-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OkU36I8SINDy3Z5rUNlxrU04KBD48RaQEniUiMUDOdBmZ14KEG5uC1x/P3LtrO4D isBJhcwpEshC9ojea66wnw== 0000912057-97-011891.txt : 19970404 0000912057-97-011891.hdr.sgml : 19970404 ACCESSION NUMBER: 0000912057-97-011891 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970403 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CCC INFORMATION SERVICES GROUP INC CENTRAL INDEX KEY: 0001017917 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 541242469 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-28600 FILM NUMBER: 97574290 BUSINESS ADDRESS: STREET 1: WORLD TRADE CENTER CHICAGO STREET 2: 444 MERCHANDISE MART CITY: CHICAGO STATE: IL ZIP: 60654 BUSINESS PHONE: 3122224636 10-K/A 1 10-K/A - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-K/A AMENDMENT NO. 1 TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1996 Commission File Number: 0-28600 CCC INFORMATION SERVICES GROUP INC. (Exact name of registrant as specified in its charter) DELAWARE 54-1242469 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number)
WORLD TRADE CENTER CHICAGO 444 MERCHANDISE MART CHICAGO, ILLINOIS 60654 (Address of principal executive offices, including zip code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (312) 222-4636 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED - --------------------- --------------------- None None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Common Stock, $0.10 par value Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes __X__ No _____ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. / / The aggregate market value of voting shares (based on the closing price of those shares listed on the Nasdaq National Market and the consideration received for those shares not listed on a national or regional exchange) held by non-affiliates (as defined in Rule 405) of the registrant as of March 7, 1997 was $347,120,954. As of March 7, 1997, 23,533,624 shares of CCC Information Services Group Inc. common stock, par value $0.10 per share, were outstanding. DOCUMENTS INCORPORATED BY REFERENCE Part III of this Annual Report on Form 10-K incorporates by reference portions of the registrant's Notice of 1997 Annual Meeting of Stockholders and Proxy Statement. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES ANNUAL REPORT ON FORM 10-K TABLE OF CONTENTS
PAGE(S) --------- PART I Item 1. Business..................................................................................... 1-11 Item 2. Properties................................................................................... 11 Item 3. Legal Proceedings............................................................................ 11-12 Item 4. Submission of Matters to a Vote of Security Holders.......................................... 12 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters........................ 12 Item 6. Selected Financial Data...................................................................... 13-14 Item 7. Management's Discussion and Analysis of Results of Operations and Financial Condition........ 14-20 Item 8. Financial Statements and Supplementary Data.................................................. 20 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure......... 20 PART III Item 10. Directors and Executive Officers of the Registrant........................................... 20 Item 11. Executive Compensation....................................................................... 21 Item 12. Security Ownership of Certain Beneficial Owners and Management............................... 21 Item 13. Certain Relationships and Related Transactions............................................... 21 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.............................. 21-43 Signatures............................................................................................... 44 Directors and Executive Officers......................................................................... 45 Corporate Information.................................................................................... 46
CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES This Annual Report on Form 10-K contains forward-looking statements within the definition of Federal Securities laws. The section entitled "Forward Looking Statements" contains additional disclosures concerning forward-looking statements. PART I ITEM 1. BUSINESS ORGANIZATION CCC Information Services Group Inc. ("Company") (formerly known as InfoVest Corporation), through its wholly owned subsidiary CCC Information Services Inc. ("CCC"), is a supplier of automobile claims information and processing services, claims management software and communication services. The Company's services and products enable automobile insurance company and collision repair facility customers to improve efficiency, manage costs and increase consumer satisfaction in the management of automobile claims and restoration. After the disposition of certain subsidiaries, as described in Note 5 to the Consolidated Financial Statements, and through April 30, 1995, the Company consisted of two primary operating entities: CCC and CCC Development Company ("Joint Venture" or "CCCDC"). The Company acquired its former partner's 50% interest in CCCDC, through the acquisition of UCOP, Inc. ("UCOP"), effective March 30, 1994. As a result of this acquisition, in combination with its original 50% interest in the Joint Venture, the Company acquired a 100% equity ownership interest in the Joint Venture. Prior to its acquisition of UCOP, the Company accounted for its 50% interest in the Joint Venture under the equity method. CCC also operates a subsidiary in Canada, Certified Collateral Corporation of Canada, Ltd. As of December 31, 1996, White River Ventures Inc. ("White River") held approximately 37% of the total outstanding common stock of the Company and had 51% of the voting power associated with the Company's total outstanding voting stock. White River is a wholly owned subsidiary of White River Corporation. BUSINESS SUMMARY The principal services and products offered by the Company automate the process of evaluating and settling both total loss and repairable automobile claims. When a vehicle cannot be repaired, the Company's vehicle valuation services and products, primarily TOTAL LOSS, provide insurance companies with the ability to effect total loss settlements on the basis of market-specific vehicle values. When a vehicle is repairable, the Company's collision estimating services and products, principally EZEST and PATHWAYS, provide insurance appraisers and collision repair facilities with up-to-date pricing, interactive decision support and computer-assisted logic to produce accurate collision repair estimates. The Company's claims outsourcing services and products, include ACCESS, a vehicle restoration and management service. Communication services offered by the Company connect insurers, appraisers and collision repair facilities, providing the information required for decision making. The Company also provides a wide variety of related services and products intended to facilitate the overall management of the automobile claims process. The Company's PATHWAYS workflow management software is designed to integrate each of the Company's product offerings on a common platform with a common graphical user interface, facilitating the learning of new applications while providing the Company's customers with a broader tool set for claims completion. The Company's services and products represent an integrated solution, combining information, claims management software and secure communication systems to improve the efficiency of the automobile claims process. 1 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES The Company's customers include the largest U.S. automobile insurance companies and most of the small to medium size automobile insurance companies in the country. In addition, the Company's products are used by approximately 10,000 collision repair facilities. The Company's core competencies include collection and processing of claims and automobile valuation and repair data, development of client-server, object-oriented claims software products, communications network management, customer service and the workflow processes of automobile insurance claims. The Company sells its services and products to insurance companies through a direct sales force. The Company contracts with independent sales representatives to sell its products to collision repair facilities. Over half of the Company's revenue for 1996 was for services and products sold pursuant to contracts, which generally have multi-year terms. A substantial portion of the Company's remaining revenue represented sales to customers that have been doing business with the Company for many years. The Company's services and products are generally sold under multi-year contracts either on a monthly subscription or a per transaction basis. OVERVIEW OF THE AUTOMOBILE INSURANCE CLAIMS PROCESS Automobile claims generally involve three types of participants: automobile insurance companies, consumers and service providers, such as collision repair facilities and attorneys. The interaction among these parties in the processing of a claim can be referred to as the "automobile claims industry." The Company believes that the claims process has historically been inefficient and contentious for the participating parties due, in part, to the lack of independently verifiable claims data and inefficient communications networks. THE AUTOMOBILE INSURANCE INDUSTRY Of the companies offering private passenger automobile insurance in the United States, the twenty largest providers account for more than 60% of all automobile insurance premiums. Insurance companies compete principally on the basis of price, marketing, consumer satisfaction and claims paying ability. State agencies closely regulate the product offerings, claims processes and the premium structure of insurance companies. In addition, the laws of many states require motorists to carry liability insurance at specified minimum levels. The automobile insurance industry is changing rapidly. The automobile insurance marketplace is experiencing price constraints as a result of increasing competition and regulatory activity. At the same time, policy holders are demanding higher levels of customer service. The growing complexity and sophistication of automobile design and engineering is increasing the actual repair cost (referred to in the automobile claims industry as "severity") of collision claims. In addition, the personal injury component of automobile insurance claims is rising, in part, as a result of the increasing frequency of, and magnitude of, claims involving alleged bodily injury, including soft-tissue claims. Competitive pressures and resistance by policy holders and regulators to premium increases are causing insurance companies to focus on managing costs. The Company believes that the insurance industry's focus on cost management has been accompanied by an increasing recognition that it is easier and more cost-effective to retain an existing policy holder than to lure a new customer away from a competitor. Dissatisfaction with the claims handling process is a frequently cited cause of policy non-renewal. 2 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES THE COLLISION REPAIR INDUSTRY The collision repair industry, which has historically been extremely fragmented, is consolidating. Most collision repair facilities are owner-operated, single-location businesses which focus on a local market. The Company estimates that 20 to 25 thousand collision repair facilities have annual revenues in excess of $300 thousand. These facilities tend to be larger, better capitalized and increasingly reliant on professional and sophisticated management who are adopting new technology and wholesale marketing techniques to compete. The costs to operate a collision repair facility have risen substantially over the past decade. Modern automobile designs coupled with extensive environmental regulations are forcing repair facilities to make significant capital investments in increasingly sophisticated equipment and better training. At the same time, insurance companies are looking to collision repair facilities to assist in cost containment. Because a substantial portion of collision repair facility revenue is derived from insurance companies, collision repair facility owners are increasingly shifting their marketing efforts from consumer-oriented advertising to wholesale marketing and insurance company referrals. For example, many collision repair facilities are seeking to capitalize on insurance industry-driven trends such as the growth in direct repair programs. A direct repair program, or DRP, allows an insured whose automobile is involved in a collision to have the repair performed within a network of approved repair facilities. To participate in DRPs with major insurance companies, collision repair facilities must meet minimum standards for equipment, training and facilities. To ensure continued satisfaction at both the referring insurance company and consumer level, collision repair facilities must seek ways to improve productivity and optimize the workflow of the automobile repair process. To achieve these goals, collision repair facilities are making substantial investments in capital equipment and computer technology. THE AUTOMOBILE CLAIMS PROCESS Insurance companies generally handle automobile physical damage claims in one of three ways: in-house staff appraisals, direct repair programs and independent adjustments. STAFF APPRAISAL. The insurance industry employs staff appraisers and claims representatives who, the Company estimates, handle 70% to 75% of all automobile claims. This estimate is based on the Company's claims experience, and interviews with its large insurance company customers. Staff appraisers handle a broad range of claims tasks, including appraisal, claims supplements, police reporting, total loss files, salvage processing and settlement payments. Based on the Company's internal estimates, staff appraisers typically handle twelve or more claims per day when in a drive-in facility and three to five claims per day when in the field. The Company believes that most insurance company staff appraisers use collision estimating software to prepare collision repair estimates. DIRECT REPAIR PROGRAMS. Sixteen of the top twenty automobile insurers, including each of the five largest, offer a direct repair program. Based on the Company's interviews with its insurance company customers, the Company estimates that 8% to 12% of all automobile claims are handled through a DRP, the fastest-growing method for handling automobile claims. The Company believes that DRPs present significant opportunities to both insurance companies and collision repair facilities to increase the satisfaction of their customers. Surveys demonstrate that DRPs result in higher consumer satisfaction than either of the other claims handling methods. In addition, by eliminating several days from the claims process, insurers utilizing DRPs reduce replacement rental car expense and eliminate the costs associated with dispatching an adjuster to appraise each vehicle. An automated DRP ensures accurate estimates, facilitates the use of alternate replacement parts and increases the productivity of auditors and reinspectors. The Company estimates that adjusters who formerly completed only three to five estimates per 3 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES day under a staff appraisal program can review 20 to 25 claims per day under a DRP. Participating collision repair facilities gain volume and efficiency and reduce disputes with consumers and insurance companies. INDEPENDENT ADJUSTMENT. Based on the Company's interviews with its insurance customers, the Company estimates that independent claims adjusters handle 15% to 22% of all automobile claims. Independent adjusters offer their appraisal skills to a variety of insurance companies in a specific geographic location. Insurers typically outsource claims to independent adjusters where their market coverage does not justify hiring local staff or when the volume of work exceeds local capacity. The Company estimates that most independent adjusters do not use automated collision estimating systems. The absence of automation, coupled with the lack of management reports and efficient inspection processes among independent adjusters, typically results in both the highest average severity per claim and the highest average claims handling expense. NEEDS AND OPPORTUNITIES IN THE AUTOMOBILE CLAIMS PROCESS The Company believes trends in the automobile insurance industry create several identifiable needs. First, automobile insurers need to increase consumer satisfaction through faster, more efficient claims handling procedures. Second, insurance companies need to improve working relationships with their primary service providers through the exchange of auditable data and improved communication. Third, insurers need to integrate emerging technologies into their legacy mainframe hardware and software systems. Finally, smaller insurance companies need to become cost competitive with the major insurers by adopting solutions which provide economies of scale benefits. Trends in the collision repair industry also present collision repair facilities with several needs and opportunities. First, repair facilities need to secure a steady supply of customers through efficient marketing and greater connectivity to insurance companies. Second, repair facilities need to improve their operating efficiency, business management and repair processing through affordable information and decision making tools. The Company believes that improvements in the automobile claims process will require that participants have ready access to data, decision making tools and efficient communications. As a result, there is a need for integrated, efficient solutions in the appraisal, repair and settlement processes which will speed repairs, assure consumer satisfaction and save money. SERVICES AND PRODUCTS The Company's services and products are integrated for use with one another across multiple platforms and are designed for ease of use by the large number of people involved in the automobile claims process on a daily basis. Approximately 69% of the Company's consolidated revenue for 1996 was from the sale of services and products to insurance companies with the remainder sold to collision repair facilities and other customers. Revenues from TOTAL LOSS valuation services and EZEST and PATHWAYS Collision Estimating software licensing accounted for 35% and 45%, respectively, of the Company's consolidated 1996 revenue. VEHICLE VALUATION SERVICES AND PRODUCTS. The Company's TOTAL LOSS service provides insurance companies the ability to effect total loss settlements on the basis of market-specific values based upon physically inspected used car inventories. The Company believes that its vehicle database, which contains detailed information about millions of vehicles either physically inventoried from one of more than 4,000 dealer lots or taken from recent advertisements, is the most comprehensive in North America. The Company uses its proprietary database and valuation software to provide insurance companies with independent, current, local, market-values and vehicle identification data. The Company's TOTAL LOSS 4 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES product complies with the regulatory requirements of all 50 states. Each total loss valuation includes a vehicle identification search under VINGUARD, the Company's vehicle identification number fraud protection program which matches current claims against the Company's database of previously totaled or stolen vehicles. COLLISION ESTIMATING SERVICES AND PRODUCTS. EZEST was the first stand-alone, PC-based collision estimating system utilizing P-page logic to automate the process of eliminating repair activity overlaps and automating all included operations and ancillary repair work in preparing an estimate. P-page logic represents procedure pages from crash estimating guides that detail the steps involved in repairing various parts of a damaged vehicle depending on the extent of the damage. EZEST provides automobile insurers with fast and reliable estimates at a low cost. EZEST runs on any IBM-compatible laptop or desktop computer and contains all nine volumes of the Motor Crash Estimating Guide and other data necessary to build an estimate. The Company licenses the Motor Crash Estimating Guide data from a subsidiary of The Hearst Corporation. A unique feature of EZEST is its recycled part valuation upgrade which will display and automatically insert into the estimate a predicted price of those recycled or salvage automotive parts statistically known to be available in the local market in which the estimate is written. The EZEST software, Motor Crash Estimating Guide database and other associated databases are updated via a monthly CD-ROM. EZEST is sold under multi-year contracts on a monthly subscription basis to both insurers and collision repair facilities. In April 1996, the Company began delivery of its next-generation estimating product, PATHWAYS Collision Estimating, which provides all of the functionality of the EZEST product while adding the functionality of total loss and settlement processing, claim payment, salvage disposal and custom electronic forms. In November 1996, the Company introduced a collision repair facility version of PATHWAYS Collision Estimating. CLAIMS OUTSOURCING SERVICES AND PRODUCTS. ACCESS is an outsourced vehicle appraisal and restoration management service. Insurance companies use ACCESS to appraise and settle claims without hiring either additional staff or independent appraisers. ACCESS uses a network of Company certified, fully equipped repair facilities and the Company's claims management tools to provide fast, low cost claims settlement with high customer satisfaction. In addition, the Company provides reinspection and restoration management staff for quality assurance. ACCESS is sold on a per claim basis under multi-year agreements. EZNET COMMUNICATIONS NETWORK. EZNET connects insurers with their appraisers and repair network partners. EZNET'S process management capabilities provide the information required to make appropriate and timely decisions, regardless of location or settlement process. EZNET is used principally for the complete electronic communication of work files and estimates to staff appraisers or DRP partners and for the receipt of auditable estimate data. EZNET is the only communications network tailored to provide automated communication service to participants in the automobile physical damage claim process, including: mailboxing, messaging, routing, imaging, assignment tracking, record library and third-party gateways. A unique feature of EZNET is the electronic appraisal review feature that provides real-time exception reporting to target re-inspections and improves management control of DRP networks and appraisers. EZNET also facilitates the management of car rental and salvage disposition. EZNET is sold both on a per transaction basis and on a monthly subscription basis. EZFOCUS DIGITAL IMAGING. The EZFOCUS computerized digital photo imaging system allows automobile insurers and collision repairers to visually document vehicle damage and electronically communicate the image. This reduces claims cycle time while eliminating film cost and saving travel and overnight delivery expense. GUIDEPOST DECISION SUPPORT. The Company recently added GUIDEPOST, an executive information and data navigation software package to its tool set. GUIDEPOST allows managers to electronically evaluate 5 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES results, format reports, drill down for subject or personnel review and compare performance to industry and regional indices. GUIDEPOST is offered on a monthly CD and development for network delivery is underway. While introduced as an element of the Company's suite of electronic DRP and collision estimating tools, GUIDEPOST will be made available for all the Company's products, extending the integration of a multi-channel claims process. ACCLAIM LITIGATION MANAGEMENT. ACCLAIM is an outsourcing service offered to insurance companies for the processing and management of defined soft-tissue bodily injury claims. ACCLAIM uses the Company's licensed case management software and information management tools in connection with a national network of lawyers to defend and dispose of lawsuits filed against insured-parties. ACCLAIM services are sold to insurance companies on a fixed fee, per claim basis. ACCLAIM is currently in pilot program status. PATHWAYS APPRAISER WORKSTATION SOFTWARE. In April 1996, the Company began delivery of PATHWAYS, its windows-based appraiser workstation software platform designed to better serve the overall workflow needs of insurance field staffs. PATHWAYS offers a common, graphical user interface across all applications which organizes claims in tabbed, electronic workfiles and reduces the time required to learn or develop new software functions or applications. PATHWAYS includes a workflow manager which assists users in managing all aspects of their day-to-day activities, including receipt of new assignments, communication of completed activity, electronic file notes and reports as well as the automatic logging of key events in the claims process. The Company intends to integrate all of its existing field applications into this platform and develop all future field applications on PATHWAYS. PATHWAYS is fully integrated with the Company's communications network, allowing adjusters to operate in the field, and thereby reduce office and other expenses. The first PATHWAYS application was PATHWAYS Collision Estimating which provides all of the functionality of the EZEST product while adding the functionality of total loss and settlement processing, claim payment, salvage disposal and custom electronic forms. PATHWAYS is sold under multi-year contracts on a monthly subscription basis. CUSTOMERS The Company's business is based on relationships with the two primary users of the Company's services: automobile insurance companies and collision repair facilities. The Company's customers include the largest U.S. automobile insurance companies and most of the small to medium size automobile insurance companies in the country. The Company's products are used by approximately 10,000 collision repair facilities. The Company has collision repair customers in all 50 states, including most major metropolitan markets. In addition to assisting collision repair facilities in managing their businesses, many of these customers use the Company's services and products as a means to participate in insurance DRP programs, thereby making the use of the Company's services and products important to the customer's business growth. Over half of the Company's revenue for 1996 was for services and products sold pursuant to contracts, which generally have multi-year terms. A substantial portion of the Company's remaining revenue represented sales to customers that have been doing business with the Company for many years. The Company's services and products are sold either on a monthly subscription or a per transaction basis. SALES AND MARKETING Including Collision Repair Representatives, the Company utilizes approximately 300 sales professionals across five different sales organizations and certain other sales and marketing functions to market and 6 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES sell its services and products. Employee counts below for each of the five sales organization are as of December 31, 1996. STRATEGIC CLIENT GROUP. The Strategic Client Group comprises 45 national account managers ("NAMs") who focus on the Company's overall relationships with the home and regional offices of twenty five leading insurance companies. NAMs are experienced sales professionals charged with meeting customers' business needs with a consultative approach. NAMs are responsible for home office relationships through which most major and all company-wide contracts are signed and renewed. BUSINESS SOLUTIONS GROUP. The Business Solutions Group consists of approximately 10 business solutions managers ("BSMs") that identify and develop qualified consulting projects. The BSMs were recruited from a variety of major consulting firms with backgrounds in workflow/process management and business systems analysis. The BSMs play a critical role in reviewing customer business practices to benchmark current operations and to identify opportunities for improvement. This serves the dual role of assisting customers in the operation of their businesses, while concretely validating the value of the Company's services and products when they are implemented. BSMs often work closely with customer system staffs to assure smooth implementation of more technically complicated and customized service offerings. NATIONAL SALES GROUP. Approximately 15 national sales account managers comprise the National Sales group. They market the Company's services and products to the home offices of large and medium-sized insurance companies outside of the top 25 ranking. The sales cycle for transactions in this division is normally shorter than in the Strategic Client Division. Most ACCESS sales are made in the National Sales division. CLAIMS OFFICE ACCOUNT EXECUTIVES. A total of approximately 65 claims office account executives are deployed geographically with responsibility for individual claims offices of all of the Company's insurance company clients. These employees are charged with on-going field training and support for the Company's transaction-based businesses. The Company's account executives assist claim managers with the training of high turnover personnel, program result analysis and problem resolution. Increasingly, account executives are functioning as claim settlement consultants. COLLISION REPAIR REPRESENTATIVES. The Company contracts with about 60 primary independent sales representatives who, in turn, contract with approximately 60 secondary independent sales representatives to sell the Company's products to collision repair facilities across the country. The primary representatives are assigned geographic territories and often employ secondary representatives to increase presence in particular areas. The representatives are highly experienced within the collision repair industry and typically assist customers in dealing with a variety of business issues. The Company's marketing efforts for the automobile insurance market are conducted through three principal means. The Company believes that most claims executives and managers learn about new technologies and solutions through sales personnel, so the majority of the Company's insurance marketing dollars is devoted to developing professional collateral materials for use by the sales force. The Company sponsors an annual industry conference for senior claims executives and collision repair industry leaders. The Company's senior managers are frequent speakers at industry gatherings and are frequent authors of articles published in industry and national print media. The Company's marketing efforts for the automobile repair market are conducted through participation in national and regional trade shows, lead generating direct marketing programs, collateral materials and trade advertising. 