have dependencies on the contracts between Equifax and
Third Party Providers.
3.15 PwCES's Use of Contractors. PwCES may engage consultants, agents or
contractors (including any of its Affiliates) to perform any Service or
any task or subtask within the Services; provided, however, that each
such consultant, agent and contractor shall agree to be bound (i) by
the confidentiality provisions, and (ii) the non-solicitation
provisions (to the extent such consultant, agent or contractor provides
any material Service or any material task or subtask), set forth in
this Agreement. PwCES shall not use any consultant, agent or contractor
set forth on Exhibit 17 without Equifax's consent. To the extent that
PwCES incurs any incremental costs as a result of Equifax's refusal to
consent to PwCES's selection of a particular consultant, agent or
contractor, Equifax shall pay such costs to PwCES as set forth in a
Change Order; provided, however, PwCES shall use commercially
reasonable efforts to mitigate the amount of the incremental costs. In
the event any problems arise in the provision of the Services, PwCES
and its employees, rather than PwCES contractors and agents, shall be
the principal points of contact for Equifax with respect to the
resolution of such problems.
3.16 No Obligation. Except as set forth in Exhibit 11, in no event shall
PwCES be obligated to provide any Service, and PwCES shall not be
liable for the failure to provide any such Service, that would result
in an Impairment of Independence. PwCES is not providing any attest
function or service under this Agreement. PwCES shall apply to Equifax
and this Agreement its interpretations of laws, rules, regulations,
guidelines and policies regarding audit independence in a manner
consistent with PwCES's application of such interpretations to
situations similar to those set forth in this Agreement.
3.17 Business Recovery and Disaster Recovery. The parties' responsibilities
for business recovery and disaster recovery and associated costs are
set forth in Exhibit 14.
3.18 Regulatory Changes. PwCES shall make any changes to the Services and
take any actions necessary in order to maintain compliance with laws
and regulations applicable to the provision of the Services. To the
extent that regulatory or statutory changes, or changes in Equifax's
policies or practices, that directly relate to the Services and require
a modification to the Services shall require PwCES to incur costs and
expenses to provide the Continuing Services beyond those required in
fulfilling its then-current responsibilities under this Agreement, the
parties shall negotiate in good faith a Change Order reflecting the
additional costs to PwCES.
3.19 Pool of Resources. To the extent a task or function related to the
Continuing Services was being performed by a Transitioned Employee
prior to the Commencement Date (and not by a Third Party Provider) and
such task or function is not specifically described in Exhibit 2 or
Exhibit 13 or within the definition of Continuing Services, PwCES shall
use the Pool of Resources to perform such task or function and such
task or function shall thereafter be deemed a Continuing Service.
ARTICLE 4. CHARGES AND PAYMENTS
4.01 Charges. In consideration of PwCES providing the Services, Equifax
shall pay to PwCES the Charges as set forth in Exhibit 1.
4.02 Incremental Charges or Credits. In consideration of an increase in the
quantity of any Continuing Service, which increase is within the
Threshold Limits, Equifax shall pay to PwCES the Incremental Charges,
as set forth in Exhibit 1. In consideration of a decrease in the
quantity of any Continuing Service, which decrease is within the
Threshold Limits, PwCES shall credit or reimburse Equifax the
Incremental Credits, as set forth in Exhibit 1.
4.03 Annual Inflation Index Adjustment. PwCES shall apply an inflation
adjustment, based on the Inflation Adjustment Index, to the Charges, as
set forth in Exhibit 1.
4.04 Payment Terms.
a. Invoice in Advance. PwCES shall issue an invoice to Equifax no
more than ten (10) business days in advance
<PAGE>
of the beginning of each month during the term of this
Agreement for the amount of the Base Charge for that month and
other Charges for that month relating to the recurring
Services.
b. Invoice in Arrears. PwCES shall issue an invoice to Equifax
within ten (10) business days after the end of each month
during the term of this Agreement for the amount of all
Incremental Charges, charges for Additional Services and
Ancillary Services (except for those Charges paid in advance
pursuant to Section 4.04a), Performance Bonuses due PwCES and
any other charges incurred during the previous month, which
invoice shall also include all Incremental Credits,
Performance Credits and any other credits due Equifax during
the previous month.
c. Payments. All invoices submitted by PwCES to Equifax are due
and payable within thirty (30) days of the receipt of the
invoice, subject to Equifax's right to withhold payment in the
event of a good faith dispute pursuant to Section 4.04e. Late
payments shall accrue interest from the invoice date at the
lesser of (i) one-and-one-half percent (1 1/2%) per month and
(ii) the highest rate allowed by law. Subject to Section
4.04e, if Equifax fails to pay any invoice within thirty (30)
days after the invoice date, and thereafter fails to make such
payment within fifteen (15) days after written notice from
PwCES of such failure, PwCES may, in addition to any other
remedies available to it under this Agreement, suspend
performance of Services.
d. Credits. With respect to any amounts to be paid or reimbursed
by PwCES to Equifax pursuant to this Agreement, including,
without limitation, Incremental Credits and Performance
Credits, PwCES may, at its option, pay that amount to Equifax
by giving Equifax a credit against Charges otherwise payable
to PwCES.
e. Disputed Amounts. If Equifax, in good faith, disputes any
Charges regarding the Services, it may withhold any such
disputed amounts (except for applicable taxes) from the
invoice in the second month following the month in which the
dispute arose if the problem giving rise to the dispute has
not been resolved to Equifax's reasonable satisfaction by the
time payment on such invoice is due. Upon request, Equifax
shall pay the withheld amounts into an interest-bearing escrow
account. In accordance with the resolution of the Dispute,
Equifax shall pay to PwCES withheld amounts, plus interest
accrued on such withheld amounts, and the escrow agent shall
release the withheld amounts to the parties. Regardless of any
Dispute, Equifax shall remit to PwCES the invoiced amount
minus the disputed amount.
4.05 Taxes.
a. Inclusive Taxes. The Charges are inclusive of any sales, use,
gross receipts or value added, withholding, ad valorem or
other taxes based on or measured by PwCES's cost in acquiring
equipment, materials, supplies or services used by PwCES in
providing the Services. Further, each party shall bear sole
responsibility for any real or personal property taxes on any
property it owns or leases, for franchise or similar taxes on
its business, for employment taxes on its employees and for
taxes on its net income.
b. Additional. Except as set forth in Section 4.05a, if a sales,
use, privilege, value added, excise, services or similar tax
is assessed on the provision of the Services by PwCES to
Equifax on PwCES's Charges to Equifax under this Agreement,
however levied or assessed, Equifax shall be responsible for
and pay the amount of any such tax. There will be added to any
Charges hereunder, and Equifax shall pay to PwCES, amounts
equal to any such taxes, however designated or levied, based
upon such Charges, or upon this Agreement or any Services or
items provided hereunder, or their use, and any such taxes or
amounts in lieu thereof paid or payable by PwCES in respect of
the foregoing. PwCES shall set forth in invoices provided to
Equifax those Services that are subject to tax.
c. Cooperation. The parties shall cooperate reasonably with each
other to determine accurately each party's tax liability and
to minimize such liability to the extent legally permissible.
To substantiate any claimed exemptions, Equifax shall supply
to PwCES the appropriate exemption or resale certificates.
4.06 Verification of Assumptions. The Charges, Services and Service Levels
are based on Assumptions derived in part from information provided by
Equifax to PwCES. Equifax shall be responsible for the accuracy of any
representations it made as part of the due diligence and negotiation
process and on which the Assumptions are based. In the event of any
material deviation from these representations during the Transition
Period, or during the first twelve (12) months after the Commencement
Date with respect to those Services or components of Services not
delivered during the Transition Period, the parties shall negotiate in
good faith to define and mutually agree upon adjustments that shall be
consistent
<PAGE>
with the intent of the parties. Any such agreed adjustment shall be set
forth in a Change Order.
4.07 Significant Business Changes and Additional Business Units.
a. Business Changes. Subject to any minimum revenue commitments
set forth in Exhibit 1, in the event that the Continuing
Services fall outside of the Threshold Limits for the period
of time set forth in Exhibit 1, Equifax and PwCES shall
negotiate and mutually agree upon an appropriate adjustment to
the Charges, pursuant to Exhibit 1.
b. Changes in Business Units. The parties may agree to add new
Affiliates of Equifax to this Agreement. Equifax shall share
information with PwCES to allow PwCES to determine the level
of resources that will be required to meet Equifax's needs
with respect to such new Affiliates. PwCES and Equifax shall
negotiate (i) a Change Order to accommodate the addition of
any new Affiliates to this Agreement or (ii) a Change Order to
accommodate the removal of an Affiliate from this Agreement.
If Equifax sells an Affiliate to a third party, Equifax may
remove such Affiliate from this Agreement, subject to an
appropriate reduction of the minimum revenue commitments set
forth in Exhibit 1; provided, however, such reduction shall
not be made if such Affiliate continues to purchase the
Services from PwCES after its removal. If Equifax sells an
Affiliate to a third party that desires to have PwCES continue
to provide services similar to the Services, PwCES shall
negotiate in good faith to provide services similar to the
Services to such Affiliate on a basis substantially comparable
to the basis on which PwCES provides Services to Equifax,
provided there would be (x) in PwCES's reasonable discretion
based on PwCES's due diligence review of such Affiliate, no
potential material adverse risk to PwCES in providing such
services or (y) no Impairment of Independence. If such
Affiliate continues to purchase the Services from PwCES after
its removal, the Charges paid by such Affiliate shall count
towards the minimum revenue commitments set forth in Exhibit
1.
4.08 Insecurity and Adequate Assurances. If Equifax fails to make payments
due hereunder in a timely manner, PwCES may demand adequate assurances
in writing of Equifax's ability to meet its payment obligations under
this Agreement. Unless Equifax provides the assurances within thirty
(30) days and in a manner acceptable to PwCES, Equifax shall pay to
PwCES a security deposit equal to three (3) months' aggregate Charges.
4.09 Most Favored Customer. If PwCES or any of its Affiliates provides any
services in the Territory to a third party from the same facilities as
Services are provided to Equifax that are comparable to the Services in
scope and complexity, for a similar or shorter duration and for similar
or lesser volumes (collectively, "Comparable Services"), on terms and
conditions in the aggregate that would be more favorable to Equifax
than those contained herein, then PwCES shall give prompt written
notice thereof to Equifax and Equifax shall have the option to replace
all of the terms and conditions of this Agreement with all such more
favorable terms. On each anniversary of the Initial Commencement Date
and at such other times as Equifax may request (based on Equifax's
reasonable belief that PwCES has an obligation under this Section),
PwCES shall deliver to Equifax a certificate duly executed by an
appropriate executive of PwCES, certifying that, as of the date of such
certificate, and at all times since the date of the last certification
pursuant to this Section (or since the Initial Commencement Date if
there has been no prior certification), stating that PwCES is and has
been in compliance with this Section. If the parties are unable to
agree as to PwCES's compliance with the requirements of this Section
or, as to the appropriate means to effectuate this Section, then such
issue shall be determined pursuant to the Dispute Resolution Process.
The parties acknowledge and agree that the provisions of this Section
have been included in this Agreement to induce Equifax to agree to the
exclusivity provisions of this Agreement, and that they are intended to
ensure that the Services are provided to Equifax on terms and
conditions granted by PwCES and its Affiliates to its most favored
customers obtaining Comparable Services in the Territory.
ARTICLE 5. AUDITS
5.01 Audit of Charges. Upon not less than thirty (30) days prior written
notice, and no more than one (1) time during any calendar year during
the term of this Agreement, PwCES shall provide to Equifax access to
PwCES's financial records and supporting documentation necessary to
verify PwCES's invoices to Equifax (including, without limitation,
expenses). Equifax shall bear the costs of any such audit. In the event
the audit results in a determination that PwCES has undercharged
Equifax, then the amount of such undercharge shall be treated, for
invoicing and payment purposes, as an adjustment in arrears for the
month in which the undercharge is discovered or in the month in which
the final resolution occurs. In the event the audit results in a
determination that PwCES has overcharged Equifax, then the amount of
such overcharge (plus interest) shall be treated, for invoicing and
payment purposes, as a credit in arrears for the month in which the
overcharge is discovered or in the month in which the final resolution
occurs. If the amount of
<PAGE>
the overcharge is equal to or exceeds five percent (5%) of the total
amount of the Charges for the calendar year in which the audit occurs,
PwCES shall reimburse Equifax for the reasonable costs of the audit.
5.02 Audit of Services. Upon not less than thirty (30) days prior written
notice, or such notice as may be reasonable under the circumstances,
and during regular business hours, PwCES will make available to
Equifax's financial management, external auditors, examiners and
regulators and their designees such books, records, information and
documentation of internal controls relating to Equifax and maintained
by PwCES in the normal course of processing Equifax's transactions.
Copies of requested information shall not be unreasonably withheld but
at all times are subject to the approval of Equifax's representatives
having authority to release such information to interested parties.
Analyses, documentation and other information not maintained by PwCES
in the normal course of providing Services will be prepared by PwCES
for use in the audit or examination process as an Additional Service.
5.03 Equifax Internal Audit. Equifax's internal auditors shall have the
right, without notice, and during regular business hours, to request
access to Equifax books, records, information and documentation of
internal controls relating to Equifax and maintained by PwCES in the
normal course of processing Equifax's transactions and access to all
personnel providing the Services. Equifax shall use reasonable judgment
in requesting such books, records, information and documentation and
shall not unduly disrupt the operation of PwCES's business. PwCES shall
cooperate reasonably and in good faith with (i) Equifax's review of the
administration of the benefit plans covered by Exhibit 2, including
compliance with the documents governing such plans and compliance with
applicable laws, rules and regulations and (ii) remedial actions
determined by Equifax to be required in connection therewith. Analyses,
documentation and other information not maintained by PwCES in the
normal course of providing Services will be prepared by PwCES for use
in the audit, examination process, review and remediation as an
Additional Service.
5.04 PwCES Internal Audit. If, as a result of an internal audit conducted by
PwCES, at its own expense, PwCES determines that it has undercharged
Equifax (including, without limitation, Base Charges, Incremental
Charges and expenses), then the amount of such undercharge shall be
treated, for invoicing and payment purposes, as an adjustment in
arrears for the month in which the undercharge is discovered or the
month in which the final resolution occurs. In the event the audit
results in a determination that PwCES has overcharged Equifax, then the
amount of such overcharge shall be treated, for invoicing and payment
purposes, as a credit in arrears for the month in which the overcharge
is discovered or in the month in which the final resolution occurs.
5.05 PwCES Audit of Equifax. Upon not less than thirty (30) days prior
written notice, and no more than one (1) time during any calendar year
during the term of this Agreement, Equifax shall provide to PwCES
access to Equifax's financial records and supporting documentation
necessary to verify the credits or reimbursements given to Equifax by
PwCES. PwCES shall bear the costs for any such audit. In the event the
audit results in a determination that such credits or reimbursements
were incorrect, then such incorrect amount shall be corrected
appropriately in arrears for the month in which such incorrect amount
is discovered or in the month in which the final resolution occurs.
5.06 Equifax Security Audit of PwCES. During the term of this Agreement,
PwCES shall provide to Equifax access to PwCES's facilities so that
Equifax can ensure PwCES's compliance with the confidentiality
provisions set forth in Article 9. In the event the audit results in a
determination that PwCES is not in full compliance with such
provisions, the parties will meet and agree upon the steps PwCES must
take to bring it into full compliance and PwCES shall promptly take
such steps. For each audit after the second such audit in a calendar
year during the term of this Agreement, Equifax shall reimburse PwCES
for the reasonable costs, if any, PwCES incurs in providing such
access. Any audit pursuant to this Section that reveals a material
non-compliance with Article 9 shall be deemed not to have occurred for
purposes of the preceding sentence of this Section.
ARTICLE 6. MANAGEMENT AND HUMAN RESOURCES
6.01 PwCES Account Executive. PwCES shall designate, prior to the Initial
Commencement Date, a PwCES Account Executive to whom all of Equifax's
communications shall be addressed and who has the authority to act for
and bind PwCES and its contractors in connection with all aspects of
this Agreement.
a. Selection. Before assigning an individual to the position of
Account Executive, whether the person is initially assigned or
subsequently assigned, PwCES shall:
(i) notify Equifax of the proposed assignment for Equifax's
approval;
<PAGE>
(ii) introduce the individual to appropriate Equifax
representatives; and
(iii) consistent with law and PwCES's reasonable personnel
practices, provide Equifax with any other information
about the individual that is reasonably requested.
b. Term. PwCES shall cause the person assigned to the position of
Account Executive to devote substantial time and effort to the
provision of the Services under this Agreement. PwCES shall
use commercially reasonable efforts to maintain the PwCES
Account Executive at PwCES for the minimum term of twenty four
(24) months during the first twenty four (24) months after the
Initial Commencement Date and twelve (12) months thereafter,
unless such Account Executive (i) voluntarily resigns from
PwCES, (ii) is dismissed by PwCES for (a) misconduct or (b)
unsatisfactory performance in respect of his or her duties and
responsibilities to Equifax or PwCES, (iii) is unable to work
due to his or her death, injury or disability or (iv) is
reassigned because of personal requirements. PwCES shall not
reassign the Account Executive during the foregoing minimum
terms except for personal requirements not related to career
development. Whenever possible, PwCES shall give Equifax at
least sixty (60) days advance notice of a change of the
Account Executive or if such sixty (60) days notice is not
possible, the longest notice otherwise possible.
c. Removal. In the event that Equifax reasonably and in good
faith determines that it is not in the best interests of
Equifax for the PwCES Account Executive to continue in his or
her capacity, then Equifax shall give PwCES written notice
specifying the reasons for its position and requesting that
the Account Executive be replaced. PwCES shall immediately
investigate the matters stated in such notice and, if it
determines that Equifax's concerns are reasonable and not
unlawful, PwCES shall replace the Account Executive in
accordance with Section 6.01a.
6.02 Equifax Account Executive. Equifax shall designate, prior to the
Initial Commencement Date, an Equifax Account Executive to whom all of
PwCES's communications shall be addressed and who has the authority to
act for and bind Equifax and its contractors in connection with all
aspects of this Agreement.
a. Selection. Before assigning an individual to the position of
Account Executive, whether the person is initially assigned or
subsequently assigned, Equifax shall:
(i) notify PwCES of the proposed assignment for PwCES's
approval;
(ii) introduce the individual to appropriate PwCES
representatives; and
(iii) consistent with law and Equifax's reasonable personnel
practices, provide PwCES with any other information
about the individual that is reasonably requested.
b. Term. Equifax shall cause the person assigned to the position
of Account Executive to devote substantial time and effort to
the management of Equifax's responsibilities under this
Agreement. Equifax shall use commercially reasonable efforts
to maintain the Equifax Account Executive at Equifax for the
minimum term of twenty four (24) months during the first
twenty four (24) months after the Initial Commencement Date
and twelve (12) months thereafter, unless such Account
Executive (i) voluntarily resigns from Equifax, (ii) is
dismissed by Equifax for (a) misconduct or (b) unsatisfactory
performance in respect of his or her duties and
responsibilities to Equifax or PwCES, (iii) is unable to work
due to his or her death, injury or disability or (iv) is
reassigned because of personal requirements. Equifax shall not
reassign the Account Executive during the foregoing minimum
terms except for personal requirements not related to career
development. Whenever possible, Equifax shall give PwCES at
least sixty (60) days advance notice of a change of the
Account Executive or if such sixty (60) days notice is not
possible, the longest notice otherwise possible.
c. Removal. In the event that PwCES reasonably and in good faith
determines that it is not in the best interests of PwCES for
the Equifax Account Executive to continue in his or her
capacity, then PwCES shall give Equifax written notice
specifying the reasons for its position and requesting that
the Account Executive be replaced. Equifax shall immediately
investigate the matters stated in such notice and, if it
determines that PwCES's concerns are reasonable and not
unlawful, Equifax shall replace the Account Executive in
accordance with Section 6.02a.
<PAGE>
6.03 Services Oversight Committee. Within fifteen (15) days after the
Initial Commencement Date, Equifax shall appoint three (3) members of
Equifax's management staff, including the Equifax Account Executive,
and PwCES shall appoint three (3) members of PwCES's management staff,
including the PwCES Account Executive, to serve on the Services
Oversight Committee. For the first twelve (12) months after the Initial
Commencement Date, one of the PwCES members shall act as the chairman
of the Services Oversight Committee; each twelve (12) months thereafter
the parties shall alternate selecting the chairman. The Services
Oversight Committee shall be authorized and responsible for (i)
generally overseeing the performance of this Agreement and (ii)
monitoring and resolving Disputes in accordance with Article 12.
6.04 Equifax Selected Employees' Employment with PwCES. PwCES shall offer to
hire those Equifax Selected Employees who (i) are actively employed by
Equifax as of the Commencement Date and (ii) meet such other reasonable
hiring requirements of PwCES to the satisfaction of PwCES. PwCES shall
be solely responsible for making such offers of employment to such
Equifax Selected Employees. PwCES's plan regarding (a) Equifax Selected
Employees, (b) offers of employment to such Equifax Selected Employees
and (c) Transitioned Employee benefits is described in the Hiring Plan.
6.05 Right to Terminate and Transfer. PwCES shall have the right, in its
sole discretion, (i) to terminate any Transitioned Employee or (ii) to
transfer any Transitioned Employee to an Affiliate of PwCES, subject to
Section 6.08.
6.06 Employment with PwCES. Equifax shall use reasonable efforts to ensure
that all of the Equifax Selected Employees to whom PwCES offers
employment accept such positions with PwCES. In the event that a
significant number of Equifax Selected Employees offered employment by
PwCES fail to accept such employment offer, the parties shall negotiate
in good faith appropriate relief in Charges, Services, Service Levels
and other obligations under this Agreement pursuant to the Change
Control Procedures; provided, however, that PwCES shall use diligent
efforts to mitigate the effects resulting from such event.
6.07 Key Personnel. In the event that the number of Key Personnel set forth
in Exhibit 6 fail to accept PwCES's employment offer or fail to enter
into an independent contractor agreement with PwCES, the parties shall
negotiate in good faith appropriate relief in Charges, Services,
Service Levels and other obligations under this Agreement pursuant to
the Change Control Procedures. PwCES shall use diligent efforts to
mitigate the effects resulting from such event.
6.08 Key PwCES Employees. PwCES shall use reasonable efforts to assign each
Key PwCES Employee to provide the Services for a minimum term of twelve
(12) months, unless (i) Equifax consents to the reassignment or
replacement of such Key PwCES Employee, (ii) reassignment or
replacement of such Key PwCES Employee will not have a more than minor
adverse effect on the Services or (iii) such Key PwCES Employee (a)
voluntarily resigns from PwCES, (b) is dismissed by PwCES for (x)
misconduct or (y) unsatisfactory performance in respect of his or her
duties and responsibilities to Equifax or PwCES, (c) is unable to work
due to his or her death, injury or disability or (d) is reassigned
because of personal requirements. PwCES shall not reassign Key
Employees during the foregoing minimum terms except for personal
requirements not related to career development.
ARTICLE 7. TRADEMARKS AND MARKETING
7.01 Use of Trademarks. For so long as PwCES is in substantial compliance
with the Service Levels, PwCES shall be permitted to use Equifax's name
and logos as necessary to market PwCES's services that are similar to
some or all of the Services, subject to Equifax's right to approve such
use; provided, however, no approval shall be necessary to the extent
PwCES is merely using Equifax's name or logos in a list of customers.
Equifax shall have no rights to use PwCES's or its Affiliate's
trademarks, service marks or trade names for any purpose without the
prior approval of PwCES.
7.02 Marketing Cooperation. For so long as PwCES is in substantial
compliance with the Service Levels, Equifax shall cooperate with PwCES,
at PwCES's reasonable request and at no charge to PwCES, in marketing
functions, tasks and projects addressed by the Services to third
parties. Equifax's cooperation shall be subject to reasonable notice by
PwCES, Equifax's availability and a lack of more than a minor impact of
such cooperation on Equifax's business operations. By way of example
and not limitation, and subject to the foregoing limitations, Equifax
shall (i) allow and participate in reasonable on-site visits by
prospective customers (who have entered into appropriate
confidentiality agreements with Equifax) and (ii) cooperate with PwCES
in preparing and publishing articles on PwCES's services. Equifax shall
refer to PwCES all inquiries and opportunities directed to Equifax,
about which Equifax becomes aware, for PwCES to provide functions,
tasks and projects addressed by the Services to any third party.