7 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES TRAINING AND SUPPORT Field appraisers, claim representatives and collision repair facility owners use the Company's tools and information for decision making. The Company addresses its customer service needs through a field and telephone training and support staff that consists of approximately 180 employees. The support staff consists of individuals with technical knowledge and experience relating not only to application software, operating systems and network communications, but also to new and used car automobile markets and collision repair. The Company routinely analyzes customer call types to modify products or training and, whenever necessary, will dispatch a field representative to provide process assistance. In addition, Company field trainers implement every new sale. The Company's collision estimating support staff can diagnose most software issues over the telephone and has the ability to download an appraiser's entire hard drive telephonically if the problem proves significant. The Company's TOTAL LOSS settlement services staff can make modifications to claims, provide regulatory information or additional backup for a valuation, providing support from the point of a loss report through claims settlement. TECHNOLOGY Underlying each of the Company's principal services and products are databases which customers access through software and the Company's communications network. VEHICLE VALUATION SERVICES AND PRODUCTS. The Company's proprietary database of valuation data used in connection with its TOTAL LOSS services and products is built through the Company's own data collection network. This network includes detailed used car inventory and sales data from more than 4,000 automobile dealers in 228 metropolitan areas throughout the United States and Canada, as well as data from local newspaper advertisements and prior transactions. The database includes more than 15 million prior valuations, including theft data. The Company maintains its TOTAL LOSS database on a mainframe computer which customers directly access using the Company's proprietary communications network or by telephone or facsimile. COLLISION ESTIMATING SERVICES AND PRODUCTS. The Company offers its collision estimating services and products through a personal computer-based, open systems approach using its object-oriented design. The Company's principal database for its collision estimating products is the Motor Crash Estimating Guide published by a subsidiary of The Hearst Corporation. The Company licenses this database under an agreement that grants to the Company a license to publish the database electronically. This agreement includes the exclusive license for P-page logic, the integral component of collision estimating software. See further discussion of this agreement under "Intellectual Property." EZNET COMMUNICATIONS NETWORK. The Company's communications network, EZNET, transmits and processes both staff and direct repair claims data. EZNET'S Transport Layer provides reliable, secure data transmission. EZNET'S Workflow Layer routes claims information and status updates to multiple recipients according to insurance company preference and provides storage through network mailboxes maintained by the Company. EZNET supports all major communications protocols, including X25, SNA, ISDN and TCP/IP, as well as industry standards such as the Collision Industry Electronic Commerce Association. PATHWAYS ENVIRONMENT. Over the past two years, the Company has built and completed class libraries consisting of approximately 1,000 business and system objects that serve as the foundation of its PATHWAYS product line. These objects were designed with a work flow orientation and are used in a framework to manage databases, maintain model persistence, create electronic workfiles, and facilitate communications. These elements are used in conjunction with a common graphical user interface for all applications. This 8 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES approach is intended to offer many advantages to the Company's customers, including ease of training and integration of complementary systems and legacy applications. In addition, the graphical user interface and object-oriented foundation of these services and products is designed to enable faster introduction of additional application modules with greater product quality assurance as well as easy integration with customer-developed software applications. It is the Company's intent to build all new products within this framework and to migrate existing products to it. PRODUCT DEVELOPMENT AND PROGRAMMING The Company's ability to maintain and grow its position in the claims industry is dependent upon expansion of its products and services. Investments in development are therefore critical to obtaining new customers and renewals from existing customers. The Company's product development and programming efforts principally consist of software development, development of enhanced communication protocols and custom user interfaces and applications, and database design and enhancement. The custom interfaces and applications are developed through the Company's Business Solution Group. The Company employs approximately 245 people in its product development organization. This group is comprised of database analysts, software engineers, business systems analysts, product managers and quality assurance employees responsible for client systems, server systems, data warehousing and distribution systems. Product engineering activities focus on improving speed to market of new products, services, and enhancements, adding new business functions without affecting existing services and products, and reducing development costs. The Company uses its class library of objects, knowledge of its clients' workflows and its automated testing tools to deliver quality workflow-oriented solutions to the marketplace quickly. The Company develops products in close collaboration with its clients based on specific needs. The Company's total product development and programming expense was $17.0 million, $14.9 million and $10.1 million for the years ended December 31, 1996, 1995 and 1994, respectively. INTELLECTUAL PROPERTY The Company relies primarily on a combination of contracts, intellectual property laws, confidentiality agreements and software security measures to protect its proprietary technology. The Company distributes its products under written license agreements, which grant end-users a license to use the Company's services and products and which contain various provisions intended to protect the Company's ownership and confidentiality of the underlying technology. The Company also requires all of its employees and other parties with access to its confidential information to execute agreements prohibiting the unauthorized use or disclosure of the Company's technology. The Company has trademarked virtually all of its services and products. These marks are used by the Company in the advertising and marketing of the Company's services and products. EZEST and CCC are well-known marks within the automobile insurance and collision repair industries. The Company has patents for its collision estimation product pertaining to the comparison and analysis of the "repair or replace" and the "new or used" parts decisions. While the TOTAL LOSS calculation process is not patented, the methodology and processes are trade secrets of the Company and are essential to the Company's TOTAL LOSS business. Despite these precautions, the Company believes that existing laws provide only limited protection for the Company's technology and that it may be possible for a third party to misappropriate the Company's technology or to independently develop similar technology. Certain data used in the Company's services and products is licensed from third parties for which they receive royalties. The Company does not believe that the Company's services and products are significantly dependent upon licensed data, other than the Motor Crash Estimating Guide data, because the Company believes it can find alternative sources for such data. The Company does not believe that it has access to an 9 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES alternative database that would provide comparable information to the Motor Crash Estimating Guide, licensed from the Hearst Corporation through a scheduled expiration of April 30, 2002. Absent notification of cancellation by either the Company or the Hearst Corporation two years before the license's scheduled expiration, the license agreement is automatically extended for one year on a rolling annual basis. Any interruption of the Company's access to the Motor Crash Estimating Guide data could have a material adverse effect on the Company's business, financial condition and results of operations. The Company is not engaged in any material disputes with other parties with respect to the ownership or use of the Company's proprietary technology. The Company has been previously involved, however, in intellectual property litigation concerning certain data ownership rights, the resolution of which resulted in substantial payments by the Company. There can be no assurance that other parties will not assert technology infringement claims against the Company in the future. The litigation of such a claim may involve significant expense and management time. In addition, if any such claim were successful, the Company could be required to pay monetary damages and may also be required to either refrain from distributing the infringing product or obtain a license from the party asserting the claim (which license may not be available on commercially reasonable terms). COMPETITION The market for the Company's products is highly competitive. The Company competes primarily on product differentiation, customer service and price. The Company's principal competitors are small divisions of two well capitalized, multinational firms, Automatic Data Processing ("ADP") and Thomson Publishing Corporation ("Thomson"). ADP offers both a PC-based collision estimating system and a total loss product to the insurance industry. It offers a different collision estimating system and a hardware-based digital imaging system to the collision repair industry. Thomson publishes crash guides for both the insurance and automobile collision repair industries and markets collision estimating, shop management and imaging products. In addition, there are several very small, collision estimating programs sold into the market which do not use P-page logic. The Company has experienced steady competitive price pressure, particularly in the collision estimating market, over the past few years and expects that trend to continue. The strength of this trend may cause the Company to alter its mix of services, features and prices. The Company intends to address competitive price pressures by providing high quality, feature enhanced products and services to its clients. The Company intends to continue to develop user-friendly claims products and services incorporating its comprehensive proprietary inventory of data. The Company expects that the PATHWAYS workflow manager will provide the necessary position with its insurance customers to effectively compete against competitive price pressures. At times, insurance companies have entered into agreements with service providers (including ADP, Thomson and CCC) wherein the agreement provides, in part, that the insurance company will either use the product or service of that vendor on an exclusive basis or designate the vendor as a preferred provider of that product or service. If it is an exclusive agreement, the insurance company mandates that collision repair facilities, independent appraisers and regional offices use the particular product or service. If the vendor is a preferred provider, the collision repair facilities, appraisers and regional offices, are encouraged to use the preferred product, but may still choose another vendor's product or service. Additionally, some insurance companies mandate that all products be tested and approved at the companies' national level before regional levels can purchase such products. The benefits of being an endorsed product or on the approved list of an insurance company include immediate customer availability and a head start over competitors who may not be so approved. With respect to those insurance companies that have endorsed ADP or Thomson, but not CCC, the Company will be at a competitive disadvantage. 10 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES In connection with the Company's strategy to provide outsourced claims processing services, the Company will compete with other third-party service providers, some of whom may have more capital and greater resources than the Company. The Company currently processes the majority of insurer-to-collision repair facility repair assignment and estimate retrieval for DRPs through its EZNET communications network. The Company believes there is a wide range of prospective competitors in this service area, many of which have greater resources than the Company. EMPLOYEES As of December 31, 1996, the Company had approximately 950 full-time employees of whom approximately 180 were employed in sales and marketing functions (excluding independent collision repair representatives), approximately 180 were employed in customer support functions, approximately 245 in product development and quality assurance functions, approximately 215 in operations and approximately 130 in finance and administration. The Company regularly seeks to identify skilled software engineers and other potential employee candidates, and has found that competition for personnel in the software industry is intense. The Company believes its ability to recruit and retain highly skilled technical and other management personnel will be critical to execute its business plans. The Company's employees are not represented by any collective bargaining agreement or organization. The Company believes that its relationships with its employees are good. FORWARD-LOOKING STATEMENTS This Item 1 contains forward-looking statements that involve risks and uncertainties. When used, the words "anticipate", "believe", "estimate", and "expect" and similar expressions as they relate to the Company and its management are intended to identify such forward-looking statements. The Company's actual results, performance or achievements could differ materially from the results expressed in, or implied by, such forward-looking statements. Factors that could affect such results, performance or achievements are set forth in "Risk Factors" in the final Prospectus filed on August 16, 1996 pursuant to Rule 424(b) in connection with the Company's Registration Statement on Form S-1 filed with the Securities and Exchange Commission (File Number 333-07287). ITEM 2. PROPERTIES The Company's corporate office is located in Chicago, Illinois where the Company leases approximately 125,000 square feet of a multi-tenant facility under a lease expiring in November 2008. The Company also leases approximately 84,000 square feet in Glendora, California where a satellite development center and distribution center are housed, under a lease expiring in August 2000. The Company is currently negotiating a lease for approximately 30,000 additional square feet in a Chicago office facility separate from its corporate office. This new space will house the Company's claims settlement services staff and enable the use of existing leased space at the Company's corporate office for additional staff growth, particularly product development and programming staff. The Company believes that its existing facilities and additional or alternative space available to it are adequate to meet its requirements for the foreseeable future. ITEM 3. LEGAL PROCEEDINGS In April 1996, the Company completed the settlement of a lawsuit involving an independent publisher of used car valuation books. The settlement amount approximated the settlement charge of $4.5 million 11 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES previously recorded in April 1995. In conjunction with the settlement agreement, the Company received a three year license to the publisher's used car valuation book data at market rates. The Company is a party to various claims and routine litigation arising in the normal course of business. Such claims and litigation are not expected to have a material adverse effect on the financial condition or results of operations of the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Common Stock (symbol: CCCG) began trading on the Nasdaq National Market ("Nasdaq") on August 16, 1996. Low and high sales prices of the Common Stock were as follows:
1996 ------------------------ THIRD FOURTH QUARTER(*) QUARTER ----------- ----------- Low..................................................................... $ 14.00 $ 12.50 High.................................................................... $ 24.00 $ 23.00
- ------------------------ (*) Represents trading activity for the period from August 16, 1996 through September 30, 1996. Since the public offering, no dividends have been declared on shares of the Company's Common Stock and the Company's Board of Directors currently has no intention to declare such dividends. As of March 7, 1997, there were 23,533,624 shares of Common Stock issued and outstanding. There were 140 stockholders of record on March 7, 1997, plus an indeterminate number of stockholders that hold shares of Common Stock in the names of nominees. 12 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES ITEM 6. SELECTED FINANCIAL DATA
YEAR ENDED DECEMBER 31, --------------------------------------------------------- 1996 1995 1994(*) 1993 1992 ---------- ---------- ---------- ---------- --------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) CONSOLIDATED STATEMENT OF OPERATIONS DATA: Revenues............................................... $ 130,977 $ 115,519 $ 91,917 $ 51,264 $ 45,805 Expenses: Operating expenses................................... 110,846 104,697 84,094 44,233 41,429 Purchased research and development................... -- -- 13,791 -- -- Loss on lease termination............................ -- -- -- 3,802 -- Litigation settlements............................... -- 4,500 1,750 -- -- ---------- ---------- ---------- ---------- --------- Operating income (loss)................................ 20,131 6,322 (7,718) 3,229 4,376 Equity in loss of Joint Venture........................ -- -- (615) (3,564) (6,713) Interest expense....................................... (2,562) (5,809) (7,830) (6,945) (9,606) Other income (expense), net............................ 636 482 316 (311) 232 ---------- ---------- ---------- ---------- --------- Income (loss) from continuing operations before income taxes.................................. 18,205 995 (15,847) (7,591) (11,711) Income tax (provision) benefit......................... (2,683) 291 2,688 1,817 4,451 ---------- ---------- ---------- ---------- --------- Income (loss) from continuing operations............... 15,522 1,286 (13,159) (5,774) (7,260) Income (loss) from discontinued operations, net of income taxes.................................. -- -- 1,006 (4,357) 409 Extraordinary loss on early retirement of debt, net of income taxes......................................... (678) -- -- -- -- ---------- ---------- ---------- ---------- --------- Net income (loss)...................................... 14,844 1,286 (12,153) (10,131) (6,851) Dividends and accretion on mandatorily redeemable preferred stock...................................... (6,694) (3,003) (1,518) -- -- ---------- ---------- ---------- ---------- --------- Net income (loss) applicable to common stock........... $ 8,150 $ (1,717) $ (13,671) $ (10,131) $ (6,851) ---------- ---------- ---------- ---------- --------- ---------- ---------- ---------- ---------- --------- PER SHARE DATA: Income (loss) from: Continuing operations................................ $ 0.76 $ 0.08 $ (0.99) $ (0.61) $ (0.78) Discontinued operations.............................. -- -- 0.07 (0.47) 0.04 Extraordinary loss on early retirement of debt, net of income taxes.................................... (0.03) -- -- -- -- Dividends and accretion on mandatorily redeemable preferred stock.................................... (0.33) (0.18) (0.11) -- -- ---------- ---------- ---------- ---------- --------- Net income (loss) applicable to common stock........... $ 0.40 $ (0.10) $ (1.03) $ (1.08) $ (0.74) ---------- ---------- ---------- ---------- --------- ---------- ---------- ---------- ---------- --------- Weighted average common and common equivalent shares outstanding.......................................... 20,367 17,028 13,241 9,396 9,231
- ------------------------ (*) The Company accounted for its interest in the Joint Venture under the equity method of accounting prior to acquiring the remaining interest in the Joint Venture, effective March 30, 1994. 13 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES
DECEMBER 31, ---------------------------------------------------------- 1996 1995 1994 1993 1992 ---------- ---------- ---------- ---------- ---------- (IN THOUSANDS) CONSOLIDATED BALANCE SHEET DATA: Cash and marketable securities........................ $ 18,404 $ 3,895 $ 5,702 $ 375 $ 3,756 Working capital....................................... 8,093 (17,953) (15,549) (11,004) 969 Total assets.......................................... 58,268 44,093 52,232 40,058 40,423 Current portion of long-term debt..................... 120 7,660 5,340 7,857 4,522 Long-term debt, excluding current maturities.......... 111 27,220 35,753 56,624 61,585 Mandatorily redeemable preferred stock................ 4,688 34,125 31,122 -- -- Stockholders' equity (deficit)........................ 24,293 (56,420) (54,729) (53,416) (43,291)
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF CONTINUING OPERATIONS The Company's results from continuing operations, for the periods indicated, are set forth below:
YEAR ENDED DECEMBER 31, ---------------------------------- 1996 1995 1994 ---------- ---------- ---------- (IN THOUSANDS) Revenues..................................................................... $ 130,977 $ 115,519 $ 91,917 Expenses: Operating Expenses: Production and customer support........................................... 31,828 32,261 25,123 Commissions, royalties and licenses....................................... 14,009 11,720 7,153 Selling, general and administrative....................................... 40,653 36,279 33,426 Depreciation and amortization............................................. 7,330 9,572 8,331 Product development and programming....................................... 17,026 14,865 10,061 Purchased research and development.......................................... -- -- 13,791 Litigation settlements...................................................... -- 4,500 1,750 ---------- ---------- ---------- Operating income (loss)..................................................... 20,131 6,322 (7,718) Equity in loss of Joint Venture............................................. -- -- (615) Interest expense............................................................ (2,562) (5,809) (7,830) Other income, net........................................................... 636 482 316 ---------- ---------- ---------- Income (loss) from continuing operations before income taxes................ 18,205 995 (15,847) Income tax (provision) benefit.............................................. (2,683) 291 2,688 ---------- ---------- ---------- Income (loss) from continuing operations.................................... $ 15,522 $ 1,286 $ (13,159) ---------- ---------- ---------- ---------- ---------- ----------
OVERVIEW The Company is a supplier of automobile claims information and processing, claims management software and communication services. The Company's customers include the largest U.S. automobile insurance companies and most of the small to medium size automobile insurance companies in the country. In addition, the companies products and services are used by approximately 10,000 collision repair facilities. The Company's services and products are designed to improve efficiency, manage costs and increase consumer satisfaction in the management of automobile claims and restoration. 14 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES The Company sells its products to two primary customer groups: insurance companies (approximately 69% of revenue in 1996) and collision repair facilities. In addition, certain Company products and services are aimed at improving the efficiency of both markets by enabling the two groups to communicate electronically. The Company's principal products for insurance companies are its TOTAL LOSS vehicle valuation service, used to estimate the value of unrepairable vehicles, and its EZEST collision estimating software, used to estimate the cost of repairing vehicles. The Company also offers insurers its claims outsourcing service, ACCESS, an integrated appraisal and restoration management service and access to EZNET, its communications network. The Company has recently introduced its PATHWAYS workflow management software, which integrates the Company's information and software products into a total workflow management solution for insurance field appraisal staffs. The Company's principal product for collision repair facilities is its EZEST collision estimating software. TOTAL LOSS vehicle valuation services are generally obtained through direct dial-up access to the Company's host-based valuation system and billed to insurance companies on a per valuation basis or under contract terms that specify fixed fees for a prescribed number of transactions. Volume discounts affect pricing. Collision Estimating software subscriptions are billed monthly in advance. ACCESS services are billed monthly to insurance companies and collision repair facilities on a per transaction basis. EZNET communication services are generally priced on a per transaction basis. Monthly subscription and transaction rates for all products and services are established under negotiated contracts or pricing agreements. In general, customer account balances are settled monthly. Under the terms of certain contracts involving quarterly or annual prepayments, deferred revenues are recorded and subsequently recognized over the periods in which related revenues are earned. Customer contracts generally have multi-year terms. A substantial portion of the Company's revenues were earned under contracts with customers that provide for exclusivity or specify minimum purchase requirements; most remaining revenue represented sales to customers that have been doing business with the Company for many years. Use of multi-year contracts is common practice within the industry, making it difficult to take customers from competitors during the contract term. As a result of debt incurred in connection with the Company's 1988 acquisition of CCC, the Company became highly leveraged. The Company's ability to invest in new product development and conduct its business in accordance with its business plan was constrained by limitations imposed by its acquisition borrowings. The Company formed CCCDC to develop the EZEST collision estimating software. To finance EZEST development and marketing efforts, the Company relied on the sale of revenue streams from certain end-user collision estimating contracts. These contract funding transactions provided essential liquidity until June 1994, when the Company completed a recapitalization. In connection with this recapitalization, White River acquired $39 million of Mandatorily Redeemable Preferred Stock ("Preferred Stock"), and 7,050,840 shares of the Company's common stock (the "White River Transaction"), and CCC entered into the 1994 bank credit facility. White River immediately sold $1,462,000 of the Preferred Stock (3.7% of the then-outstanding Preferred Stock) and 264,407 shares of the Common Stock (1.6% of the then-outstanding Common Stock) to two investment partnerships affiliated with Hambrecht & Quist LLC. In 1994, the Company acquired the 50% of CCCDC that it did not previously own. Since the acquisition, the Company has consolidated the accounts of CCCDC. The Preferred Stock includes certain rights set forth in detail in Notes 12 and 13 to the consolidated financial statements, Mandatorily Redeemable Preferred Stock and Initial Public Offering of Common Stock, respectively. In particular, the Series E Preferred Stock permits White River and its affiliates to cast 51% of the votes to be cast on any matter to be voted on by the holders of the Company's common stock, subject to reductions in the event that either the Company redeems part of the outstanding Series E Preferred Stock or White River and its affiliates no longer hold all of such stock. In addition, under the 15 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES terms of a Stockholders Agreement among White River and certain stockholders, including the Company's Chairman (the "Management Stockholders"), the parties have agreed, subject to fiduciary duties, that White River will vote with the Management Stockholders regarding defined business combinations and subsequent offerings of Company common stock. The principal payment obligations and the restrictive covenants of the 1994 bank credit facility constrained the Company's operating activities through the first half of 1996. As a result of the payment obligations and restrictive covenants, the Company did not incur certain operating expenditures and make certain investments that it otherwise would have made. As a result of these delayed expenditures, the Company believes that its operating income increased during the first half of 1996 by between $0.8 million and $1.0 million. The postponed expenditures to enhance internal functions and capabilities (including improvements to customer tracking software, additional staff hiring and training, and certain sales and marketing activities) were made during the second half of the year. Depreciation expense includes depreciation attributable to certain software acquired through the Company's acquisition of UCOP's interest in CCCDC. In the purchase price allocation for the CCCDC acquisition, $5.2 million was assigned to purchased software with a two year life, $13.8 million was assigned to in-process research and development software projects, $6.6 million was assigned to acquired tangible assets and the balance of $3.7 million was assigned to goodwill. The amount assigned to in-process research and development was charged against operating results at the time of the acquisition. As a result of expiration of the purchased software's two year life as of March 31, 1996, purchased software depreciation of approximately $2.6 million in 1995 declined to approximately $0.7 million in 1996. The Company expenses research and development costs as incurred. The Company has evaluated the establishment of technological feasibility of its product in accordance with Statement of Financial Accounting Standard No. 86, "Accounting for the Costs of Computer Software to be Sold Leased or Otherwise Marketed." The Company sells its products in a market that is subject to rapid technological change, new product development and changing customer needs. Accordingly, the Company has concluded that technological feasibility is not established until the development stage of the product is nearly complete. The Company defines technological feasibility as the completion of a working model. The time period during which costs could be capitalized, from the point of reaching technological feasibility until the time of general product release, is very short and, consequently, the amounts that could be capitalized are not material to the Company's financial position or results of operations. Therefore, the Company has charged all such costs to research and development in the period incurred. The Company believes that its future success depends on its ability to enhance its current services and products and to develop new services and products that address the needs of its customers. As a result, the Company has in the past and intends to continue to commit substantial resources to product development and programming. Over the past three years ended December 31, 1996 the Company expended approximately $42.0 million for product development and programming. The Company had offset the income tax benefit attributable to a portion of the Company's future income tax deductions with tax valuation allowances because of the Company's history of operating losses and an inability to project future taxable income with certainty. This treatment increased the Company's overall effective income tax rate in the years the deferred income tax valuation allowances were provided. As a result of the Company's successful public offering and recently improved operating results, valuation allowances totaling $4.7 million were released to income in 1996. Despite its pre-offering accumulated deficit, the Company's net operating loss carryforwards totaled only $0.3 million. This disparity is attributable to the lack of tax basis for certain past operating charges. Since inception, the Company has charged against earnings: (i) goodwill amortization related to acquired 16 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES businesses in the amount of approximately $37.5 million, (ii) purchased in-process research and development software projects of approximately $13.8 million and (iii) purchased software amortization of approximately $4.6 million. The Offering did not result in a change in control for income tax purposes that would limit the use of the net operating loss carryforwards. In addition, as of December 31, 1996, the Company had no research or investment tax credit carryforwards. RESULTS OF CONTINUING OPERATIONS AS A PERCENTAGE OF REVENUE The Company's results from continuing operations, as a percentage of revenue for the periods indicated, are set forth below:
YEAR ENDED DECEMBER 31, ------------------------------------- 1996 1995 1994 ----------- ----------- ----------- Revenues.......................................................................... 100.0% 100.0% 100.0% ----- ----- ----- Expenses: Operating Expenses: Production and customer support............................................... 24.3 27.9 27.3 Commissions, royalties and licenses........................................... 10.7 10.1 7.8 Selling, general and administrative........................................... 31.0 31.4 36.4 Depreciation and amortization................................................. 5.6 8.3 9.1 Product development and programming........................................... 13.0 12.9 10.9 Purchased research and development.............................................. -- -- 15.0 Litigation settlements.......................................................... -- 3.9 1.9 ----- ----- ----- Operating income (loss)........................................................... 15.4 5.5 (8.4) Equity in loss of Joint Venture................................................... -- -- (0.7) Interest expense.................................................................. (2.0) (5.0) (8.5) Other income, net................................................................. 0.5 0.4 0.3 ----- ----- ----- Income (loss) from continuing operations before income taxes...................... 13.9 0.9 (17.2) Income tax (provision) benefit.................................................... (2.0) 0.2 2.9 ----- ----- ----- Income (loss) from continuing operations.......................................... 11.9% 1.1% (14.3)% ----- ----- ----- ----- ----- -----
1996 COMPARED WITH 1995 For the year ended December 31, 1996, the Company reported net income applicable to common stock of $8.2 million, or $0.40 per share, versus net loss of $1.7 million, or $0.10 per share, for the same period last year. Operating income for the year ended December 31, 1996 of $20.1 million was $13.8 million higher than the same period last year. A litigation settlement charge of $4.5 million was recorded in the comparable 1995 period. REVENUES. Revenues for the year ended December 31, 1996 of $131.0 million were $15.5 million, or 13.4%, higher than the same period last year. The increase in revenues was due primarily to higher revenues from collision estimating software licensing, from ACCESS claims services and from TOTAL LOSS vehicle valuation services. Collision estimating software licensing revenues increased primarily because of an increase in the number of software licenses, particularly at collision repair facilities. ACCESS claims services revenues increased primarily as a result of higher transaction volume. TOTAL LOSS revenues increased as a result of both higher volume and a slightly higher rate per transaction. 17 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES PRODUCTION AND CUSTOMER SUPPORT. Production and customer support decreased from $32.3 million, or 27.9% of revenues, to $31.8 million or 24.3% of revenues, due primarily to the Company's efforts to reduce selected production costs. COMMISSIONS, ROYALTIES AND LICENSES. Commission, royalties and licenses increased from $11.7 million, or 10.1% of revenues, to $14.0 million, or 10.7% of revenues. The increase as a percent of revenues was due primarily to higher revenues from collision estimating licensing which generates both a commission and a data royalty. SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative increased from $36.3 million, or 31.4% of revenues, to $40.7 million, but declined to 31.0% of revenues. The decline as a percentage of revenue primarily represents the increase in revenues but also reflects the results of the Company's cost containment programs. DEPRECIATION AND AMORTIZATION. Depreciation and amortization declined from $9.6 million, or 8.3% of revenues, to $7.3 million, or 5.6% of revenues. The decline relates primarily to expiration, as of March 31, 1996, of purchased software amortization associated with the Company's acquisition of its former partner's interest in CCCDC. PRODUCT DEVELOPMENT AND PROGRAMMING. Product development and programming increased from $14.9 million, or 12.9% of revenues to $17.0 million, or 13.0% of revenues. The increase was due primarily to an increasing allocation of Company resources to product development and wage pressure associated with retaining software engineers. INTEREST EXPENSE AND INCOME TAXES. Interest expense declined from $5.8 million to $2.6 million due to repayments of long-term debt, including the substantial debt repayments following the Company's initial public offering of common stock. The effective income tax rate for the year of 14.7% reflects the release of deferred income tax valuation allowances totaling $4.7 million. The decision to release these deferred income tax valuation allowances was based upon the successful recapitalization of the Company through its initial public offering and management's increased confidence in predicting the timing and amount of future taxable income. 1995 COMPARED WITH 1994 REVENUES. Total revenues increased by $23.6 million, or 25.7%. The total revenue increase includes the effect of consolidating CCCDC for a full year in 1995, versus use of the equity method during the first quarter of 1994 when CCCDC recorded revenues of $11.4 million. Had CCCDC been consolidated for all of 1994, the 1995 over 1994 revenue increase would have been $13.3 million, or 13.0%. This increase in revenue was primarily attributable to higher revenues from collision estimating software licensing, from EZNET and from ACCESS claims services. Collision estimating software licensing revenue increased primarily because of an increase in the number of software licenses, particularly in the collision repair facility market. The increase in EZNET revenues was due to additional EZNET network and recycled part locator transactions, with EZNET at a slightly higher average price per transaction. The increase in revenues for ACCESS claims services was due primarily to higher transaction volume. TOTAL LOSS valuation service revenues were down slightly, reflecting primarily lower volume. In addition, sales of certain other miscellaneous services and products were up slightly. COMMISSIONS, ROYALTIES AND LICENSES. Commissions, royalties and licenses increased from $7.2 million, or 7.8% of revenues, to $11.7 million, or 10.1% of revenues. This increase in such expenses as a percent of revenues was due primarily to a change in the mix of products sold, including higher revenues 18 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES from the licensing of collision estimating software, which generates both a sales commission and a data royalty. The increase in revenue from licenses of collision estimating software resulted from higher volume together with the effect of consolidating CCCDC for all of 1995. SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative increased from $33.4 million, or 36.4% of revenues, to $36.3 million, or 31.4% of revenues. This increase is attributable primarily to higher salaries and travel expense associated with the Company's sales force. The decline in expense as a percentage of revenue is due to the increase in revenues, including the effect on revenues of consolidating CCCDC for all of 1995, and the fixed nature of certain general and administrative expenses. DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased from $8.3 million, or 9.1% of revenues, to $9.6 million, or 8.3% of revenues, due primarily to the acquisition of CCCDC, effective March 30, 1994. As a result of the acquisition, purchased software amortization, goodwill amortization and depreciation expense increased $0.7 million, $0.1 million and $1.1 million, respectively. PRODUCT DEVELOPMENT AND PROGRAMMING. Product development and programming increased from $10.1 million, or 10.9% of revenues, to $14.9 million, or 12.9% of revenues. The increase was due predominantly to greater investment in product development, relating in large part to the Company's PATHWAYS software, and wage pressure associated with hiring and retaining software engineers. The increase in these expenses as a percent of revenues also reflects the effect of consolidating CCCDC for all of 1995. PURCHASED RESEARCH AND DEVELOPMENT. In the CCCDC purchase price allocation, $13.8 million was assigned to in-process research and development projects. The amount assigned to in-process research and development software projects was charged against operating results at the time of the acquisition. See Note 4 to the Consolidated Financial Statements. INTEREST EXPENSE AND INCOME TAXES. Interest expense declined from $7.8 million to $5.8 million, due primarily to lower average borrowings outstanding, reflecting the Company's June 1994 recapitalization, including the White River Transaction. The income tax benefit attributable to continuing operations declined from $2.7 million to $0.3 million, due primarily to improvements in results from continuing operations. See Note 6 to the Consolidated Financial Statements. LITIGATION SETTLEMENT. The litigation settlement charge of $4.5 million in 1995 was recorded to provide for resolution of litigation involving a corporate publisher of used car valuation books. This matter was settled in April 1996, however, the original settlement charge was sufficient to provide for the ultimate settlement. In June 1994 litigation involving an independent corporate provider of guidebook data was settled. Under the settlement agreement the Company agreed to pay the provider $1.75 million. See Note 16 to the Consolidated Financial Statements. LIQUIDITY AND CAPITAL RESOURCES During the year ended December 31, 1996, net cash provided by operating activities was $20.3 million, net of contract funding revenue amortization of $3.3 million. The Company applied $5.6 million, excluding noncash capital expenditures, to purchase equipment and software and invested $9.0 million in marketable securities. On August 21, 1996, the Company completed its initial public offering of common stock, generating proceeds of $72.1 million, net of underwriters' discounts and related equity issue costs. Proceeds from the offering of $36.1 million were used to redeem approximately 87% of the Company's mandatorily redeemable preferred stock at stated value plus accrued dividends. In addition, proceeds from the offering of 19 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES $28.0 million were used to make principal repayments on long-term debt. The balance of the Company's principal repayments during the year ended December 31, 1996 was generated from operations. On August 22, 1996, the Company secured a $20.0 million revolving credit facility through a new commercial bank. There have been no borrowings under the new facility. Indebtedness under the new facility would bear interest at either of two rates as selected by the Company: the London Inter-Bank Offering Rate ("LIBOR") plus 1.5% or the prime rate. Following the offering, the Company's principal liquidity requirements include its operating activities, including product development, and its investments in internal and customer capital equipment. Under the new bank facility, CCC is, with certain exceptions, prohibited from making certain sales or transfers of assets, incurring nonpermitted indebtedness or encumbrances, and redeeming or repurchasing its capital stock, among other restrictions. In addition, the new bank credit facility also requires CCC to maintain certain levels of operating cash flow and debt coverage, and limits CCC's ability to make capital expenditures and investments and declare dividends. Management believes that cash flows from operations and the new credit facility will be sufficient to meet the Company's liquidity needs over the next 12 months. There can be no assurance, however, that the Company will be able to satisfy its liquidity needs in the future without engaging in financing activities beyond those described above. FORWARD-LOOKING STATEMENTS The Private Securities Litigation Reform Act of 1995 contains certain safe harbors regarding forward-looking statements. In that context, the discussion in this Item 7 contains forward-looking statements which involve certain degrees of risk and uncertainties, including statements relating to liquidity and capital resources. Except for the historical information, the matters discussed in this Item 7 are such forward-looking statements that involve risks and uncertainties, including, without limitation, the effect of competitive pricing within the industry, the presence of competitors with greater financial resources than the Company, the intense competition for top software engineering talent and the volatile nature of technological change within the automobile claims industry. Additional factors that could affect the Company's financial condition and results of operations are included in the Company's Final Prospectus in connection with the Registration Statement on Form S-1, as amended, filed with the Securities and Exchange Commission on August 16, 1996, Commission File Number 333-07287. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements and supplementary data required with respect to this Item 8 are listed in Item 14(a)(1) and 14(a)(2) included elsewhere in this filing ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by this item is hereby incorporated by reference to CCC Information Services Group Inc.'s Notice of 1997 Annual Meeting of Stockholders and Proxy Statement, which was filed with the Securities and Exchange Commission and provided to stockholders on or about March 14, 1997. 20 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES ITEM 11. EXECUTIVE COMPENSATION The information required by this item is hereby incorporated by reference to CCC Information Services Group Inc.'s Notice of 1997 Annual Meeting of Stockholders and Proxy Statement, which was filed with the Securities and Exchange Commission and provided to stockholders on or about March 14, 1997. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this item is hereby incorporated by reference to CCC Information Services Group Inc.'s Notice of 1997 Annual Meeting of Stockholders and Proxy Statement, which was filed with the Securities and Exchange Commission and provided to stockholders on or about March 14, 1997. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this item is hereby incorporated by reference to CCC Information Services Group Inc.'s Notice of 1997 Annual Meting of Stockholders and Proxy Statement, which was filed with the Securities and Exchange Commission and provided to stockholders on or about March 14, 1997. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) Index to Consolidated Financial Statements and Schedules 1. Consolidated Financial Statements
PAGE(S) --------- Report of Independent Accountants............................................... 22 Consolidated Financial Statements: Consolidated Statement of Operations.......................................... 23 Consolidated Balance Sheet.................................................... 24 Consolidated Statement of Cash Flow........................................... 25 Consolidated Statement of Stockholders' Equity (Deficit)...................... 26 Notes to Consolidated Financial Statements.................................... 27-41
2. Financial Statement Schedule Schedule II--Valuation and Qualifying Accounts.................. 42
All other schedules have been omitted because the required information is included in the financial statements or notes thereto or because they are not required. 3. Exhibits Index to Exhibits............................................... 43
(b) Reports on Form 8-K No reports on Form 8-K were filed by CCC Information Services Group Inc. during 1996. 21 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of CCC Information Services Group Inc. In our opinion, the consolidated financial statements listed in the accompanying index appearing under Item 14(a)1 and (a)2 on page 21 present fairly, in all material respects, the financial position of CCC Information Services Group Inc. (formerly known as InfoVest Corporation) (a subsidiary of White River Ventures, Inc.) and its subsidiaries at December 31, 1996 and 1995, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP January 22, 1997 Chicago, Illinois 22 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS)
YEAR ENDED DECEMBER 31, ---------------------------------- 1996 1995 1994 ---------- ---------- ---------- Revenues...................................................................... $ 130,977 $ 115,519 $ 91,917 Expenses: Production and customer support............................................. 31,828 32,261 25,123 Commissions, royalties and licenses......................................... 14,009 11,720 7,153 Selling, general and administrative......................................... 40,653 36,279 33,426 Depreciation and amortization............................................... 7,330 9,572 8,331 Product development and programming......................................... 17,026 14,865 10,061 Purchased research and development.......................................... -- -- 13,791 Litigation settlements...................................................... -- 4,500 1,750 ---------- ---------- ---------- Operating income (loss)....................................................... 20,131 6,322 (7,718) Equity in loss of Joint Venture............................................... -- -- (615) Interest expense.............................................................. (2,562) (5,809) (7,830) Other income, net............................................................. 636 482 316 ---------- ---------- ---------- Income (loss) from continuing operations before income taxes.................. 18,205 995 (15,847) Income tax (provision) benefit................................................ (2,683) 291 2,688 ---------- ---------- ---------- Income (loss) from continuing operations...................................... 15,522 1,286 (13,159) Income from discontinued operations, net of income taxes...................... -- -- 1,006 Extraordinary loss on early retirement of debt, net of income taxes........... (678) -- -- ---------- ---------- ---------- Net income (loss)............................................................. 14,844 1,286 (12,153) Dividends and accretion on mandatorily redeemable preferred stock............. (6,694) (3,003) (1,518) ---------- ---------- ---------- Net income (loss) applicable to common stock.................................. $ 8,150 $ (1,717) $ (13,671) ---------- ---------- ---------- ---------- ---------- ---------- Income (loss) per common and common equivalent share from: Continuing operations....................................................... $ 0.76 $ 0.08 $ (0.99) Discontinued operations..................................................... -- -- 0.07 Extraordinary loss on early retirement of debt, net of income taxes......... (0.03) -- -- Dividends and accretion on mandatorily redeemable preferred stock........... (0.33) (0.18) (0.11) ---------- ---------- ---------- Net income (loss) applicable to common stock.................................. $ 0.40 $ (0.10) $ (1.03) ---------- ---------- ---------- ---------- ---------- ---------- Weighted average common and common equivalent shares outstanding.............. 20,367 17,028 13,241
The accompanying notes are an integral part of these consolidated financial statements. 23 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (IN THOUSANDS) ASSETS
1996 1995 ---------- ---------- Cash...................................................................................... $ 9,403 $ 3,895 Investments in marketable securities...................................................... 9,001 -- Accounts receivable, net.................................................................. 9,772 9,899 Income taxes receivable................................................................... -- 1,079 Other current assets...................................................................... 3,207 2,877 ---------- ---------- Total current assets.................................................................... 31,383 17,750 Equipment and purchased software, net of accumulated depreciation of $20,361 and $23,695 at December 31, 1996 and 1995, respectively...................... 8,088 7,310 Goodwill, net of accumulated amortization of $8,893 and $7,548 at December 31, 1996 and 1995, respectively............................................. 11,230 12,575 Deferred income taxes..................................................................... 6,410 3,810 Other assets.............................................................................. 1,157 2,648 ---------- ---------- Total Assets............................................................................ $ 58,268 $ 44,093 ---------- ---------- ---------- ---------- LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) Accounts payable and accrued expenses..................................................... $ 15,821 $ 19,652 Income taxes payable...................................................................... 1,517 -- Current portion of long-term debt......................................................... 120 7,660 Deferred revenues......................................................................... 5,709 5,063 Current portion of contract funding....................................................... 123 3,328 ---------- ---------- Total current liabilities............................................................... 23,290 35,703 Long-term debt............................................................................ 111 27,220 Contract funding.......................................................................... -- 135 Deferred revenues......................................................................... 1,997 597 Other liabilities......................................................................... 3,889 2,733 Commitments and contingencies (Note 15) ---------- ---------- Total liabilities....................................................................... 29,287 66,388 ---------- ---------- Mandatorily redeemable preferred stock ($1.00 par value, 100,000 shares authorized, 4,915 and 39,000 shares designated and outstanding at December 31, 1996 and 1995, respectively............................. 4,688 34,125 ---------- ---------- Common stock ($0.10 par value, 30,000,000 shares authorized, 23,472,355 and 16,316,400 shares issued and outstanding at December 31, 1996 and 1995, respectively)............................................... 2,347 1,632 Additional paid-in capital................................................................ 84,223 11,679 Accumulated deficit....................................................................... (61,898) (69,519) Treasury stock, at cost ($0.10 par value, 112,505 and 111,920 shares in treasury at December 31, 1996 and 1995, respectively)................................ (379) (212) ---------- ---------- Total stockholders' equity (deficit).................................................... 24,293 (56,420) ---------- ---------- Total Liabilities, Mandatorily Redeemable Preferred Stock and Stockholders' Equity (Deficit).................................................. $ 58,268 $ 44,093 ---------- ---------- ---------- ----------