<PAGE>
ARTICLE 8. PROPRIETARY RIGHTS
8.01 Definitions.
a. The term "Materials" means literary works or other works of
authorship, such as computer programs, computer program
listings, program tools, documentation, reports and drawings,
as well as user manuals, charts, graphs and other written
documentation and machine-readable text and files, including,
without limitation, computer programming code (including
source code and object code), in each case used in or
initially developed in connection with the Services.
b. The term "Derivative Work" means a work based on one or more
preexisting works, including, without limitation, a
condensation, transformation, expansion or adaptation, that,
if prepared without authorization of the owner of the
copyright of such preexisting work, would constitute a
copyright infringement.
8.02 PwCES Materials. All copyright, patent, trademark and other
intellectual property rights in the PwCES Software and preexisting
Materials of PwCES or its Affiliates shall be the property of PwCES or
its Affiliates, as the case may be. With respect to any Materials
developed solely by PwCES, its Affiliates or its or their contractors,
or jointly by Equifax personnel and PwCES, its Affiliates or its or
their contractors, under this Agreement or in the performance of
Services, except as otherwise expressly set forth in this Agreement
(e.g., Additional Services), ownership will be as follows:
a. Materials that constitute a Derivative Work for which the
preexisting copyright is owned by Equifax, shall be owned by
Equifax, and PwCES shall have (i) an irrevocable,
nonexclusive, worldwide, paid-up license to access, use,
execute, reproduce, display, perform, prepare derivative works
of and distribute such Materials only in connection with (a)
the Services or (b) services provided to third parties from
the facility from which the Services are provided and (ii) the
right to sublicense third parties to do any of the foregoing.
Such license shall include the Materials of Equifax for which
the preexisting copyright is owned by Equifax and upon which
such Derivative Work is based, but only to the extent such
Materials are embodied in, or necessary for the exercise of
the license to, such Derivative Work.
b. Materials that constitute a Derivative Work for which the
preexisting copyright is owned by PwCES, its contractors or a
third party shall, as between PwCES and Equifax, be owned by
PwCES, and during the term of this Agreement Equifax shall
have (i) an irrevocable, nonexclusive, worldwide, paid-up
license to access, use, execute, reproduce, display, perform,
prepare derivative works of and distribute such Materials
internally within Equifax and its Affiliates solely in
connection with the Services and (ii) the right to sublicense
third parties to do any of the foregoing.
c. Materials that do not constitute a Derivative Work of any
Materials owned by Equifax, PwCES or any third party shall be
owned by PwCES, and during the term of this Agreement Equifax
shall have (i) an irrevocable, nonexclusive, worldwide,
paid-up license to access, use, execute, reproduce, display,
perform, prepare derivative works of and distribute such
Materials internally within Equifax and its Affiliates solely
in connection with the Services and (ii) the right to
sublicense third parties to do any of the foregoing; provided,
however, with respect to any such Materials developed jointly
by Equifax personnel and PwCES, its Affiliates or its or their
contractors, PwCES shall not use, for any entity other than
Equifax or its Affiliates, any portion of such Materials
specific to Equifax operations, procedures or management
processes that are Confidential Information of Equifax.
d. If, pursuant to a Change Order, Materials are developed by
PwCES for use in connection with the Services, at an
additional cost to Equifax, then prior to such development,
the parties shall mutually agree in writing on the ownership
and use of such Materials.
8.03 Equifax Materials. With respect to any Materials that are or have been
developed (i) solely by Equifax, whether or not developed under this
Agreement or (ii) for Equifax prior to this Agreement, such Materials
shall be owned by Equifax, and during the term of this Agreement PwCES
shall have (a) an irrevocable, nonexclusive, worldwide, paid-up license
to access, use, execute, reproduce,
<PAGE>
display, perform, prepare derivative works of and distribute such
Materials internally within PwCES solely in connection with the
Services and (b) the right to sublicense third parties to do any of the
foregoing. With respect to those items of Equifax Software designated
as "for use by PwCES for third parties" on Exhibit 9, the license set
forth in the preceding sentence shall also include the right to access,
use, execute, reproduce, display, perform, prepare derivative works of
and distribute such Equifax Software internally within PwCES in
connection with services provided to third parties from the facility
from which the Services are provided and the right to sublicense third
parties to do any of the foregoing. Each party waives any claims for
indemnification against the other party with respect to any third party
claims that may arise from PwCES's use of Equifax Software for third
parties pursuant to the preceding sentence.
8.04 Derivative Works of PwCES Materials. With respect to any Materials that
are developed solely by Equifax and that constitute a Derivative Work
of any Materials for which the preexisting copyright is owned by PwCES
or its Affiliates, such Materials shall be owned by PwCES or its
Affiliates, and during the term of this Agreement Equifax shall have
(i) an irrevocable, nonexclusive, worldwide, paid-up license to access,
use, execute, reproduce, display, perform, prepare derivative works of
and distribute such Materials internally within Equifax and its
Affiliates solely in connection with the Services and (ii) the right to
sublicense third parties to do any of the foregoing.
8.05 Limitation. Any ownership or license rights herein granted to either
party are limited by and subject to any intellectual property rights
(including, without limitation, patents and copyrights) held by, and
terms and conditions of any license agreements with, applicable vendor
software providers, excluding PwCES and its Affiliates.
8.06 Assignment. To the extent any of the Materials may not, by operation of
law, be owned by the party to which ownership has been granted (as
described in this Article), each party agrees to assign and hereby
assigns, without further consideration, the ownership of all right,
title and interest in all United States of America and foreign
copyrights in such Materials to the other party, and such assignee
party shall have the right to obtain and hold in its own name
copyrights, registrations, renewals and all other rights relating or
pertinent thereto.
8.07 Inventions. The term "Invention" means any idea, concept, know-how or
technique that either party first conceives or reduces to practice in
connection with performance of the Services during this Agreement and
for which a patent application is or could be filed. Inventions will be
treated as follows:
(i) if made by Equifax personnel, it shall be Equifax
property and Equifax grants PwCES a nonexclusive,
perpetual, irrevocable, worldwide and paid-up license
under such Invention, and under any patent application
and patents issued thereon;
(ii) if made by PwCES personnel, it shall be PwCES's property
and PwCES grants Equifax a nonexclusive, perpetual,
irrevocable, worldwide and paid-up license under such
Invention, and under any patent application and patents
issued thereon;
(iii) if made by PwCES and Equifax personnel jointly (a) it
shall be PwCES's property, (b) PwCES grants Equifax a
nonexclusive, perpetual irrevocable, worldwide and
paid-up license under such Invention, and under any
patent application and patents issued thereon, (c) if
PwCES intentionally decides not to pay any or all of the
required maintenance fees for the patent for such
Invention, it shall promptly notify Equifax of its
decision and if Equifax elects to pay any such fee,
PwCES shall assign such patent to Equifax and PwCES
shall retain a license equivalent to that granted to
Equifax pursuant to subsection (b) above, (d) Equifax
shall have the right to file for and obtain ownership of
patent and other intellectual property rights with
respect to such Invention in any territory where Equifax
plans to use such Invention if PwCES has not so filed or
fails to so file within sixty (60) days of written
notice to PwCES and PwCES shall retain a license
equivalent to that granted to PwCES pursuant to
subsection (c) above and (e) the owner of a patent in a
territory shall reimburse the other party with respect
to any enforcement or other actions with respect to such
patent and shall retain all damages awarded thereon;
(iv) all licenses granted to either party include the right
to make, have made, use, have used, import, offer to
sell, sell, lease or otherwise transfer any apparatus,
or practice and have practiced any method and shall
include the right to grant, directly or indirectly,
revocable or irrevocable sublicenses to Affiliates of
such party; and
(v) nothing contained in this Agreement shall be deemed to
grant any license under any patents or patent
applications arising out of any other inventions of
either party.
8.08 Licenses. To the extent that either PwCES or Equifax licenses any
Materials of the other party to a third party, each
<PAGE>
such license shall be in writing and shall contain provisions that
protect the owning party's intellectual property rights in such
Materials, including, without limitation, confidentiality provisions
and provisions that appropriately limit the use and number of copies of
the Materials.
8.09 Sale of an Affiliate. Equifax may extend to (i) an Affiliate sold or
otherwise transferred to a third party, (ii) a business unit of Equifax
or an Affiliate that is sold or otherwise transferred to a third party,
or (iii) a business unit of Equifax or an Affiliate of Equifax that is
distributed via a stock dividend or other distribution to the
stockholders of Equifax (collectively a "Transferred Affiliate"), in
each case for such Transferred Affiliate's own internal use only, the
rights in Materials granted to Equifax pursuant to this Article 8;
provided, however, such Transferred Affiliate must agree in writing to
be bound by the obligations set forth in this Article 8 and by
provisions that protect PwCES's intellectual property rights in such
Materials, including, without limitation, confidentiality provisions
and provisions that appropriately limit the use (by or for such
Transferred Affiliate only) and number of copies of such Materials and
provided further that PwCES had provided Services to such Affiliate or
business unit.
ARTICLE 9. CONFIDENTIALITY AND DATA
9.01 Confidential Information. The term "Confidential Information" means the
terms and conditions of this Agreement and all information, data,
knowledge and know-how (in whatever form and however communicated)
relating directly or indirectly to the disclosing party (or to its
Affiliates or contractors, or to its or their businesses, operations,
properties, products, markets or financial positions) that is delivered
or disclosed by such party or any of its officers, directors, partners,
members, employees, agents, Affiliates or shareholders to the other
party in writing, electronically, orally or through visual means, or
that such party learns or obtains aurally, through observation or
analyses, interpretations, compilations, studies or evaluations of such
information, data, knowledge or know-how. All information that
qualified as Confidential Information pursuant to the Confidentiality
Agreement dated June 25, 1998 by and between PwCES and Equifax shall be
deemed Confidential Information under this Agreement.
9.02 Ownership. All Equifax Data shall be owned by Equifax. Without limiting
the foregoing, Equifax may use the Equifax Data in any manner, and may
provide the Equifax Data to third parties. PwCES shall not use the
Equifax Data except in connection with the provision of the Services,
and shall not disclose, sell, assign, lease or otherwise provide the
Equifax Data to third parties, except as specifically permitted by
Equifax in writing or as necessary to perform the Services. Upon
request of Equifax, and at any time during the term of this Agreement,
and upon expiration or termination of this Agreement for any reason,
PwCES shall promptly provide copies of all or any part of the Equifax
Data to Equifax, in the form or format and on the media requested by
Equifax; provided, however, that Equifax shall reimburse PwCES for its
costs to provide the Equifax Data in a form or format not then being
currently used by PwCES to provide the Services. Upon expiration or
termination of this Agreement, and completion of all Termination
Services, PwCES shall destroy, and cause all of its contractors, agents
and Affiliates to destroy, all copies of the Equifax Data, and the
Account Executive of PwCES shall certify the same to Equifax in
writing.
9.03 Loss of Status. Confidential Information shall not include information,
data, knowledge and know-how, as shown by written records, that (i) is
known to the receiving party prior to disclosure to such party, (ii) is
in the public domain prior to disclosure to such party, (iii) enters
the public domain through no violation of this Agreement after
disclosure to such party, (iv) such party receives from a third party
not under obligation of confidentiality to the disclosing party or (v)
the receiving party independently develops without reliance on
Confidential Information.
9.04 Limited Use and Access. Each party shall keep in confidence and prevent
the unauthorized duplication, use and disclosure of Confidential
Information. Confidential Information may only be used for furthering
the purposes of this Agreement and providing the Services hereunder.
Each party shall, upon expiration or termination of this Agreement or
otherwise upon demand, at the other party's option, either return to
the other party or destroy and certify in writing to the other party
the destruction of any and all documents (the term "document," as used
in this Article, shall include, without limitation, any writing,
instrument, agreement, letter, memorandum, chart, graph, blueprint,
photograph, financial statement or data, telex, facsimile, cable, tape,
disk or other electronic, digital, magnetic, laser or other recording
or image in whatever form or medium), papers and materials and notes
thereon in each party's possession, including copies or reproductions
thereof, to the extent they contain Confidential Information of the
party; provided, however, the foregoing shall not apply to Confidential
Information to the extent it is a part of any license or other ongoing
agreement between the parties following termination or expiration of
this Agreement or that survives the termination or expiration of this
Agreement. In addition, each party shall be entitled to retain one copy
of the other party's Confidential Information in such party's legal
files solely for purposes of resolving Disputes. Each party agrees that
it will protect the confidentiality of Confidential Information through
the exercise of the same procedures that it
<PAGE>
uses in preserving and safeguarding its own proprietary information,
which procedures shall at a minimum constitute reasonable care. Each
party will limit access to Confidential Information to only those of
its employees, agents and contractors having a need-to-know in
connection with this Agreement. When a party discloses Confidential
Information to any of its employees, agents or contractors, such party
will inform them of the restrictions on duplication, use and disclosure
to third parties.
9.05 Proper Disclosures. Subject to Section 9.04, each party shall keep the
Confidential Information confidential and shall not disclose such
information to any third party without the prior written approval of
the other party, except that (i) PwCES may disclose general information
relating to the scope of Services and the duration of this Agreement to
potential buyers of PwCES and persons or entities engaged in the
valuation of PwCES and may disclose information as agreed upon by the
parties to potential clients, (ii) Equifax may disclose general
information relating to the scope of Services and the duration of this
Agreement to potential buyers of Equifax or any one or more Affiliates
of Equifax, (iii) PwCES may disclose the terms and conditions of this
Agreement as necessary to comply with most favored customer provisions
in agreements with other customers of services similar to the Services,
(iv) either party may disclose the provisions of this Agreement to
bankers and other financial institutions in the ordinary course of
business and (v) either party may disclose the provisions of this
Agreement to the extent required by any applicable law, regulation or
rules of any stock exchange. The party disclosing the other party's
Confidential Information (except pursuant to (v)) to a third party
shall require the third party to enter into a confidentiality agreement
protecting such Confidential Information.
9.06 Injunctive Relief. Each party acknowledges that the other party may
suffer irreparable damage in the event of a breach or threatened breach
of any provision of this Article. Accordingly, in such an event,
notwithstanding Articles 12 and 13, such party shall be entitled to
preliminary and final injunctive relief, as well as any and all other
applicable remedies at law or equity, including the recovery of
damages.
9.07 No License. The parties acknowledge and agree that (i) each party
maintains that the Confidential Information contains valuable trade
secrets and (ii) all rights to Confidential Information are reserved by
the disclosing party. No license, express or implied, by estoppel or
otherwise, under any trade secret right, trademark, patent, copyright
or other proprietary right or applications that are now or may
hereafter be owned by a party, is granted by the disclosure of
Confidential Information under this Agreement.
9.08 Residual Information. The receiving party and its Affiliates shall be
free to use the residuals of such Confidential Information provided by
the disclosing party for any purpose, including, without limitation,
use in the development, manufacturing, marketing and maintenance of its
products and services subject only to its obligations with respect to
disclosure set forth herein and any copyrights and patents of the
disclosing party. The term "residuals" means information in
non-tangible form that may be retained in the unaided memories of those
employees who have had access to the Confidential Information of the
other party during the term of this Agreement. The receiving party and
its Affiliates may use the documents and other tangible materials
containing the Confidential Information of the disclosing party only
for the purposes of this Agreement. It is understood that receipt of
Confidential Information under this Agreement shall not create any
obligation in any way limiting or restricting the assignment or
reassignment of PwCES's employees within PwCES or its Affiliates and
Equifax's employees within Equifax or its Affiliates.
ARTICLE 10. COVENANTS
10.01 Non-Solicitation. Except as otherwise expressly provided in this
Agreement, including, without limitation on Exhibit 11, or with PwCES's
written consent, during the term of this Agreement and for two (2)
years after the later of the cessation of Termination Services and the
date of termination or expiration, Equifax agrees not to solicit or
hire any of PwCES's, or its Affiliates' and contractors', partners,
employees and agents that become known to Equifax as a result of
Services provided under this Agreement. Except as otherwise expressly
provided in this Agreement or with Equifax's written consent, during
the term of this Agreement and for two (2) years after termination or
expiration of this Agreement, PwCES agrees not to solicit or hire any
of Equifax's, or its Affiliates' and contractors', partners, employees
and agents that become known to PwCES as a result of providing Services
under this Agreement. Notwithstanding the foregoing, either party may
at any time hire any contractor, partner, employee or agent of the
other party that responds to a general solicitation to the public.
10.02 Cooperation. During the term of this Agreement, each party shall
provide to the other party reasonable cooperation and assistance in
connection with its performance of its obligations under this
Agreement.
<PAGE>
ARTICLE 11. REPRESENTATIONS AND WARRANTIES
11.01 By Equifax. Equifax represents and warrants to PwCES as follows:
a. Authority. Equifax (i) is a corporation duly incorporated,
validly existing and in good standing under the laws of
Georgia, (ii) has full corporate power to own, lease, license
and operate its properties and assets, to conduct its business
as currently conducted and to enter into this Agreement and to
consummate the transactions contemplated hereby and (iii) has
the ability and authority to cause its Affiliates to be bound
by the terms and conditions of this Agreement.
b. Authorized Agreement. This Agreement has been duly authorized,
executed and delivered by Equifax and constitutes a valid and
binding agreement of Equifax, enforceable against Equifax in
accordance with the terms of this Agreement.
c. No Default. Neither the execution and delivery of this
Agreement by Equifax, nor the consummation of the transactions
contemplated hereby, shall result in the breach of any term or
provision of, or constitute a default under, any charter
provision or bylaw, agreement (subject to any applicable
consent), order, law, rule or regulation to which Equifax is a
party or which is otherwise applicable to Equifax, except for
a breach or default under any agreement, order, law, rule or
regulation that would not have a more than minor adverse
effect upon Equifax's ability to perform its obligations under
this Agreement.
d. Agreements and Software. Subject to the receipt of any
required consents or approvals, (i) the Equifax Software and
the rights PwCES shall obtain under the Transferred Agreements
constitute all the software and rights that Equifax used prior
to the Commencement Date to perform for itself the tasks,
functions and projects addressed by the Services (except for
software and rights that PwCES has elected not to acquire from
Equifax) and (ii) Equifax has the right and authority to
assign, license or sublicense the Equifax Software and
Transferred Agreements to PwCES, except where any failure of
the foregoing will not prevent PwCES from performing
substantially in accordance with this Agreement or will
increase PwCES's cost to provide the Services.
e. Assets. The Transferred Assets shall be free of liens and
encumbrances.
f. No Infringement. The Equifax Software owned by Equifax and
Equifax-created modifications or derivative works of Equifax
Software licensed by Equifax do not infringe, violate or
misappropriate any patent, copyright, trademark, trade secret
or other proprietary right of any third party.
g. Third Party Agreements. All of Equifax's obligations with
respect to the Third Party Agreements accruing prior to or
attributable to periods prior to the Commencement Date have
been or will be satisfied in accordance with their terms.
11.02 By PwCES. PwCES represents and warrants to Equifax as follows:
a. Authority. PwCES (i) is a limited liability company, duly
organized, validly existing and in good standing under the
laws of Delaware, (ii) has full power to own, lease, license
and operate its properties and assets, to conduct its business
as currently conducted and to enter into this Agreement and to
consummate the transactions contemplated hereby and (iii) has
the ability and authority to cause its Affiliates to be bound
by the terms and conditions of this Agreement.
b. Authorized Agreement. This Agreement has been duly authorized,
executed and delivered by PwCES and constitutes a valid and
binding agreement of PwCES, enforceable against PwCES in
accordance with the terms of this Agreement.
c. No Default. Neither the execution and delivery of this
Agreement by PwCES, nor the consummation of the transactions
contemplated hereby, shall result in the breach of any term or
provision of, or constitute a default under, any charter
provision or bylaw, agreement (subject to any applicable
consent), order, law, rule or regulation to which PwCES is a
party or that is otherwise applicable to PwCES, except for a
breach or default under any agreement, order, law, rule or
regulation that would not have a more than minor adverse
effect upon PwCES's ability to perform its obligations under
this Agreement.
<PAGE>
d. No Infringement. The PwCES Software does not infringe, violate
or misappropriate any patent, copyright, trademark, trade
secret or other proprietary right of any third party.
e. Services. PwCES shall render Services using personnel that are
qualified and shall render Services consistent with good
commercial practice in PwCES's industry.
11.03 By PwC. PwC represents and warrants to Equifax as follows:
a. Authority. PwC (i) is a limited liability partnership, duly
organized, validly existing and in good standing under the
laws of Delaware, (ii) has full power to own, lease, license
and operate its properties and assets, to conduct its business
as currently conducted and to enter into this Agreement and to
consummate the transactions contemplated hereby and (iii) has
the ability and authority to cause its Affiliates to be bound
by the terms and conditions of this Agreement.
b. Authorized Agreement. This Agreement has been duly authorized,
executed and delivered by PwC and constitutes a valid and
binding agreement of PwC, enforceable against PwC in
accordance with the terms of this Agreement.
c. No Default. Neither the execution and delivery of this
Agreement by PwC, nor the consummation of the transactions
contemplated hereby, shall result in the breach of any term or
provision of, or constitute a default under, any charter
provision or bylaw, agreement (subject to any applicable
consent), order, law, rule or regulation to which PwC is a
party or that is otherwise applicable to PwC, except for a
breach or default under any agreement, order, law, rule or
regulation that would not have a more than minor adverse
effect upon PwC's ability to perform its obligations under
this Agreement.
11.04 DISCLAIMER OF WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY WARRANTIES AND SPECIFICALLY
DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
ARTICLE 12. DISPUTE RESOLUTION
12.01 Account Executives. All Disputes shall be referred to the Account
Executives prior to escalation to the Services Oversight Committee. If
the Account Executives are unable to resolve, or do not anticipate
resolving, the Dispute within ten (10) days after referral of the
Dispute to them, the parties shall submit the Dispute to the Services
Oversight Committee.
12.02 Services Oversight Committee. The Services Oversight Committee shall
meet at least once every sixty (60) days during the term of this
Agreement or at such other time as either party may designate upon
notice to the other party for the purposes of monitoring the parties'
performance under this Agreement and of resolving Disputes that may
arise under this Agreement. The Services Oversight Committee shall
consider Disputes in the order such Disputes are brought before it. In
the event the Services Oversight Committee is unable to resolve a
Dispute within fifteen (15) days of the date of the first meeting
during which such Dispute was considered, the Services Oversight
Committee shall notify the senior executive selected by each party
pursuant to Section 12.03. No Dispute under this Agreement shall be the
subject of arbitration or other formal proceedings between Equifax and
PwCES before being considered by the Services Oversight Committee and
senior management, pursuant to Section 12.03, except for an action to
seek injunctive relief to stay a breach of this Agreement.
12.03 Senior Management. Either party may, upon receipt of a notice from the
Services Oversight Committee pursuant to Section 12.02, elect to
utilize a non-binding dispute resolution procedure whereby each
presents its case at a hearing before a panel consisting of one (1)
senior executive of each of the parties. If a party elects to use the
procedure set forth in this Section, the other party shall participate.
The hearing shall occur within ten (10) business days after a party
serves notice to use the procedure set forth in this Section. Each
party may be represented at the hearing by lawyers. If the matter
cannot be resolved at the hearing, each party's only recourse shall be
binding arbitration as provided in Article 13 and the proceedings
occurring pursuant to this Section shall be without prejudice to the
legal position of either party. Except as provided in Section 12.04, no
arbitration may commence concerning the Dispute until thirty (30)
business days have elapsed from the first day of the hearing under this
Section. Each party shall bear its respective costs
<PAGE>
incurred in connection with the procedure set forth in this Section,
except that the parties shall share equally in the cost of the facility
for the hearing.
12.04 Expedited Resolution. If a Dispute arises because Equifax believes that
Critical Service Levels are not being met or that such Dispute relates
to (i) matters that materially and adversely impact its business
operations or (ii) compliance with applicable laws, and either party
initiates the dispute resolution provisions set forth in Articles 12
and 13 for such Dispute, the time period set forth in Section 12.01
shall be changed to twenty-four (24) hours and either party may elect
to bypass the Services Oversight Committee as provided in Section 12.02
and refer the Dispute directly from the Account Executives to senior
management as provided in Section 12.03, and the thirty (30) business
day period in Section 12.03 shall be reduced to fifteen (15) days.