The accompanying notes are an integral part of these consolidated financial statements. 24 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (IN THOUSANDS)
YEAR ENDED DECEMBER 31, ------------------------------- 1996 1995 1994 --------- --------- --------- Operating Activities: Net income (loss).............................................................. $ 14,844 $ 1,286 $ (12,153) Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: Income from discontinued operations, net of income taxes..................... -- -- (1,006) Extraordinary loss on early retirement of debt, net of income taxes.......... 678 -- -- Purchased research and development........................................... -- -- 13,791 Equity in loss of Joint Venture.............................................. -- -- 615 Depreciation and amortization of equipment and purchased software............ 5,948 8,154 6,770 Amortization of goodwill..................................................... 1,345 1,346 1,380 Deferred income tax provision (benefit)...................................... (2,600) 1,659 (2,885) Contract funding proceeds.................................................... -- 149 4,995 Contract funding revenue amortization........................................ (3,340) (10,249) (12,989) Other, net................................................................... 451 559 560 Changes in: Accounts receivable, net................................................... 127 (1,272) 185 Other current assets....................................................... (330) 339 853 Other assets............................................................... (58) (149) (21) Accounts payable and accrued expenses...................................... (3,831) 5,194 (769) Current income taxes....................................................... 3,371 (961) (827) Deferred revenues.......................................................... 2,046 1,312 971 Other liabilities.......................................................... 1,604 356 547 --------- --------- --------- Net cash provided by (used for) operating activities: Continuing operations.......................................................... 20,255 7,723 17 Discontinued operations, net................................................... -- -- (4,169) --------- --------- --------- Net cash provided by (used for) operating activities..................... 20,255 7,723 (4,152) --------- --------- --------- Investing Activities: Purchases of equipment and software............................................ (5,568) (3,003) (5,220) Purchase of investment securities.............................................. (9,001) -- -- Acquisition of Joint Venture, net of cash acquired............................. -- -- (4,519) Purchase of Faneuil ISG stock and options...................................... -- -- (530) Proceeds from sale of discontinued operations, net of expenses................. -- 500 5,728 Other, net..................................................................... 25 48 (643) --------- --------- --------- Net cash used for investing activities................................... (14,544) (2,455) (5,184) --------- --------- --------- Financing Activities: Principal payments on long-term debt........................................... (46,740) (11,101) (15,842) Proceeds from issuance of long-term debt....................................... 10,750 4,000 30,793 Public offering of common stock, net of underwriters' discounts................ 73,795 -- -- Redemption of preferred stock, including accrued dividends..................... (36,131) -- -- Payment of equity and debt issue costs......................................... (2,053) -- (1,802) Advances from Joint Venture, net............................................... -- -- 1,511 Other, net..................................................................... 176 26 3 --------- --------- --------- Net cash provided by (used for) financing activities..................... (203) (7,075) 14,663 --------- --------- --------- Net increase (decrease) in cash.................................................. 5,508 (1,807) 5,327 Cash: Beginning of period............................................................ 3,895 5,702 375 --------- --------- --------- End of period.................................................................. $ 9,403 $ 3,895 $ 5,702 --------- --------- --------- --------- --------- ---------
The accompanying notes are an integral part of these consolidated financial statements. 25 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) (IN THOUSANDS, EXCEPT NUMBER OF SHARES)
OUTSTANDING COMMON STOCK TREASURY STOCK TOTAL ---------------------- ADDITIONAL ---------------------- STOCKHOLDERS' NUMBER OF PAID-IN ACCUMULATED NUMBER OF EQUITY SHARES PAR VALUE CAPITAL (DEFICIT) SHARES COST (DEFICIT) ----------- --------- ----------- ------------ ----------- --------- ------------ December 31, 1993................... 9,245,720 925 2 (54,131) 111,920 (212) (53,416) Stock issuance.................... 7,050,840 705 11,652 -- -- -- 12,357 Preferred stock accretion......... -- -- -- (936) -- -- (936) Preferred stock dividends accrued............... -- -- -- (582) -- -- (582) Stock options exercised........... 640 -- 1 -- -- -- 1 Net loss.......................... -- -- -- (12,153) -- -- (12,153) ----------- --------- ----------- ------------ ----------- --------- ------------ December 31, 1994................... 16,297,200 1,630 11,655 (67,802) 111,920 (212) (54,729) Preferred stock accretion......... -- -- -- (1,931) -- -- (1,931) Preferred stock dividends accrued............... -- -- -- (1,072) -- -- (1,072) Stock options exercised........... 19,200 2 24 -- -- -- 26 Net income........................ -- -- -- 1,286 -- -- 1,286 ----------- --------- ----------- ------------ ----------- --------- ------------ December 31, 1995................... 16,316,400 1,632 11,679 (69,519) 111,920 (212) (56,420) Initial public offering of common stock, net of underwriters' discounts and equity issue costs.......... 6,900,000 690 71,434 -- -- -- 72,124 Preferred stock accretion......... -- -- -- (6,006) -- -- (6,006) Preferred stock dividends accrued............... -- -- -- (688) -- -- (688) Stock options exercised, including income tax benefit (*).......... 242,355 24 678 -- 14,185 (193) 509 Treasury stock issuance........... 13,600 1 21 -- (13,600) 26 48 Investment security distribution.. -- -- -- (530) -- -- (530) Other............................. -- -- 411 1 -- -- 412 Net income........................ -- -- -- 14,844 -- -- 14,844 ----------- --------- ----------- ------------ ----------- --------- ------------ December 31, 1996................... 23,472,355 $ 2,347 $ 84,223 $ (61,898) 112,505 $ (379) $ 24,293 ----------- --------- ----------- ------------ ----------- --------- ------------ ----------- --------- ----------- ------------ ----------- --------- ------------
- -------------------------- (*) Note 14--Stock Option Plan contains a table of stock option activity that reflects 256,540 stock options exercised in 1996. The difference between the table in Note 14 and the Statement above represents the payment of a portion of the exercise price and/or income tax obligation arising from the stock option exercise with mature shares of the Company's common stock. These shares totaled 14,185 in 1996 and are held in treasury. The accompanying notes are an integral part of these consolidated financial statements. 26 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1--DESCRIPTION OF BUSINESSES AND ORGANIZATION CCC Information Services Group Inc. ("Company") (formerly known as InfoVest Corporation), through its wholly owned subsidiary CCC Information Services Inc. ("CCC"), is a supplier of automobile claims information and processing, claims management software and communication services. The Company's services and products enable automobile insurance company customers and collision repair facility customers to improve efficiency, manage costs and increase consumer satisfaction in the management of automobile claims and restoration. After the disposition of certain subsidiaries, as described in Note 5, and through April 30, 1995, the Company consisted of two primary operating entities: CCC and CCC Development Company ("Joint Venture"). The Company acquired its former partner's 50% interest in the Joint Venture, through the acquisition of UCOP, Inc. ("UCOP"), effective March 30, 1994. As a result of this acquisition, in combination with its original 50% interest in the Joint Venture, the Company acquired a 100% equity ownership interest in the Joint Venture. Prior to its acquisition of UCOP, the Company accounted for its 50% interest in the Joint Venture under the equity method. CCC also operates a subsidiary in Canada, Certified Collateral Corporation of Canada, Ltd. As of December 31, 1996, White River Ventures, Inc. ("White River") held approximately 37% of the total outstanding common stock of the Company. White River is a wholly owned subsidiary of White River Corporation. As a result of White River's substantial equity interest and 51% voting power, including voting rights established through its ownership interest in the Company's Series E Preferred Stock, the Company is a consolidated subsidiary of White River. See Note 12--Mandatorily Redeemable Preferred Stock and Note 13--Initial Public Offering of Common Stock. NOTE 2--SIGNIFICANT ACCOUNTING POLICIES BASIS OF CONSOLIDATION The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are currently wholly owned. REVENUE RECOGNITION Revenues are recognized as services are provided. Of total Company revenues in the years 1996, 1995 and 1994, 69%, 70% and 79%, respectively, were attributable to revenues from insurance companies. ACCOUNTS RECEIVABLE Accounts receivable as presented in the accompanying consolidated balance sheet are net of reserves for customer credits and doubtful accounts. As of December 31, 1996 and 1995, $1.9 million, and $1.5 million, respectively, have been applied as a reduction of accounts receivable. Of total accounts receivable, net of reserves, at December 31, 1996 and 1995, $8.7 million and $8.4 million, respectively, were due from insurance companies. INTERNAL SOFTWARE DEVELOPMENT COSTS The Company expenses research and development costs as incurred. The Company has evaluated the establishment of technological feasibility of its product in accordance with SFAS No. 86, "Accounting for 27 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 2--SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) the Costs of Computer Software to be Sold Leased or Otherwise Marketed." The Company sells its products in a market that is subject to rapid technological change, new product development and changing customer needs. Accordingly, the Company has concluded that technological feasibility is not established until the development stage of the product is nearly complete. The Company defines technological feasibility as the completion of a working model. The time period during which costs could be capitalized, from the point of reaching technological feasibility until the time of general product release, is very short and, consequently, the amounts that could be capitalized are not material to the Company's financial position or results of operations. Therefore, the Company has charged all such costs to research and development in the period incurred. For the years 1996, 1995 and 1994, research and development costs of approximately $4.3 million, $3.5 million and $2.8 million, respectively, are reflected in the accompanying consolidated statement of operations. EQUIPMENT AND PURCHASED SOFTWARE Equipment is stated at cost, net of accumulated depreciation. Depreciation of equipment is provided on a straight-line basis over estimated useful lives ranging from 2 to 15 years. Purchased software to be marketed is stated at cost and amortized in proportion to anticipated future revenues or on a straight-line basis over the estimated economic life of the purchased software, whichever provides the greater rate of amortization. In 1996, 1995 and 1994, amortization of purchased software to be marketed was $0.7 million, $2.6 million and $2.0 million, respectively. GOODWILL The excess of purchase price paid over the estimated fair value of identifiable tangible and intangible net assets of acquired businesses is capitalized and amortized on a straight-line basis over periods of 7 or 20 years. Goodwill is periodically reviewed to determine recoverability by comparing its carrying value to expected undiscounted future cash flows. DEBT ISSUE COSTS As of December 31, 1996 and 1995, deferred debt issue costs, net of accumulated amortization, of $0.4 million and $1.3 million, respectively, were included in other assets. CONTRACT FUNDING Future revenue streams under certain end-user collision estimating contracts (Contracts) were discounted and sold to various investors. Cash proceeds from a sold Contract equals the Contract's future revenue stream, discounted at an annual rate of approximately 14%, less, for certain Contracts, investor reserves for customer nonperformance under the Contracts. Sales proceeds, which are remitted directly to the investors in these Contracts, and related interest expense are recognized in the accompanying consolidated statement of operations as revenue and interest expense, respectively, over the life of the Contract. The Company no longer utilizes Contract funding as a financing vehicle. 28 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 2--SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) PER SHARE INFORMATION Earnings per share are based on the weighted average number of shares of common stock outstanding and common stock equivalents using the treasury stock method. FAIR VALUE OF FINANCIAL INSTRUMENTS As of December 31, 1996, the carrying amount of the Company's financial instruments approximates their estimated fair value based upon market prices for the same or similar type of financial instruments. PERVASIVENESS OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, and that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. NEW ACCOUNTING PRONOUNCEMENTS The Company adopted Statement of Financial Accounting Standard ("SFAS") No. 121, "Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" in the first quarter of 1996. This Statement establishes a new standard for accounting for the impairment of long-lived assets and certain identifiable intangibles. The adoption of SFAS No. 121 was not material to the Company's financial position or results of operations. Effective January 1, 1996, the Company adopted the "disclosure method" provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," which became effective January 1, 1996. As permitted by SFAS No. 123, the Company continues to recognize stock-based compensation costs under the intrinsic value-based method of accounting as prescribed by Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees." NOTE 3--NONCASH INVESTING AND FINANCING ACTIVITIES The Company directly charges accumulated deficit for preferred stock accretion and preferred stock dividends accrued. During 1996, 1995 and 1994, these amounts totaled $6.7 million, $3.0 million and $1.5 million, respectively. In addition to amounts reported as purchases of equipment in the consolidated statement of cash flows, the Company has directly financed certain noncash capital expenditures. During 1996, 1995 and 1994, these noncash capital expenditures totaled $1.3 million, $0.9 million and $0.4 million, respectively. In June 1994, as part of a reorganization and recapitalization of the Company, debt and equity issue costs of $1.1 million and $0.5 million, respectively, were paid on behalf of the Company by its commercial bank. 29 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 4--ACQUISITION OF PARTNER'S INTEREST IN JOINT VENTURE On March 30, 1994, White River acquired the stock of UCOP. Also on March 30, 1994, the Company entered into a Call Agreement with White River to purchase the stock of UCOP from White River within 180 days. On May 31, 1994, using cash generated through a commercial bank bridge loan, the Company completed the acquisition of UCOP's interest in the Joint Venture by purchasing the stock of UCOP from White River for $6.9 million. As of the date of its acquisition, UCOP's only business was its 50% investment in the Joint Venture. The purchase price of $6.9 million, plus liabilities assumed of $22.4 million, have been allocated to the estimated fair value of tangible and intangible assets acquired. In the purchase price allocation, $5.2 million was assigned to purchased software, $13.8 million was assigned to in-process research and development software projects, $6.6 million was assigned to acquired tangible assets and the balance of $3.7 million was assigned to goodwill. The amount assigned to in-process research and development was charged against operating results at the time of the acquisition. NOTE 5--DISCONTINUED OPERATIONS On August 25, 1994, the Company sold (a) the net operating assets of Credit Card Service Corporation, which had previously been accounted for as a discontinued operation and (b) all the capital stock of Original Research II Corporation (ORC), GIS Information Systems, Inc. (GIS) and Equitel Corporation. Net cash proceeds from the sale of these businesses totaled $6.2 million. In conjunction with the sale, the Company acquired, for $530 thousand, a 4.5% common equity interest and options to purchase additional common stock in Faneuil ISG, a Canadian Corporation that will conduct the future operations of these businesses. At December 31, 1995, this investment was carried at cost as a component of other assets. Final cash proceeds from the sale of $500 thousand were received from escrow in March of 1995. On June 6, 1996, the Board of Directors of the Company approved a distribution of the Faneuil ISG investment to stockholders. In November 1994, the Company completed the planned sale of its investment in Phone Base Systems Inc. (Phone Base). Both the gain and cash proceeds from the sale were not material. Revenues and income from discontinued operations for the year ended December 31, 1994 were as follows:
(IN THOUSANDS) Revenues...................................................................... $ 25,137 ------- ------- Loss before income taxes...................................................... $ (5,171) Income tax benefit............................................................ 2,536 ------- Loss from operations.......................................................... (2,635) ------- Gain on sale.................................................................. 4,650 Income tax provision.......................................................... (1,009) ------- Net gain on sale.............................................................. 3,641 ------- Income from discontinued operations......................................... $ 1,006 ------- -------
30 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 6--INCOME TAXES Income taxes applicable to continuing operations consisted of the following (provision) benefit:
1996 1995 1994 --------- --------- --------- (IN THOUSANDS) Current: Federal...................................................... $ (4,225) $ 1,792 $ (193) State........................................................ (1,057) 134 73 International................................................ (1) 24 (77) --------- --------- --------- Total current.............................................. (5,283) 1,950 (197) --------- --------- --------- Deferred: Federal...................................................... 2,098 (1,668) 1,910 State........................................................ 502 9 975 --------- --------- --------- Total deferred............................................. 2,600 (1,659) 2,885 --------- --------- --------- Total income tax (provision) benefit....................... $ (2,683) $ 291 $ 2,688 --------- --------- --------- --------- --------- ---------
The Company's effective income tax rate applicable to continuing operations differs from the federal statutory rate as follows:
1996 1995 1994 ----------------------- ----------------------- ----------------------- (IN THOUSANDS, EXCEPT %'S) Federal income tax (provision) benefit at statutory rate................................ $ (6,190) (34.0)% $ (338) (34.0)% $ 5,388 34.0 % State and local taxes, net of federal income tax effect and before valuation allowances........ (924) (5.1) 60 6.0 960 6.1 International taxes............................. (21) (0.1) 12 1.2 (132) (0.8) Goodwill amortization........................... (471) (2.6) (494) (49.6) (337) (2.1) Change in valuation allowance................... 4,679 25.7 1,260 126.6 (2,630) (16.6) Nondeductible expenses.......................... (186) (1.0) (242) (24.3) (48) (--) Other, net...................................... 430 2.4 33 3.3 (513) (3.6) --------- ----- --------- ----- --------- ----- Income tax (provision) benefit................ $ (2,683) (14.7)% $ 291 29.2 % $ 2,688 17.0 % --------- ----- --------- ----- --------- ----- --------- ----- --------- ----- --------- -----
During 1996 and 1994, the Company made income tax payments, net of refunds, of $1.9 million and $1.6 million, respectively. During 1995, the Company received income tax refunds, net of payments, of $1.0 million. 31 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 6--INCOME TAXES (CONTINUED) The approximate income tax effect of each type of temporary difference giving rise to deferred income tax assets and deferred income tax liabilities were as follows:
DECEMBER 31, -------------------- 1996 1995 --------- --------- (IN THOUSANDS) Deferred income tax assets: Deferred revenue......................................................... $ 1,893 $ 2,394 Rent..................................................................... 1,363 980 Depreciation and amortization............................................ 997 990 Bad debt expense......................................................... 759 568 Capital loss carryforward................................................ 284 -- Accrued compensation..................................................... 247 1,127 Long-term receivable..................................................... 145 150 Lease termination........................................................ 48 440 Net operating loss carryforward.......................................... 18 110 Litigation settlement.................................................... -- 1,145 Other, net............................................................... 940 1,121 --------- --------- Subtotal................................................................. 6,694 9,025 Valuation allowance...................................................... (284) (4,963) --------- --------- Total deferred income tax asset............................................ 6,410 4,062 --------- --------- Deferred income tax liabilities: Purchased software....................................................... -- (252) --------- --------- Total deferred income tax liability........................................ -- (252) --------- --------- Net deferred income tax asset............................................ $ 6,410 $ 3,810 --------- --------- --------- ---------
The Company had previously established deferred income tax asset valuation allowances because of its history of operating losses and an inability to project future taxable income with certainty. Valuation allowances totaling $4.7 million were released to income in 1996 as a result of the Company's successful recapitalization, through its public offering of common stock, and its demonstrated pattern of profitability. The valuation allowance as of December 31, 1996 pertains to the capital loss carryforward. Net operating loss carryforwards totaled $52 thousand as of December 31, 1996. These net operating loss carryforwards expire in 2005. Prior to calendar year 1995, the Company's fiscal year-end was April 30. The Internal Revenue Service (IRS) has examined the Company's income tax returns for fiscal years 1992 through 1995. The findings must be reported to the Joint Committee on Taxation before they become final. All Company income tax returns for fiscal years prior to 1992 are closed to further examination by the IRS. 32 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 7--OTHER CURRENT ASSETS Other current assets consisted of the following:
DECEMBER 31, -------------------- 1996 1995 --------- --------- (IN THOUSANDS) Prepaid data royalties..................................................... $ 1,195 $ 1,138 Prepaid equipment maintenance.............................................. 614 444 Prepaid commissions........................................................ 614 259 Computer inventory......................................................... 210 522 Prepaid insurance.......................................................... 170 56 Other, net................................................................. 404 458 --------- --------- Total.................................................................... $ 3,207 $ 2,877 --------- --------- --------- ---------
NOTE 8--EQUIPMENT AND PURCHASED SOFTWARE Equipment and purchased software consisted of the following:
DECEMBER 31, ---------------------- 1996 1995 ---------- ---------- (IN THOUSANDS) Computer equipment.................................................... $ 22,614 $ 19,997 Purchased software, licenses and databases............................ 2,858 8,007 Furniture and other equipment......................................... 2,804 2,814 Leasehold improvements................................................ 173 187 ---------- ---------- Total, gross........................................................ 28,449 31,005 Less accumulated depreciation......................................... (20,361) (23,695) ---------- ---------- Total, net.......................................................... $ 8,088 $ 7,310 ---------- ---------- ---------- ----------
Purchased software, licenses and databases includes software of $5.2 million acquired through the acquisition of its former partner's interest in the Joint Venture. As of December 31, 1996, this acquired software had been fully amortized. As of December 31, 1995 it had a net asset value of $0.7 million. As of December 31, 1996 and 1995, computer equipment, net of accumulated depreciation, that is on lease to certain customers under operating leases of $3.6 million and $2.5 million, respectively, is included in computer equipment. Future minimum rentals under noncancelable customer leases aggregate approximately $2.9 million and $1.0 million in years 1997 and 1998, respectively. 33 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 8--EQUIPMENT AND PURCHASED SOFTWARE (CONTINUED) Furniture and other equipment includes equipment under capital leases as follows:
DECEMBER 31, -------------------- 1996 1995 --------- --------- (IN THOUSANDS) Capital leases............................................................... $ 574 $ 574 Less accumulated depreciation................................................ (357) (240) --------- --------- Total, net................................................................. $ 217 $ 334 --------- --------- --------- ---------
NOTE 9--GOODWILL Goodwill consisted of the following:
DECEMBER 31, -------------------- LIFE 1996 1995 --------- --------- --------- (IN THOUSANDS) CCC acquisition (1988)...................................... 20years $ 16,458 $ 16,458 UCOP acquisition (1994)..................................... 7years 3,665 3,665 --------- --------- Total, gross.............................................. 20,123 20,123 Less accumulated amortization............................... (8,893) (7,548) --------- --------- Total, net................................................ $ 11,230 $ 12,575 --------- --------- --------- ---------
NOTE 10--ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consisted of the following:
DECEMBER 31, -------------------- 1996 1995 --------- --------- (IN THOUSANDS) Accounts payable........................................................ $ 5,783 $ 5,464 Compensation............................................................ 4,652 2,799 Professional fees....................................................... 1,484 2,586 Sales tax............................................................... 1,283 1,501 Commissions............................................................. 1,162 1,015 Health insurance........................................................ 406 957 Lease termination....................................................... 121 1,136 Litigation settlement................................................... -- 2,956 Other, net.............................................................. 930 1,238 --------- --------- Total................................................................. $ 15,821 $ 19,652 --------- --------- --------- ---------
NOTE 11--LONG-TERM DEBT In August 1996, CCC negotiated a new credit facility with a new commercial bank to replace its prior bank credit facility. The new credit facility provides CCC with the ability to borrow up to $20 million under 34 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 11--LONG-TERM DEBT (CONTINUED) a revolving line of credit for general corporate purposes. The Company guarantees CCC's obligations under the new credit facility, which is secured by a lien on the Company's common stock interest in CCC and CCC's assets. The interest rate under the new bank credit facility is the London Interbank Offering Rate (LIBOR) plus 1.5% or the prime rate in effect from time to time, as selected by CCC. When borrowings are outstanding, interest payments are made monthly. There were no borrowings under the new revolving credit facility during 1996. CCC pays a commitment fee of 0.25% on any unused portion of the revolving credit facility. The revolving credit facility terminates on October 1, 2001. Under the new bank facility, CCC is, with certain exceptions, prohibited from making certain sales or transfers of assets, incurring nonpermitted indebtedness or encumbrances, and redeeming or repurchasing its capital stock, among other restrictions. In addition, the new bank credit facility requires CCC to maintain certain levels of operating cash flow and debt coverage, and limits CCC's ability to make capital expenditures and investments and declare dividends. CCC's prior bank credit facility consisted of a term loan and revolving credit facility. The average interest rate in effect during the years ended December 31, 1996 and 1995 for the term loan and revolving credit facility was 8.7% and 8.7%, and 9.2% and 9.0%, respectively. The Company made cash interest payments of $2.6 million, $4.1 million and $3.3 million during the year ended December 31, 1996, 1995 and 1994, respectively. Long-term debt consisted of the following:
DECEMBER 31, -------------------- 1996 1995 --------- --------- (IN THOUSANDS) Senior bank term loan..................................................... $ -- $ 25,500 Senior bank revolving credit facility..................................... -- 8,000 Equipment financing obligations........................................... -- 985 Capital lease obligations................................................. 231 395 --------- --------- Total debt.............................................................. 231 34,880 Due within one year....................................................... (120) (7,660) --------- --------- Due after one year........................................................ $ 111 $ 27,220 --------- --------- --------- ---------
NOTE 12--MANDATORILY REDEEMABLE PREFERRED STOCK On June 16, 1994, pursuant to a reorganization and recapitalization, the Company issued: (a) 5,000 shares of its preferred stock, par value $1.00, designated as Series C Cumulative Redeemable Preferred Stock ("Series C Preferred Stock"), (b) 34,000 shares of its preferred stock, par value $1.00, designated as Series D Cumulative Redeemable Preferred Stock ("Series D Preferred Stock") and (c) 7,050,840 shares of the Company's Common Stock, par value $0.10, to White River in exchange for the Company's subordinated debt and Series A, B and C warrants acquired from the original subordinated debtholders by White River on April 15, 1994. At the date of exchange, the subordinated debt consisted of a principal balance of $41.7 million and accrued interest of $2.7 million. In recording the exchange, $3.9 million and $25.7 million were assigned to the Series C and Series D Preferred Stock, respectively. The balance of 35 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 12--MANDATORILY REDEEMABLE PREFERRED STOCK (CONTINUED) $14.8 million, less certain transaction costs of $2.4 million, was assigned to common stock and credited to paid-in capital. As part of the reorganization and recapitalization, the Company and White River entered into an agreement under which the Company, following receipt of written notification from White River that the number of shares of the Company's common stock owned by White River represents less than a majority of the issued and outstanding shares of common stock of the Company, must issue to White River 500 shares of the Company's preferred stock, par value $1.00, designated as Series E Cumulative Redeemable Preferred Stock ("Series E Preferred Stock") in exchange for 500 shares of the Series D Preferred Stock. (Collectively, the Series C, D and E Preferred Stock are hereinafter referred to as "Preferred Stock.") The terms of the Series E Preferred Stock and the Series C and D Preferred Stock are generally the same, except that outstanding shares of the Series E Preferred Stock carry certain voting rights if they are beneficially owned by White River or any of its affiliates. In such circumstances, White River and/or its affiliates that own any shares of Series E Preferred Stock would be entitled to vote on all matters voted on by holders of the Company's common stock. Subject to the pro-ration provisions described below, the number of votes that each share of Series E Preferred Stock may cast is determined according to a formula, the effect of which is to cause White River and/or it affiliates to have 51% of the votes to be cast on any matter to be voted upon by holders of the Company's common stock, for so long as all of the shares of Series E Preferred Stock are issued, outstanding and held by White River and/or its affiliates. To the extent White River also owns shares of the Company's common stock, such Series E Preferred Stock will only provide an additional voting percentage that, when added together with the vote from White River's shares of Company common stock, will provide White River with a maximum of 51% of the votes. Under the terms of a Stockholders Agreement among White River and certain stockholders, including the Company's Chairman (the "Management Stockholders"), the parties have agreed, subject to fiduciary duties, that White River will vote with the Management Stockholders regarding defined business combinations and subsequent offerings of Company common stock. The terms of the Series E Preferred Stock provide for the pro-rata reduction of Series E Preferred Stock voting power from the voting power established as of its original issuance, to the extent that outstanding shares of Series E Preferred Stock are either redeemed by the Company or no longer owned by White River and/or its affiliates. Outstanding shares of Series E Preferred Stock are redeemable pro rata with the outstanding shares of Series C and Series D Preferred Stock. Through the date of redemption, Preferred Stock dividends have accrued at a rate of 2.75% per annum. Because the Company completed the required redemption of Preferred Stock through the use of proceeds from the company's initial public offering of common stock, Preferred Stock dividends from the date of redemption through June 16, 1998 have been eliminated. See Note 13--Initial Public Offering of Common Stock. Beginning June 17, 1998, Preferred Stock dividends, payable quarterly, accrue at an annual rate of 8%. The Preferred Stock is mandatorily redeemable, at stated value plus accrued dividends, on June 16, 1999. Prior to the mandatory redemption date, under the terms of the Preferred Stock, White River is only required to accept an offer to redeem that is funded through a public offering of the Company's common stock. If White River should decline a good faith offer to redeem all or a portion of the Preferred Stock, the dividend rate on the Preferred Stock subject to the redemption offer shall be reduced from 8% to 1%. 36 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 12--MANDATORILY REDEEMABLE PREFERRED STOCK (CONTINUED) During the years ended December 31, 1996, 1995 and 1994, the original discount on the Preferred Stock accreted $6.0 million, $1.9 million and $0.9 million, respectively, and dividends of $0.7 million, $1.1 million and $0.6 million, respectively, were accrued. NOTE 13--INITIAL PUBLIC OFFERING OF COMMON STOCK On June 27, 1996, the Company's Board of Directors authorized the filing of a registration statement with the Securities and Exchange Commission for an initial public offering (IPO) of the Company's common stock. In addition, on August 13, 1996 the Company's Board of Directors authorized a 40 for 1 split of the common stock of the Company, which was effective August 13, 1996. All reported share information has been restated to reflect the split. On August 21, 1996, the Company completed its IPO by issuing 6,900,000 shares of common stock, par value $0.10, at $11.50 per share. Gross proceeds from the IPO of $79.4 million were reduced by Underwriters' discounts of $5.6 million and equity issue costs of $1.7 million. Proceeds from the IPO were used to repay certain bank debt and, as required by the terms of the Company's Series C and Series D Preferred Stock, the Company used 50% of the net proceeds from the IPO to redeem 34,085 shares of outstanding Preferred Stock at its stated value of $34.1 million plus accrued dividends of $2.0 million. As a result of the redemption and in accordance with the terms of the Preferred Stock, Preferred Stock dividends from the IPO date through June 16, 1998 have been eliminated. As a result of the IPO, White River's common equity ownership percentage was reduced from approximately 52% to approximately 37%. On August 23, 1996, White River informed the Company of its intention to exchange 500 shares of Series D Preferred Stock for 500 shares of the Company's Series E Preferred Stock. Pursuant to the request from White River, the Company issued 500 Shares of Series E Preferred Stock in exchange for 500 Shares of Series D Preferred Stock. At December 31, 1996, 630 Shares of Series C Preferred Stock, 3,785 Shares of Series D Preferred Stock and 500 Shares of Series E Preferred Stock are issued and outstanding. NOTE 14--STOCK OPTION PLAN In May 1988, the Company's Board of Directors adopted a nonqualified stock option plan (the "1988 Plan"). Under the 1988 Plan, as amended in 1992, options may be granted at a per share price of not less than the greater of $1.375 or the fair market value as of the date of grant, as determined by the Compensation Committee of the Board of Directors (Committee). Options are generally exercisable within 5 years from the date of grant, subject to vesting schedules determined at the discretion of the Committee. In general, however, option grants vest over 4 years. As a result of the Company's June 1994 reorganization and recapitalization, under an agreement with White River, the number of incremental options that may be granted under the 1988 Plan subsequent to June 16, 1994 was limited to 3% of outstanding stock on June 16, 1994 or 488,880 shares. Including these incremental options, 2,956,040 total options were available under the plan to be granted. No additional options can be granted under the 1988 Plan. The Company's Board of Directors has approved a new stock option plan that, if approved by the Company's shareholders, would provide for the granting to employees of up to 675,800 new options to purchase Company common stock. 37 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 14--STOCK OPTION PLAN (CONTINUED) Option activity during 1996, 1995 and 1994 is summarized below:
1996 1995 1994 ----------------------- ----------------------- ----------------------- WEIGHTED WEIGHTED WEIGHTED AVERAGE AVERAGE AVERAGE SHARES PRICE SHARES PRICE SHARES PRICE ---------- ----------- ---------- ----------- ---------- ----------- Options Outstanding: Beginning of year........................ 2,956,040 $ 1.93 2,193,079 $ 1.40 2,312,453 $ 1.46 Granted.................................. 409,280 11.20 1,247,521 2.64 269,680 1.38 Exercised (*)............................ (256,540) 1.43 (19,200) 1.38 (640) 1.38 Surrendered or terminated................ (428,841) 2.47 (465,360) 1.39 (388,414) 1.75 ---------- ----------- ---------- ----- ---------- ----- End of year............................ 2,679,939 $ 3.29 2,956,040 $ 1.93 2,193,079 1.40 ---------- ----------- ---------- ----- ---------- ----- ---------- ----------- ---------- ----- ---------- ----- Options exercisable at year-end............ 1,764,774 $ 2.11 1,694,999 $ 1.60 1,643,303 $ 1.43 ---------- ----------- ---------- ----- ---------- ----- ---------- ----------- ---------- ----- ---------- ----- Weighted-average fair value of options granted during the year.................. $ 11.20 $ 2.65 $ 1.38 ---------- ---------- ---------- ---------- ---------- ----------
- ------------------------ (*) In 1996, the number of options exercised in the accompanying consolidated statement of stockholders' equity (deficit) is net of shares tendered by employees as payment of the stock exercise price and related income taxes. Shares tendered to the Company, which are held in treasury, totaled 14,185 in 1996. The next table summarizes information about fixed stock options outstanding at December 31, 1996:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE --------------------------------------------- ----------------------- WEIGHTED WEIGHTED WEIGHTED AVERAGE AVERAGE AVERAGE NUMBER REMAINING EXERCISE NUMBER EXERCISE RANGE OF EXERCISE PRICES OUTSTANDING CONTRACTUAL LIFE PRICE EXERCISABLE PRICE - ------------------------------------------------ ----------- ------------------- ----------- ---------- ----------- $ 1.38 to $ 1.38................................ 1,402,518 1.81 $ 1.38 1,306,526 $ 1.38 $ 1.75 to $ 2.88................................ 580,821 3.06 $ 1.87 260,392 $ 1.96 $ 4.38 to $ 4.38................................ 292,680 3.95 $ 4.38 117,072 $ 4.38 $11.20 to $11.20................................ 403,920 4.49 $ 11.20 80,784 $ 11.20 ----------- ---------- $ 1.38 to $11.20................................ 2,679,939 2.72 $ 3.29 1,764,774 $ 2.11 ----------- ---------- ----------- ----------
The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model. The principal determinants of option pricing are: fair market value of the Company's common stock at the date of grant, expected volatility, risk-free interest rate, expected option lives and dividend yields. Weighted average assumptions employed by the Company for 1996 and 1995, respectively, were: expected volatility of 30% and 31%; and a risk-free interest rate of 6.5% and 6.4%. In addition, the Company assumed an expected option life of 4.5 years and no dividend yield in both years. The Company applies APB Opinion 25 in accounting for its fixed stock option plan and, accordingly, has not recognized compensation cost in the accompanying consolidated statement of operations. Had compensation cost been recognized based on fair value as of the grant dates as defined in SFAS No. 123, 38 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 14--STOCK OPTION PLAN (CONTINUED) the Company's net income (loss) applicable to common stock and related per share amounts would have been reduced as indicated below:
1996 1995 --------- --------- (IN THOUSANDS, EXCEPT PER SHARE DATA) Net income (loss) applicable to common stock: As reported.......................................................... $ 8,150 $ (1,717) Pro forma............................................................ $ 7,864 $ (2,019) Per share net income (loss) applicable to common stock: As reported.......................................................... $ 0.40 $ (0.10) Pro forma............................................................ $ 0.39 $ (0.12)
The effects of applying SFAS No. 123 in the above pro forma disclosures are not indicative of future amounts as they do not include the effects of awards granted prior to 1995, some of which would have had income statement effects in 1996 and 1995 due to the four-year vesting period associated with the fixed stock option awards. Additionally, future amounts are likely to be affected by the number of grants awarded since additional awards are generally expected to be made at varying amounts. NOTE 15--COMMITMENTS AND CONTINGENCIES The Company leases facilities, computers, telecommunications and office equipment under the terms of noncancelable operating lease agreements which expire at various dates through 2008. As of December 31, 1996, future minimum cash lease payments were as follows:
(IN THOUSANDS) 1997.......................................................................... $ 2,848 1998.......................................................................... 3,186 1999.......................................................................... 3,484 2000.......................................................................... 2,509 2001.......................................................................... 2,042 Thereafter.................................................................... 16,490 ------- Total....................................................................... $ 30,559 ------- -------
During 1996, 1995 and 1994, operating lease expense was $3.2 million, $2.9 million and $3.2 million, respectively. In conjunction with the sale of the Faneuil Group, CCC entered into a contract with GIS Information systems, Inc. ("GIS"), under which GIS is to provide certain computer services to CCC through June 1999 at approximately market rates. The contract prescribes that CCC make minimum payments to GIS through June 1997 and provides an option under which CCC can elect to extend the contract for certain services through June 1999. As of December 31, 1996, future minimum payments due GIS in 1997 totaled $1.1 million. During 1996, 1995 and 1994, CCC incurred charges from GIS for computer services of $3.6 million, $3.2 million and $3.7 million, respectively. 39 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 16--LEGAL PROCEEDINGS In April 1995, the Company recorded a litigation settlement charge of $4.5 million in connection with the litigation involving an independent corporate publisher of used car valuation books. In December 1995, substantive settlement discussions were held. As a result of those discussions, the parties conditionally agreed to a settlement structure that would resolve all outstanding disputes. All conditions precedent to the settlement agreement were satisfied in 1996. As a result, all issues arising out of the litigation between the parties have been fully and completely settled and each civil action had been dismissed with prejudice. The settlement amount approximated the settlement charge previously recorded. In conjunction with the settlement agreement, the Company received a three year license to the publisher's used car valuation book data at market rates. On June 10, 1994, the litigation involving an independent corporate provider of guidebook data was settled. In this matter, the plaintiff alleged copyright infringement, among other things. Under the settlement agreement CCC paid the plaintiff $1.75 million. The parties also entered into a five year agreement under which CCC is licensing the guidebook data at market rates. The settlement charge is reported under litigation settlements in the accompanying consolidated statement of operations for the year ended December 31, 1994. The Company is a party to various other legal proceedings in the ordinary course of business. The Company believes that the ultimate resolution of these other matters will not have a material effect on the Company's financial position. NOTE 17--SUMMARIZED QUARTERLY OPERATING RESULTS (UNAUDITED) The following table sets forth unaudited consolidated statements of operations for the quarters in the years ended December 31, 1996 and 1995. These quarterly statements of operations have been prepared on a basis consistent with the audited financial statements. They include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the quarterly results of operations, when such results are read in conjunction with the audited consolidated financial statements and the notes thereto. The operating results for any quarter are not necessarily indicative of results for any future period. 40 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 17--SUMMARIZED QUARTERLY OPERATING RESULTS (UNAUDITED) (CONTINUED)
1996 1995 ------------------------------------------ ------------------------------------------ FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH --------- --------- --------- --------- --------- --------- --------- --------- Revenues.............................. $ 31,369 $ 31,956 $ 32,602 $ 35,050 $ 28,012 $ 28,612 $ 28,817 $ 30,078 Expenses: Operating expenses.................. 27,031 26,241 27,235 30,339 25,106 26,401 26,394 26,796 Litigation settlements(*)........... -- -- -- -- -- 4,500 -- -- --------- --------- --------- --------- --------- --------- --------- --------- Operating income (loss)............... 4,338 5,715 5,367 4,711 2,906 (2,289) 2,423 3,282 Interest expense...................... (1,032) (950) (526) (54) (1,610) (1,500) (1,422) (1,277) Other income, net..................... 53 240 169 174 82 251 68 81 --------- --------- --------- --------- --------- --------- --------- --------- Income (loss) from continuing operations before income taxes...... 3,359 5,005 5,010 4,831 1,378 (3,538) 1,069 2,086 Income tax (provision) benefit........ (775) (898) (292) (718) (511) 1,564 (243) (519) --------- --------- --------- --------- --------- --------- --------- --------- Income (loss) from continuing operations.......................... 2,584 4,107 4,718 4,113 867 (1,974) 826 1,567 Extraordinary loss on early retirement of debt, net of income taxes........ -- -- (678) -- -- -- -- -- --------- --------- --------- --------- --------- --------- --------- --------- Net income (loss)..................... 2,584 4,107 4,040 4,113 867 (1,974) 826 1,567 Dividends and accretion on mandatorily redeemable preferred stock.......... (793) (811) (5,003) (87) (715) (740) (765) (783) --------- --------- --------- --------- --------- --------- --------- --------- Net income (loss) applicable to common stock............................... $ 1,791 $ 3,296 $ (963) $ 4,026 $ 152 $ (2,714) $ 61 $ 784 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Income (loss) per common and common equivalent share from: Continuing operations................. $ 0.15 $ 0.23 $ 0.22 $ 0.16 $ 0.05 $ (0.12) $ 0.05 $ 0.09 Extraordinary loss on early retirement of debt, net of income taxes........ -- -- (0.03) -- -- -- -- -- Dividends and accretion on mandatorily redeemable preferred stock.......... (0.05) (0.04) (0.24) -- (0.04) (0.04) (0.05) (0.04) --------- --------- --------- --------- --------- --------- --------- --------- Net income (loss) applicable to common stock............................... $ 0.10 $ 0.19 $ (0.05) $ 0.16 $ 0.01 $ (0.16) $ (--) $ 0.05 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Weighted average common and common equivalent shares outstanding....... 17,618 17,757 21,270 24,765 16,523 16,691 17,017 17,299
- -------------------------- (*) See Note 16--Legal Proceedings. 41 CCC INFORMATION SERVICES GROUP, INC. AND SUBSIDIARIES SUPPLEMENTAL FINANCIAL STATEMENT SCHEDULES SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS (IN THOUSANDS)
BALANCE AT CHARGED TO CHARGED TO BALANCE AT BEGINNING COSTS AND OTHER END OF DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD - -------------------------------------------------- ----------- ----------- ------------- ------------ ----------- 1994 Allowance for Doubtful Accounts.............. $ 260 $ 727 $ 497(a) $ (541)(b) $ 943 1995 Allowance for Doubtful Accounts.............. 943 2,257 -- (1,735)(b) 1,465 1996 Allowance for Doubtful Accounts.............. 1,465 3,781 -- (3,300)(b) 1,946 1994 Deferred Income Tax Valuation Allowance...... 3,550 1,701 972(a) -- 6,223 1995 Deferred Income Tax Valuation Allowance...... 6,223 -- -- (1,260)(c) 4,963 1996 Deferred Income Tax Valuation Allowance...... 4,963 -- -- (4,679)(c) 284
- ------------------------ (a) Purchase of remaining 50% in the Joint Venture, effective March 30, 1994. (b) Accounts receivable write-offs, net of recoveries. (c) Reversal of deferred tax valuation allowances. 42 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES EXHIBIT INDEX 3.1 Amended and Restated Certificate of Incorporation 3.2 Amended and Restated Bylaws 4.2 Stockholders' Agreement (incorporated herein by reference to Exhibit 4.2 of the Company's Registration Statement on Form S-1, Commission File Number 333-07287) 10.1 Credit Facility Agreement between CCC Information Services Inc., Signet Bank and the other financial institutions party thereto 10.2 Motor Crash Estimating Guide Data License (incorporated herein by reference to Exhibit 10.2 of the Company's Registration Statement on Form S-1, Commission File Number 333-07287) 10.3 Stock Option Plan 11 Statement Re: Computation of Per Share Earnings 23 Consent of Price Waterhouse LLP 27 Financial Data Schedule
43 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: April 3, 1997 CCC Information Services Group Inc. By: /s/ DAVID M. PHILLIPS ------------------------------------ Name: David M. Phillips Title: Chairman, President and Chief Executive Officer By: /s/ LEONARD L. CIARROCCHI ------------------------------------ Name: Leonard L. Ciarrocchi Title: Executive Vice President and Chief Financial Officer By: /s/ DONALD J. HALLAGAN ------------------------------------ Name: Donald J. Hallagan Title: Vice President, Controller and Chief Accounting Officer
44 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES DIRECTORS John J. Byrne Chairman, President and Chief Executive Officer Fund American Enterprise Holdings, Inc. Morgan W. Davis President and Chief Executive Officer White Mountain Insurance Company Thomas L. Kempner Chairman and Chief Executive Officer Loeb Partners Corporation Gordon S. Macklin Chairman White River Corporation Robert T. Marto President and Chief Executive Officer White River Corporation David M. Phillips Chairman, President and Chief Executive Officer Michael R. Stanfield Managing Director Loeb Partners Corporation EXECUTIVE OFFICERS David M. Phillips Chairman, President and Chief Executive Officer J. Laurence Costin Jr. Vice Chairman Githesh Ramamurthy Chief Technology Officer and President -- Insurance Division John Buckner President -- Automotive Services Division Blaine R. Ornburg Executive Vice President -- New Market Development Leonard L. Ciarrocchi Executive Vice President -- Chief Financial Officer Donald J. Hallagan Vice President, Controller -- Chief Accounting Officer
45 CCC INFORMATION SERVICES GROUP INC. AND SUBSIDIARIES CORPORATE INFORMATION CORPORATE OFFICE ANNUAL MEETING World Trade Center Chicago The 1997 Annual Meeting of Stockholders will 444 Merchandise Mart be held on April 15, 1997 at The Fairmont Chicago, Illinois 60654 Hotel, 200 Columbus Drive, Chicago, Illinois (312) 222-4636 60601 at 10:00 a.m. TRANSFER AGENT REGISTRAR FOR COMMON STOCK INDEPENDENT ACCOUNTANTS Harris Trust and Savings Bank Price Waterhouse LLP Shareholder Communications 200 East Randolph Drive P.O. Box A3504 Chicago, Illinois 60601 Chicago, Illinois 60690-3504 STOCKHOLDER AND INVESTMENT (312)-360-5213 COMMUNITY INQUIRIES (312)-461-5633 (TDD) Written inquiries should be sent to the Chief STOCKHOLDER SERVICES Financial Officer at the Company's corporate You should deal with the Transfer Agent for office. the stockholder services listed below: ADDITIONAL INFORMATION Change of Mailing Address This Annual Report on Form 10-K provides all Consolidation of Multiple Accounts annual information filed with the Securities Elimination of Duplicate Report Mailings and Exchange Commission, except for exhibits. Lost or Stolen Certificates A listing of exhibits appears on page 43 of Transfer Requirements this Form 10-K. Copies of exhibits will be Duplicate 1099 Forms provided upon request for a nominal charge. Please be prepared to provide your tax Written requests should be directed to the identification or social security number, Investor Relations Department at the description of securities and address of Company's corporate office. record. STOCK LISTING AND TRADING SYMBOL The Company's common stock is listed on the Nasdaq National Market System. The trading symbol is CCCG.