Except as expressly modified by this Section 12.04, all other
provisions of Articles 12 and 13 shall apply to a Dispute.
ARTICLE 13. ARBITRATION
13.01 Panel. The arbitration shall be heard and determined by a panel of
three (3) persons. Each party shall have the right to designate one (1)
member of the panel. Such members shall select a third member of the
panel. The party demanding arbitration shall communicate its demand
therefore in writing, identifying the nature of the Dispute and the
name of its arbitrator, to the other party. The other party shall then
be bound to name, in writing, its arbitrator within twenty (20) days
after receipt of such demand. Failure or refusal of the other party to
name its arbitrator within the twenty (20) day time period shall
empower the demanding party to name the second arbitrator as well. If
the two (2) arbitrators are unable to agree upon a third arbitrator
within twenty (20) days after the second arbitrator is named, the
American Arbitration Association ("AAA") shall appoint a third
arbitrator from candidates submitted by both parties.
13.02 AAA. The commercial rules of the AAA shall apply to any arbitration
under this Agreement, except to the extent the provisions of this
Article vary therefrom.
13.03 Decisions. Decisions of the panel shall be made by majority vote. The
panel is empowered to render awards enjoining a party from performing
any act prohibited or compelling a party to perform any act directed by
this Agreement. The panel may not award punitive damages.
13.04 Interim Orders. The panel may issue such interim orders in accord with
principles of equity as may be necessary to protect any party from
irreparable harm during the pendency of any arbitration before it. Any
such order shall be without prejudice to the final determination of the
controversy.
13.05 Location. The proceeding before the panel shall be held in Atlanta,
Georgia, or as otherwise agreed upon by the parties.
13.06 Expedited Schedule. The arbitration shall be conducted on an expedited
schedule. Unless otherwise agreed by the parties, the parties shall
make their initial submissions to the panel and the hearing shall
commence within thirty (30) days of the initiation of proceedings. The
hearing shall be completed within twenty (20) days thereafter.
13.07 Prompt Award. The award shall be made promptly by the panel, and,
unless agreed by the parties, no later than thirty (30) days from the
closing of the hearing. Any failure to render the award within the
foregoing time period shall not affect the validity of such award.
13.08 Discovery. The parties shall be entitled to discovery of all documents
and information reasonably necessary for a full understanding of any
Dispute raised in the arbitration relating to this Agreement. The
parties may use all methods of discovery available under the Federal
Rules of Civil Procedure, including, without limitation, depositions,
requests for admission and requests for production of documents. The
time periods applied to these discovery methods shall be set by the
panel so as to permit compliance with the scheduling provisions of this
Article.
13.09 Binding Decisions. The decision or award rendered or made in connection
with the arbitration shall be final and binding upon the parties
thereto. The prevailing party may present the decision or award to any
court of competent jurisdiction for confirmation pursuant to the
provisions of the Federal Arbitration Act, 9 U.S.C.ss.ss.1-14, and such
court shall enter forthwith an order confirming such decision or award.
ARTICLE 14. YEAR 2000 AND EURO
14.01 Year 2000 Background. Equifax acknowledges that, because of programming
assumptions previously made in the
<PAGE>
computer industry, certain existing and future computer programs
(including, without limitation, applications, utilities and operating
systems software), databases and documentation for such programs and
databases may not perform as originally designed with respect to date
data processing as the Year 2000 draws closer and beyond.
14.02 Year 2000 Disclaimer. Equifax recognizes that it is responsible for the
resolution of any Year 2000 problem that is the result of software,
systems, equipment or other items or materials made available to PwCES
to provide the Services. Except as expressly provided in this Agreement
or in a Change Order, PwCES is not providing any Year 2000 services
(for example, Year 2000 assessment, conversion or testing) under this
Agreement. PwCES shall not be responsible for a failure to perform the
Services under this Agreement, if such failure is the result, directly
or indirectly, of (i) the inability of any products (for example,
hardware, software or firmware) other than the PwCES Products ("Other
Products") to correctly process, provide or receive date data (i.e.,
representations for month, day and year) and to properly exchange date
data with the PwCES Products or deliverables provided by PwCES under
this Agreement or (ii) modifications made by Equifax, its employees or
any third party (excluding any PwCES employees, agents or contractors)
to any PwCES Products or such deliverables. PwCES assumes no
responsibilities or obligations to cause products or deliverables
provided by PwCES to accurately exchange date data with Other Products
or to cause Other Products to accurately exchange date data with
products or deliverables provided by PwCES; unless, such Other Products
can properly exchange accurate date data with products or deliverables
provided by PwCES under this Agreement. If Equifax requests PwCES to
undertake to remedy any such problem, such an undertaking shall be an
Additional Service, subject to a Change Order.
14.03 NO WARRANTY. EQUIFAX RECOGNIZES THAT NEITHER PWCES NOR ITS AFFILIATES
WILL WARRANT THAT ANY YEAR 2000 WORK PERFORMED BY PWCES OR ITS
AFFILIATES ON THE TRANSFERRED ASSETS OR EQUIFAX SOFTWARE WILL SUCCEED
IN RESOLVING SATISFACTORILY ALL OR ANY SPECIFIC YEAR 2000 PROBLEM.
SUBJECT TO THE FOREGOING, PWCES WILL PERFORM, WITHOUT ANY WARRANTIES
(EXPRESS OR IMPLIED), THE YEAR 2000 WORK THAT IS SPECIFICALLY SET FORTH
HEREIN AS PART OF THE SERVICES.
14.04 Euro Disclaimer. PwCES shall not be responsible for a failure to
perform the Services under this Agreement, if such failure is the
result, directly or indirectly, of the inability of any Other Products
(i) to perform all functions set out in the specification for more than
one currency and for any common currency adopted by one or more members
of the European Union (the "Euro"), (ii) to comply with all legal
requirements applicable to the Euro in any jurisdiction, including,
without limitation, the rules on conversion and rounding set out in the
EC Regulation number 1103/97, (iii) to display and print all symbols
and codes adopted by any government or any other European Union body in
relation to the Euro or (iv) to properly exchange Euro data with the
PwCES Products or deliverables provided by PwCES under this Agreement.
ARTICLE 15. BREACH; REMEDIES
15.01 Limitation of Remedy. PwCES shall not be liable for its failure to
perform to the extent PwCES's failure is due to (i) a failure by
Equifax or any third party retained by, or under the control of,
Equifax to provide hardware, software, services, data or materials that
Equifax or such third party is required to provide to PwCES under this
Agreement and that PwCES requires to perform the Services, (ii) a
failure by Equifax to timely and accurately perform its
responsibilities as set forth in this Agreement, (iii) an audit
conducted pursuant to Article 5, (iv) a failure by Equifax to obtain
consents or approvals for PwCES's agents and contractors to use the
Equifax Software or exercise rights under the Transferred Agreements,
(v) a failure by Equifax to timely and accurately provide input data or
review output produced by PwCES as a result of the Services or (vi) a
problem associated with the Year 2000 or Euro, to the extent provided
in Article 14.
15.02 Equifax's Failure to Perform Responsibilities. In the event Equifax or
any of its licensors or contractors fail to perform any of its or their
responsibilities in connection with any Services, then PwCES may, in
its sole discretion, after providing notice to Equifax of such failure
by Equifax or any of Equifax's licensors or contractors, perform
Equifax's responsibility and charge Equifax for all reasonable costs
and expenses incurred as a result of performing Equifax's
responsibility. PwCES may not charge Equifax in excess of twenty-five
thousand dollars ($25,000.00) per failure pursuant to this Section
without Equifax's consent.
15.03 Force Majeure. Neither party shall be liable for any default or delay
in the performance of its obligations hereunder (except for the payment
of money) if and to the extent such default or delay is caused,
directly or indirectly, by acts of
<PAGE>
God, governmental acts, accidents, wars, terrorism, riots or civil
unrest, labor disputes, fires, storms, earthquakes, floods or elements
of nature, or any other cause beyond the reasonable control of such
party, provided such default or delay could not have been prevented by
reasonable precautions and cannot reasonably be circumvented by the
nonperforming party through the use of commercially reasonable
alternative sources, workaround plans or other means (individually, a
"Force Majeure Event"). Upon the occurrence of a Force Majeure Event,
the nonperforming party will be excused from any further performance or
observance of the obligations so affected for as long as such
circumstances prevail and such party continues to use commercially
reasonable efforts to recommence performance or observance whenever and
to whatever extent possible without delay. Any party so delayed in its
performance will immediately notify the other by telephone (to be
confirmed in writing within five (5) days of the inception of such
delay) and describe at a reasonable level of detail the circumstances
causing such delay. If any Force Majeure Event substantially prevents,
hinders, or delays performance of the Services necessary for the
performance of a critical business function of Equifax for more than
fifteen (15) consecutive days, then Equifax may procure such Services
from an alternate source (whereupon the Charges hereunder shall be
reduced accordingly irrespective of any minimum revenue commitment set
forth in Exhibit 1). If any Force Majeure Event continues for more than
sixty (60) consecutive days, then Equifax may terminate this Agreement
as of a date specified by Equifax in a written notice of termination to
PwCES pursuant to Section 16.01h. This Section does not limit or
otherwise affect the parties' obligations regarding disaster recovery
services as set forth in Exhibit 14.
15.04 Limitation of Liability. Each party's, its Affiliates' and its and
their contractors' and licensors' liability for damages (whether a
claim therefor is based on warranty, contract, tort (including
negligence or strict liability), statute or otherwise) arising out of
or relating to any performance or nonperformance of Services under this
Agreement shall be limited in the aggregate for all claims to an amount
equal to the payments made by Equifax to PwCES for recurring Services
under a Set of Exhibits during the twelve (12) months prior to the
occurrence of the first event that is the subject of the first claim
(or if twelve (12) months have not yet elapsed since the Initial
Commencement Date for a Set of Exhibits, then twelve (12) times the
average monthly payments made by Equifax to PwCES for recurring
Services since the Initial Commencement Date for such Set of Exhibits)
(the "Cap"). Both parties acknowledge and agree that any such payment
by the other party shall be the final remedy in the event of an
exhaustion of all other remedies hereunder and shall not be deemed or
alleged by the other party to have failed of its essential purpose. If
a party's liability under this Agreement does not exceed four million
dollars ($4,000,000) in any consecutive three (3) year period for a Set
of Exhibits, then the Cap for such party shall be reduced from the
amount set forth above to an amount equal to the payments made by
Equifax to PwCES for recurring Services under a Set of Exhibits during
the nine (9) months prior to the occurrence of the first event that is
the subject of the first claim. Notwithstanding the foregoing, for (i)
a breach of Article 9 and (ii) indemnification claims set forth in
Sections 17.01(vi), 17.01(ix) and 17.02(viii), an amount equal to the
payments made by Equifax to PwCES for recurring Services under a Set of
Exhibits during the (y) six (6) months preceding the period set forth
above if such period is twelve (12) months and (z) nine (9) months
preceding the period set forth above if such period has been reduced to
nine (9) months, shall be added to the Cap. The Cap for indemnification
claims set forth in Section 17.01(x) with respect to Transitioned
Employees for the first twelve (12) months after the Initial
Commencement Date shall be equal to the amount of insurance set forth
in Section 19.06(iv). For purposes of this Section 15.04, if, after an
event giving rise to a claim there is a subsequent event giving rise to
a claim that is related to the prior claim, then the time periods
described above shall be measured from the date of the subsequent
event.
15.05 CONSEQUENTIAL DAMAGES. IN NO EVENT SHALL EITHER PARTY, ITS AFFILIATES
OR ITS CONTRACTORS BE LIABLE FOR ANY SPECIAL, INDIRECT, EXEMPLARY,
INCIDENTAL OR CONSEQUENTIAL DAMAGES WHATSOEVER, INCLUDING, WITHOUT
LIMITATION, ANY LOSS OF PROFITS OR SAVINGS INCURRED BY THE OTHER PARTY,
ITS CONTRACTORS OR ANY THIRD PARTY, EVEN IF SUCH PARTY HAS BEEN
ADVISED, KNOWS OR SHOULD KNOW OF THE POSSIBILITY OF SAME.
15.06 Exclusions. The limitations or exculpation of liability set forth in
Sections 15.04 and 15.05 are not applicable to (i) the failure of
Equifax to make payments due under this Agreement, (ii) indemnification
claims as set forth in Sections 17.01(i), 17.02(i), 17.01(v) and
17.02(vii), (iii) damages caused by the intentional misconduct of the
breaching party, (iv) any Termination Charges, (v) Performance Credits
or Performance Bonuses or (vi) payments made pursuant to Exhibit 11.
The limitations set forth in Section 15.04 are not applicable to
indemnification claims as set forth in Sections 17.01(vii), 17.02(ix),
17.01(x), 17.01(xii), 17.02(iii), 17.02(v), 17.02(vi) and 17.02(xi).
The exculpation of liability set forth in Section 15.05 is not
applicable to a breach of Article 9 or indemnification for third party
claims pursuant to Article 17.
<PAGE>
15.07 Affiliates of PwCES. Except as set forth in Article 18, with regard to
any claim or action against PwCES or its Affiliates, Equifax shall look
solely to PwCES and the assets of PwCES in satisfaction of any claim or
action relating to PwCES's obligations under this Agreement and in no
event shall (i) any Affiliate of PwCES be liable for any obligation
under or in connection with this Agreement or (ii) any member or
partner of PwCES or any Affiliate of PwCES be personally liable for any
obligation of PwCES under or in connection with this Agreement, and no
recourse may be had or sought against the assets of any Affiliate of
PwCES or the assets of any member or partner of PwCES or any Affiliate
of PwCES in satisfaction of any such obligation. Nothing in this
Section shall be deemed to relieve PwCES of any liability under this
Agreement.
15.08 Limitation. Neither party shall make any claim against the other party
more than two (2) years after such party knew or should have known of
the breach or other event giving rise to such claim.
ARTICLE 16. TERMINATION
16.01 Conditions of Termination. In addition to expiration at the end of the
term specified in Article 2, this Agreement may be terminated under the
following circumstances, subject to any Charges that may be applicable
as set forth below and in Exhibits 1 and 11.
a. Convenience. At any time (i) after the third anniversary of
the Initial Commencement Date or (ii) before such third
anniversary if there is a Change of Control of Equifax,
Equifax may deliver to PwCES written notice of its intent to
terminate this Agreement for convenience. The termination
notice shall specify a termination date no sooner than six (6)
months after the date of the notice.
b. Equifax for Cause. Equifax may terminate this Agreement in the
event of PwCES's material breach (in the form of a single
event or series of events) of its obligations or warranties,
if such material breach is not cured within fifteen (15) days
after Equifax notifies PwCES in writing of such material
breach; provided, however, that if after using commercially
reasonable efforts such breach could not be cured by PwCES
within such fifteen (15) day period, the cure period for such
breach shall be extended for an additional thirty (30) days
(provided that such breach is capable of cure and PwCES
continues to diligently pursue such cure), unless otherwise
agreed in writing.
c. Partial Termination by Equifax for Cause. Equifax may
terminate a Service, in whole or in part, if PwCES
consistently fails to (i) substantially perform such Service
or (ii) meet a Service Level with respect to such Service.
Equifax shall provide PwCES with written notice of its intent
to so terminate, which notice shall specify a termination date
no less than ninety (90) days after the date of the notice,
and the minimum revenue commitment set forth in Exhibit 1
shall be appropriately adjusted.
d. PwCES for Cause. Subject to Equifax's right as set forth in
Section 4.04e to withhold disputed payment amounts, PwCES may
terminate this Agreement in the event of Equifax's material
breach (in the form of a single event or series of events) of
its obligations or warranties, if such material breach is not
cured within fifteen (15) days after PwCES notifies Equifax in
writing of such material breach; provided, however, that if
after using commercially reasonable efforts such breach (other
than one relating to the payment of money) could not be cured
by Equifax within such fifteen (15) day period, the cure
period for such breach shall be extended for an additional
thirty (30) days (provided that such breach is capable of cure
and Equifax continues to diligently pursue such cure), unless
otherwise agreed in writing.
e. Change of Control of Equifax. PwCES shall have the right to
terminate this Agreement immediately upon a Change of Control
of Equifax that results in control of Equifax by any entity
set forth in Exhibit 17.
f. PwCES for Impairment of Independence. Each of PwCES and
Equifax shall promptly notify the other regarding potential
Impairment of Independence situations about which it becomes
aware. In the event of any potential Impairment of
Independence, PwCES and Equifax shall consider all reasonable
alternatives to reconcile such potential Impairment of
Independence in order to maintain the relationship between the
parties, including, without limitation:
(i) obtaining a favorable resolution from the SEC and the
AICPA;
(ii) changes within PwCES or its Affiliates as to how it or
they organize its or their outsourcing business; and
<PAGE>
(iii) changes in scope of the Services.
If the potential Impairment of Independence is not resolved to
the satisfaction of PwCES and Equifax within thirty (30) days
of the notice given above or the time period required by the
applicable regulations, then PwCES shall have the right to
terminate this Agreement, in whole or in part; provided,
however, that if PwCES terminates this Agreement in part, the
minimum revenue commitment set forth in Exhibit 1 shall be
reduced appropriately, and Equifax may, within thirty (30)
days of receipt of notice of such partial termination,
terminate this Agreement with respect to the affected Set of
Exhibits if the portion of this Agreement terminated in part
by PwCES represents a material portion of the Services under
such Set of Exhibits such that continuing to receive the
remaining Services under such Set of Exhibits does not present
a viable business case to Equifax, as determined by Equifax in
its reasonable discretion. If Equifax exercises its right
pursuant to the preceding sentence (x) the Set of Exhibits
shall, for purposes of Exhibit 11, have been deemed to have
been terminated by PwCES for the event that created the
Impairment of Independence that led to the termination in part
by PwCES or (y) if the Set of Exhibits terminated is the only
Set of Exhibits, this Agreement shall, for purposes of Exhibit
11, have been deemed to have been terminated in whole by PwCES
for the event that created the Impairment of Independence that
led to the termination in part by PwCES.
g. Equifax for Change of Control of PwC or PwCES. Equifax shall
have the right to terminate this Agreement immediately upon
the sale of a controlling interest of PwC or PwCES to any
entity set forth in Exhibit 17.
h. Equifax for Force Majeure. Equifax shall have the right to
terminate this Agreement pursuant to Section 15.03.
i. Equifax for Additional Charges. If the Base Charges for
Services provided on the Initial Commencement Date are
increased pursuant to Section 3.03(ii) by more than eleven
percent (11%) from the amount set forth on Exhibit 1, then
Equifax may, on not less than six (6) months prior written
notice, terminate this Agreement. This right to terminate may
only be exercised by Equifax within thirty (30) days after the
end of the twelve (12) month period referred to in Section
4.06.
j. Maximum Liability. If a party is liable for damages in excess
of the applicable Cap, the other party may terminate this
Agreement upon not less than six (6) months notice, unless the
party that exceeded its Cap agrees, within thirty (30) days
after receiving notice of the other party's intention to
terminate this Agreement, to reset such Cap to an amount equal
to the payments made by Equifax to PwCES for recurring
Services under a Set of Exhibits during the three (3) months
prior to the occurrence of the first event that is the subject
of the first claim with respect to any liability arising after
receipt of such notice.
16.02 Effects of Termination or Expiration. Exhibit 11 sets forth the
parties' respective obligations and rights under each possible
circumstance of termination or expiration; provided, however,
termination pursuant to Sections 16.01b, c and d shall not constitute a
party's exclusive remedy for a breach of this Agreement, and neither
party shall be deemed to have waived any of its rights accruing
hereunder prior to such termination.
16.03 Termination Charge. If applicable, Equifax shall pay PwCES the
Termination Charge specified in Exhibit 1 (i) on the date PwCES ceases
to provide the Continuing Services if this Agreement is terminated
pursuant to Section 16.01a or (ii) the earlier of thirty (30) days from
the date of notice of termination and the date PwCES ceases to provide
the Continuing Services if this Agreement is terminated pursuant to any
other Section. The Termination Charge for any partial termination
(e.g., termination of a Service or reduction in the list of Affiliates
of Equifax) shall be calculated by applying the percentage of charges
attributable to the reduction in Services pro rata against the
Termination Charge for termination of the entire Agreement. With
respect to those termination events for which the Termination Charge
applies, Equifax acknowledges that the Termination Charge plus the
costs to be paid by Equifax pursuant to Exhibit 11 constitute
liquidated damages for the loss of the bargain, are not a penalty and
are a reasonable approximation of PwCES's damages under the
circumstances as can best be determined as of the date of this
Agreement. In consideration for payment of the applicable Termination
Charge and such costs, Equifax shall have no liability, and PwCES shall
not allege that Equifax has any liability, for claims relating solely
to the termination of this Agreement.
16.04 Critical Services. The parties acknowledge that the performance of the
Services will be critical to the operations of Equifax and its
Affiliates. Accordingly, notwithstanding any other provision in this
Agreement to the contrary, except Sections 3.16 and 4.04c and except
for an intentional breach of Article 9, PwCES shall not voluntarily
withhold the
<PAGE>
provision of the Services under any circumstances.
ARTICLE 17. INDEMNIFICATION
17.01 PwCES Indemnification of Equifax. PwCES shall indemnify and hold
harmless Equifax and its Affiliates and their respective officers,
directors, employees, members, partners, agents, successors and assigns
from, and shall defend Equifax against, any costs, liabilities, fines,
penalties, damages or expenses (including reasonable attorneys' fees
and amounts paid in settlement) arising out of or relating to:
(i) any claim by a third party that the Services, the PwCES
Products, or any work performed by PwCES, or work
performed by PwCES's agents, consultants or contractors
with respect to the PwCES Products, under this Agreement
infringes the proprietary rights of any third party;
(ii) any alleged act or omission by PwCES or any of its
employees giving rise to potential liability arising out
of or relating to (a) any unlawful discrimination or
harassment, (b) PwCES employee benefits or (c) any other
aspect of the employment relationship or the termination
of the employment relationship relating to a
Transitioned Employee, arising on or after such
Transitioned Employee's starting date with PwCES
(including claims for breach of an express or implied
contract of employment), except to the extent any such
claim arises from the wrongful act of Equifax;
(iii) any unlawful discrimination by PwCES in selecting the
Equifax Selected Employees;
(iv) materials prepared by PwCES pursuant to Section 7.01;
(v) claims for personal injuries, death or damage to
tangible personal or real property to the extent caused
by acts or omissions of PwCES or its Affiliates,
contractors and agents, including negligence;
(vi) claims arising from a violation of any federal, state,
local or foreign law, rule or regulation to the extent
caused by acts or omissions of PwCES;
(vii) claims arising out of any Transferred Agreement after
the date such Transferred Agreement is transferred to
PwCES, except to the extent any such claim arises from
the failure of Equifax to obtain the appropriate
consents or approvals;
(viii) claims arising from PwCES's provision of any services
to any third party from the same facilities from which
the Services are provided to Equifax;
(ix) claims arising out of PwCES's use (in providing the
Services to Equifax) of any Equifax Software licensed by
Equifax from a third party, to the extent due to PwCES's
(or any of its agents' or subcontractors') breach of the
third party's license agreement with Equifax, excluding,
however, any claim arising from the failure of Equifax
to obtain the appropriate consents or approvals for such
use, or any claims arising under Section 17.02 below;
(x) claims arising from fraud committed by a PwCES employee
(this obligation with respect to a Transitioned Employee
during the first twelve (12) months after the Initial
Commencement Date is limited as set forth in Section
15.04);
(xi) claims or suits attributable to breaches of PwCES's
express representations and warranties contained in this
Agreement; and
(xii) PwCES's tax liabilities arising from PwCES's provision
of Services, as set forth in Section 4.05.
17.02 Equifax Indemnification of PwCES. Equifax shall indemnify and hold
harmless PwCES and its Affiliates and their respective officers,
directors, employees, members, partners, agents, successors and assigns
from, and shall defend PwCES against, any costs, liabilities, damages
or expenses (including reasonable attorneys' fees and amounts paid in
settlement) arising out of or relating to:
(i) any claim by a third party that the use by PwCES, in the
performance of the Services to Equifax and its
Affiliates in accordance with this Agreement, of any
Equifax Software or other software owned or licensed by
Equifax accessed by, used by or assigned by Equifax to
PwCES infringes the proprietary rights of any third
party, but excluding any claims relating to any changes
or modifications to the Equifax Software or such other
software made by PwCES or its Affiliates or contractors;
<PAGE>
(ii) any alleged act or omission by Equifax or its employees
giving rise to potential liability arising out of or
relating to (a) any unlawful discrimination or
harassment, (b) Equifax employee benefits not expressly
assumed by PwCES, (c) any representations, oral or
written, made by Equifax to Transitioned Employees or
(d) any other aspect of the employment relationship or
the termination of the employment relationship relating
to a Transitioned Employee, arising prior to such
Transitioned Employee's starting date with PwCES,
including, without limitation, claims that Equifax has
violated the WARN Act or other claims arising as a
result of the transition, claims for breach of an
express or implied contract of employment, Equifax
employee benefits plans, policies or programs or with
respect to any claims by Equifax Selected Employees
under such plans, policies or programs or otherwise with
respect to services rendered or events or incidents that
occur prior to a Transitioned Employee's starting date
with PwCES;
(iii) the failure of Equifax to obtain any consent or approval
as required under Section 3.12b;
(iv) claims or suits attributable to breaches of Equifax's
express representations and warranties contained in this
Agreement;
(v) Equifax tax liabilities accruing prior to the
Commencement Date;
(vi) Equifax's tax liabilities arising from PwCES's provision
of Services, as set forth in Section 4.05;
(vii) claims for personal injuries, death or damage to
tangible personal or real property to the extent caused
by acts or omissions of Equifax or its Affiliates,
contractors or agents, including negligence;
(viii) claims arising from a violation of any federal, state,
local or foreign law, rule, regulation or order to the
extent caused by acts or omissions of Equifax;
(ix) claims arising out of any Transferred Agreement before
the date such Transferred Agreement is transferred to
PwCES;
(x) shareholder derivative suits against Equifax; and
(xi) claims made by Affiliates of Equifax related to Services
provided under this Agreement.
17.03 General Equifax Indemnity. Without limiting PwCES's liability to
Equifax under this Agreement related to meeting PwCES's obligations to
perform the Services in accordance with the terms of this Agreement,
Equifax agrees to indemnify and defend PwCES and its Affiliates and
hold PwCES and its Affiliates harmless from any and all third party
claims, actions, damages, liabilities, costs and expenses, including,
without limitation, reasonable attorneys' fees and expenses, arising
out of or relating to the use by Equifax of the Services in the
operation of Equifax's business. The indemnification set forth in this
Section shall not apply to claims arising out of or related to PwCES's
negligence, willful misconduct or breach of this Agreement, or
violation of any law, rule, regulation or order, to the extent such
negligence, willful misconduct, breach or violation is the cause of
such claim.
17.04 Indemnification Procedure.
a. In General. The indemnified party shall notify the
indemnifying party of any claim under this Article within
thirty (30) days (or such shorter period as may be required to
respond to a third party claim) after receipt of notice. A
party required to indemnify the other party under this
Agreement shall have no obligation for any claim under this
Article if:
(i) the indemnified party fails to notify the indemnifying
party of such claim as provided above, but only to the
extent that the defense of such claim is prejudiced by
such failure;
(ii) the indemnified party fails to tender control of the
defense of such claim to the indemnifying party; or
(iii) the indemnified party fails to provide the indemnifying
party with all reasonable cooperation in the defense of
such claim (the cost thereof to be borne by the
indemnifying party).
b. Consent. The indemnifying party shall have no obligation for
any claim under this Agreement if the indemnified party makes
any admission or settlement regarding such claim without the
prior written consent of the indemnifying party, which consent
shall not be unreasonably withheld.
<PAGE>
c. Participation. The indemnified party shall have the right (but
not the obligation) to participate in such defense or
settlement, in which event each party shall pay its respective
attorneys' fees.
ARTICLE 18. PWC
PwC shall be jointly and severally liable for the obligations of PwCES
under this Agreement. For the avoidance of doubt, the joint and several
liability of PwC and PwCES under this Agreement shall not entitle
Equifax to double recovery for any one claim. PwC shall not be deemed
the employer of any Transitioned Employee.
ARTICLE 19. MISCELLANEOUS
19.01 Independent Contractors. Each of PwCES and Equifax is an independent
contractor. Neither party shall have any authority to bind the other
party unless expressly agreed in writing. Nothing in this Agreement
shall be construed to create a partnership, agency or employer-employee
relationship between PwCES and Equifax, and in no event shall PwCES and
Equifax be deemed joint employers. The rights, obligations and
liabilities of the parties shall be several and not joint or
collective.
19.02 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, and all of which taken together
shall constitute a single instrument.
19.03 Entire Agreement. Except as otherwise provided herein, this Agreement,
including the Exhibits hereto, represents the entire understanding and
agreement between the parties, and supersedes any prior agreement,
understanding or communication between the parties, with respect to the
subject matter hereof. This Agreement may only be amended by a writing
executed by both parties.
19.04 Construction. The parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question
of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.
19.05 Assignment. Neither party may assign or transfer this Agreement, or any
of its rights and obligations under it, without the prior written
consent of the other party. Notwithstanding the foregoing, (i) either
party may assign or transfer this Agreement, and its rights and
obligations under it, to one of its Affiliates, provided (a) the
Affiliate agrees in writing to the obligations of the assigning or
transferring party set forth in this Agreement, (b) such party
guarantees the obligations of such Affiliate and (c) such assignment or
transfer does not create an Impairment of Independence and (ii) subject
to Section 16.01e, Equifax may assign this Agreement in connection with
the sale of all or substantially all of its assets.
19.06 Insurance. During the term of this Agreement, PwCES shall maintain and
keep in full force and effect, at its sole cost and expense, insurance
as set forth below with an insurance company licensed to do business in
the location where the Services are to be performed.
(i) Commercial General Liability insurance including, without
limitation, contractual liability coverage that indicates this
Agreement is a "covered contract," premises, completed
operations, broad-form property damage, independent
contractors and personal injury liability in an amount not
less than two million dollars ($2,000,000.00) each occurrence
and two million dollars ($2,000,000.00) aggregate;
(ii) Workers Compensation insurance in accordance with statutory
requirements as well as Employer's Liability insurance with
limits not less than $1,000,000.00/$1,000,000.00/$1,000,000.00
and such insurance shall cover all individuals who will be
used in any capacity by PwCES in performing Services;
(iii) Automobile Liability insurance (including owned, non-owned,
hired and loaned vehicles) with a combined single limit of not
less than one million dollars ($1,000,000.00) for bodily
injury and property damage;
(iv) Fidelity Bond/Commercial Crime insurance covering employee
dishonesty, including, without limitation, dishonest acts of
PwCES and its employees, agents or subcontractors and such
insurance shall also include
<PAGE>
third party liability coverage and be written for limits not
less than ten million dollars ($10,000,000.00);
(v) Professional Liability insurance for operations performed for
Equifax and its employees or customers with limits of
liability not less than fifty million dollars ($50,000,000.00)
each claim and fifty million dollars ($50,000,000.00)
aggregate; and
(vi) Umbrella/Excess Liability insurance on a follow form basis
with a limit of not less than twenty million dollars
($20,000,000.00) for each occurrence and twenty million
dollars ($20,000,000.00) aggregate and such umbrella insurance
shall name as underlying policies the Commercial General
Liability, Employer's Liability and Auto Liability insurance
coverage required above.
19.07 Order of Precedence. In the event of a Dispute, the terms of this
Agreement, the Exhibits and any Change Orders shall be interpreted in
the following order of precedence: (i) the terms of a Change Order
shall take precedence, (ii) followed by the terms of an Exhibit and
(iii) followed by the terms in this Agreement. Notwithstanding the
foregoing sentence, a Change Order may only amend an Exhibit or this
Agreement by express reference to the term or condition of the Exhibit
or this Agreement that is to be amended.
19.08 Remedy. Nothing in this Agreement shall prevent any disputing or
allegedly aggrieved party from pursuing a temporary restraining order,
injunctive relief or other equitable relief from a court of competent
jurisdiction against the other party at any time if the disputing or
allegedly aggrieved party believes in good faith that a breach or
threatened breach of any of the provisions of this Agreement would
cause it irreparable harm.
19.09 Survival. To the extent a provision of this Agreement, including,
without limitation, Articles entitled Breach; Remedies,
Indemnification, Confidentiality and Data, Dispute Resolution,
Arbitration and Miscellaneous, provides for rights, interests, duties,
claims, undertakings and obligations subsequent to the termination or
expiration of this Agreement, such provision of this Agreement shall
survive such termination or expiration.
19.10 Required Approvals. Each party shall obtain all necessary licenses,
permits and approvals of this Agreement required by any governmental
agency, at its sole cost and expense.
19.11 Compliance with Laws. Each party shall comply with all applicable laws,
rules and regulations.
19.12 Waiver. Except as set forth in Section 3.11c, the failure of either
party to insist upon the strict and punctual performance of any
provision hereof shall not constitute a waiver of, or estoppel against
asserting the right to require such performance, nor should a waiver or
estoppel in one case constitute a waiver or estoppel with respect to a
later breach whether of a similar nature or otherwise.
19.13 Unenforceable Terms. In the event any term or provision of this
Agreement shall for any reason be declared or held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction or by
the arbitrators contemplated by Article 13, each party shall agree that
(i) such invalidity, illegality or unenforceability shall not affect
any other term or provision of this Agreement and (ii) such term or
provision shall be (a) reformed to the extent necessary to render such
term or provision valid and enforceable and to reflect the intent of
the parties to the maximum extent possible under applicable law or (b)
interpreted and construed as if such term or provision, to the extent
unenforceable, had never been contained herein.
19.14 Further Assurances. During the term of this Agreement and at all times
thereafter, each party shall provide to the other party, at its
request, reasonable cooperation and assistance (including, without
limitation, the execution and delivery of affidavits, declarations,
oaths, assignments, samples, exhibits, specimens and any other
documentation) as necessary to effect the terms of this Agreement.
19.15 References to Articles, Sections and Exhibits. Unless otherwise
specified herein, all references herein to an Article, Section, or
Exhibit shall be deemed to be references to the corresponding Article,
Section or Exhibit of this Agreement.
19.16 Governing Law, Submission to Jurisdiction and Service of Process. All
rights and obligations of the parties relating to this Agreement shall
be governed by and construed in accordance with the law of the State of
New York, without giving effect to any choice-of-law provision or rule
(whether of the State of New York or any other jurisdiction) that would
cause the application of the laws of any other jurisdiction. Each party
shall bring any suit, action or other proceeding to enforce the
obligation of the other party hereto to resolve a Dispute in accordance
with Article 13 in a
<PAGE>
court of competent jurisdiction sitting in the State of Georgia, and
each party hereby irrevocably waives, to the fullest extent permitted
by law, any objection that it may have, whether now or in the future,
to the laying of venue in, or to the jurisdiction of, any and each of
such courts for the purpose of any such suit, action, proceeding or
judgment and further waives any claim that any such suit, action
proceeding or judgment has been brought in an inconvenient forum, and
each party hereto hereby submits to such jurisdiction. Each party
hereto hereby agrees that service of process may be completed in any
such suit, action or proceeding by any reasonable means calculated to
assure actual notice, including, without limitation delivery by Federal
Express or other courier service, certified mail or postage prepaid
first class mail.
19.17 Notices. All notices, requests, demands and other communications given
or made in accordance with the provisions of this Agreement shall be
deemed to have been given (i) five (5) days after mailing when mailed
(by registered or certified mail, postage prepaid, only), (ii) on the
second day after delivery to a national express courier service
(including, without limitation, DHL and Federal Express), (iii) on the
date sent when made by facsimile transmission with confirmation of
receipt (with hard copy to follow by registered or certified mail,
postage prepaid, only or by a national express courier service) and
(iv) on the date received when delivered in person or by hand courier,
to the address set forth below or such other place or places as such
party may from time to time designate in writing. Any party may alter
its address set forth above by notice in writing to the other party in
the manner set forth herein.
<TABLE>
<S> <C>
if to PwCES: if to Equifax:
PwCES LLC Equifax Inc.
50 Hurt Plaza, Suite 1700 1600 Peachtree Street
Atlanta, GA 30303 Atlanta, GA 30309
Attention: Karl Sachsenmaier Attention: David Post
Telephone: 404-658-8740 Telephone: 404-885-8544
Facsimile: 404-658-8899 Facsimile: 404-885-8682
With a copy (which shall not constitute notice) to: with a copy (which shall not constitute notice)
to:
PricewaterhouseCoopers LLP
1301 Avenue of the Americas Equifax Inc.
New York, NY 10019 1600 Peachtree Street
Attention: Office of General Counsel Atlanta, GA 30309
Telephone: 212-707-6754 Attention: General Counsel
Facsimile: 212-259-5142 Telephone: 404-888-5093
Facsimile: 404-885-8682
if to PwC:
PricewaterhouseCoopers LLP
50 Hurt Plaza, Suite 1700
Atlanta, GA 30303
Attention: Karl Sachsenmaier
Telephone: 404-658-8740
Facsimile: 404-658-8899
With a copy (which shall not constitute notice) to:
PricewaterhouseCoopers LLP
1301 Avenue of the Americas
New York, NY 10019
Attention: Office of General Counsel
Telephone: 212-707-6754
Facsimile: 212-259-5142
</TABLE>
19.18 No Third Party Beneficiary Status. Except as expressly stated herein
with respect to each party's Affiliates and contractors, the terms and
provisions of this Agreement are intended solely for the benefit of
each party hereto and their
<PAGE>
respective successors or permitted assigns, and it is not the intention
of the parties to confer third party beneficiary rights upon any other
party.
19.19 Headings. Headings and captions contained in this Agreement are for
convenience only and do not substantively affect the terms of this
Agreement.
19.20 Expenses. Each party shall be responsible for the costs and expenses
associated with the preparation or completion of this Agreement and the
transactions contemplated hereby.
19.21 Equifax Most Favored Vendor Provision. If PwCES provides any services
to a third party from the same facilities from which the Services are
provided to Equifax, which services include or utilize any internet,
intranet or other network security, verification or authentication
product or service then offered by Equifax (including, without
limitation, digital signature, certification or authentication products
or services), (collectively, "Equifax Products"), Equifax shall have a
right of first refusal to provide the Equifax Products to PwCES in
connection with such third party services.
* * * * *
IN WITNESS WHEREOF, each of the parties hereto, by its duly authorized
representative, has hereby executed this Finance and Accounting Business Process
and Support Services Agreement.
Agreed to by:
PWCES LLC EQUIFAX INC.
By:/s/ Larry B. Quimby By:/s/ John T. Chandler
Name: Larry B. Quimby Name: John T. Chandler
Title: V.P. Title: Corporate V.P.
PRICEWATERHOUSECOOPERS LLP
By:/s/ Larry B. Quimby
Name: Larry B. Quimby
Title: Partner
<PAGE>
FIRST AMENDMENT TO
FINANCE AND ACCOUNTING BUSINESS PROCESS AND SUPPORT SERVICES
AGREEMENT
This First Amendment ("Amendment"), dated as of June 11, 1999, is made
by and between PwCES LLC, a Delaware limited liability company ("PwCES") and
PricewaterhouseCoopers LLP, a Delaware limited liability partnership ("PwC") on
the one hand, and Equifax Inc., a Georgia corporation ("Equifax") on the other
hand.
RECITALS
WHEREAS, the parties have entered into that certain Financing and
Accounting Business Process and Support Services Agreement, dated as of June 4,
1999 (the "Agreement"); and
WHEREAS, the parties desire to amend the Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Section 3.12(b) of the Agreement is amended by deleting the last
sentence thereof and substituting in lieu thereof the following:
"PwCES's use of the Equifax Software licensed by Equifax will be subject
to the restrictions of the third party license agreements with the licensors of
such Equifax Software (except to the extent such restriction prohibit PwCES from
using such Equifax Software), and Equifax appoints PwCES as Equifax's agent for
the limited purpose of using such Equifax software to provide the Services,
subject to the restrictions of such third party license agreements, but not for
the purpose of entering into any oral or written agreements for or on behalf of
Equifax with respect to such Equifax Software."
This Amendment shall be construed in connection with and as part of the
Agreement, and except as modified and expressly amended by this Amendment, all
terms, conditions and covenants contained in the Agreement shall be and remain
in full force and effect. Any and all notices, requests, orders and other
instruments executed and delivered after the execution of this Amendment may
refer to the Agreement without making specific reference to this Amendment, but
nevertheless all such references shall be deemed to include this Amendment
unless the context otherwise requires.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto, by its duly authorized
representatives, has hereunto executed this Amendment.
PwCES LLC EQUIFAX INC.
By: Larry B. Quimby By: John T. Chandler
----------------------------- ---------------------------
Name: Larry B. Quimby Name: John T. Chandler
Title: Vice President Title: Corporate Vice President
PRICEWATERHOUSECOOPERS LLP
By: Larry B. Quimby
------------------------------
Name: Larry B. Quimby
Title: Partner
<PAGE>
EXHIBIT 10.29
SCHEDULE OF OMITTED EXHIBITS
OF THE
FINANCE AND ACCOUNTING BUSINESS PROCESS
AND SUPPORT SERVICES AGREEMENT
The following exhibits to the Finance and Accounting Business Process and
Support Services Agreement, dated as of June 4, 1999 (the "FA Agreement"), among
PwCES LLC ("PwCES"), PricewaterhouseCoopers LLP ("PwC"), and Equifax, Inc.
("Equifax"), as amended by the First Amendment to Finance and Accounting
Business Process and Support Services Agreement, dated as of June 11, 1999,
among PwCES, PwC, and Equifax are omitted from this filing. Equifax agrees to
provide to the Commission supplementally upon request copies of all exhibits
described below.
Exhibit 1 - is a financial exhibit containing (a) a statement of base charges
- --------- for the ten year term of the FA Agreement; (b) a statement of
baseline services to be provided by PwCES: (c) a statement of
incremental charges for additional costs to Equifax for additional
services provided by PwCES: (d) a statement of incremental credits
to Equifax for sub baseline provision of services by PwCES: (e) an
inflation adjustment index; (f) provisions for the calculation of
performance credits and bonuses; (g) a statement of termination
charges; (h) a statement of threshold limits with respect to
services provided in the FA Agreement; (i) a statement of the
minimum revenue commitment; (j) a statement of the pool of resources
to be made available to Equifax by PwCES; and (k) a statement of
procedures with respect to third party agreements.
Exhibit 2 - (a) sets forth a general description and a detailed description of
- --------- base services to be provided by PwCES to Equifax in the United
States and Canada which include: (i) finance and accounting
management, (ii) credit marketing services, (iii) consumer
information services ("CIS"), (iv) risk management services ("RMS")
- general accounting, (v) Canada - CIS, (vi) Canada - RMS, (vii)
payment services general accounting and accounts payable, (viii)
accounts receivable - shared services, (ix) control accounting -
shared services, (x) staff support services - shared services, (xi)
fixed assets - shared services, (xii) budget - shared services,
(xiii) accounts payable - shared services, and (xiv) information
technology services; (b) provides that service levels will be
developed and refined after the execution of the HR Agreement; and
(c) sets forth service level reporting guidelines for PwCES.
Exhibit 3 - has been intentionally left blank.
- ---------
<PAGE>
Exhibit 4 - shows that there have been no transferred agreements, and provides a
- --------- reference to determine transferred assets.
Exhibit 5 - describes the transition plan pursuant to which PwCES will begin
- --------- providing services to Equifax.
Exhibit 6 - sets forth employees that will be affected by the provisions of the
- --------- FA Agreement as follows: (a) employees of Equifax that may be
affected; (b) key Equifax personnel for whom PwCES will attempt to
assist Equifax in documenting services provided by such personnel in
case such personnel fail to enter into independent contractor
agreements with PwCES; (c) it describes the hiring plan of PwCES for
selected Equifax employees; and (d) and (e) will be attached after
execution of the FA Agreement to set forth employees who have made
the transition from being employed by Equifax to being employed by
PwCES and those persons that will be key employees of PwCES,
respectively.
Exhibit 7 - is a list of Equifax affiliates.
- ---------
Exhibit 8 - shows that there is no PwCES software relevant to the FA Agreement.
- ---------
Exhibit 9 - is a list of Equifax owned and licensed software relevant to the FA
- --------- Agreement.
Exhibit 10 - provides for an operating level agreement to be developed and
- ---------- refined after the execution of the FA Agreement, and inserted after
the execution of the FA Agreement.
Exhibit 11 - sets forth termination provisions and services to be provided by
- ---------- PwCES to Equifax upon termination.
Exhibit 12 - describes facilities owned by Equifax to which PwCES will have
- ---------- access to and use of.
Exhibit 13 - sets forth projects on which Equifax employees are currently
- ---------- working, and on which certain employees will continue working as
they transition from being employed by Equifax to being employed by
PwCES, for the purpose of calculating base charges to be paid from
Equifax to PwCES.
Exhibit 14 - sets forth a schedule for implementation of a business recovery
- ---------- plan and a disaster recovery plan for PwCES technology, for Equifax
software and related hardware, and for critical business processes.
<PAGE>
Exhibit 15 - sets forth (a) a change of control procedure; (b) a bill of sale,
- ---------- assignment, and power of attorney; and (c) a confidentiality
agreement to be used among Equifax, PwCES, and third parties.
Exhibit 16 - sets forth certain assumptions to be considered with respect to the
- ---------- FA Agreement.
Exhibit 17 - is (a) a list of Equifax competitors, and (b) a list of PwCES
- ---------- competitors.
Exhibit 18 - shows that there is no third party software with respect to the FA
- ---------- Agreement.
Exhibit 19 - shows that there are no third party agreements with respect to the
- ---------- FA Agreement.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 13.1
SUMMARY OF SELECTED FINANCIAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share amounts)
- -----------------------------------------------------------------------------------------------------------------------------------
Year ended December 31 1999 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Operating revenue $ 1,772,694 $ 1,620,978 $ 1,366,087 $ 1,222,798
Operating costs and expenses before unusual items 1,358,155 1,255,326 1,042,179 955,897
Unusual items -- -- (25,000) (10,313)
- -----------------------------------------------------------------------------------------------------------------------------------
Operating income 414,539 365,652 298,908 256,588
Other income, net 12,356 4,294 45,027 22,400
Interest expense (60,971) (42,701) (20,797) (16,439)
- -----------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations before income taxes
and cumulative effect of accounting change 365,924 327,245 323,138 262,549
Provision for income taxes 150,047 133,812 137,613 109,452
- -----------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations before
cumulative effect of accounting change 215,877 193,433 185,525 153,097
Discontinued operations, net of income taxes -- -- 1,449 24,520
Cumulative effect of accounting change, net of income taxes * -- -- (3,237) --
- -----------------------------------------------------------------------------------------------------------------------------------
Net income $ 215,877 $ 193,433 $ 183,737 $ 177,617
===================================================================================================================================
Dividends paid $ 51,961 $ 52,063 $ 52,030 $ 49,704
PER COMMON SHARE (diluted)
Income from continuing operations before
cumulative effect of accounting change $ 1.55 $ 1.34 $ 1.26 $ 1.03
Discontinued operations -- -- 0.01 0.16
Cumulative effect of accounting change -- -- (0.02) --
- -----------------------------------------------------------------------------------------------------------------------------------
Net income $ 1.55 $ 1.34 $ 1.24 $ 1.19
===================================================================================================================================
Dividends $ 0.363 $ 0.353 $ 0.345 $ 0.330
Weighted average common shares outstanding (diluted) 139,603,000 144,403,000 147,818,000 149,207,000
BALANCE SHEET DATA (at December 31)
Total assets - continuing operations $ 1,839,781 $ 1,828,795 $ 1,177,104 $ 1,011,104
Total assets $ 1,839,781 $ 1,828,795 $ 1,177,104 $ 1,207,518
Long-term debt $ 933,708 $ 869,486 $ 339,301 $ 304,942
Shareholders' equity $ 215,625 $ 366,466 $ 349,397 $ 424,950
Common shares outstanding 134,001,000 140,042,000 142,609,000 144,876,000
OTHER INFORMATION (at December 31)
Stock price per share ** $ 23.56 $ 34.19 $ 35.44 $ 27.41
Book value per share $ 1.61 $ 2.62 $ 2.45 $ 2.93
Market capitalization ** $ 3,157,388 $ 4,787,686 $ 5,053,706 $ 3,970,444
Employees - continuing operations 12,700 14,000 10,000 9,500
<CAPTION>
(Dollars in thousands, except per share amounts)
- --------------------------------------------------------------------------------------------------------------------------------
Year ended December 31 1995 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Operating revenue $ 1,105,309 $ 968,660 $ 813,235 $ 724,030
Operating costs and expenses before unusual items 883,405 770,779 649,135 584,204
Unusual items 9,243 -- (48,438) --
- --------------------------------------------------------------------------------------------------------------------------------
Operating income 231,147 197,881 115,662 139,826
Other income, net 7,335 8,643 3,881 7,474
Interest expense (15,342) (12,986) (8,742) (3,031)
- --------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations before income taxes
and cumulative effect of accounting change 223,140 193,538 110,801 144,269
Provision for income taxes 90,355 79,804 48,525 59,056
- --------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations before
cumulative effect of accounting change 132,785 113,734 62,276 85,213
Discontinued operations, net of income taxes 14,865 6,612 1,239 133
Cumulative effect of accounting change, net of income taxes * -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Net income $ 147,650 $ 120,346 $ 63,515 $ 85,346
================================================================================================================================
Dividends paid $ 50,223 $ 47,161 $ 42,041 $ 42,770
PER COMMON SHARE (diluted)
Income from continuing operations before
cumulative effect of accounting change $ 0.86 $ 0.75 $ 0.41 $ 0.52
Discontinued operations 0.10 0.04 0.01 --
Cumulative effect of accounting change -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Net income $ 0.96 $ 0.79 $ 0.42 $ 0.52
================================================================================================================================
Dividends $ 0.315 $ 0.303 $ 0.280 $ 0.260
Weighted average common shares outstanding (diluted) 154,375,000 150,691,000 151,631,000 164,746,000
BALANCE SHEET DATA (at December 31)
Total assets - continuing operations $ 871,489 $ 836,728 $ 629,318 $ 621,322
Total assets $ 976,173 $ 934,832 $ 643,279 $ 638,375
Long-term debt $ 302,665 $ 211,962 $ 200,070 $ 191,749
Shareholders' equity $ 353,465 $ 361,935 $ 254,031 $ 257,990
Common shares outstanding 147,245,000 151,790,000 149,618,000 151,550,000
OTHER INFORMATION (at December 31)
Stock price per share ** $ 19.13 $ 11.80 $ 12.25 $ 9.23
Book value per share $ 2.40 $ 2.38 $ 1.70 $ 1.70
Market capitalization ** $ 2,816,061 $ 1,790,667 $ 1,832,821 $ 1,399,413
Employees - continuing operations 9,800 9,600 8,000 7,500
</TABLE>
* The 1997 accounting change relates to EITF No. 97-13 regarding accounting
for business process reengineering costs.