46 EX-3.1 2 EXHIBIT 3.1 EXHIBIT A AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF CCC INFORMATION SERVICES GROUP INC. It is hereby certified that CCC Information Services Group Inc. (the "CORPORATION") existing pursuant to the provisions of the Delaware General Corporation Law, as from time to time amended (the "ACT"), hereby is amending its Certificate of Incorporation, as previously amended, by amending and restating the original Certificate of Incorporation, as previously amended, in its entirety, and further certified as follows: The original Certificate of Incorporation was filed on April 28, 1983 under the name "Financial Protection Services, Inc." The exact text of the entire Certificate of Incorporation, as amended and restated (the "CERTIFICATE"), is set forth in its entirety below: ARTICLE 1 The name of the Corporation is: CCC INFORMATION SERVICES GROUP INC. ARTICLE 2 The address of the Corporation's registered office in the State of Delaware is 229 South State Street, in the City of Dover, County of Kent. The name of the Corporation's registered agent at that address is Prentice-Hall Corporation System, Inc. ARTICLE 3 The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under the Delaware General Corporation Law (the "DELAWARE LAW"). ARTICLE 4 4.1 The total number of shares of stock which the Corporation shall have authority to issue is 30,000,000 shares of Common Stock, having a par value of $.10 per share (the "COMMON STOCK"), and 100,000 shares of Preferred Stock, having a par value of $1.00 per share (the "PREFERRED STOCK"). 4.2 Each holder of record of shares of the Common Stock shall be entitled to vote at all meetings of the stockholders and shall have one (1) vote for each share held by him of record. 4.3 Subject to all of the rights of the holders of all classes or series of stock at the time outstanding having prior rights as to dividends, the holders of the Common Stock shall be entitled to receive dividends at such times and in such amounts as may be determined by the Board of Directors of the Corporation. 4.4 The Board of Directors is expressly authorized to provide for the issuance of all or any shares of the Preferred Stock in one or more classes or series, and to fix for each such class or series such voting powers, full or limited, or no voting powers, and such distinctive designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issuance of such class or series and as may be permitted by the Delaware Law. As of the date of the filing of this Amended and Restated Certificate of Incorporation, the Corporation shall have series of Preferred Stock with the designations, number of shares, rights, preferences and limitations as set forth on EXHIBIT A hereto. 4.5 In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of the Common Stock shall be entitled, after payment or provision for payment of the debts and other liabilities of the Corporation and the amount to which the holders of any class or series of the Preferred Stock shall be entitled, to share ratably in the remaining net assets of the Corporation. ARTICLE 5 The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders: (a) The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. (b) The number of directors of the Corporation shall be not less than three (3) nor more than seven (7) and shall be fixed in accordance with the By-Laws of the Corporation. Election of directors need not be by written ballot unless the By-Laws so provide. (c) Subject to the rights, if any, of holders of any series of the Preferred Stock then outstanding, any vacancy on the Board of Directors that results from an increase in the number of directors may be filled by a majority of the Board of Directors then in office, provided that a quorum is present, and any other vacancy occurring in the Board of Directors may be filled by a majority of the directors then in office, even if less than a quorum. Any -2- director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his predecessor. (d) No director shall be personally liable to the Corporation or any of its stockholders for monetary damagers for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the Delaware Law or (iv) for any transaction from which the director derived an improper personal benefit. (e) In addition to the powers and authority hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the Delaware Law, this Amended and Restated Certificate of Incorporation, and any By-Laws adopted by the stockholders; provided, however, that no By-Laws hereafter adopted by the stockholders shall invalidate any prior act of the directors which would have been valid if such By-Laws had not been adopted. ARTICLE 6 The Corporation shall indemnify, in accordance with and to the full extent now or hereafter permitted by law, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including, without limitation, an action by or in the right of the Corporation), by reason of his acting as a director of the Corporation (and the Corporation, in the discretion of the Board of Directors, may so indemnify a person by reason of the fact that he is or was an officer or employee of the Corporation or is or was serving at the request of the Corporation in any other capacity for or on behalf of the Corporation) against any liability or expense actually or reasonably incurred by such person in respect thereof; PROVIDED, HOWEVER, that the Corporation shall not be obligated to indemnify any such person: (i) with respect to proceedings, claims or actions initiated or brought voluntarily without the authorization or consent of the Corporation by such person and not by way of defense; or (ii) for any amounts paid in settlement of an action effected without the prior written consent of the Corporation to such settlement. Such indemnification is not exclusive of any other right of indemnification provided by law, agreement or otherwise. ARTICLE 7 No amendment to or repeal of Articles 5(d) or 6 of this Amended and Restated Certificate of Incorporation shall apply to or have any effect on the rights of any individual referred to in Article 5(d) or 6 for or with respect to acts or omissions of such individual occurring prior to such amendment or repeal. -3- ARTICLE 8 Meetings of stockholders may be held within or without the State of Delaware, as the By-Laws may provide. The books of the Corporation may be kept (subject to any provision contained in Delaware Law) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the By-Laws of the Corporation. Election of directors need not be by written ballot unless the By-laws of the Corporation shall so provide. ARTICLE 9 No stockholder of the Corporation shall by reason of holding shares of any class of stock have any pre-emptive or preferential right to purchase or subscribe to any shares of any class of stock of the Corporation, now or hereafter to be authorized, or any notes, debentures, bonds, or other securities convertible into or carrying options or warrants to purchase shares of any class of such stock, now or hereafter to be authorized, whether or not the issuance of any such shares, or such notes, debentures, bonds or other securities would adversely affect the dividend or voting rights of such stockholder, other than such rights, if any, as the Board of Directors, in its discretion from time to time, may grant and at such price as the Board of Directors in its discretion may fix; and the Board of Directors may issue shares of any class of stock of the Corporation, or any notes, debentures, bonds or other securities convertible into or carrying options or warrants to purchase shares of any class of such stock, without offering any such shares of any class, either in whole or in part, to the existing stockholders of any class of such stock. ARTICLE 10 The By-laws may be altered, amended or repealed or new By-laws may be adopted by the holders of at least 50% of the total voting power of all shares of stock of the Corporation entitled to vote in the election of directors, considered for the purposes of this Article 10 as one class, at any regular meeting of the stockholders, or at any special meeting of the stockholders if notice of such alteration, amendment, repeal or adoption of new By-laws be contained in the notice of such special meeting. ARTICLE 11 The Corporation is hereby exempt from the applicability and coverage of Section 203 of the Delaware Law. -4- This Certificate has been duly adopted in accordance with the provisions of Sections 228, 242 and 245 of the Act. IN WITNESS WHEREOF, the Corporation has caused this Certificate to be executed by the undersigned duly authorized officer of the Corporation on this 21st day of August, 1996. CCC INFORMATION SERVICES GROUP INC. By: /s/ Gerald P. Kenney -------------------------------- Name: Gerald P. Kenney ------------------------------ Title: Secretary ----------------------------- EXHIBIT A CERTIFICATE OF DESIGNATIONS of SERIES C CUMULATIVE REDEEMABLE PREFERRED STOCK of CCC INFORMATION SERVICES GROUP INC. (Pursuant to Section 151 of the Delaware General Corporation Law) ------------------------- Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be designated as Series C Cumulative Redeemable Preferred Stock (the "Series C Preferred Stock") and the number of shares constituting the Series C Preferred Stock shall be 5,000 shares. The stated value of each share of Series C Preferred Stock (the "Stated Value") shall be $1,000. The Series C Preferred Stock shall rank prior to the common stock, par value $0.10 per share (the "Common Stock") and any other capital stock of the Corporation which by its terms is junior to the Series C Preferred Stock with respect to dividend rights and with respect to the distribution of assets upon liquidation, dissolution or winding up, whether voluntary or involuntary, of the Corporation ("Junior Stock") and on a parity with the Series D Cumulative Redeemable Preferred Stock, par value $1.00 per share (the "Series D Preferred Stock"), the Series E Cumulative Redeemable Preferred Stock, par value $1.00 per share (the "Series E Preferred Stock"), and any other capital stock subsequently issued by the Corporation which by its terms is on a parity with the Series C Preferred Stock with respect to dividend rights and with respect to the distribution of assets upon the liquidation, dissolution or winding up, whether voluntary or involuntary, of the Corporation ("Parity Stock"). Section 2. DIVIDENDS. (a) GENERAL. Commencing on the first Dividend Payment Date (as defined below) to occur following the fourth anniversary of the Original Issue Date (the "Dividend Rate Adjustment Date"), the holders of shares of the Series C Preferred Stock shall be entitled to receive cash dividends, when and as declared by the Board of Directors or by a duly authorized committee of said Board of Directors, out of assets legally available for such purpose, at the Dividend Rate set forth below in Section 3 applied to the Stated Value. Such dividends shall be cumulative from the date of original issue of such shares (the "Original Issue Date"), whether or not there shall have been net profits or net assets of the Corporation legally available for the payment of dividends at the time such dividends were payable, and shall be payable quarterly, when and as declared by the Board of Directors of the Corporation or by a duly authorized committee of said Board of Directors, on November 30, February 28, May 31 and August 31 of each year (each such date being hereafter referred to as a "Dividend Payment Date"), commencing on the Dividend Rate Adjustment Date; PROVIDED; HOWEVER, in the event the Corporation shall fail to redeem shares of the Series C Preferred Stock in accordance with Section 7(b)(ii), dividends shall be payable commencing on the first Dividend Payment Date following the 90th day after the consummation of the IPO (as defined in Section 9). Each such dividend shall be payable to the holders of record of shares of the Series C Preferred Stock as they appear on the stock register of the Corporation on such record date, not more than 60 days preceding the payment date thereof, as shall be fixed by the Board of Directors or by a duly authorized committee of said Board of Directors, PROVIDED THAT such record date shall not precede the date upon which the resolution fixing the record date is adopted. Dividends on account of arrears for any past Dividend Periods (as defined in subsection (b) of this Section 2) may be declared and paid at any time, without reference to any regular Dividend Payment Date, to holders of record on such record date, not exceeding 60 days preceding the payment date thereof, as may be fixed by the Board of Directors or a duly authorized committee of said Board of Directors. (b) DIVIDEND PERIODS. Dividend periods (hereinafter called "Dividend Periods") shall commence on December 1, March 1, June 1 and September 1 of each year and shall end on and include the calendar day next preceding the first day of the next Dividend Period (other than the initial Dividend Period which shall commence on the Original Issue Date and shall end on and include the Dividend Rate Adjustment Date). The amount of dividends payable for each Dividend Period or portion thereof for the Series C Preferred Stock shall be computed by multiplying the Stated Value by a fraction, (i) the numerator of which is (A) the applicable Dividend Rate multiplied by (B) the number of calendar days elapsed during such Dividend Period or portion thereof and (ii) the denominator of which is 365. If more than one Dividend Rate applies to any Dividend Period or portion thereof, the calculation in the preceding sentence shall be applied for each period of time during which a given Dividend Rate is applicable. The dividend payable to each holder of Series C Preferred Stock shall be rounded to the nearest one cent with $.005 being rounded upward. (c) DIVIDENDS ON PARITY STOCK. So long as any shares of the Series C Preferred Stock are outstanding, no full dividends shall be declared on any Parity Stock for any period unless full cumulative dividends have been or contemporaneously are declared on the Series C Preferred Stock for all Dividend Periods terminating on or prior to the date of payment of such full cumulative dividends. When dividends are not declared to be paid in full, as described above, upon the shares of the Series C Preferred Stock and any Parity Stock, all dividends declared upon shares of the Series C Preferred Stock and any Parity Stock shall be declared pro rata so that the amount of dividends declared per share on the Series C Preferred Stock and such Parity Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the shares of the Series C Preferred Stock and such Parity Stock bear to each other. (d) DIVIDENDS ON JUNIOR STOCK. So long as any shares of the Series C Preferred Stock are outstanding, no dividend (other than dividends or distributions paid in shares of, or options, -2- warrants or rights to subscribe for or purchase shares of Junior Stock) shall be declared or paid or set aside for payment or other distribution declared or made upon any Junior Stock, or upon any Parity Stock except as provided in Subsection (c) of this Section 2, nor shall any Junior Stock or Parity Stock (other than the Series D Preferred Stock and the Series E Preferred Stock) be redeemed, purchased or otherwise acquired for any consideration (or any monies be paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the Corporation (except by conversion into or exchange for Junior Stock). (e) NO ADDITIONAL DIVIDENDS. Holders of shares of the Series C Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full cumulative dividends, as herein provided, on the Series C Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect to any dividend payment or payments on the Series C Preferred Stock. Section 3. DIVIDEND RATE. The Dividend Rate on the shares of Series C Preferred Stock shall be 2.75% per annum for the period from the Original Issue Date to and including the EARLIER of the (i) date of the consummation of the IPO or (ii) the Dividend Rate Adjustment Date and shall be 8.0% per annum for each Dividend Period or portion thereof thereafter occurring, subject to adjustment as follows: (a) If the Corporation consummates an IPO prior to the Dividend Rate Adjustment Date and redeems the Series C Preferred Stock in accordance with the terms set forth in Section 7(b)(i) or 7(b)(ii),, then the Dividend Rate shall be 0% per annum from the date of consummation of the IPO to the Dividend Rate Adjustment Date. (b) If, prior to the date for mandatory redemption of all outstanding shares of Series C Preferred Stock established pursuant to Section 7(a), 7(b)(i) or 7(b)(ii), the Corporation offers in good faith to repurchase on a pro rata basis all or a portion of the outstanding shares of each of the Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock at a repurchase price per share equal to at least the Stated value, together with accrued and unpaid dividends thereon to (and including) the date fixed for such repurchase, the Dividend Rate applicable to the shares of Series C Preferred Stock which the Corporation offered to repurchase and which the holders thereof refused such offer to repurchase shall, after the date fixed for such repurchase of the Series C Preferred Stock, be the LESSER of 1% and any Dividend Rate calculated pursuant to Subsection (a) of this Section 3. Section 4. VOTING RIGHTS. (a) The holders of the Series C Preferred Stock shall not have any voting rights, except as required by the Delaware General Corporation Law; PROVIDED, HOWEVER, that the affirmative vote of the holders of at least 66-2/3% of the outstanding shares of the Series C Preferred Stock, voting separately as a class, in person or by proxy, at a special or annual meeting of stockholders called for the purpose, shall be necessary to (i) authorize, create or increase the authorized or issued -3- number of shares of, or issue (including on conversion or exchange of any convertible or exchangeable securities or by reclassification) any shares of any class or classes or series of Parity Stock or the capital stock of the Corporation having rights senior to the Series C Preferred Stock with respect to dividend rights and with respect to the distribution of assets upon the liquidation, dissolution or winding up, whether voluntary or involuntary of the Corporation ("Senior Stock") or (ii) amend, alter or repeal (whether by merger, consolidation or otherwise) any of the provisions of the Certificate of Incorporation of the Corporation or the Certificate of Designations of the Series C Preferred Stock which would materialy and adversely affect any right, preference, privilege or voting power of the Series C Preferred Stock or the holders thereof; PROVIDED, HOWEVER, that the creation and issuance of any Junior Stock, shall not be deemed to materially and adversly affect such rights, preferences or voting powers. For the taking of any action as provided in this paragraph (a) by the holders of shares of the Series C Preferred Stock, each such holder shall have one vote for each share of Series C Preferred Stock standing in his or her name on the transfer books of the Corporation as of any record date fixed for such purpose or, if no such date has been fixed, at the close of business on the Business Day (as defined in Section 9) next preceding the day on which notice is given, or if notice is waived, at the close of business on the Business Day next preceding the day on which the meeting is held. At each meeting of stockholders at which the holders of shares of the Series C Preferred Stock shall have the right, voting separately as a single class, to take any action pursuant to this paragraph (a), the presence in person or by proxy of the holders of record of 50% of the total number of shares of the Series C Preferred Stock then outstanding and entitled to vote on the matter shall be necessary and sufficient to constitute a quorum. At any such meeting or at any adjournment thereof, (i) the absence of a quorum of the holders of shares of any other class or series of capital stock of the Corporation shall not prevent the taking of any action as provided in this paragraph (a) and (ii) in the absence of a quorum of the holders of shares of the Series C Preferred Stock, the holders of a majority of such shares present in person or by proxy shall have the power to adjourn the meeting as to the actions to be taken by the holders of shares of the Series C Preferred Stock from time to time and place to place without notice other than announcement at the meeting until a quorum shall be present. (b) So long as White River Ventures, Inc. ("White River") or any of its Affiliates (as defined in Section 9) beneficially owns at least fifty percent of the issued and outstanding shares of Series C Preferred Stock, if the Corporation shall fail (i) to discharge its obligation to redeem shares of the Series C Preferred Stock pursuant to Section 7 (a "Redemption Default") or (ii) to declare and pay in full the dividends on the Series C Preferred Stock with respect to a Dividend Period pursuant to Section 2 and such dividends have not been declared and paid within 90 days after the end of such Dividend Period (such failure to declare and pay being hereinafter referred to as a "Dividend Default"), the number of directors constituting the Board of Directors shall, without further action, be increased by a number of directors sufficient to permit the directors elected to fill such newly created directorships to constitute a majority of the directors of the Corporation and shall thereafter be increased by a number of directors sufficient to permit the directors elected to fill all such newly created directorships to continue to constitute a majority of the directors of the Corporation, and the holders of the Series C Preferred Stock shall have, in addition to the other voting rights set forth herein, the exclusive right, voting separately as a single class, to elect the -4- directors of the Corporation to fill such newly created directorships, the remaining directors to be elected by the other classes and series of stock entitled to vote therefor, at each meeting of stockholders held for the purpose of electing directors. In the case of a Redemption Default, such additional directors shall continue as directors and such additional voting rights shall continue until such time as White River and its Affiliates shall cease to own at least fifty percent of the issued and outstanding shares of the Series C Preferred Stock, at which tame such additional directors shall cease to be directors and such additional voting rights of the holders of the Series C Preferred Stock shall terminate. In the case of a Dividend Default, such additional directors shall continue as directors and such additional voting rights shall continue until such time as a Dividend Default no longer exists, at which time such additional directors shall cease to be directors and such additional voting rights of the Series C Preferred Stock shall terminate subject to revesting in the event of each and every subsequent Dividend Default. In the event that for any reason the number of directors constituting the Board of Directors cannot be increased sufficiently to permit the implementation of this Subsection (b), the Corporation shall take all actions necessary to implement the intent of this Subsection (b), including, without limitation, causing a number of directors to resign from the Board of Directors sufficient to permit directors elected pursuant to this Subsection (b) to fill the resulting vacancies and constitute a majority of the Board of Directors. (c) The foregoing rights of holders of shares of the Series C Preferred Stock to take any actions as provided in this section 4 may be exercised at any annual meeting of stockholders or at a special meeting of stockholders held for such purpose or at any adjournment thereof, or by the written consents delivered to the Secretary of the Corporation, of the holders of the minimum number of shares required to take such action. Section 5. REACQUIRED SHARES. Any shares of Series C Preferred Stock redeemed, purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of preferred stock, par value $1.00 per share, of the Corporation and may be reissued as part of another series of preferred stock, par value $1.00 per share, of the Corporation subject to the conditions or restrictions on authorizing or creating any class or series, or any shares of any class or series as set forth herein. Section 6. LIQUIDATION DISSOLUTION OR WINDING-UP. (a) In the event of any liquidation, dissolution or winding up of the corporation, whether voluntary or involuntary, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for the holders of shares of any series or class or classes of Junior Stock, the holders of the shares of the Series C Preferred Stock shall be entitled to receive the Stated Value per share plus an amount equal to all dividends (whether or not earned or declared) accrued and unpaid thereon to the date of final distribution to such holders; but such holders shall not be entitled to any further payment, if, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of the shares of the Series C Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payment on any Parity Stock, then such assets, or the proceeds thereof, shall be distributed among -5- the holders of shares of Series C Preferred Stock and any Parity Stock ratably in accordance with the respective amounts which would be payable on such shares of Series C Preferred Stock and any Parity Stock if all amounts payable thereon were paid in full. For the purposes of this Section 6, a consolidation or merger of the Corporation with one or more corporations shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary. (b) Subject to the rights of the holders of shares of any series or classes of Parity Stock or Senior Stock, upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of the Series C Preferred Stock as provided in this Section 6, but not prior thereto, any series or class of classes of Junior Stock shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Series C Preferred Stock shall not he entitled to share therein. Section 7. REDEMPTION. (a) MANDATORY FIVE YEAR REDEMPTION. Unless redeemed pursuant to Sections 7(b), 7(c) and 7(d) prior to June 16, 1999, the Corporation shall, on such date and to the