** Stock prices and market capitalization have been adjusted to reflect the
spinoff of ChoicePoint.
<PAGE>
EXHIBIT 13.2
1999 ANNUAL REPORT MD&A
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
This discussion and analysis should be read in conjunction with the consolidated
financial statements and accompanying notes. On August 7, 1997, the Company
completed the spinoff of its Insurance Services industry segment, "ChoicePoint"
(Note 2). Accordingly, the results of operations information presented below do
not reflect the ChoicePoint operations.
RESULTS OF OPERATIONS
Consolidated revenue for the year was $1.77 billion, an increase of $151.7
million or 9.4% over 1998. Excluding the impact of divestitures (Note 4),
revenue increased 10.2% in 1999 and 19.8% in 1998 with acquisitions contributing
about 6.4 and 11.9 percentage points of the increases, respectively. Revenue
growth in 1999 also benefited from improvements in the Company's U.S. card and
check operations. However, the 1999 revenue growth was tempered by the currency
exchange rate decline in Brazil, which negatively impacted 1999 revenue growth
by $25.2 million, or 1.6 percentage points. Revenue growth in 1998 benefited
from the performances of Card Solutions and U.S. Credit Information and
Marketing Services, as well as acquisitions.
Operating income of $414.5 million increased $48.9 million, or 13.4% over 1998.
In 1998, operating income increased $41.7 million, or 12.9% over 1997 (excluding
a $25 million unusual charge in 1997 - Note 9). The 1999 improvement over 1998
resulted primarily from revenue growth in U.S. check and card operations as well
as cost control initiatives and expense reductions throughout the Company. Cost
control initiatives in 1999 included headcount reductions, the outsourcing of
certain administrative functions, and obtaining lower costs from service
providers. One provider of data processing services issued the Company a $3.5
million rebate in September related to 1999 services through that date. Expense
reductions in 1999 included $10.1 million for the U.S. retirement plan (Note 8),
and $5.1 million in performance share plan expense (Note 7). However, these cost
control initiatives and expense reductions were partially offset by a $16.3
million increase in operating losses in two strategic emerging businesses,
Knowledge Engineering and Equifax Secure, and $2.2 million higher "year 2000
program" expenses.
The 1998 operating income improvement over 1997 resulted from the revenue growth
and operating margin improvements in North American Information Services and
Payment Services, as well as gains related to acquisitions in Latin America and
continuing expense controls throughout the organization. These improvements were
partially offset by Equifax Europe, which had a $26.2 million reduction in
operating income from 1997 due to several factors (see Equifax Europe segment
discussion below).
In 1999, the Company expensed approximately $26.4 million ($15.8 million after
tax, or $0.11 per share) in costs related to the Company's "year 2000 program."
During 1998 and 1997, the Company expensed approximately $24.2 million ($14.5
million after tax or $0.10 per share) and $4.8 million ($2.9 million after tax
or $0.02 per share), respectively for these costs.
In April 1999, the Company sold its 34% equity interest in Proceda S.A. in
Brazil, and in June 1999, also sold three risk management offices located in the
U.S. These sales resulted in a gain of $7.1 million recorded in other income
($2.9 million after tax, or $0.02 per share). During the second quarter of 1997,
the Company's National Decision Systems business unit was sold resulting in a
gain of $42.8 million ($17.9 million after tax, or $0.12 per share) recorded in
other income. During the fourth quarter of 1997, Equifax recorded a $25.0
million expense charge ($15.0 million after tax, or $0.10 per share) in
connection with its purchase of Computer Science Corporation's (CSC) collections
business. This charge reflects valuation differences on this acquisition, which
was then sold in October 1998 for approximately the carrying amount of its net
assets (Note 9).
Results for 1997 also include a nonrecurring after-tax charge of $3.2 million or
$.02 per share related to an accounting rule established by the Financial
Accounting Standards Board Emerging Issues Task Force on November 20, 1997. This
rule, EITF Issue No. 97-13, requires certain components of computer system
1
<PAGE>
development projects to be expensed as they are incurred and also requires that
any unamortized amounts previously capitalized be written off (Note 1).
Diluted earnings per share in 1999 increased 15.7%, from $1.34 in 1998 to $1.55
in 1999. Net income was $215.9 million in 1999, an increase of 11.6% over 1998's
net income of $193.4 million. Higher diluted earnings per share increases
relative to net income increases reflect the Company's continued repurchase of
treasury stock during 1999. For the year, the average diluted shares outstanding
declined 3.3%, with 2.1% as a result of Equifax's 1999 stock repurchases.
There are five reporting segments: North American Information Services, Payment
Services, Equifax Europe, Equifax Latin America, and Other. The discussion below
analyzes the following: (1) revenue and operating income for each of the five
segments; (2) general corporate expense; (3) consolidated other income, interest
expense, and effective income tax rates; and (4) financial condition. Prior year
information has been restated to conform with the current year presentation
(Note 11). Note 10 provides details on the segment results by quarter for 1999
and 1998, and Note 11 provides additional segment and geographic information.
NORTH AMERICAN INFORMATION SERVICES
(In millions) 1999 1998 1997
------------- ---- ---- ----
Revenue $768.4 $769.1 $703.4
Operating income $281.5 $266.6 $241.3
North American Information Services includes U.S. Credit Information and
Marketing Services, U.S. Risk Management Services, Mortgage Services, Canadian
Operations, Knowledge Engineering, Consumer Direct, Equifax Secure, as well as
National Decision Systems (divested in May 1997). Revenue in this segment
declined slightly in 1999 compared to a 9.3% increase in 1998. Excluding the
effects of acquisitions and divestitures, revenue increased .2% in 1999 and 7.8%
in 1998, with the revenue increase in 1999 tempered by lower growth in U.S.
Credit and Marketing Services and Mortgage Services as well as a revenue decline
within U.S. Risk Management Services.
U.S. Credit Information and Marketing Services' revenue increased 3.2% in 1999
and 11.1% in 1998. Excluding the effects of acquisitions, revenue was up 1.9% in
1999 and 8.7% in 1998. The lower revenue growth in 1999 reflects reduced growth
in both credit information services and marketing services. The lower growth in
credit information services' revenue was driven by reduced demand from mortgage
industry customers resulting from the higher interest rate environment, lower
volume growth from financial services and telecommunication/utility industries'
customers, and an average price decline of about 4%. The slowdown in marketing
services' revenue growth was due to pricing pressures and consolidation within
the financial services industry. Pricing pressures within credit information
services and marketing services are expected to continue in 2000, but volume
growth is expected to more than offset the price declines. The increase in U.S.
Credit and Marketing Services' revenue in 1998 was due to volume growth from
telecommunication/utility industries' customers as well as growth in marketing
services. The 1998 increase also benefited from higher volumes associated with
mortgage refinancing activities due to the favorable interest rate environment.
Average prices for credit reports were up slightly in 1998.
After adjusting for the effects of divestitures, revenue in U.S. Risk Management
Services declined 5.9% in 1999 and increased 9.1% in 1998. The decline in 1999
was due to lower revenue from the accounts receivable outsourcing business due
to reduced volumes and the attrition of a customer that took its business in
house earlier in the year, while the 1998 increase was due primarily to new
business from accounts receivable outsourcing.
Revenue in Mortgage Services increased 6.7% in 1999 and 45.7% in 1998. The
revenue growth in 1999 was tempered in the last half of the year by an 18%
percent decline in revenue, as compared to the comparable prior year period, due
to rising interest rates impacting refinancing activity. The increase in 1998
was due to increased
2
<PAGE>
volumes resulting from the favorable interest rate environment in that period.
Canadian revenue was virtually the same level in 1999 as the prior year amount
and was down 3.7% in 1998. Excluding acquisitions, in local currency, revenue
was down 3.0% in 1999 and .2% in 1998. The 1999 decline was due to lower revenue
from the consumer information business driven by pricing pressures and increased
competition, partially offset by higher revenue in risk management services. The
slight decline in 1998 resulted from revenue gains in the consumer information
business being more than offset by declines in risk management services.
Revenue in Equifax Secure and Knowledge Engineering totaled $11.1 million in
1999, and is expected to more than double in 2000.
Operating income for North American Information Services increased 5.6% in 1999
and 10.5% in 1998. Growth in both periods was tempered by increased operating
losses within Equifax Secure related to the development of remote authentication
and digital certificates as well as increased operating losses from
developmental activities in the Knowledge Engineering business. These
investments are expected to continue in 2000, but at a lower level than in 1999.
Absent these strategic investments in emerging businesses, operating income
increased approximately 12% in 1999 and 13% in 1998. The increase in 1999
resulted from cost control initiatives that included headcount reductions and
lower costs from service providers, including a $3.5 million rebate from a data
processing services provider recorded in the third quarter. Additionally, 1999
operating income benefited from lower incentive expense and a $5.3 million
reduction in pension expense. The increase in this segment's operating income in
1998 was due primarily to revenue growth within U.S. Credit Information and
Marketing Services, reflecting the operating leverage inherent in this business.
PAYMENT SERVICES
(In millions) 1999 1998 1997
------------- ---- ---- ----
Revenue $680.7 $566.1 $486.5
Operating income $135.5 $109.3 $ 85.2
Payment Services consists of Card Solutions, Check Solutions, and Card Software.
In September 1998, Payment Services expanded its operations into Latin America
by acquiring a 59.3% interest in UNNISA, a card services business in Brazil.
Revenue in Payment Services was up 20.2% in 1999 compared to an increase of
16.4% in 1998. After adjusting to exclude the impact of acquisitions, revenue
increased 13.9% in 1999 and 10.3% in 1998. The 1999 increase benefited from the
June 1999 start-up of a card operation in the U.K., which contributed 2.4
percentage points to the 1999 increase. However, 1999 revenue growth was
tempered by an exchange rate decline in Brazil, which negatively impacted
revenue growth by 2.0 percentage points.
Excluding the effects of acquisitions, revenue within Card Solutions increased
16.5% in 1999 and 12.1% in 1998, with 4.1 percentage points of the 1999 increase
attributable to the card processing operation in the U.K. The growth in both
periods was driven by higher revenue within the U.S. card business, which
increased 15.4% in 1999 following a 12.1% increase in 1998. These increases were
due to growth in processing of both merchant and cardholder transactions.
Revenue from the Brazilian card processing operation was up 21.7% in local
currency in 1999 due to growth in the cardholder account base. However, Brazil's
revenue was down in U.S. dollars due to the unfavorable decline in the exchange
rate.
Revenue in Check Solutions was up 13.5% in 1999 compared to a 5.9% increase in
1998. The total volume of checks authorized increased 17.2% to $26.6 billion in
1999, from $22.7 billion in 1998. The 1999 revenue growth in Check Solutions was
due to volume increases in the U.S. check operations driven by increased
business from Sears, Roebuck and Co. resulting from a 1999 agreement to provide
check authorization services at the retailer's U.S. locations. Revenue from the
U.K. check business was up 5.8% (8.4% in local currency) in 1999, while
3
<PAGE>
revenue from Canadian operations was down slightly in the year. The 1998 revenue
growth in Check Solutions was primarily due to volume increases in the U.S.
Revenue in the U.K. increased 5.7% (4.4% in local currency) while Canada
experienced a decline in 1998.
Revenue in Card Software declined 14.1% in 1999 and increased 29.7% in 1998 due
to timing of license sales between periods. Going forward, the Company is
de-emphasizing card software sales as it grows its global card processing
operations which will utilize this proprietary software to generate a recurring
revenue stream.
Payment Services operating income increased 24.0% in 1999 and 28.3% in 1998. The
1999 increase was driven by the revenue growth in U.S. card and check
operations. Operating income growth, however, was tempered by start-up costs
incurred in the U.K. card operation and lower income from Card Software due to
the decline in license sales between years. A decline in this segment's pension
expense in 1999 of $4.0 million was offset by higher incentive expenses. The
increase in this segment's operating income in 1998 was primarily attributable
to the revenue growth in the U.S. card business.
EQUIFAX EUROPE
(In millions) 1999 1998 1997
------------- ---- ---- ----
Revenue $188.4 $172.2 $137.7
Operating income (loss) $ 1.7 $ (2.7) $ 23.5
Equifax Europe consists of operations primarily in the United Kingdom and Spain.
During the second quarter of 1998, the Company increased its ownership in the
operations in Spain to 58% and obtained the control necessary to consolidate
these operations. Also, in the first quarter 1998, Equifax Europe acquired a
risk management services business in the U.K. Exclusive of these acquisitions,
revenue declined 0.4% in 1999 following a 1.9% increase in 1998. The decline in
revenue in 1999 is primarily attributable to lower sales of commercial credit
information and auto lien information services and lower exchange rates in the
U.K. and Spain. The decline in auto lien information resulted from a slowdown in
vehicle sales and increased competition within that market. Exchange rates
negatively impacted 1999 revenue approximately 3.4 percentage points, as the
U.K. rate dropped about 2.4%, while the Spain rate dropped about 8.8% during
that operation's comparable period of ownership between years. The 1998 revenue
increase over 1997, exclusive of acquisitions, resulted primarily from higher
auto lien services.
Operating income for Equifax Europe improved $4.4 million in 1999 after
declining $26.2 million in 1998. While the results of Equifax Europe were
disappointing in 1998, the Company moved swiftly to make appropriate management
and process changes, and heightened its focus on managing and reducing the
expense base of Equifax Europe to improve its financial performance. In 1999,
progress was made each quarter in Europe, with declining operating losses in the
first and second quarters, slightly better than breakeven operating income in
the third quarter, and $4.4 million operating income (8.8% operating margin) in
the fourth quarter. Management expects to continue to experience improving
operating results throughout 2000. The operating income decline in 1998 resulted
primarily from: (1) a decline in revenue growth in conjunction with a higher
expense base built on the expectation of higher revenues; (2) increased bad debt
provisions due to collectibility of past due receivables; (3) expenses related
to the Company's equity investment in RequesT, a start-up joint venture which
was written off in the fourth quarter; and (4) increased year 2000 expense.
EQUIFAX LATIN AMERICA
(In millions) 1999 1998 1997
------------- ---- ---- ----
Revenue $125.5 $103.9 $28.8
Operating income $ 23.0 $ 21.4 $ 9.2
4
<PAGE>
Equifax Latin America consists of a commercial information company in Brazil
(SCI) as well as credit information companies in Chile (DICOM) and Argentina
(VERAZ), and majority interests in credit information companies in Peru and El
Salvador. This segment's 1999 revenue increase was due to the August 1998
acquisition of an 80% interest in SCI. Excluding revenue from acquisitions
during their noncomparable period of ownership, segment revenue declined 17.2%
in 1999. Of this decline, 16.9 percentage points were attributable to lower
exchange rates in Brazil and Chile, which fell 37.6% and 9.4% respectively
between years. In local currency, SCI revenue increased 7.5% while DICOM revenue
was down slightly versus the prior year. VERAZ revenue declined 9.4% in 1999.
Both DICOM and VERAZ were impacted by recessions in their local economies. This
segment's 1998 revenue increase was due to the August 1998 acquisition of an 80%
interest in SCI and the consolidation of operations in Argentina (beginning in
the first quarter 1998) and Chile (beginning in the second quarter of 1997). In
December 1997, the Company increased its ownership interest in VERAZ from 33.3%
to 66.7%, and began to consolidate their operations in January 1998. In the
second quarter of 1997, Equifax acquired the remaining 50% of DICOM in Chile,
which accounted for the entire $28.8 million of revenue in 1997.
Operating income for Equifax Latin America increased $1.6 million in 1999. This
increase resulted from the SCI acquisition, but was partially offset by declines
in Argentina and Chile operating income. In 1998, operating income for Equifax
Latin America increased $12.2 million over 1997. This increase was primarily due
to the ownership increase in Argentina and the SCI acquisition.
OTHER
(In millions) 1999 1998 1997
------------- ---- ---- ----
Revenue $9.6 $9.6 $9.6
Operating income $8.9 $8.9 $8.9
This segment's revenue and operating income remained comparable between 1999,
1998 and 1997. Its operations consist solely of a subcontract expiring in 2002
related to HISI, the Company's lottery subsidiary.
GENERAL CORPORATE EXPENSE
(In millions) 1999 1998 1997
------------- ---- ---- ----
Expense $36.0 $37.8 $44.1
General corporate expense declined $1.8 million in 1999 from 1998 due primarily
to lower performance share plan expense partially offset by higher expenses
associated with global technology initiatives. The decline in performance share
plan expense was driven by the Company's lower stock price, as these plans have
certain measurement criteria based on both the period end stock price and the
average price during the last year of their measurement periods.
General corporate expense declined $6.3 million in 1998 from 1997 due to lower
incentive compensation expense,
5
<PAGE>
including performance share plan expense.
OTHER INCOME, INTEREST EXPENSE,
AND EFFECTIVE INCOME TAX RATES
(Dollars in millions) 1999 1998 1997
--------------------- ---- ---- ----
Other income, net $12.4 $ 4.3 $45.0
Interest expense $61.0 $42.7 $20.8
Effective income tax 41.0% 40.9% 42.6%
rate*
*ON INCOME FROM CONTINUING OPERATIONS BEFORE ACCOUNTING CHANGE
Other income in 1999 increased $8.1 million over 1998. This increase resulted
primarily from one-time gains of $7.1 million recorded in the second quarter of
1999, when the Company sold its 34% interest in Proceda in Brazil and also sold
three risk management offices in the U.S. (Note 4).
Other income in 1998 declined $40.7 million from 1997 due to a one-time gain of
$42.8 million in 1997 related to the sale of National Decision Systems (Note 4),
partially offset by higher levels of interest income in 1998.
The increase in interest expense in both years reflects the additional
borrowings (including the 1998 issuance of $400 million in senior notes and
debentures - Note 5) associated with the high level of acquisition activity in
1998 and treasury stock purchases in 1999 and 1998.
The effective income tax rate for 1999 was comparable to the rate in 1998. The
decline in the effective income tax rate in 1998 from 1997 resulted primarily
from non-deductible goodwill related to the 1997 sale of National Decision
Systems, partially offset by higher levels of non-deductible goodwill from 1998
acquisitions. The effective income tax rate in 2000 is expected to be slightly
higher than the rate in 1999.
FINANCIAL CONDITION
Net cash provided by operations increased to $324.7 million in 1999 from $289.1
million in 1998 due primarily to the Company's higher operating income before
depreciation and amortization. Normal capital expenditures and dividend payments
were met with these internally generated funds.
Other significant outlays in 1999 included $210.2 million of treasury stock
purchases and $22.9 million for acquisitions and equity investments. These items
were principally financed by an increase in long-term debt (primarily from the
Company's revolving credit facility) and excess cash from operations.
Capital expenditures for 1999, exclusive of acquisitions, were $120.9 million.
Capital expenditures for 2000, exclusive of acquisitions, are expected to
approximate the 1999 level, with continued investment in products and services
and system enhancements, additional projects to improve processes, and
investments in international development. Budgeted capital expenditures are
expected to be met with internally generated funds. As of December 31, 1999,
approximately $100 million remained available for future treasury stock
purchases. For 2000, the Company expects to significantly reduce the level of
its stock repurchases as compared to 1999. In February 2000, the Company signed
an agreement to purchase the Consumer Information Solutions (CIS) Group from
R.L. Polk & Co. for approximately $260 million in cash. The CIS Group provides
consumer marketing information services to a wide range of industries. This
transaction, which is subject to certain terms and closing conditions, is
expected to be completed by April 30, 2000, and is expected to be slightly
dilutive to the Company's earnings in the year 2000 and accretive to earnings
thereafter.
6
<PAGE>
In 1997, the Company increased its revolving credit facility with its bank group
from $550 million to $750 million. At December 31, 1999, $369 million was
available under this facility to fund future capital requirements, including the
CIS Group acquisition mentioned above. Should CSC exercise its option to sell
its credit reporting business to the Company (Note 9), additional sources of
financing would be required. However, the CSC agreement calls for a six-month
notice period, and management believes the Company would have alternative
sources of liquidity available to fund this potential purchase through the
public debt markets and bank lines of credit. Management believes that the
Company's liquidity will remain strong in both the short and long terms, and
that the Company has sufficient sources of external funding to finance all of
its capital needs, if necessary.
YEAR 2000 INFORMATION
1. Background. It was widely anticipated that the widespread use of computer
software that relied on two digits, rather than four digits, to define the
applicable year could cause computers and computer-controlled systems to
malfunction or incorrectly process data as we approached and entered the
year 2000. In view of the potential adverse impact that these "year 2000
problems" could have had on our business, operations and financial
condition, we implemented a central function to manage, validate and report
on a continuing basis to the Company's executive management and Board of
Directors with regard to our "year 2000 program." Our year 2000 program
process comprised five continuing activities: (a) identification and
assessment, (b) remediation planning, (c) remediation, (d) testing, and (e)
contingency planning for year 2000 problem failures.
2. The Company's Year 2000 Focus. We focused our year 2000 program primarily
in the following areas: (a) our information technology systems, which
include (i) internally developed business applications software, (ii)
software provided by vendors and (iii) the computer and peripheral hardware
used in our operations; (b) electronic data interchange systems; (c)
non-information technology systems (embedded technology) including office
business machines, and security, backup power and other building systems;
and (d) the flow of materials and non-information technology services from
our vendors.
3. Readiness and Plans. This section describes the status of our year 2000
program activities:
(a) Information Technology Systems.
Prior to the end of 1999, and substantially in accordance with our
plans, we completed our year 2000 identification, assessment,
remediation planning, remediation, testing, and contingency planning
activities for the application software and host environments
(operating systems software and hardware) of our information technology
systems, including our systems for North American Information Services,
Payment Services, Equifax Europe, Equifax Latin America and our central
corporate functions.
(b) Electronic Data Interchange Systems.
Prior to the end of 1999, and substantially in accordance with our
plans, we completed the identification, assessment, remediation
planning, remediation, and contingency planning for Company owned
hardware components of our critical network telecommunications systems.
We completed internal testing of our critical internal network and
conducted customer testing. There were no additional replacements or
upgrades required as a result of that testing.
(c) Non-Information Technology Systems.
Prior to the end of 1999, and substantially in accordance with our
plans, we completed the identification, assessment, remediation
planning, remediation, testing, and contingency planning for the year
2000 problem failures that might have occurred in our non-information
technology systems resulting from embedded technologies, including
office business machines, and security, backup power and other building
systems.
7
<PAGE>
(d) Materials and Services.
We distributed surveys to our materials and non-information technology
services vendors that support our material operations requesting
disclosure of their year 2000 readiness status and their plans for
addressing year 2000 problems relating to those goods and services and
any applicable delivery systems. We obtained additional assurances
(including in some instances audit and test activities) from a
substantial majority of our critical vendors that their goods, services
and delivery systems were appropriately and timely year 2000 ready to
meet our continuing needs. As previously disclosed, we believed that if
any vendor had been unable or unwilling to provide appropriate
assurances, we would have been able to use alternative vendors or
otherwise modify our services in a manner that would have avoided any
material impact to the Company.
We plan to continue to monitor our systems and processes for year 2000
problems as appropriate, as part of our regular, ongoing, quality assurance
efforts.
4. Costs to Address.
We estimate that the cost of our year 2000 program activities will be $58
million. Through December 31, 1999, we have incurred costs of approximately
$57 million related to those activities. Regarding our annual per share
charges, we expensed approximately one cent per share in 1996, two cents
per share in 1997, ten cents per share in 1998, and approximately eleven
cents per share in 1999, in connection with our year 2000 program
activities. In addition to costs and expenses of outside consultants,
programmers and professional advisors, and acquired hardware and software,
the above figures include direct costs associated with Company information
technology employees who worked on our year 2000 program and some of the
Company's non-information technology employees who devoted significant time
to the year 2000 program.
5. Business Continuity and Contingency Planning.
Prior to the end of 1999, and substantially in accordance with our plans,
we completed the process of updating our business continuity and
contingency plans to address the internal and external issues specific to
year 2000. The strategies and supporting plans, which were intended to
enable us to continue to operate, included performing certain processes
manually; repairing or obtaining replacement systems; changing suppliers;
and reducing or suspending certain non-critical aspects of our operations.
6. No Significant Year 2000 Problems to Report.
We believe that we put in place the processes and devoted the resources
necessary to achieve a level of readiness to meet our year 2000 challenges in a
timely and appropriate manner. As of the preparation of this disclosure, we are
well into the year 2000, and report no significant year 2000 problem failures
whatsoever (including as a result of the February 29 leap year date). While
there can be no assurance that our internal systems or the systems of others on
which we rely will not experience significant year 2000 problem failures going
forward, we believe that our comprehensive year 2000 preparations, along with
the absence of such failures thus far, strongly suggest that there will be few
if any such failures, and that the year 2000 problem will have no material
impact on our business, operations or financial condition in the future.
8
<PAGE>
3/3/00
FORWARD-LOOKING INFORMATION
The management's discussion and analysis, and other portions of this Annual
Report, include "forward-looking statements" within the meaning of the federal
securities laws. These forward-looking statements include, among others,
statements concerning the Company's outlook for 2000, volume and pricing trends,
cost control measures and their results, effective income tax rates, the
Company's expectations as to funding its capital expenditures and operations
during 2000, the Company's expectations that there will be few, if any,
significant year 2000 problem failures going forward, and other statements
relative to future plans and strategies. These forward-looking statements
reflect management's current expectations and are based upon currently available
data. Actual results are subject to future events, risks, and uncertainties
which could materially impact performance from that expressed or implied in
these statements.
Equifax expects to post another year of record financial performance in 2000. To
accomplish this goal, Equifax must successfully continue to implement its
strategy of expanding and leveraging its core businesses in markets where it
holds a substantial market share while positioning itself to exploit
opportunities in the credit economies worldwide. Equifax expects to achieve
these results by growing through global expansion, acquisitions and alliances,
value-added products and services, sales to customers in new and growing
industries, and new distribution channels. The Company will also continue its
focus on cost containment.
Important factors that either individually or in the aggregate could cause
actual results to differ materially from those expressed in the forward-looking
statements include, but are not limited to, the following: a change in the
growth rate of the overall U.S. economy, such that consumer spending and related
consumer debt are impacted; a decline or change in the marketing techniques of
credit card issuers; unexpected pricing pressure above and beyond the levels
experienced in the last several years; a reversal of the trend toward credit
card use increasing as a percentage of total consumer expenditures; the
Company's realization of cost control and synergies from integration of
acquisitions at levels lower than expected; unanticipated cancellation or
termination of customer or vendor contracts; risks associated with investments
and operations in foreign countries, including regulatory environments, exchange
rate fluctuations, and local political, social, and economic factors; the extent
to which the Company will continue its successful development and marketing of
new products and services to existing and new industries; changes in regulatory
environments; unforeseen year 2000 problem failures; negative change in market
conditions; or other unforeseen factors.
<PAGE>
EXHIBIT 13.3
EQUIFAX INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(In thousands)
-----------------------------------------------------------------------------------------------------------
December 31 1999 1998
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 136,596 $ 90,617
Trade accounts receivable, net of allowance for doubtful
accounts of $14,057 in 1999 and $12,811 in 1998 302,809 298,201
Other receivables 87,873 54,904
Deferred income tax assets 28,015 26,223
Other current assets 54,140 50,420
-------------- ---------------
Total current assets 609,433 520,365
-------------- ---------------
Property and Equipment:
Land, buildings and improvements 28,302 30,963
Data processing equipment and furniture 258,314 239,391
-------------- ---------------
286,616 270,354
Less accumulated depreciation 171,126 151,016
-------------- ---------------
115,490 119,338
-------------- ---------------
Goodwill 612,551 719,662
-------------- ---------------
Purchased Data Files 157,701 173,473
-------------- ---------------
Other Assets 344,606 295,957
-------------- ---------------
$ 1,839,781 $ 1,828,795
============== ===============
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
<PAGE>
<TABLE>
<CAPTION>
(In thousands, except par values)
- ----------------------------------------------------------------------------------------
December 31 1999 1998
- ----------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term debt and current maturities of long-term debt $ 79,866 $ 47,387
Accounts payable 177,427 107,346
Accrued salaries and bonuses 38,203 37,973
Income taxes payable 12,005 9,518
Other current liabilities 197,294 216,955
----------- -----------
Total current liabilities 504,795 419,179
----------- -----------
Long-Term Debt, Less Current Maturities 933,708 869,486
----------- -----------
Long-Term Deferred Revenue 22,547 32,465
----------- -----------
Deferred Income Tax Liabilities 73,132 50,132
----------- -----------
Other Long-Term Liabilities 89,974 91,067
----------- -----------
Commitments and Contingencies (Note 9)
Shareholders' Equity:
Common stock, $1.25 par value; shares
authorized - 300,000; issued - 174,259 in 1999
and 173,722 in 1998; outstanding - 134,001 in
1999 and 140,042 in 1998 217,824 217,153
Preferred stock, $0.01 par value; shares
authorized - 10,000; issued and outstanding -
none in 1999 or 1998 -- --
Paid-in capital 304,532 286,511
Retained earnings 726,827 562,911
Accumulated other comprehensive income (Note 7) (161,982) (35,063)
Treasury stock, at cost, 34,640 shares in 1999
and 27,698 shares in 1998 (Note 7) (816,213) (606,092)
Stock held by employee benefits trusts, at cost,
5,619 shares in 1999 and 5,983 shares in 1998 (Note 7) (55,363) (58,954)
----------- -----------
Total shareholders' equity 215,625 366,466
----------- -----------
$ 1,839,781 $ 1,828,795
=========== ===========
</TABLE>
<PAGE>
EQUIFAX INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS'
EQUITY AND COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Accumulated Other Comprehensive Income:
--------------------------------------------
Common Stock: Minimum
------------------- Foreign Liability Under
Shares Paid-In Retained Currency Supplemental
(In thousands) Outstanding Amount Capital Earnings Translation Retirement Plan Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 144,876 $213,573 $207,142 $ 401,233 $ (3,913) $(4,893) $ (8,806)
1997 changes:
Net income - - - 183,737 - - -
Foreign currency translation adjustment - - - - (9,771) - (9,771)
Adjustment for minimum liability under
supplemental retirement plan - - - - - (1,499) (1,499)
Shares issued under stock plans 1,606 2,008 22,800 - - - -
Treasury stock purchased (4,143) - - - - - -
Treasury stock reissued for acquisitions 270 - 3,468 - - - -
Cash dividends - - - (52,030) - - -
Spinoff dividend - - - (111,396) - - -
Income tax benefit from stock plans - - 8,825 - - - -
Dividends from employee benefits trusts - - 2,261 - - - -
Other - - - (3) - - -
------- -------- -------- --------- --------- ------- ---------
Balance, December 31, 1997 142,609 215,581 244,496 421,541 (13,684) (6,392) (20,076)
1998 changes:
Net income - - - 193,433 - - -
Foreign currency translation adjustment - - - - (15,313) - (15,313)
Adjustment for minimum liability under
supplemental retirement plan - - - - - 326 326
Shares issued under stock plans 1,451 1,572 18,952 - - - -
Shares contributed to U.S. retirement plan 390 - 10,392 - - - -
Treasury stock purchased (4,555) - - - - - -
Treasury stock reissued for acquisitions 147 - 2,346 - - - -
Cash dividends - - - (52,063) - - -
Income tax benefit from stock plans - - 8,085 - - - -
Dividends from employee benefits trusts - - 2,240 - - - -
------- -------- -------- --------- --------- ------- ---------
Balance, December 31, 1998 140,042 217,153 286,511 562,911 (28,997) (6,066) (35,063)
1999 changes:
Net income - - - 215,877 - - -
Foreign currency translation adjustment - - - - (128,283) - (128,283)
Adjustment for minimum liability under
supplemental retirement plan - - - - - 1,364 1,364
Shares issued under stock plans 599 671 6,945 - - - -
Shares contributed to U.S. retirement plan 304 - 7,003 - - - -
Treasury stock purchased (6,944) - - - - - -
Cash dividends - - - (51,961) - - -
Income tax benefit from stock plans - - 2,046 - - - -
Dividends from employee benefits trusts - - 2,027 - - - -
------- -------- -------- --------- --------- ------- ---------
Balance, December 31, 1999 134,001 $217,824 $304,532 $ 726,827 $(157,280) $(4,702) $(161,982)
======= ======== ======== ========= ========= ======= =========
<CAPTION>
Stock Held
By Employee Total
Treasury Benefits Shareholders' Comprehensive
(In thousands) Stock Trusts Equity Income
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1996 (323,625) $(64,567) $ 424,950
1997 changes:
Net income - - 183,737 $ 183,737
Foreign currency translation adjustment - - (9,771) (9,771)
Adjustment for minimum liability under
supplemental retirement plan - - (1,499) (1,499)
Shares issued under stock plans - - 24,808 -
Treasury stock purchased (129,085) - (129,085) -
Treasury stock reissued for acquisitions 5,132 - 8,600 -
Cash dividends - - (52,030) -
Spinoff dividend - - (111,396) -
Income tax benefit from stock plans - - 8,825 -
Dividends from employee benefits trusts - - 2,261 -
Other - - (3) -
--------- -------- --------- ---------
Balance, December 31, 1997 (447,578) (64,567) 349,397 $ 172,467
=========
1998 changes:
Net income - - 193,433 $ 193,433
Foreign currency translation adjustment - - (15,313) (15,313)
Adjustment for minimum liability under
supplemental retirement plan - - 326 326
Shares issued under stock plans 279 1,770 22,573 -
Shares contributed to U.S. retirement plan - 3,843 14,235 -
Treasury stock purchased (161,797) - (161,797) -
Treasury stock reissued for acquisitions 3,004 - 5,350 -
Cash dividends - - (52,063) -
Income tax benefit from stock plans - - 8,085 -
Dividends from employee benefits trusts - - 2,240 -
--------- -------- --------- ---------
Balance, December 31, 1998 (606,092) (58,954) 366,466 $ 178,446
=========
1999 changes:
Net income - - 215,877 $ 215,877
Foreign currency translation adjustment - - (128,283) (128,283)
Adjustment for minimum liability under
supplemental retirement plan - - 1,364 1,364
Shares issued under stock plans 54 594 8,264 -
Shares contributed to U.S. retirement plan - 2,997 10,000 -
Treasury stock purchased (210,175) - (210,175) -
Cash dividends - - (51,961) -
Income tax benefit from stock plans - - 2,046 -
Dividends from employee benefits trusts - - 2,027 -
--------- -------- --------- ---------
Balance, December 31, 1999 $(816,213) $(55,363) $ 215,625 $ 88,958
========= ======== ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE>
EQUIFAX INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(In thousands)
- -------------------------------------------------------------------------------------------------------------------------
Year Ended December 31 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 215,877 $ 193,433 $ 183,737
Adjustments to reconcile net income to net cash provided
by operating activities of continuing operations:
Depreciation and amortization 125,263 103,825 77,069
Gain from sale of businesses (7,095) - (42,798)
Income from discontinued operations - - (14,336)
Costs associated with effecting the spinoff - - 12,887
Cumulative effect of accounting change - - 3,237
Valuation loss on pending acquisition - - 25,000
Changes in assets and liabilities, excluding effects of acquisitions:
Accounts receivable, net (45,110) (40,179) (45,982)
Current liabilities, excluding debt 53,703 38,949 11,909
Other current assets 3,541 (336) (3,827)
Deferred income taxes 20,885 34,595 9,726
Other long-term liabilities, excluding debt (3,609) (16,831) 4,894
Other assets (38,743) (24,328) (11,431)
---------- --------- ---------
Net cash provided by operating activities of
continuing operations 324,712 289,128 210,085
---------- --------- ---------
Cash flows from investing activities:
Additions to property and equipment (39,033) (44,921) (34,587)
Additions to other assets, net (81,838) (74,411) (51,452)
Acquisitions, net of cash acquired (22,162) (478,463) (96,630)
Investments in unconsolidated affiliates (700) (22,752) (18,839)
Proceeds from sale of businesses 25,957 12,874 80,998
---------- --------- ---------
Net cash used by investing activities of continuing operations (117,776) (607,673) (120,510)
---------- --------- ---------
Cash flows from financing activities:
Net short-term borrowings 33,114 28,988 8,556
Additions to long-term debt 70,244 524,068 67,285
Payments on long-term debt (6,256) (3,692) (92,582)
Treasury stock purchases (210,175) (161,797) (129,085)
Dividends paid (51,961) (52,063) (52,030)
Proceeds from exercise of stock options 6,996 12,245 18,343
Other 5,011 11,704 11,085
---------- ---------- ---------
Net cash (used) provided by financing
activities of continuing operations (153,027) 359,453 (168,428)
---------- --------- ---------
Effect of foreign currency exchange rates on cash (7,930) (2,542) 196
Net cash provided by discontinued operations - - 82,748
---------- --------- ---------
Net cash provided 45,979 38,366 4,091
Cash and cash equivalents, beginning of year 90,617 52,251 48,160
---------- --------- ---------
Cash and cash equivalents, end of year $136,596 $90,617 52,251
========== ========= =========
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
(In thousands, except par values)
- --------------------------------------------------------------------------------------------------
December 31 1999 1998
- --------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
<S> <C> <C>
Short-term debt and current maturities of $ 79,866 $ 47,387
long-term debt
Accounts payable 177,427 107,346
Accrued salaries and bonuses 38,203 37,973
Income taxes payable 12,005 9,518
Other current liabilities 197,294 216,955
------------- -------------
Total current liabilities 504,795 419,179
------------- -------------
Long-Term Debt, Less Current Maturities 933,708 869,486
------------- -------------
Long-Term Deferred Revenue 22,547 32,465
------------- -------------
Deferred Income Tax Liabilities 73,132 50,132
------------- -------------
Other Long-Term Liabilities 89,974 91,067
------------- -------------
Commitments and Contingencies (Note 9)
Shareholders' Equity:
Common stock, $1.25 par value; shares
authorized - 300,000; issued - 174,259 in 1999
and 173,722 in 1998; outstanding - 134,001 in
1999 and 140,042 in 1998 217,824 217,153
Preferred stock, $0.01 par value; shares
authorized - 10,000; issued and outstanding -
none in 1999 or 1998 -- --
Paid-in capital 304,532 286,511
Retained earnings 726,827 562,911
Accumulated other comprehensive income (Note 7) (161,982) (35,063)
Treasury stock, at cost, 34,640 shares in 1999
and 27,698 shares in 1998 (Note 7) (816,213) (606,092)
Stock held by employee benefits trusts, at cost,
5,619 shares in 1999 and 5,983 shares in 1998 (Note 7) (55,363) (58,954)
------------- -------------
Total shareholders' equity 215,625 366,466
------------- -------------
$ 1,839,781 $ 1,828,795
============= =============
</TABLE>
<PAGE>
EXHIBIT C
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the
accounts of the Company and its majority-owned and controlled subsidiaries. All
significant intercompany transactions and balances have been eliminated. Certain
prior year amounts have been reclassified to conform with the current year
presentation. The historical financial statements presented reflect the spinoff
of ChoicePoint Inc. as a discontinued operation (Note 2).
NATURE OF OPERATIONS The Company principally provides information services to
businesses to help them grant credit and authorize and process credit card and
check transactions. The principal lines of business are information services and
payment services (see Note 11 for segment information). The principal markets
for both information and payment services are retailers, banks, and other
financial institutions, with information services also serving the
telecommunication and utility industries. The Company's operations are
predominantly located within the United States, with foreign operations
principally located within Canada, the United Kingdom, and Brazil.
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 RECOGNITION Revenue is recognized principally as services are provided
to customers. Amounts billed in advance are recorded as current or long-term
deferred revenue on the balance sheet, with current deferred revenue reflecting
services expected to be provided within the next twelve months. Current deferred
revenue is included with other current liabilities in the accompanying
consolidated balance sheets, and as of December 31, 1999 and 1998 totaled
$31,523,000 and $45,140,000, respectively. In 1996, the Company received a
one-time payment of $58,000,000 related to a lottery subcontract and recognized
$5,400,000 in revenue. The remaining balance is being recognized as revenue over
the term of the contract, with $9,636,000 per year recognized in 1999, 1998 and
1997. The unrecognized balance at December 31, 1999 totaled $23,692,000, with
$14,056,000 included in long-term deferred revenue in the accompanying
consolidated balance sheets.
EARNINGS PER SHARE Basic EPS is calculated as income available to common
stockholders divided by the weighted average number of common shares outstanding
during the period. Diluted EPS is calculated to reflect the potential dilution
that would occur if stock options or other contracts to issue common stock were
exercised and resulted in additional common shares outstanding. The income
amount used in the Company's EPS calculations is the same for both basic and
diluted EPS. A reconciliation of the average outstanding shares used in the two
calculations is as follows:
<TABLE>
<CAPTION>
(In thousands) 1999 1998 1997
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Weighted average shares outstanding (basic) 137,457 141,397 144,233
Effect of dilutive securities:
Stock options 1,880 2,714 3,099
Performance share plan 266 292 486
- ----------------------------------------------------------------------------------------------
Weighted average shares outstanding (diluted) 139,603 144,403 147,818
==============================================================================================
</TABLE>
PROPERTY AND EQUIPMENT The cost of property and equipment is depreciated
primarily on the straight-line basis over estimated asset lives of 30 to 50
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 Goodwill is amortized on a straight-line basis predominantly over
periods from 20 to 40 years. Amortization expense was $26,926,000 in 1999,
$21,536,000 in 1998, and $12,221,000 in 1997. As of December 31, 1999 and 1998,
accumulated amortization was $87,533,000 and $62,352,000, respectively. The
Company regularly evaluates whether events and circumstances have occurred which
indicate that the carrying amount of goodwill may warrant revision or may not be
recoverable. When factors indicate that goodwill 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 in
measuring whether the goodwill is recoverable.
PURCHASED DATA FILES Purchased data files are amortized on a straight-line
basis primarily over 15 years. Amortization expense was $17,566,000 in 1999,
$14,982,000 in 1998, and $11,506,000 in 1997. As of December 31, 1999 and 1998,
accumulated amortization was $109,269,000 and $91,235,000, respectively.
OTHER ASSETS Other assets at December 31, 1999 and 1998 consist of the
following:
(In thousands) 1999 1998
- --------------------------------------------------------------------------------
Systems development and other deferred costs $154,301 $127,912
Purchased software 55,013 47,691
Prepaid pension cost 86,764 58,518
Investments in unconsolidated affiliates 5,558 21,027
Other 42,970 40,809
- --------------------------------------------------------------------------------
$344,606 $295,957
================================================================================
<PAGE>
Purchased software and systems development and other deferred costs are being
amortized on a straight-line basis over five to ten years. Amortization expense
for other assets was $43,156,000 in 1999, $32,078,000 in 1998, and $23,018,000
in 1997. As of December 31, 1999 and 1998, accumulated amortization was
$159,840,000 and $120,286,000, respectively.
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. Exchange gains and losses on intercompany balances of a long-term
investment nature are also recorded as a component of shareholders' equity.
Other foreign currency translation 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.
Cash paid for income taxes and interest from continuing operations is as
follows:
(In thousands) 1999 1998 1997
- --------------------------------------------------------------------------------
Income taxes, net of amounts refunded $127,611 $98,905 $123,670
Interest 60,379 28,885 21,593
In 1999, 1998, and 1997, the Company acquired various businesses that were
accounted for as purchases (Note 3). In conjunction with these transactions,
liabilities were assumed as follows:
(In thousands) 1999 1998 1997
- --------------------------------------------------------------------------------
Fair value of assets acquired $24,783 $540,078 $127,724
Cash paid for acquisitions 24,182 485,076 102,903
Value of treasury shares reissued
for acquisitions -- 6,000 8,600
Notes and deferred payments -- -- 5,800
- --------------------------------------------------------------------------------
Liabilities assumed $ 601 $49,002 $10,421
================================================================================
FINANCIAL INSTRUMENTS The Company's financial instruments consist primarily of
cash and cash equivalents, accounts and notes receivable, accounts payable, and
short-term and long-term debt. The carrying amounts of these items, other than
long-term debt, approximate their fair market values due to their short
maturity. As of December 31, 1999, the fair value of the Company's long-term
debt (determined primarily by broker quotes) was $896,028,000 compared to its
carrying value of $933,708,000. During 1999, the Company did not hold any
material derivative financial instruments.
RECENT ACCOUNTING PRONOUNCEMENTS AND ACCOUNTING CHANGE In November 1997, the
Financial Accounting Standards Board (FASB) Emerging Issues Task Force released
Issue No. 97-13 "Accounting for Costs Incurred in Connection with a Consulting
Contract or an Internal Project That Combines Business Process Reengineering and
Information Technology Transformation" (EITF 97-13). This issue requires that
the cost of business process reengineering activities that are a part of a
systems development project be expensed as incurred, and that any costs
previously capitalized be written off net of tax as a change in accounting
principle in the current period. Prior to the issuance of EITF 97-13, the
Company had capitalized certain costs of business process reengineering related
to several of its systems development projects. Accordingly, during the fourth
quarter 1997, the Company recorded an expense of $5,298,000 ($3,237,000 after
tax, or $.02 per share) to reflect the write off of these previously capitalized
costs in accordance with EITF 97-13.
In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133 (SFAS 133), "Accounting for Derivative Instruments and Hedging Activities."
SFAS 133 establishes accounting and reporting standards for derivative
instruments and hedging activities and is effective (as amended by SFAS No. 137)
on January 1, 2001 for the Company. Based on its current level of derivative
instruments and hedging activities, the Company does not believe the adoption of
SFAS 133 will have a significant impact on its financial statements or reported
earnings.
2. DISCONTINUED OPERATIONS
On December 9, 1996, the Company announced its intention to split into two
independent, publicly traded companies by spinning off its Insurance Services
industry segment, contingent on receiving a favorable ruling from the IRS
regarding the tax-free status of the dividend for U.S. shareholders. In July
1997, the Company received the favorable IRS ruling and on August 7, 1997,
completed the spinoff of its Insurance Services industry segment. The spinoff
was accomplished by the Company's contribution of the business units that
comprised the Insurance Services segment into one wholly owned subsidiary,
ChoicePoint Inc. All of the common stock of ChoicePoint was then distributed to
Equifax shareholders as a dividend, with one share of ChoicePoint common stock
distributed for each ten shares of Equifax common stock held.
As a result of the spinoff, the Company's December 31, 1997 financial statements
have been prepared with the Insurance Services segment results of operations and
cash flows shown as "discontinued operations." All historical financial
statements presented conform to this presentation. During the second quarter of
1997, the Company recorded an expense of $15,041,000 to reflect the net costs
associated with effecting the spinoff ($12,887,000 after tax, or $.09 per
share). These costs include duplicate software licenses, severance, legal and
investment banker fees, and other related costs, partially offset by a $17.1
million curtailment gain related to the U.S. retirement plan caused by the
spinoff and the pretax earnings of ChoicePoint for July 1997.
<PAGE>
Summarized financial information for the discontinued operation is as follows:
(In thousands) 1997
- ---------------------------------------------------------------------------
Revenue $340,251
Income before income taxes 24,515
Net income 14,336
The results of operations of ChoicePoint in the table above include its
operations only through June 30, 1997. ChoicePoint's results after June 30, 1997
through the spinoff date (July 31, 1997 for accounting purposes) are included
with "Costs associated with effecting the spinoff" in the accompanying
consolidated statements of income. The July results totaled $4.5 million of
income before income taxes and $2.6 million of net income.
The Company's intercompany receivable from ChoicePoint totaled $85.6 million at
July 31, 1997, and was repaid to the Company by ChoicePoint in August 1997.
Other significant spinoff-related transactions occurring near the date of the
spinoff included ChoicePoint's assumption of $29.0 million of the Company's
long-term debt and a $13.0 million capital contribution made by the Company to
ChoicePoint. These transactions, net of cash payments related to spinoff costs,
have been included in "Net cash provided by discontinued operations" in the
accompanying consolidated statements of cash flows.
3. ACQUISITIONS AND INVESTMENTS IN UNCONSOLIDATED AFFILIATES
In 1999, the Company acquired the credit files of fourteen credit affiliates
located in the United States and three credit affiliates in Canada. They were
accounted for as purchases and had an aggregate purchase price of $24,182,000,
with $7,508,000 allocated to goodwill and $15,954,000 allocated to purchased
data files. Their results of operations have been included in the consolidated
statements of income from the dates of acquisition and were not material. In
February 2000, the Company signed an agreement to purchase the Consumer
Information Solutions (CIS) Group from R.L. Polk & Co. for approximately $260
million in cash. The CIS Group provides consumer marketing information services
to a wide range of industries. This transaction, which is subject to certain
terms and closing conditions, is expected to be completed by April 30, 2000, and
will be accounted for as a purchase.
During 1998 and 1997, the Company acquired, made equity investments, or
increased its ownership in the following businesses:
<TABLE>
<CAPTION>
Date Industry Percentage
Business Acquired Segment Ownership
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Unnisa Ltda. (Brazil) September 1998 Payment Services 59.3%
Proceda S.A. (Brazil) September 1998 Payment Services 34.0%
Seguranca ao Credito e Informacoes (SCI-Brazil) August 1998 Latin America 80.0%
Credit Bureau of Vancouver (Canada) July 1998 North America 100.0%
Equifax Canada Inc. July 1998 North America 100.0%(1)
Decisioneering Group, Inc. July 1998 North America 100.0%
ASNEF-Equifax Servicios de Informacion de Credito, S.L. May 1998 Europe 58.0%(2)
(Spain)
Infocorp (Peru) April 1998 Latin America 51.0%(3)
CCI Group Plc (U.K.) March 1998 Europe 100.0%
Goldleaf Technologies, Inc. December 1997 Payment Services 100.0%
Organizacion VERAZ S.A. (Argentina) December 1997 Latin America 66.7%(4)
Equifax Venture Infotek (India) November 1997 Payment Services 50.0%
Group Incresa (Spain) July 1997 Europe 100.0%
DICOM S.A. (Chile) March 1997 Latin America 100.0%(5)
HLS Financial Group, Inc. February 1997 North America 100.0%
Foothill Collection Services, Inc. February 1997 North America 100.0%
</TABLE>
1 Increased to 100.0% from 84.4%
2 Increased from 49.0% acquired in 1994
3 Increased from 35.0% acquired with DICOM S.A. in 1994
4 Increased to 66.7% from the 33.3% ownership position acquired in 1994
5 Increased to 100.0% from the 50.0% ownership position acquired in 1995 and
1994
In 1998, in addition to the businesses above, the Company acquired the credit
files of fourteen credit affiliates located in the United States and the
collection businesses of Computer Sciences Corporation (CSC), which was
subsequently sold (Note 9). Also, during the first quarter of 1998, the Company
obtained the control necessary and began to consolidate the operations of its
66.7% owned investment in Organizacion VERAZ S.A. in Argentina. The investment
in Proceda S.A., along with increases in certain other equity investments,
totaled $22.8 million and was accounted for under the equity method. They were
purchased with cash and recorded as other assets. The remaining 1998 business
and credit file acquisitions were accounted for as purchases and had an
aggregate purchase price of $491,076,000. They were purchased with a combination
of cash totaling $485,076,000 and the reissuance of treasury stock with a fair
market value of $6,000,000. These acquisitions and the consolidation of VERAZ
resulted in $389,013,000 of goodwill, $86,259,000 of purchased data files, and
$22,170,000 of other assets (primarily software and deferred systems costs).
These allocations include $26.0 million reallocated from other assets related to
investments in companies previously accounted for under the equity method. Their
results of operations have been included in the consolidated statements of
income from the dates of acquisition. The following unaudited pro forma
information has been prepared as if these acquisitions had occurred on January
1, 1997. The information is based on the
<PAGE>
historical results of the separate companies, and may not necessarily be
indicative of the results that could have been achieved, or of results that may
occur in the future.
(In thousands, except per share amounts) 1998 1997
- --------------------------------------------------------------------------------
Revenue $1,751,184 $1,592,264
Net income 181,598 170,588
Net income per common share (diluted) 1.26 1.15
================================================================================
In 1997, in addition to the businesses above, the Company acquired the credit
files of sixteen credit affiliates located in the United States. The investments
in companies in India and Argentina totaled $18.8 million and were accounted for
under the equity method. They were purchased with cash and recorded as other
assets. The investment in Group Incresa in Spain was made by the Company's
49%-owned equity investment, ASNEF. The remaining 1997 business and credit file
acquisitions were accounted for as purchases and had an aggregate purchase price
of $117,303,000, with $88,661,000 allocated to goodwill, $32,695,000 to
purchased data files, and $10,096,000 to other assets (primarily purchased
software). These allocations include $25.2 million reallocated from other assets
related to the Company's first 50% ownership in DICOM S.A. Their results of
operations have been included in the consolidated statements of income from the
dates of acquisition and were not material. They were purchased using a
combination of cash totaling $102,903,000, notes payable to sellers of
$5,800,000, and the reissuance of treasury stock with a fair market value of
$8,600,000.
4. DIVESTITURES
In April 1999, the Company sold its 34% equity interest in Proceda S.A. in
Brazil, and in June 1999, also sold three risk management offices located in the
U.S. Proceeds from these sales totaled $25,957,000 and resulted in a gain of
$7,095,000 recorded in other income ($2,888,000 after tax, or $.02 per share).
In October 1998, the Company sold the collection businesses it had purchased
from CSC earlier in the year (Note 9).
During the second quarter of 1997, the Company sold its National Decision
Systems business unit from its North America Information Services segment. Cash
proceeds, net of related divestiture expenses, totaled $80,998,000 and resulted
in a gain of $42,798,000 recorded in other income ($17,881,000 after tax, or
$.12 per share).
5. LONG-TERM DEBT AND SHORT-TERM BORROWINGS
Long-term debt at December 31, 1999 and 1998 is as follows:
<TABLE>
<CAPTION>
(In thousands) 1999 1998
- --------------------------------------------------------------------------------------
<S> <C> <C>
Senior Notes, 6.5%, due 2003, net of unamortized
discount of $357 in 1999 and $459 in 1998 $199,643 $199,541
Senior Notes, 6.3%, due 2005, net of unamortized
discount of $921 in 1999 and $1,089 in 1998 249,079 248,911
Senior Debentures, 6.9%, due 2028, net of unamortized
discount of $1,425 in 1999 and $1,475 in 1998 148,575 148,525
Borrowings under $750 million revolving credit facility,
Weighted average rate of 6.62% at December 31, 1999 318,000 249,000
Other 22,581 30,584
- --------------------------------------------------------------------------------------
937,878 876,561
Less current maturities 4,170 7,075
- --------------------------------------------------------------------------------------
$933,708 $869,486
======================================================================================
</TABLE>
In June 1998, the Company issued new 6.3% seven-year notes with a face value of
$250,000,000 in a public offering. The notes were sold at a discount of
$1,172,500. In July 1998, the Company issued new 6.9% thirty-year debentures
with a face value of $150,000,000 in a public offering. The debentures were sold
at a discount of $1,500,000. The discounts and related issuance costs will be
amortized on a straight-line basis over the respective term of the notes and
debentures.
In November 1997, the Company replaced its $550 million revolving credit
facility with a new, committed $750 million revolving credit facility with a
group of commercial banks that expires November 2002. The agreement provides
interest rate options tied to Base Rate, LIBOR, or Money Market indexes and
contains certain financial covenants related to interest coverage, funded debt
to cash flow, and limitations on subsidiary indebtedness.
In 1997, the Company also arranged for a $75 million revolving credit facility
with a commercial bank that expires December 2000. The agreement provides
interest rate options tied to LIBOR, Prime, and Federal Funds indexes and
contains certain financial covenants related to interest coverage, funded debt
to cash flow, and limitations on subsidiary indebtedness. No amounts were
outstanding under this facility at December 31, 1999 or 1998.
Scheduled maturities of long-term debt during the five years subsequent to
December 31, 1999, are as follows: $4,170,000 in 2000; $14,631,000 in 2001;
$321,781,000 in 2002; $199,643,000 in 2003; and none in 2004.
<PAGE>
In October 1999, a Canadian subsidiary of the Company entered into a
C$100,000,000 loan, renewable annually, with a group of banks. The loan
agreement provides interest rate options tied to Prime, Base Rate, LIBOR, and
Canadian Banker's Acceptances, and contains financial covenants related to
interest coverage, funded debt to cash flow, and limitations on subsidiary
indebtedness. The Company's short-term borrowings at December 31, 1999 (which
includes the Canadian loan mentioned above) and 1998 totaled $75,696,000 and
$40,312,000, respectively, and consisted primarily of notes payable to banks.
These notes had a weighted average interest rate of 5.20% at December 31, 1999
and 5.47% at December 31, 1998.
6. INCOME TAXES
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 from continuing operations consists of the
following:
(In thousands) 1999 1998 1997
- --------------------------------------------------------------------------------
Current:
Federal $96,342 $74,769 $109,804
State 15,855 10,854 21,408
Foreign 16,355 17,020 9,093
- --------------------------------------------------------------------------------
128,552 102,643 140,305
- --------------------------------------------------------------------------------
Deferred:
Federal 11,467 26,309 (8,361)
State 2,596 4,952 (2,269)
Foreign 7,432 (92) 7,938
- --------------------------------------------------------------------------------
21,495 31,169 (2,692)
- --------------------------------------------------------------------------------
$150,047 $133,812 $137,613
================================================================================
The provision for income taxes from continuing operations is based on income
from continuing operations before income taxes as follows:
(In thousands) 1999 1998 1997
- --------------------------------------------------------------------------------
United States $322,782 $299,815 $284,116
Foreign 43,142 27,430 39,022
- --------------------------------------------------------------------------------
$365,924 $327,245 $323,138
================================================================================
The provision for income taxes from continuing operations is reconciled with the
federal statutory rate as follows:
<TABLE>
<CAPTION>
(In thousands) 1999 1998 1997
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal statutory rate 35.0% 35.0% 35.0%
- ---------------------------------------------------------------------------------------
Provision computed at federal statutory rate $128,073 $114,536 $113,098
State and local taxes, net of federal tax benefit 11,993 10,274 12,440
Nondeductible goodwill from divestitures -- -- 5,652
Other 9,981 9,002 6,423
- ---------------------------------------------------------------------------------------
$150,047 $133,812 $137,613
=======================================================================================
</TABLE>
Components of the Company's deferred income tax assets and liabilities at
December 31, 1999 and 1998 are as follows:
(In thousands) 1999 1998
- --------------------------------------------------------------------------------
Deferred income tax assets:
Reserves and accrued expenses $26,067 $24,710
Postretirement benefits 9,515 9,591
Employee compensation programs 15,890 18,205
Deferred revenue 11,517 14,985
Net operating loss carryforwards of subsidiaries 11,066 10,257
Foreign tax credit carryforwards 18,629 13,120
Other 8,318 4,265
- --------------------------------------------------------------------------------
101,002 95,133
- --------------------------------------------------------------------------------
Deferred income tax liabilities:
Data files and other assets (71,163) (61,643)
Depreciation (2,940) (3,952)
Pension expense (34,236) (22,989)
Undistributed earnings of foreign subsidiaries (28,891) (20,520)
Other (8,889) (9,938)
- --------------------------------------------------------------------------------
(146,119) (119,042)
- --------------------------------------------------------------------------------
Net deferred income tax liability $(45,117) $(23,909)
================================================================================
<PAGE>
The Company's deferred income tax assets and liabilities at December 31, 1999
and 1998 are included in the accompanying consolidated balance sheets as
follows:
(In thousands) 1999 1998
- --------------------------------------------------------------------------------
Deferred income tax assets $28,015 $26,223
Deferred income tax liabilities (73,132) (50,132)
- --------------------------------------------------------------------------------
Net deferred income tax liability $(45,117) $(23,909)
================================================================================
Accumulated undistributed retained earnings of Canadian subsidiaries amounted to
approximately $104,515,000 at December 31, 1999. No provision for Canadian
withholding taxes or United States federal income taxes is made on these
earnings because they are considered by management to be permanently invested in
those subsidiaries and, under the tax laws, are not subject to such taxes until
distributed as dividends. If the earnings were not considered permanently
invested, approximately $5,226,000 of deferred income taxes would have been
provided. Such taxes, if ultimately paid, may be recoverable as foreign tax
credits in the United States.
7. SHAREHOLDERS' EQUITY
RIGHTS PLAN In 1995, the Company's Board of Directors adopted a Shareholder
Rights Plan (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 Board of
Directors to represent shareholders' interests fully. Pursuant to the Rights
Plan, the Board of Directors declared a dividend of one Share Purchase Right (a
Right) for each outstanding share of the Company's common stock, with
distribution to be made to shareholders of record as of November 24, 1995. The
Rights, which will expire in November 2005, initially will be represented by,
and traded together with, the Company's common stock. The Rights are not
currently exercisable and do not become exercisable unless certain triggering
events occur. Among the triggering events is the acquisition of 20% or more of
the Company's common stock by a person or group of affiliated or associated
persons. Unless previously redeemed, 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.
COMPREHENSIVE INCOME Effective with the first quarter 1998, the Company
adopted Statement of Financial Accounting Standards No. 130 (SFAS 130),
"Reporting Comprehensive Income." SFAS 130 requires the disclosures of the
components of comprehensive income (net income plus other changes in equity
accounts from non-owner transactions), and accumulated other comprehensive
income (the accumulated total of comprehensive income transactions other than
net income). The Company has elected to disclose these items in its Consolidated
Statements of Shareholders' Equity and has changed the format of those
statements to meet the requirements of SFAS 130.
TREASURY STOCK During 1999, 1998, and 1997, the Company repurchased 6,944,000,
4,555,000, and 4,143,000 of its own common shares through open market
transactions at an aggregate cost of $210,175,000, $161,797,000, and
$129,085,000, respectively. At its January 1999 meeting, the Company's Board of
Directors authorized an additional $250,000,000 in share repurchases, and at
December 31, 1999, approximately $100 million remained available for future
purchases. During 1998 and 1997, the Company reissued 164,000 and 270,000
treasury shares, respectively, in connection with acquisitions (Note 3). In
1998, the Company received 17,000 treasury shares in conjunction with the final
settlement of a prior year acquisition.
In 1993, the Company established the Equifax Inc. Employee Stock Benefits Trust
to fund various employee benefit plans and compensation programs and transferred
6,200,000 treasury shares to the Trust. In 1994, the Company transferred 600,000
treasury shares to another employee benefits trust. Shares held by the trusts
are not considered outstanding for earnings per share calculations until
released to the employee benefit plans or programs. During 1999, 364,354 shares
were used, with 304,183 shares contributed to the Company's U.S. Retirement Plan
and 60,171 shares used for various employee incentive programs. In 1998, 569,655
shares were used for a contribution to the Company's U.S. Retirement Plan, an
employee stock purchase plan, and an employee bonus plan. The shares contributed
to the U.S. Retirement Plan (390,000 shares) were repurchased by the Company at
the current market price and recorded as treasury stock. No shares were used in
1997.
STOCK OPTIONS The Company's shareholders have approved several stock option
plans which provide that qualified and nonqualified options may be granted to
officers and employees at exercise prices not less than market value on the date
of grant. Generally, options vest proportionately over a four-year period and
are exercisable for ten years from grant date. Certain of the plans also provide
for awards of restricted shares of the Company's common stock. At December 31,
1999, there were 1,563,000 shares available for future option grants and
restricted stock awards.
A summary of changes in outstanding options and the related weighted average
exercise price per share is shown in the following table. The number of options
outstanding and their exercise prices were adjusted pursuant to a formula as a
result of the spinoff of ChoicePoint in August 1997. The 1997 grant,
cancellation, and exercise information reflects the impact of this adjustment
back to January 1, 1997, with the adjustment increasing the number of options
outstanding at the beginning of fiscal 1997 by approximately 1,096,000 shares.
<TABLE>
<CAPTION>
1999 1998 1997
-------------------------------------------------------------------
(Shares in thousands) Shares Average Shares Average Shares Average
Price Price Price
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, beginning of year 7,820 $22.40 6,582 $14.89 7,526 $14.62
Adjustment to beginning balance
due to spinoff -- -- -- -- 1,096 --
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Granted:
At market price 3,924 $27.62 2,581 $34.90 968 $26.06
In excess of market price -- -- 271 $45.97 119 $35.44
Canceled (591) $34.42 (388) $28.61 (1,434) $15.81
Exercised (590) $13.39 (1,226) $11.20 (1,693) $11.45
- ---------------------------------------------------------------------------------------------------------
Balance, end of year 10,563 $24.14 7,820 $22.40 6,582 $14.89
- ---------------------------------------------------------------------------------------------------------
Exercisable at end of year 5,165 $17.95 4,230 $15.35 4,420 $12.53
=========================================================================================================
</TABLE>
The following table summarizes information about stock options outstanding at
December 31, 1999 (shares in thousands):
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
--------------------------------------------------- ------------------------------
Weighted Average Weighted Weighted
Range of Remaining Average Average
Exercise Contractual Exercise Exercise
Prices Shares Life in Years Price Shares Price
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$7.09-$16.26 3,052 3.2 $11.42 2,947 $11.24
17.57-24.44 3,437 8.8 $23.13 1,389 $22.78
24.44-36.87 3,432 6.9 $33.29 580 $28.95
37.00-55.12 642 7.9 $41.12 249 $44.79
- ------------------------------------------------------------------------------------------------------------
10,563 6.5 $24.14 5,165 $17.95
============================================================================================================
</TABLE>
The weighted-average grant-date fair value per share of options granted in 1999,
1998, and 1997 is as follows:
1999 1998 1997
- --------------------------------------------------------------------------------
Grants at market price $9.95 $13.27 $10.05
Grants in excess of market price -- $6.63 $6.17
The fair value of options granted in 1999, 1998, and 1997 is estimated on the
date of grant using the Black-Scholes option-pricing model based on the
following weighted average assumptions:
1999 1998 1997
- --------------------------------------------------------------------------------
Dividend yield 1.4% 1.1% 1.1%
Expected volatility 42.4% 41.9% 41.3%
Risk-free interest rate 5.6% 5.6% 6.3%
Expected life in years 4.0 4.3 4.3
PERFORMANCE SHARE PLAN The Company has a performance share plan for certain
key officers that provides for distribution of the Company's common stock at the
end of three-year measurement periods based on the growth in earnings per share
and certain other criteria. Recipients may elect to receive up to 50% of their
distribution in cash based on the Company's common stock price at the end of the
measurement period. Units outstanding at July 31, 1997 were increased by 14.6%
to reflect the impact of the ChoicePoint spinoff. The total expense under the
plan was a credit to expense of $900,000 in 1999, and a charge to expense of
$4,213,000 in 1998 and $11,022,000 in 1997. At December 31, 1999, 913,482 shares
of common stock were available for future awards under the plan. Units awarded
during the year were 177,000 in 1999, 187,000 in 1998, and 190,000 in 1997.
Award-date fair value per unit was $36.88 in 1999, $32.69 in 1998, and $29.50 in
1997. Units outstanding at December 31 were 443,412 in 1999, 489,753 in 1998,
and 809,600 in 1997.
PRO FORMA INFORMATION In accordance with the provisions of Statement of
Financial Accounting Standards, "Accounting for Stock-Based Compensation" (SFAS
No. 123), the Company has elected to apply APB Opinion No. 25 and related
interpretations in accounting for its stock option and performance share plans.
Accordingly, the Company does not recognize compensation cost in connection with
its stock option plans and records compensation expense related to its
performance share plan based on the current market price of the Company's common
stock and the extent to which performance criteria are being met. 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 table
below (in thousands, except per share amounts):
<TABLE>
<CAPTION>
1999 1998 1997
---------------------- ----------------------- -----------------------
Reported Pro forma Reported Pro forma Reported Pro forma
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net income $215,857 $201,006 $193,433 $184,690 $183,737 $182,239
=========================================================================================================
Net income per share (basic) $1.57 $1.46 $1.37 $1.31 $1.27 $1.26
=========================================================================================================
Net income per share (diluted) $1.55 $1.44 $1.34 $1.28 $1.24 $1.23
=========================================================================================================
</TABLE>
Because the SFAS No. 123 fair value disclosure requirements apply only to
options and performance share units granted after December 31, 1994, the
resulting pro forma compensation cost may not be representative of that to be
expected in future years.
<PAGE>
8. EMPLOYEE BENEFITS
In 1998, the Company adopted Statement of Financial Accounting Standards No.
132, "Employers' Disclosures about Pensions and Other Postretirement Benefits."
This statement revises employers' disclosures about pension and other
postretirement benefit plans. It does not change the measurement or recognition
of these plans.
U.S. RETIREMENT PLAN The Company has a non-contributory qualified retirement
plan covering most U.S. salaried employees. Benefits are primarily a function of
salary and years of service. A reconciliation of the benefit obligation, plan
assets, and funded status of the plan is as follows (in thousands):
<TABLE>
<CAPTION>
Change in benefit obligation 1999 1998
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Benefit obligation at beginning of year $411,689 $388,859
Service cost 5,089 4,351
Interest cost 27,587 27,562
Actuarial (gain) loss (24,085) 21,638
Curtailments (3,912) --
Benefits paid (29,269) (30,721)
- ----------------------------------------------------------------------------------------------------
Benefit obligation at end of year $387,099 $411,689
====================================================================================================
<CAPTION>
Change in plan assets 1999 1998
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Fair value of plan assets at beginning of year $455,727 $435,005
Actual return on plan assets 64,137 33,443
Employer contribution 10,000 18,000
Benefits paid (29,270) (30,721)
- ----------------------------------------------------------------------------------------------------
Fair value of plan assets at end of year $500,594 $455,727
====================================================================================================
Funded status $113,495 $44,038
Unrecognized actuarial (gain) loss (39,300) 9,262
Unrecognized prior service cost 512 1,027
- ----------------------------------------------------------------------------------------------------
Prepaid pension cost $74,707 $54,327
====================================================================================================
<CAPTION>
Assumptions used in accounting for the plan are as follows: 1999 1998
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Discount rate 7.75% 6.75%
Expected return on plan assets 9.50% 9.50%
Rate of compensation increase 4.25% 4.25%
</TABLE>
Net pension income for the plan includes the following (income) expense
components:
<TABLE>
<CAPTION>
(In thousands) 1999 1998 1997
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 5,089 $ 4,351 $ 5,266
Interest cost 27,587 27,562 26,735
Expected return on plan assets (40,066) (34,588) (32,835)
Amortization of prior service cost 429 846 1,293
Recognized actuarial loss 407 1,517 --
Curtailment gain (3,827) -- (17,118)
Amortization of transition obligation -- -- (62)
- --------------------------------------------------------------------------------------
Net pension income $(10,381) $ (312) $(16,721)
======================================================================================
</TABLE>
The 1999 curtailment gain of $3,827,000 was recognized in the fourth quarter and
resulted from workforce reductions related to outsourcing certain administrative
and data processing functions and the sale of three risk management offices. Net
pension income in 1997 includes income allocated to discontinued operations
totaling $16,707,000, of which $17,118,000 related to a curtailment gain
resulting from the spinoff of ChoicePoint (see Note 2).
At December 31, 1999, the plan's assets included 1,284,538 shares of the
Company's common stock with a market value of approximately $30,267,000.
FOREIGN RETIREMENT PLANS The Company maintains a defined benefits plan for
most salaried employees in Canada. The aggregate fair market value of the
Canadian plan assets approximates that plan's projected benefit obligation,
which totaled $25,701,000 and $26,021,000 at December 31, 1999 and 1998,
respectively. Prepaid pension cost for this plan was $12,027,000 and $4,191,000
at December 31, 1999 and 1998, respectively. The Company also maintains defined
contribution plans for certain employees in the United Kingdom.
SUPPLEMENTAL RETIREMENT PLAN The Company maintains a supplemental executive
retirement program for certain key employees. The plan, which is unfunded,
provides supplemental retirement payments based on salary and years of service.
The expense for this plan was $3,087,000 in 1999, $4,182,000 in 1998, and
$3,691,000 in 1997. The accrued liability for this plan at December 31, 1999 and
1998 was $26,371,000 and $28,474,000, respectively, and is included in other
long-term liabilities in the accompanying consolidated balance sheets.
<PAGE>
EMPLOYEE RETIREMENT SAVINGS PLAN The Company's retirement savings plans
provide for annual contributions, within specified ranges, determined at the
discretion of the Board of Directors for the benefit of eligible employees in
the form of cash or shares of the Company's common stock. Expense for these
plans was $5,170,000 in 1999, $3,346,000 in 1998, and $3,294,000 in 1997.
POSTRETIREMENT BENEFITS The Company maintains certain unfunded healthcare and
life insurance benefit plans for eligible retired employees. Substantially all
of the Company's U.S. employees may become eligible for these benefits if they
reach normal retirement age while working for the Company and satisfy certain
years of service requirements. The Company accrues the cost of providing these
benefits over the active service period of the employee. Expense for these plans
was $1,480,000 in 1999, $1,969,000 in 1998, and $1,690,000 in 1997. The accrued
liability for these plans at December 31, 1999 and 1998 was $24,386,000 and
$24,680,000, respectively, and is included in other long-term liabilities in the
accompanying consolidated balance sheets.
9. COMMITMENTS AND CONTINGENCIES
Leases The Company's operating leases involve principally office space and
office equipment. Rental expense relating to these leases was $47,376,000 in
1999, $46,087,000 in 1998, and $38,779,000 in 1997.
Future minimum payment obligations for noncancelable operating leases exceeding
one year are as follows as of December 31, 1999:
(In thousands) Amount
- ------------------------------------------------------------------------------
2000 $35,240
2001 27,729
2002 19,476
2003 14,296
2004 12,854
Thereafter 117,915
- ------------------------------------------------------------------------------
$227,510
- ------------------------------------------------------------------------------
AGREEMENT WITH COMPUTER SCIENCES CORPORATION The Company has an agreement with
Computer Sciences Corporation (CSC) under which CSC-owned credit bureaus and
certain CSC affiliate bureaus utilize the Company's credit database service. CSC
and these affiliates retain ownership of their respective credit files and the
revenues generated by their credit reporting activity. The Company receives a
processing fee for maintaining the database and for each report supplied. The
initial term of the agreement expired in July 1998 and was renewable at the
option of CSC for successive ten-year periods. CSC has renewed the agreement for
the ten-year period beginning August 1, 1998. The agreement provides CSC with an
option to sell its credit reporting businesses to the Company and provides the
Company with an option to purchase CSC's credit reporting businesses if CSC does
not elect to renew the agreement or if there is a change in control of CSC while
the agreement is in effect. Both options expire in 2013. As of August 1, 1998,
the option price is determined by appraisal.
On November 25, 1997, CSC exercised an option, also contained in the agreement,
to sell its collection businesses to the Company at a purchase price of
approximately $38 million. Subsequent to November 25, 1997, the Company
determined that the fair value of the business being sold (based on its
estimated discounted cash flows) was less than the contractual purchase price
because a major contract expiring in 1998 would not be renewed. Accordingly, in
the fourth quarter of 1997, the Company recorded a $25,000,000 charge
($14,950,000 after tax, or $.10 per share) to reflect a valuation loss on this
acquisition, with a corresponding $25,000,000 liability included in other
current liabilities. This transaction was finalized in the second quarter of
1998, and the $25,000,000 liability was reclassified to reduce the amount of
goodwill recorded with the acquisition. In October 1998, this business was sold
for approximately the carrying amount of its net assets.
DATA PROCESSING SERVICES AGREEMENTS The Company has separate ten-year
agreements with IBM and EDS which outsource portions of its computer data
processing operations and related functions, and expire in 2008 and 2009,
respectively. The estimated aggregate contractual obligation remaining under
these agreements is approximately $900 million as of December 31, 1999. However,
this amount could be more or less depending on various factors such as the
inflation rate, the introduction of significant new technologies, or changes in
the Company's data processing needs as a result of acquisitions or divestitures.
Under certain circumstances (e.g., a change in control of the Company, or for
the Company's convenience), the Company may terminate either agreement. However,
the agreements provide that the Company must pay a significant termination
charge in the event of such a termination.
CHANGE IN CONTROL AGREEMENTS The Company has agreements with nineteen of its
officers which provide certain severance pay and benefits in the event of a
termination of the officer's employment under certain circumstances following a
"change in control" of the Company. "Change in control" is defined as the
accumulation by any person, entity, or group of 20% or more of the combined
voting power of the Company's voting stock or the occurrence of certain other
specified events. In the event of a "change in control," the Company's
performance share plan provides that all shares designated for future
distribution will become fully vested and payable, subject to the achievement of
certain levels of growth in earnings per share and certain other criteria. At
December 31, 1999, the maximum contingent liability under the agreements and
plans was approximately $22,126,000.
LITIGATION A number of lawsuits seeking damages are brought against the
Company each year, largely as a result of reports issued by the Company. 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.
10. QUARTERLY FINANCIAL DATA (UNAUDITED)
<PAGE>
Quarterly operating revenue and operating income by reportable segment (Note 11)
and other summarized quarterly financial data for 1999 and 1998 are as follows
(in thousands, except per share amounts; 1998 amounts have been restated to
conform to the 1999 presentation):
<TABLE>
<CAPTION>
1999 First Second Third Fourth
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating revenue:
North American Information Services $191,992 $196,835 $189,253 $190,366
Payment Services 151,129 163,602 175,084 190,837
Equifax Europe 46,053 47,220 45,038 50,111
Equifax Latin America 29,921 32,520 32,581 30,516
Other 2,409 2,409 2,409 2,409
- -------------------------------------------------------------------------------------------------
$421,504 $442,586 $444,365 $464,239
=================================================================================================
Operating income (loss):
North American Information Services $65,679 $71,696 $71,721 $72,428
Payment Services 28,637 30,607 34,756 41,529
Equifax Europe (1,688) (1,289) 242 4,419
Equifax Latin America 4,187 5,047 7,447 6,273
Other 2,217 2,217 2,217 2,217
- -------------------------------------------------------------------------------------------------
99,032 108,278 116,383 126,866
General Corporate Expense (10,222) (11,398) (4,214) (10,186)
- -------------------------------------------------------------------------------------------------
$88,810 $96,880 $112,169 $116,680
=================================================================================================
Net income $43,901 $52,106 $58,098 $61,772
=================================================================================================
Per common share (basic):
Net income (1) $0.32 $0.38 $0.42 $0.46
=================================================================================================
Per common share (diluted):
Net income $0.31 $0.37 $0.42 $0.45
=================================================================================================
<CAPTION>
1998 First Second Third Fourth
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating revenue:
North American Information Services $180,307 $194,127 $200,355 $194,264
Payment Services 117,963 132,504 142,323 173,331
Equifax Europe 36,746 46,458 50,829 38,212
Equifax Latin America 15,669 17,966 29,498 40,790
Other 2,409 2,409 2,409 2,409
- -------------------------------------------------------------------------------------------------
$353,094 $393,464 $425,414 $449,006
=================================================================================================
Operating income (loss):
North American Information Services $61,864 $68,069 $69,107 $67,549
Payment Services 19,235 23,970 27,510 38,600
Equifax Europe 3,155 4,732 6,724 (17,352)
Equifax Latin America 4,186 4,346 6,046 6,830
Other 2,215 2,217 2,217 2,217
- -------------------------------------------------------------------------------------------------
90,655 103,334 111,604 97,844
General Corporate Expense (9,661) (11,151) (11,957) (5,016)
- -------------------------------------------------------------------------------------------------
$80,994 $92,183 $99,647 $92,828
=================================================================================================
Net income $44,735 $50,632 $53,529 $44,537
=================================================================================================
Per common share (basic):
Net income (1) $0.32 $0.36 $0.38 $0.32
=================================================================================================
Per common share (diluted):
Net income $0.31 $0.35 $0.37 $0.31
=================================================================================================
</TABLE>
1 Quarterly per share amounts do not add to the amounts shown in the
consolidated statements of income due to rounding.
11. SEGMENT INFORMATION
Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 131 (SFAS 131), "Disclosures About Segments of an Enterprise and
Related Information." In the first quarter of 1999, the Company changed its
segment reporting structure to more closely match
<PAGE>
management's internal reporting of business operations. Significant changes
included moving the check solutions businesses in Canada and the U.K.
(previously in the North American and Europe segments, respectively) into
Payment Services, and moving the operations of Equifax Secure, which is
developing authentication and digital certificate services, from General
Corporate Expense to the North American segment. The 1998 and 1997 segment data
has been restated to conform with the current year presentation.
The Company's operations are primarily organized by its two major product
groups, information services and payment services. Information services are
organized in three reportable segments based on geographic region (North
America, Europe, and Latin America), while payment services are contained in one
reportable segment. The accounting policies of the segments are the same as
those described in the Company's summary of significant accounting and reporting
policies (Note 1). The Company evaluates the segment performance based on its
operating income before unusual items. Intersegment sales and transfers are not
material.
A description of segment product and services is as follows:
NORTH AMERICAN INFORMATION SERVICES Consumer credit information; credit card
marketing services; risk management and collection services; locate services;
fraud detection and prevention services; mortgage loan origination information;
analytics and consulting; commercial credit reporting in Canada; internet
identity verification and digital certificate services; and through May 1997,
PC-based marketing systems, geo-demographic systems, and mapping tools.
PAYMENT SERVICES Credit and debit card authorization and processing; credit
card marketing enhancement; software products to manage credit card, merchant,
and collection processing; and check guarantee and verification services.
EQUIFAX EUROPE Consumer and commercial credit information and marketing
services, credit scoring and modeling services, and auto lien information.
EQUIFAX LATIN AMERICA Consumer and commercial credit information and other
commercial, financial, and consumer information.
OTHER Lottery services.
Segment information for 1999, 1998, and 1997 is as follows (dollars in
thousands):
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------------------------------------------------------
Amount % Amount % Amount %
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating revenue:
North American Information $768,446 43 % $769,053 47 % $703,368 51 %
Services
Payment Services 680,652 38 566,121 35 486,534 36
Equifax Europe 188,422 11 172,245 11 137,732 10
Equifax Latin America 125,538 7 103,923 6 28,818 2
Other 9,636 1 9,636 1 9,635 1
- --------------------------------------------------------------------------------------------------------------
$1,772,694 100 % $1,620,978 100 % $1,366,087 100 %
==============================================================================================================
Operating income:
North American Information $281,524 63 % $266,589 66 % $241,262 66 %
Services
Payment Services 135,529 30 109,315 27 85,217 23
Equifax Europe 1,684 - (2,741) - 23,458 6
Equifax Latin America 22,954 5 21,408 5 9,208 3
Other 8,868 2 8,866 2 8,868 2
- --------------------------------------------------------------------------------------------------------------
450,559 100 % 403,437 100 % 368,013 100 %
General Corporate Expense (36,020) (37,785) (44,105)
Valuation Loss (Note 9) -- -- (25,000)
- --------------------------------------------------------------------------------------------------------------
$414,539 $365,652 $298,908
==============================================================================================================
Total assets at December 31:
North American Information $ 612,002 33 % $ 553,809 30 % $ 451,487 38 %
Services
Payment Services 499,646 27 491,821 27 276,573 24
Equifax Europe 297,048 16 326,865 18 223,415 19
Equifax Latin America 277,015 15 341,834 19 115,617 10
Other 3,951 - 3,517 - 4,227 -
Corporate 150,119 9 110,949 6 105,785 9
- --------------------------------------------------------------------------------------------------------------
$1,839,781 100 % $1,828,795 100 % $1,177,104 100 %
==============================================================================================================
<CAPTION>
1999 1998 1997
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Depreciation and amortization:
North American Information Services $45,818 $42,035 $38,563
Payment Services 35,628 28,279 19,552
Equifax Europe 21,405 15,362 9,042
Equifax Latin America 16,430 12,513 4,736
Other 768 768 768
Corporate 5,214 4,868 4,408
- ------------------------------------------------------------------------------------------------------------
$125,263 $103,825 $77,069
============================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Capital expenditures excluding property and equipment and other
assets acquired in acquisitions:
North American Information Services $38,345 $36,618 $30,719
Payment Services 51,052 43,835 26,358
Equifax Europe 15,590 25,028 13,160
Equifax Latin America 10,108 4,874 4,771
Other -- -- --
Corporate 5,776 8,977 11,031
- ------------------------------------------------------------------------------------------------------------
$120,871 $119,332 $86,039
============================================================================================================
</TABLE>
Financial information by geographic area is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- -------------------------------------------------------------------------------------------------------
Amount % Amount % Amount %
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating revenue based
on location of customer:
United States $1,233,983 70 % $1,174,733 72 % $1,057,032 78 %
Canada 97,251 5 96,628 6 100,943 7
United Kingdom 198,333 11 184,161 12 166,099 12
Brazil 115,985 7 62,253 4 -- -
Other 127,142 7 103,203 6 42,013 3
- -------------------------------------------------------------------------------------------------------
$1,772,694 100 % $1,620,978 100 % $1,366,087 100 %
- -------------------------------------------------------------------------------------------------------
Long-lived assets at December
31:
United States $557,960 45 % $511,482 39 % $421,559 54 %
Canada 107,687 9 96,840 7 60,521 8
United Kingdom 212,651 17 215,254 16 184,755 24
Brazil 220,298 18 347,355 27 -- --
Other 131,752 11 137,499 11 109,337 14
- -------------------------------------------------------------------------------------------------------
$1,230,348 100 % $1,308,430 100 % $776,172 100 %
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 21
----------
SUBSIDIARIES
Registrant - Equifax Inc. (a Georgia corporation).
The Registrant owns, directly or indirectly, 100% of the stock of the following
subsidiaries as of March 20, 2000 (all of which are included in the consolidated
financial statements):
<TABLE>
<CAPTION>
State or
Country of
Name of Subsidiary Incorporation
- ------------------ -------------
<S> <C>
Acrofax Inc.(1) Canada
CBI Ventures, Inc.(1) Georgia
CCI Group Plc(10) England
CCI Trace and Investigation Services Ltd.(11) England
Computer Ventures, Inc.(1) Delaware
Credence, Inc. Georgia
Credit Consultants International Ltd.(11) England
Credit Link (U.K.) Ltd.(11) England
Credit Northwest Corporation(1) Washington
Credit Union Card Services, Inc. (6) Wisconsin
Equifax Accounts Receivable Services, Inc. (owned by Trust) Canada
Equifax Asia Pacific Holdings, Inc. Georgia
Equifax Australia Plc (14) England
Equifax Canada (AFX) Inc.(2) Canada
Equifax Canada Inc.(3) Canada
Equifax Card Services, Inc.(4) Florida
Equifax Card Services (Madison), Inc.(5) Wisconsin
Equifax Card Solutions(12) France
Equifax (Caymen Islands) Ltda.(19) Caymen Islands
Equifax Check Services, Inc.(4) Delaware
Equifax Consumer Services, Inc. Georgia
Equifax Credit Information Services, Inc. Georgia
<PAGE>
</TABLE>
<TABLE> <CAPTION>
<S> <C>
Equifax Decision Systems, B.V. The Netherlands
Equifax de Mexico Sociedad de Informacion Crediticia, S.A.(8)(9) Mexico
Equifax do Brasil Ltda.(18) Brazil
Equifax E-Banking Solutions, Inc. (4) Georgia
Equifax Europe Inc. Georgia
Equifax Finance (1), Inc. Georgia
Equifax Finance (2), Inc. Georgia
Equifax Healthcare Information Services, Inc. Georgia
Equifax Holdings (Mexico) Inc. Georgia
Equifax Information Technology, Inc. (1) Georgia
Equifax Investments (Mexico) Inc. Georgia
Equifax Investments (U.S.), Inc. Georgia
Equifax Knowledge Engineering, Inc. Arizona
Equifax Ltd.(14) New Zealand
Equifax Luxembourg S.A. (3) Luxembourg
Equifax Luxembourg (No. 2) S.A. Luxembourg
Equifax Mauritius Private Ltd.(7) Philippines
Equifax Payment Services, Inc. Delaware
Equifax Plc(12) England
Equifax Pty Ltd. (15) Australia
Equifax Properties, Inc. Georgia
Equifax-Rochester, Inc. (1) New York
Equifax Secure, Inc. Georgia
Equifax Secure U.K. Ltd. (23) United Kingdom
Equifax SNC(16) France
Equifax South America, Inc. Georgia
Equifax U.K. Finance Ltd. (21) England
Equifax U.K. Finance (No. 2) (20) England
Equifax Ventures, Inc. Georgia
Financial Institution Benefit Association, Inc. (4) District of Columbia
Financial Insurance Marketing Group, Inc.(4) District of Columbia
</TABLE>
<PAGE>
<TABLE> <CAPTION>
<S> <C>
First Bankcard Systems, Inc.(4) Georgia
Global Scan Ltd.(17) United Kingdom
Global Scan (USA) Inc.(22) Delaware
High Integrity Systems, Inc. (4) California
Infolink Ltd.(14) United Kingdom
Light Signatures, Inc. (4) California
Messagegram Ltd. (11) England
Procard(24) Chile
Propago(24) Chile
Stewardship, Inc. (1) Mississippi
Telecredit Canda, Inc. (2) Canada
The Database Company Ltd. (13) Ireland
The Equifax Database Company Ltd. (12) Ireland
The Infocheck Group Ltd. (14) England
Transax France Plc(14) England
Transax (Ireland) Ltd.(14) England
Ultimate Business Services Plc(14) England
Ultimate Media Concepts Ltd. (11) England
Viv Ltd.(14) England
</TABLE>
(1)Subsidiary of Equifax Credit Information Services, Inc.
(2)Subsidiary of Equifax Canada Inc.
(3)Subsidiary of Acrofax Inc.
(4)Subsidiary of Equifax Payment Services, Inc.
(5)Subsidiary of Equifax Card Services, Inc.
(6)Subsidiary of Equifax Card Services (Madison), Inc.
(7)Subsidiary of Equifax Asia Pacific Holdings, Inc.
(8)Subsidiary of Equifax Holdings (Mexico) Inc.
(9)Subsidiary of Equifax Investments (Mexico) Inc.
(10)Subsidiary of Ultimate Business Services Plc
(11)Subsidiary of CCI Group Plc
(12)Subsidiary of Equifax Europe Inc.
(13)Subsidiary of The Equifax Database Company
(14)Subsidiary of Equifax Plc
(15)Subsidiary of Equifax Australia Plc
<PAGE>
(16)Subsidiary of Transax France Plc
(17)Subsidiary of The Infocheck Group Ltd.
(18)Subsidiary of Equifax South America, Inc.
(19)Subsidiary of Equifax do Brasil Holdings, Ltda.
(20)Subsidiary of Equifax Luxembourg (No. 2) S.A.
(21)Subsidiary of Equifax Luxembourg S.A.
(22)Subsidiary of Global Scan Ltd.
(23)Subsidiary of Equifax Secure, Inc.
(24)Subsidiary of Equifax de Chile, S.A.
Registrant's subsidiary Equifax Asia Pacific Holdings, Inc. owns 100% of the
stock of Equifax Mauritius Private Ltd. which owns 50% of the stock of Equifax
Venture Infotek Ltd. (India).
Registrant's subsidary Equifax Europe Inc. owns 49% of the stock of Precision
Marketing Information Ltd. (Ireland) and 58% of the stock of Equifax Iberisa,
S.A. (Spain). Equifax Iberica, S.A. owns 95% of the stock of ASNEF-Equifax
Servicios de Informacion de Credito, S.L. (Spain); 100% of the stock of Dicodi,
S.A. (Spain); 100% of the stock of Informacion Tecnica Del Credito S.L. (Spain);
100% of the stock of Via Ejecutiva S.A. (Spain); and owns 50% of the stock of
Credinformacoes, Informacoes de Credito, LDA (Portugal), along with Equifax
Decision Systems, B.V., wholly-owned subsidiary of Equifax Inc., which owns 25%.
Registrant's subsidiary Equifax South America, Inc. owns 66% of the stock of
Organizacion Veraz S.A. (Argentina) and 99% of the stock of Equifax de Chile,
S.A. (Chile). Equifax de Chile, S.A. owns 100% of the stock of Dicom, S.A.
(Chile) which owns 100% of the stock of Cobranza Integral S.A. (Chile); 51% of
the stock of Dicom CentroAmerica (El Salvador); 51% of the stock of InfoCorp
S.A. (Peru); and 100% of the stock of Equifax Peru Srl. Registrant's subsidiary
Equifax do Brasil Ltda. owns 80% of the stock of Equifax do Brasil Ltda. (SCI);
59.336% of the stock of Unnisa - Solucoes em Meios de Pagamento Ltda. (Brazil);
and 51% of the stock of Partech Ltda.
Registrant's subsidiary Equifax Plc owns 51% of the stock of Equifax Card
Solutions Ltd. (England).
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 10-K into the Company's previously filed
Registration Statements on Form S-3 or Form S-8, File No. 33-40011, File No. 33-
58734, File No. 33-34640, File No. 33-71202, as amended, File No. 33-66728, File
No. 33-71200, File No. 33-82374, File No. 33-86018, File No. 33-86978, File No.
33-58627, File No. 33-63001, File No. 333-12961, File No. 33-04583, as amended,
File No. 333-42613, File No. 333-42955, File No. 333-47599, File No. 333-52201,
File No. 333-52203, File No. 333-68421, File No. 333-68477.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
March, 30, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM EQUIFAX
INC., FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 136,596
<SECURITIES> 0
<RECEIVABLES> 316,866
<ALLOWANCES> 14,057
<INVENTORY> 0
<CURRENT-ASSETS> 609,433
<PP&E> 286,616
<DEPRECIATION> 171,126
<TOTAL-ASSETS> 1,839,781
<CURRENT-LIABILITIES> 504,795
<BONDS> 933,708
0
0
<COMMON> 217,824
<OTHER-SE> (2,199)
<TOTAL-LIABILITY-AND-EQUITY> 1,839,781
<SALES> 1,772,694
<TOTAL-REVENUES> 1,772,694
<CGS> 1,032,389
<TOTAL-COSTS> 1,032,389
<OTHER-EXPENSES> 325,766
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 60,971
<INCOME-PRETAX> 365,924
<INCOME-TAX> 150,047
<INCOME-CONTINUING> 215,877
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 215,877
<EPS-BASIC> 1.57
<EPS-DILUTED> 1.55
</TABLE>