extent the Corporation has funds legally available therefor, redeem all shares of Series C Preferred Stock then outstanding at a redemption price per share equal to the Stated Value, together with accrued and unpaid dividends thereon to (and including) such redemption date, without interest. (b) MANDATORY REDEMPTION EVENTS. (i) Concurrent with the consummation of an IPO having net proceeds to the Corporation less than or equal to $40,000,000, the Corporation shall, to the extent the Corporation has funds legally available therefor, redeem the LESSER of (A) the number of shares of Series C Preferred Stock then outstanding and (B) that number of shares of Series C Preferred Stock having an aggregate Stated Value and accrued and unpaid dividends equal to $2,564,103 at a redemption price per share equal to the Stated Value, together with accrued and unpaid dividends thereon to (and including) such redemption date, without interest, employing a Dividend Rate of 8.0% on the portion to be so redeemed for the period from the date of the consummation of such IPO to (and including) such redemption date; PROVIDED, HOWEVER, that to the extent the Corporation after giving effect to any required payments under the Loan Agreement (as defined in Section 9) from the net proceeds of the IPO would not have sufficient funds available to so redeem shares of Series C Preferred Stock in accordance with this subsection (b)(i) and any Parity Stock entitled to redemption in accordance with the terms of such Parity Stock, the Corporation shall redeem concurrent with the consummation of the IPO that number of shares of Series C Preferred Stock and Parity Stock entitled to redemption having an aggregate Stated Value equal to the balance of the net proceeds of the IPO remaining after any such payments under the Loan Agreement and shall redeem the remaining shares of Series C Preferred Stock to be redeemed pursuant to this Section (b)(i) and any Parity Stock entitled to redemption within 120 calendar days after the consummation of the IPO; PROVIDED, FURTHER, that to the extent that all shares of Series C Preferred Stock to be redeemed pursuant to this Subsection (b)(i) have not been redeemed within such 120 calendar day period, the Corporation shall, to the extent the Corporation has funds legally available -6- therefor, redeem all shares of Series C Preferred Stock then outstanding at a redemption price per share equal to the Stated Value, together with accrued and unpaid dividends thereon to (and including) such redemption date, without interest, employing a Dividend Rate of 8.0% for the period from the date of the consummation of the IPO to (and including) such redemption date. (ii) Concurrent with the consummation of an IPO having net proceeds to the Corporation in excess of $40,000,000, the Corporation shall, to the extent the Corporation has funds legally available therefor, redeem the LESSER of (1) the number of shares of Series C Preferred Stock then outstanding and (2) the number of shares of Series C Preferred Stock having an aggregate Stated Value and accrued and unpaid dividends at least equal to 6.424% of the net proceeds to the Corporation from the IPO at a redemption price per share equal to the Stated Value, together with accrued and unpaid dividends thereon to (an including) such redemption date, without interest, employing a Dividend Rate of 8.0% for the period from the date of the consummation of such IPO to (and including) such redemption date; PROVIDED, HOWEVER, that to the extent the Corporation after giving effect to any required payments under the Loan Agreement would not have sufficient funds available to so redeem shares of Series C Preferred Stock in accordance with this subsection (b)(ii) and any Parity Stock entitled to redemption in accordance with the terms of such Parity Stock, the Corporation shall redeem concurrent with the consummation of the IPO that number of shares of Series C Preferred Stock and Parity Stock entitled to redemption having an aggregate Stated Value equal to the balance of the net proceeds of the IPO remaining after any such payments under the Loan Agreement and shall redeem the remaining shares of Series C Preferred Stock to be redeemed pursuant to this subsection (b)(ii) and any Parity Stock entitled to redemption within 90 calendar days after the consummation of the IPO; PROVIDED, FURTHER, that to the extent that shares of the Series C Preferred Stock to be redeemed pursuant to this subsection (b)(ii) having an aggregate Stated Value and accrued and unpaid dividends of at least $2,564,103 have not been redeemed within such 90 calendar day period, the Corporation shall, to the extent the Corporation has funds legally available therefor redeem all shares of Series C Preferred Stock then outstanding at a redemption price per share equal to the Stated Value; together with accrued and unpaid dividends thereon to (and including) such redemption date, without interest, employing a Dividend Rate of 8.0% for the period from the date of the consummation of the IPO to (and including) such redemption date and; PROVIDED, FURTHER, to the extent that the Corporation has redeemed shares of the Series C Preferred Stock to be redeemed pursuant to this subsection (b)(ii) having an aggregate Stated Value and accrued and unpaid dividends of at least $2,564,103, but less that the full amount of shares of Series C Preferred Stock required by this subsection (b)(ii), the Corporation shall on June 15, 1998, to the extent the Corporation has funds legally available therefor, redeem all shares of Series C Preferred Stock then outstanding at a redemption price per share equal to the Stated Value, together with accrued and unpaid dividends thereon to (and including) such redemption date, without interest. (iii) In the event that the Corporation fails to use at least 6.41% of the net proceeds received by the Corporation from any Subsequent Offering (as defined in Section 9) to redeem any outstanding shares of Series C Preferred Stock on the date of the consummation of such Subsequent Offering, the Series C Preferred Stock shall be subject to redemption, in whole or in part, in cash, at the option of the holder thereof from time to time and at any time as determined by the -7- holders of a majority of the outstanding shares of the Series C Preferred Stock (with written notice thereof being delivered to the Corporation) at a redemption price per share equal to the Stated Value, together with accrued and unpaid dividends thereon to (and including) the redemption date, without interest. On the redemption date, the Corporation shall redeem all shares of Series C Preferred Stock tendered for redemption pursuant to this subsection (b)(iii). (c) REDEMPTION IN THE EVENT OF ACCELERATION OF INDEBTEDNESS. In the event that the Corporation or any Subsidiary shall fail to perform or observe any term, covenant or condition related to any Indebtedness (as defined in section 9) of the Corporation or any Subsidiary (other than any Indebtedness of Phone Base Systems, Inc. ("Phone Base") which is non-recourse to the Corporation or any subsidiary, other than Phone Base) and the effect of such failure to perform or observe is (i) a failure by the Corporation or any Subsidiary to pay any principal or interest on any indebtedness when due or during any applicable grace period therefor or (ii) receipt of notice by the Corporation or any Subsidiary of the acceleration of the maturity or required prepayment (other than by a regularly scheduled required prepayment) prior to the stated maturity of any Indebtedness and demand for payment with respect thereto, in either case with respect to Indebtedness in an aggregate amount in excess of $500,000 (the "Acceleration Redemption Event"), (A) the Series C Preferred Stock shall be subject to redemption, in whole or in part, in cash at the option of the holder thereof from time to time and at any time as determined by the holders of a majority of the outstanding shares of the Series C Preferred Stock (with written notice thereof being delivered to the Corporation) after the Accelerated Redemption Event at a redemption price per share equal to the Stated Value, together with accrued and unpaid dividends thereon to (and including) the redemption date, without interest and (B) notwithstanding Section 4(b), the holders of a majority of the outstanding Series C Preferred Stock shall have the sole discretion to determine on behalf of the Corporation any and all actions to be taken by the Corporation or any Subsidiary with respect to any Indebtedness related to the Accelerated Redemption Event so long as any such actions permit all holders of the Common Stock to participate on a proportionate basis in any actions to be effected by the holders of the Common Stock. On the redemption date, the Corporation shall redeem all shares of Series C Preferred Stock tendered for redemption pursuant to this subsection (c). (d) REDEMPTION IN THE EVENT OF CERTAIN BUSINESS COMBINATIONS. For so long as White River or any of its Affiliates shall own any shares of Series C Preferred Stock (A) neither the Corporation nor any of its Material Subsidiaries (as defined in Section 9) shall engage in any merger, reorganization or consolidation (other than transactions involving the merger, reorganization or consolidation of a Subsidiary of the Corporation with or into the Corporation or with or into a wholly owned Subsidiary of the Corporation) and (B) the Corporation shall not sell or otherwise transfer, in a single transaction or series of transactions, all or substantially all or a material part of the assets or shares of the Common Stock of the Corporation to or with any Person (as defined in section 9) other than in connection with the sale of the Faneuil Group or to or with the Corporation or a wholly owned Subsidiary of the Corporation unless on or prior to the consummation of the transactions described in clauses (A) and (B) all shares of the Series C Preferred Stock shall have been redeemed at a redemption price per share equal to the Stated Value, together with accrued and unpaid dividends thereon to (and including) such redemption date, without interest. -8- (e) RIGHTS OF SERIES C PREFERRED STOCK FOLLOWING REDEMPTION. On and after any date fixed for redemption, PROVIDED THAT the redemption price (including any accrued and unpaid dividends to (and including) the date fixed for redemption) has been duly paid or segregated and held in trust by a duly authorized independent paying agent for the benefit of the Persons entitled thereto, dividends shall cease to accrue on the Series C Preferred Stock called for redemption, such shares shall no longer be deemed to be outstanding and all rights of the holders of such shares as stockholders of the Corporation shall cease and the right to receive the moneys payable upon such redemption, without interest thereon, upon surrender of the certificates evidencing such shares. (f) NOTICE OF REDEMPTION. Notice of any redemption be given to the holders of shares of Series C Preferred Stock not less than 30 nor more than 60 days prior to the date fixed for redemption. Notice of redemption shall be given by first class mail to such holders, respective addresses as shown on the stock books of the corporation and will specify (A) the date fixed for redemption, (B) the applicable redemption price and (C) in the case of a partial redemption, the number of shares of Series C Preferred Stock to be redeemed and the aggregate number of shares of Series C Preferred Stock which will be outstanding after such redemption. If less than all shares of Series C Preferred Stock then outstanding are to be redeemed, the shares of Series C Preferred stock will be redeemed pro rata from among the holders of shares of Series C Preferred Stock then outstanding. (g) FINAL REDEMPTION OBLIGATION. If the Corporation shall fail any time to discharge its obligation to redeem shares of Series C Preferred Stock pursuant to this Section 7 (the "Final Redemption Obligation"), such Final Redemption obligation shall be discharged as soon as the Corporation is able to discharge such Final Redemption Obligation using funds legally available therefor. Notwithstanding anything in this Section 7 to the contrary, in the event the Corporation fails to discharge its obligation to redeem shares of Series C Preferred Stock as and when such shares are tendered for redemption pursuant to Section 7 for any reason whatsoever (including, without limitation, the failure of the Corporation to have funds legally available therefor), such failure shall constitute a failure by the Corporation to discharge its obligation to redeem shares of the Series C Preferred Stock for purposes of Section 4(b). (h) REDEMPTION OF PARITY STOCK PRO-RATA. If upon the occurrence of any event requiring redemption of the shares of Series C Preferred Stock pursuant to this Section 7, the assets of the Corporation, or net proceeds thereof, shall be insufficient to redeem in full the applicable amount of Series C Preferred Stock and any Parity Stock required to be redeemed by the Corporation, then the Corporation shall redeem shares of Series C Preferred Stock and any Parity Stock ratably in accordance with the respective amounts which would be redeemable if the Series C Preferred Stock and the Parity Stock required to be redeemed by the Corporation were redeemed in full. Section 8. CERTAIN COVENANTS. Any registered holder of the Series C Preferred Stock may proceed to protect and enforce its rights and the rights of such holders by any available remedy by proceeding at law or in equity to protect and enforce any such rights, whether for the -9- specific enforcement of any provision or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. Section 9. DEFINITIONS. For the purposes of this Certificate of Designations of Series C Redeemable Preferred Stock, the following terms shall have the meanings indicated: "Affiliate" means a Person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another Person. "Business Day" means any day other than a Saturday, Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "Capital Lease" means any lease of any property (whether real, personal or mixed) by the Corporation or any of the Subsidiaries as lessee which, in conformity with generally accepted accounting principles, is accounted for as a capital lease on the balance sheet of the Corporation or any of the Subsidiaries; PROVIDED, HOWEVER, any such lease which is nonrecourse to the Corporation or any of the Subsidiaries shall not constitute a Capital Lease. "Common Stock Equivalents" means all options, warrants and other rights to acquire Common Stock or securities convertible into or exchangeable for Common Stock. "Contingent Obligation" means any contractual obligation, contingent or otherwise, of one Person with respect to any Indebtedness, obligation or liability of another, including, without limitation, direct or indirect guaranties, endorsements (except for collection or deposit in the ordinary course of business), notes co-made or discounted, recourse agreements, keep-well agreements, agreements to purchase or repurchase such indebtedness, obligation or liability or any security therefor or to provide funds for the payment or discharge thereof, agreements to maintain solvency, assets, level of income, or other financial condition, and agreements to make payment other than for value received. "Faneuil Group" means GIS Information Systems, Inc., and Illinois corporation, Equitel Corp., a Virginia corporation, Original Research II Corporation, a Delaware corporation, and Credit Card Service Corporation, a Delaware corporation, collectively. "Indebtedness" means, with respect to the Corporation or any of the Subsidiaries, at any time, (a) all indebtedness, obligations or other liabilities of the Corporation or any of the Subsidiaries (i) for borrowed money or evidenced by debt securities, debentures, acceptances, notes or other similar instruments, (ii) with respect to letters of credit issued for the Corporation's or any of the Subsidiaries, account, (iii) in respect of Capital Leases and (iv) which are Contingent Obligations, (b) all indebtedness, obligations or other liabilities of the Corporation or any of the Subsidiaries or others secured by a Lien on any property of the Corporation or any of the Subsidiaries, whether or not such indebtedness, obligations or liabilities are assumed by the -10- Corporation or any of the subsidiaries, all as of such time, (c) all indebtedness, obligations or other liabilities of the Corporation or any of the Subsidiaries in respect of Interest Rate Contracts and currency hedging agreements, net of liabilities owed to the Corporation or any of the Subsidiaries by the counterparties thereon, and (d) all preferred stock subject (upon the occurrence of any contingency or otherwise) to mandatory redemption, other than the Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock. "Interest Rate Contracts" means interest rate exchange, collar or cap or similar agreements providing interest rate protection. "IPO" means the initial public offering of Common Stock on a firm commitment basis pursuant to an effective registration statement under the Securities Act. "Lien" means any mortgage, deed of trust, pledge, security interest, encumbrance, lien or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any lease in the nature thereof, and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction in connection with any of the foregoing). "Loan Agreement" means (i) the Loan Agreement, dated as of April 29, 1994, among CCC Information Services Inc. and CCC Development Company, as Borrowers, the financial institutions party thereto, as Lenders and Canadian Imperial Bank of Commerce, as Agent, (ii) the Security Agreement, dated as of April 29, 1994, among CCC Information Services Inc., Canadian Imperial Bank of Commerce, as Agent and Canadian Imperial Bank of Commerce, as Collateral Agent, (iii) the Guaranty, dated as of April 29, 1994, made by the Corporation in favor of the Lenders party to the Loan Agreement and Canadian Imperial Bank of Commerce, as Agent, (iv) the Pledge and Security Agreement, dated as of April 29, 1994, among the Corporation, Canadian Imperial sank of Commerce, as Agent and Canadian Imperial Bank of Commerce, as Collateral Agent and (v) each other agreement, document or instrument delivered in connection with the foregoing. "Material Subsidiary" means any Subsidiary which produces or represents 20% or more of (i) consolidated net assets of the Corporation, (ii) consolidated gross revenues of the Corporation or (iii) consolidated net income of the Corporation. "Person" means an individual or a corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company or any other entity or organization, including a government or political subdivision or agency or instrumentality thereof. "Public Offering" means a sale of any of the Corporation's securities pursuant to an effective registration statement under the Securities Act. "Securities Act" means the Securities Act of 1933, as amended. -11- "Subsequent Offering" means a sale of Common Stock or any Common Stock Equivalent of the Corporation in a Public Offering after an IPO. "Subsidiary" means (i) any Person of which 50% or more of the securities having ordinary voting power for the election of directors are at the time owned directly or indirectly by the Corporation or any Subsidiary thereof, (ii) any Person of which 50% or more of the joint venture, limited partnership or partnership interests are at the time owned directly or indirectly by the Corporation or any Subsidiary thereof or (iii) any Person which is a limited partnership in which the corporation or any Subsidiary is at the time the general partner or at the time owns 50% or more of the general partner of such person. -12- CERTIFICATE OF DESIGNATIONS of SERIES D CUMULATIVE REDEEMABLE PREFERRED STOCK of CCC INFORMATION SERVICES GROUP INC. (Pursuant to Section 151 of the Delaware General Corporation Law) ___________________ Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be designated as Series D Cumulative Redeemable Preferred Stock (the "Series D Preferred Stock") and the number of shares constituting the Series D Preferred Stock shall be 34,000 shares. The stated value of each share of Series D Preferred Stock (the "Stated Value") shall be $1,000. The Series D Preferred Stock shall rank prior to the common stock, par value $0.10 per share (the "Common Stock"), and any other capital stock of the Corporation which by its terms is junior to the Series D Preferred Stock with respect to dividend rights and with respect to the distribution of assets upon liquidation, dissolution or winding up, whether voluntary or involuntary, of the Corporation ("Junior Stock") and on a parity with the Corporation's Series C Cumulative Redeemable Preferred Stock, par value $1.00 per share (the "Series C Preferred Stock"), Series E Cumulative Redeemable Preferred Stock, par value $1.00 per share (the "Series E Preferred Stock"), and any other capital stock subsequently issued by the corporation which by its terms is on a parity with the Series D Preferred Stock with respect to dividend rights and with respect to the distribution of assets upon the liquidation, dissolution or winding up, whether voluntary or involuntary, of the Corporation ("Parity Stock"). Section 2. DIVIDENDS. (a) GENERAL. Commencing on the first Dividend Payment Date (as defined below) to occur following the fourth anniversary of the Original Issue Date (the "Dividend Rate Adjustment Date"), the holders of shares of the Series D Preferred Stock shall be entitled to receive cash dividends, when and as declared by the Board of Directors or by a duly authorized committee of said Board of Directors, out of assets legally available for such purpose, at the Dividend Rate set forth below in Section 3 applied to the Stated Value. Such dividends shall be cumulative from the date of original issue of such shares (the "Original Issue Date"), whether or not there shall have been net profits or net assets of the Corporation legally available for the payment of dividends at the time such dividends were payable, and shall be payable quarterly, when and as declared by the Board of Directors of the Corporation or by a duly authorized committee of said Board of Directors, on November 30, February 28, May 31 and August 31 of each year (each such date being hereinafter referred to as a "Dividend Payment Date"), commencing on the Dividend Rate Adjustment Date; PROVIDED, HOWEVER, in the event the Corporation shall fail to redeem shares of the Series D Preferred Stock in accordance with Section 7(b)(ii), dividends shall be payable commencing on the first Dividend Payment Date following the 90th day after the consummation of the IPO (as defined in Section 9). Each such dividend shall be payable to the holders of record of shares of the Series D Preferred Stock as they appear on the stock register of the Corporation on such record date, not more than 60 days preceding the payment date thereof, as shall be fixed by the Board of Directors or by a duly authorized committee of said Board of Directors, PROVIDED THAT such record date shall not precede the date upon which the resolution fixing the record date is adopted. Dividends on account of arrears for any past Dividend Periods (as defined in subsection (b) of this Section 2) may be declared and paid at any time, without reference to any regular Dividend Payment Date, to holders of record on such record date, not exceeding 60 days preceding the payment date thereof, as may be fixed by the Board of Directors or a duly authorized committee of said Board of Directors. (b) DIVIDEND PERIODS. Dividend periods (hereinafter called "Dividend Periods") shall commence on December 1, March 1, June 1 and September 1 of each year and shall end on and include the calendar day next preceding the first day of the next Dividend Period (other than the initial Dividend Period which shall commence on the Original Issue Date and shall and on and include the Dividend Rate Adjustment Date). The amount of dividends payable for each Dividend Period or portion thereof for the Series D Preferred Stock shall be computed by multiplying the Stated Value by a fraction, (i) the numerator of which is (A) the applicable Dividend Rate multiplied by (B) the number of calendar days elapsed during such Dividend Period or portion thereof and (ii) the denominator of which is 365. If more than one Dividend Rate applies to any Dividend Period or portion thereof, the calculation in the preceding sentence shall be applied for each period of time during which a given Dividend Rate is applicable. The dividend payable to each holder of Series D Preferred Stock shall be rounded to the nearest one cent with $.005 being rounded upward. (c) DIVIDENDS ON PARITY STOCK. So long as any shares of the Series D Preferred Stock are outstanding, no full dividends shall be declared on any Parity Stock for any period unless full cumulative dividends have been or contemporaneously are declared on the Series D Preferred Stock for all Dividend Periods terminating on or prior to the date of payment of such full cumulative dividends. When dividends are not declared to be paid in full, as described above, upon the shares of the Series D Preferred Stock and any Parity Stock, all dividends declared upon shares of the Series D Preferred Stock and any Parity Stock shall be declared pro rata so that the amount of dividends declared per share on the Series D Preferred Stock and such Parity Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the shares of the Series D Preferred Stock and such Parity Stock of the Corporation bear to each other. -2- (d) DIVIDENDS ON JUNIOR STOCK. So long as any shares of the Series D Preferred Stock are outstanding, no dividend (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of Junior Stock) shall be declared or paid or set aside for payment or other distribution declared or made upon any Junior Stock, or upon any Parity Stock (other than the Series C Preferred Stock and the Series E Preferred Stock) except as provided in subsection (c) of this Section 2, nor shall any Junior Stock or Parity Stock (other than the Series C Preferred Stock and the Series E Preferred Stock) be redeemed, purchased or otherwise acquired for any consideration (or any monies be paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the Corporation (except by conversion into or exchange for Junior Stock). (e) NO ADDITIONAL DIVIDENDS. Holders of shares of the Series D Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full cumulative dividends, as herein provided, on the Series D Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect to any dividend payment or payments on the Series D Preferred Stock. Section 3. DIVIDEND RATE. The Dividend Rate on the shares of Series D Preferred Stock shall be 2.75% per annum for the period from the Original Issue Date to and including the EARLIER of the (i) date of the consummation of the IPO or (ii) the Dividend Rate Adjustment Date and shall be 8.0% per annum for each Dividend Period or portion thereof thereafter occurring, subject to adjustment as follows: (a) If the Corporation completes an IPO prior to the Dividend Rate Adjustment Date and redeems the Series D Preferred Stock, in accordance with the terms set forth in Section 7(b)(i) or (b)(ii), then the Dividend Rate shall be 0% per annum from the date of closing of the IPO to the Dividend Rate Adjustment Date. (b) If, prior to the date for mandatory redemption of all outstanding shares of Series D Preferred Stock established pursuant to Section 7(a), 7(b)(i) or (b)(ii), the Corporation offers in good faith to repurchase on a pro rata basis all or a portion of the outstanding shares of each of the Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock at a repurchase price per share equal to at least the Stated Value, together with accrued and unpaid dividends thereon to (and including) the date fixed for such repurchase, the Dividend Rate applicable to the shares of Series D Preferred Stock which the Corporation offered to repurchase and which the holders thereof refused such offer to repurchase shall, after the date fixed for such repurchase of the Series D Preferred Stock, be the LESSER of 1% and any Dividend Rate calculated pursuant to subsection (a) of this Section 3. Section 4. VOTING RIGHTS. (a) The holders of the Series D Preferred Stock shall not have any voting rights, except as required by the Delaware General Corporation Law; PROVIDED, HOWEVER, the affirmative -3- vote of the holders of at least 66-2/3% of the outstanding shares of the Series D Preferred Stock, voting separately as a class, in person or by proxy, at a special or annual meeting of stockholders called for the purpose, shall be necessary to (i) authorize, create, increase the authorized or issued number of shares of, or issue (including on conversion or exchange of any convertible or exchangeable securities or by reclassification) any shares of any class or classes or series of Parity Stock or the Corporation's capital stock having rights senior to or on a parity with the Series D Preferred Stock with respect to dividend rights and with respect to the distribution of assets upon the liquidation, dissolution or winding up, whether voluntary or involuntary, of the Corporation ("Senior Stock") or (ii) amend, alter or repeal (whether by merger, consolidation or otherwise) any of the provisions of the Certificate of Incorporation of the Corporation or the certificate of Designations of the Series D Preferred Stock which would materially and adversely affect any right, preference, privilege or voting power of the Series D Preferred Stock or the holders thereof; PROVIDED, HOWEVER, that the creation and issuance of any Junior Stock, shall not be deemed to materially and adversely affect such rights, preferences or voting powers. For the taking of any action as provided in this paragraph (a) by the holders of shares of the Series D Preferred Stock, each such holder shall have one vote for each share of Series D Preferred Stock standing in his or her name on the transfer books of the Corporation as of any record date fixed for such purpose or, if no such date has been fixed, at the close of business on the Business Day (as defined in Section 9) next preceding the day on which notice is given, or if notice is waived, at the close of business on the Business Day next preceding the day on which the meeting is held. At each meeting of stockholders at which the holders of shares of the Series D Preferred Stock shall have the right, voting separately as a single class, to take any action pursuant to this paragraph (b), the presence in person or by proxy of the holders of record of 50% of the total number of shares of the Series D Preferred Stock then outstanding and entitled to vote on the matter shall be necessary and sufficient to constitute a quorum. At any such meeting or at any adjournment thereof, (i) the absence of a quorum of the holders of sharers of any other class or series of capital stock of the Corporation shall not prevent the taking of any action as provided in this paragraph (b) and (ii) in the absence of a quorum of the holders of shares of the Series D Preferred Stock, the holders of a majority of such shares present in person or by proxy shall have the power to adjourn the meeting as to the actions to be taken by the holders of shares of the Series D Preferred Stock from time to time and place to place without notice other than announcement at the meeting until a quorum shall be present. (b) The foregoing rights of holders of shares of the Series D Preferred Stock to take any actions as provided in this Section 4 may be exercised at any annual meeting of stockholders or at a special meeting of stockholders held for such purpose or at any adjournment thereof, or by the written consent, delivered to the Secretary of the Corporation, of the holders of the minimum number of shares required to take such action. Section 5. REACQUIRED SHARES. Any shares of Series D Preferred Stock redeemed, purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of preferred stock par value $1.00 per share, of the Corporation and may be reissued as part of another series of preferred stock, par value $1.00 per share, of the -4- Corporation subject to the conditions or restrictions on authorizing or creating any class or series, or any shares of any class or series as set forth herein. Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, and subject to the rights of the holders of shares of any series or class or classes of Senior Stock before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for the holders of shares of any series or class or classes of Junior Stock, the holders of the shares of the Series D Preferred Stock shall be entitled to receive the Stated Value per share plus an amount equal to all dividends (whether or not earned or declared) accrued and unpaid thereon to the date of final distribution to such holders; but such holders shall not be entitled to any further payment. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of the shares of the Series D Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payment on any Parity Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of shares of Series D Preferred Stock and any Parity Stock ratably in accordance with the respective amounts which would be payable on such shares of Series D Preferred Stock and any Parity Stock if all amounts payable theron were paid in full. For the purposes of this Section 6, a consolidation or merger of the Corporation with one or more corporations shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary. (b) Subject to the rights of the holders of shares of any series or class or classes of Parity Stock or Senior Stock, upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of the Series D Preferred Stock as provided in this Section 6, but not prior thereto any other series or class or classes of Junior Stock shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Series D Preferred Stock shall not be entitled to share therein. Section 7. REDEMPTION. (a) MANDATORY FIVE YEAR REDEMPTION. Unless redeemed pursuant to Section 7(b) and 7(c), prior to June 16, 1999, the Corporation shall, on such date and to and to the extent the Corporation has funds legally available therefor, redeem all shares of Series D Preferred Stock then outstanding at a redemption price per share equal to the Stated Value, together with accrued and unpaid dividends thereon to (and including) such redemption date, without interest. (b) MANDATORY REDEMPTION EVENTS. (i) Concurrent with the consummation of an IPO having net proceeds to the Corporation less than or equal to $40,000,000, the Corporation shall, to the extent the Corporation has funds legally available therefor, redeem the LESSER of (A) the number of shares of Series D Preferred Stock then outstanding and (B) that number of shares of Series D -5- Preferred Stock having an aggregate Stated Value and accrued and unpaid dividends equal to (1) $17,435,897 or (2) in the event that any shares of the Series E Preferred Stock are issued and outstanding on the date of the closing of the IPO, $17,179,487, at a redemption price per share equal to the Stated Value, together with accrued and unpaid dividends thereon to (and including) such redemption date, without interest, employing a Dividend Rate of 8.0% on the portion to be so redeemed for the period from the date of the consummation of such IPO to (and including) such redemption date; PROVIDED, HOWEVER, that to the extent that the Corporation after giving effect to any required payments under the Loan Agreement (as defined in Section 9) from the net proceeds of the IPO would not have sufficient funds available to so redeem shares of Series D Preferred Stock in accordance with this subsection (b)(i) and any Parity Stock entitled to redemption in accordance with the terms of such Parity Stock, the Corporation shall redeem concurrent with the closing of the IPO that number of shares of Series D Preferred Stock and any Parity Stock entitled to redemption having an aggregate Stated Value equal to the balance of the net proceeds of the IPO remaining after any such payments under the Loan Agreement and shall redeem the remaining shares of Series D Preferred Stock to be redeemed pursuant to this subsection (b)(i) within 120 calendar days after the consummation of the IPO; PROVIDED, FURTHER, that to the extent that all shares of Series D Preferred Stock to be redeemed pursuant to this subsection (b)(i) have not been redeemed within such 120 calendar day period, the Corporation shall; to the extent the Corporation has funds legally available therefor, redeem all shares of Series D Preferred Stock then outstanding at a redemption price per share equal to the Stated Value, together with accrued and unpaid dividends thereon to (and including) such redemption date, without interest, employing a Dividend Rate of 8.0% for the period from the date of the closing of the IPO to (and including) such redemption date. (ii) Concurrent with the closing of an IPO having net proceeds to the Corporation in excess of $40,000,000, the Corporation shall, to the extent the Corporation has funds legally available therefor, redeem the LESSER of (1) the number of shares of Series D Preferred Stock then outstanding and (2) the number of shares of Series D Preferred Stock having an aggregate Stated Value and accrued and unpaid dividends at least equal to (I) 43.59% of the net proceeds to the Corporation, from the IPO or (II) in the event that any shares of the Series E Preferred Stock are issued and outstanding on the date of the consummation of the IPO, 42.95% of the proceeds to the Corporation from the IPO, at a redemption price per share equal to the Stated Value, together with accrued and unpaid dividends thereon to (and including) such redemption date, without interest, employing a Dividend Rate of 8.0% for the period from the date of the closing of such IPO to (and including) such redemption date; PROVIDED, HOWEVER, that to the extent that the Corporation after giving effect to any required payments under the Loan Agreement would not have sufficient funds available to so redeem shares of Series D Preferred Stock in accordance with this Subsection (b)(ii) and any Parity Stock entitled to redemption in accordance with the terms of such Parity Stock, the Corporation shall redeem concurrent with the consummation of the IPO that number of shares of Series D Preferred Stock and any Parity Stock entitled to redemption having an aggregate Stated Value equal to the balance of the net proceeds of the IPO remaining after any such payments under the Loan Agreement and shall redeem the remaining shares of Series D Preferred Stock to be redeemed pursuant to this subsection (b)(ii) and any Parity Stock entitled to redemption within 90 calendar days after the consummation of the IPO; PROVIDED, FURTHER, that to the extent the shares of -6- the Series D Preferred Stock to be redeemed pursuant to this subsection (b)(ii) having an aggregate Stated Value and accrued and unpaid dividends of at least (1) $17,435,897 or (2) in the event that any shares of the Series E Preferred Stock are issued and outstanding on the date of the closing of the IPO, $17,179,487, have not been redeemed within such 90 calendar day period, the Corporation shall, to the extent the Corporation has funds legally available therefore redeem all shares of Series D Preferred Stock then outstanding at a redemption price per share equal to the Stated Value, together with accrued and unpaid dividends thereon to (and including) such redemption date, without interest, employing a Dividend Rate of 8.0% for the period from the date of the consummation of the IPO to (and including) such redemption date and; PROVIDED, FURTHER, to the extent that the Corporation has redeemed shares of the Series D Preferred Stock to be redeemed pursuant to this subsection (b)(ii) having an aggregate Stated Value and accrued and unpaid dividends of at least (1) $17,435,897 or (2) in the event that any shares of the Series E Preferred Stock are issued and outstanding on the date of the closing of the IPO, $17,179,487, but less than the full amount of shares of Series D Preferred Stock required by this subsection (b)(ii), the Corporation shall on June 15, 1998, to the extent the Corporation has funds legally available therefor, redeem all shares of Series D Preferred Stock then outstanding at a redemption price per share equal to the Stated Value, together with accrued and unpaid dividends thereon to (and including) such redemption date, without interest. (iii) In the event that the Corporation fails to use at least (1) 43.59% of the net proceeds received by the Corporation from any Subsequent Offering (as defined in Section 9) or (2) in the event that any shares of the series B Preferred Stock are issued and outstanding on the date of the closing of such Subsequent Offering, 42.95% of such proceeds, to redeem any outstanding shares of Series D Preferred Stock on date of the consummation of such Subsequent Offering, the Series D Preferred Stock shall be subject to redemption, in whole or in part, in cash, as determined by the holders of a majority of the outstanding shares of the Series C Preferred Stock at a redemption price per share equal to the Stated Value, to ether with accrued and unpaid dividends thereon to (and including) the redemption date, without interest. On the redemption date, the Corporation shall redeem all shares of Series D Preferred Stock tendered for redemption pursuant to this subsection (b)(iii). (c) REDEMPTION IN THE EVENT OF ACCELERATION OF INDEBTEDNESS. In the event that the Corporation or any Subsidiary shall fail to perform or observe any term, covenant or condition related to any Indebtedness (as defined in Section 9) of the Corporation or any Subsidiary (other than any Indebtedness of Phone Base Systems, Inc. ("Phone Base") which is non-recourse to the Corporation or any Subsidiary, other than Phone Base) and the effect of such failure to perform or observe is (i) a failure by the Corporation or any Subsidiary to pay any principal or interest on any Indebtedness when due or during any applicable grace therefor or (ii) receipt of notice by the Corporation or any Subsidiary of the acceleration of the maturity or required prepayment (other than by a regularly scheduled required prepayment) prior to the stated maturity of any Indebtedness and demand payment with respect thereto, in either case with respect to Indebtedness in an aggregate amount in excess of $500,000 (the "Accelerated Redemption Date"), the Series D Preferred Stock shall be subject to redemption, in whole or in part, in cash, as determined by the holders of a majority of the outstanding shares of the Series C Preferred Stock after the Accelerated Redemption Date at -7- a redemption price per share equal to the Stated Value, together with accrued and unpaid dividends thereon to (and including) the redemption date, without interest. On the redemption date, the Corporation shall redeem all shares of Series D Preferred Stock tendered for redemption pursuant to this subsection (c). (d) REDEMPTION IN THE EVENT OF CERTAIN BUSINESS COMBINATIONS. For so long as White River or any of its Affiliates shall own any shares of Series D Preferred Stock (A) neither the Corporation nor any of its Material Subsidiaries (as defined in Section 9) shall engage in any merger, reorganization or consolidation (other than transactions involving the merger, reorganization or consolidation of a Subsidiary of the Corporation with or into the Corporation or with or into a wholly owned Subsidiary of the Corporation) and (B) the Corporation shall not sell or otherwise transfer, in a single transaction or series of transactions, all or substantially all or a material part of the assets or shares of the Common Stock of the Corporation to or with any Person (as defined in Section 9) other than in connection with the sale of the Faneuil Group or to or with the Corporation or a wholly owned Subsidiary of the Corporation unless on or prior to the consummation of the transactions described in clauses (A) and (B) all shares of the Series D Preferred Stock shall have been redeemed at a redemption price per share equal to the Stated Value, together with accrued and unpaid dividends thereon to (and including) such redemption date, without interest. (e) RIGHTS OF SERIES D PREFERRED STOCK FOLLOWING REDEMPTION. On and after any date fixed for redemption, PROVIDED THAT the redemption price (including any accrued and unpaid dividends to (and including) the date fixed for redemption) has been duly paid or segregated and hold in trust by a duly authorized independent paying agent for the benefit of the Persons entitled thereto, dividends shall cease to accrue on the Series D Preferred Stock called for redemption, such shares shall no longer be deemed to be outstanding and all rights of the holders of such shares as stockholders of the Corporation shall cease and the right to receive the moneys payable upon such redemption, without interest thereon, upon surrender of the certificates evidencing such shares. (f) NOTICE OF REDEMPTION. Notice of any redemption pursuant to Section 7(a) shall be given to the holders of shares of Series D Preferred Stock not less than 30 nor more than 60 days prior to the date fixed for redemption. Notice of redemption shall be given by first class mail to such holders, respective addresses as shown on the stock books of the Corporation and will specify (A) the date fixed for redemption, (B) the applicable redemption price and (C) in the case of a partial redemption, the number of shares of Series D Preferred Stock to be redeemed and the aggregate number of shares of Series D Preferred Stock which will be outstanding after such redemption. If less than all shares of Series D Preferred Stock then outstanding are to be redeemed, the shares of Series D Preferred Stock will be redeemed pro rata from among the holders of shares of Series D Preferred Stock then outstanding. (g) FINAL REDEMPTION OBLIGATION. If the Corporation shall fail at any time to discharge its obligation to redeem shares of Series D Preferred Stock pursuant to this Section 7 (the "Final Redemption Obligation"), such Final Redemption obligation shall be discharged as soon as the -8- Corporation is able to discharge such Final Redemption Obligation using funds legally available therefore. (h) REDEMPTION OF PARITY STOCK PRO-RATA. If upon the occurrence of any event requiring redemption of the shares of Series D Preferred Stock pursuant to this Section 7, the assets of the Corporation, or proceeds thereof, shall be insufficient to redeem in full the applicable amount of Series D Preferred Stock and any Parity Stock required to be redeemed by the Corporation, then the Corporation shall redeem shares of Series D Preferred Stock and any Parity Stock ratably in accordance with the respective amounts which would be redeemable if the Series D Preferred Stock and the Parity Stock required to be redeemed by the Corporation were redeemed in full. Section 8. CERTAIN COVENANTS. Any registered holder of the Series D Preferred Stock may proceed to protect and enforce its rights and the rights of such holders by any available remedy by proceeding at law or in equity to protect and enforce any additional rights, whether for the specific enforcement of any provision or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. Section 9. DEFINITIONS. For the purposes of this Certificate of Designations of Series D Redeemable Preferred Stock, the following terms shall have the meanings indicated: "Affiliate" means a Person that directly, or indirectly through one or more intermediaries, controls, or is, controlled by, or is under common control with, another Person. "Business Day" means any day other than a Saturday, Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "Capital Lease" means any lease of any property (whether real, personal or mixed) by the Corporation or any of the Subsidiaries as lessee which, in conformity with generally accepted accounting principles, is accounted for as a capital lease on the balance sheet of the Corporation or any of the Subsidiaries; PROVIDED, HOWEVER, any such lease which is nonrecourse to the Corporation or any of the Subsidiaries shall not constitute a Capital Lease. "Common Stock Equivalents" means all options, warrants and other rights to acquire Common Stock or securities convertible into or exchangeable for Common Stock. "Contingent Obligation" means any contractual obligation, contingent or otherwise, of one Person with respect to any Indebtedness, obligation or liability of another, including, without limitation, direct or indirect guaranties, endorsements (except for collection or deposit in the ordinary course of business), notes co-made or discounted, recourse agreements, keep-well agreements, agreements to purchase or repurchase such Indebtedness, obligation or liability or any security therefor or to provide funds for the payment of discharge thereof, agreements to maintain solvency, -9- assets, level of income, or other financial condition, and agreements to make payment other than for value received. "Faneuil Group" means GIS Information Systems, Inc., an Illinois corporation, Equitel Corp., a Virginia corporation, Original Research II Corporation, a Delaware corporation, and Credit Card Service Corporation, a Delaware corporation, collectively. "Indebtedness" means, with respect to the Corporation or any of the Subsidiaries, at any time, (a) all indebtedness, obligations or other liabilities of the Corporation or any of the Subsidiaries (i) for borrowed money or evidenced by debt securities, debentures, acceptances, notes or other similar instruments, (ii) with respect to letters of credit issued for the Corporation's or any of the Subsidiaries, account, (iii) in respect of Capital Leases and (iv) which are Contingent Obligations, (b) all indebtedness, obligations or other liabilities of the Corporation or any of the Subsidiaries or others secured by a Lien on any property of the Corporation or any of the Subsidiaries whether or not such indebtedness, obligations or liabilities are assumed by the Corporation or any of the subsidiaries, all as of such time, (a) all indebtedness, obligations or other liabilities of the Corporation or any of the subsidiaries in respect of Interest Rate Contracts and currency hedging agreements, net of liabilities owed to the Corporation or any of the Subsidiaries by the counterparties thereon, and (d) all preferred stock subject (upon the occurrence of any contingency or otherwise) to mandatory redemption, other than Series C Preferred Stock, Series D Preferred Stock and Series B Preferred Stock. "Interest Rate Contracts" means interest rate exchange, collar or cap or similar agreements providing interest rate protection. "IPO" means the initial public offering of Common Stock on a firm commitment basis pursuant to an effective registration statement under the Securities Act. "Lien" means any mortgage, deed of trust, pledge, security interest, encumbrance, lien or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any lease in the nature thereof, and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction in connection with any of the foregoing). "Loan Agreement" means (i) the Loan Agreement, dated as of April 29, 1994, among CCC Information Services Inc. and CCC Development Company, as Borrowers, the financial institutions party thereto, as Lenders and Canadian Imperial Bank of Commerce, as Agent; (ii) the Security Agreement, dated as of April 29, 1994, among CCC Information Services Inc., Canadian Imperial Bank of Commerce, as Agent and Canadian Imperial Bank of Commerce, as Collateral Agent, (iii) the Guaranty, dated as of April 29, 1994, made by the Corporation in favor of the Lenders party to the Loan Agreement and Canadian Imperial Bank of Commerce, as Agent, (iv) the Pledge and Security Agreement, dated as of April 29, 1994 among the Corporation, Canadian Imperial Bank -10- of Commerce, as Agent and Canadian Imperial Bank of Commerce, as Collateral Agent and (v) each other agreement, document or instrument delivered in connection with the foregoing. "Material Subsidiary" means any Subsidiary which produces or represents 20%, or more of (i) consolidated net assets of the Corporation, (ii) consolidated gross revenues of the Corporation or (iii) consolidated net income of the Corporation. "Person" meant an individual or a corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company or any other entity or organization, including a government or political subdivision or agency or instrumentality thereof. "Public Offering" means a sale of any of the Corporation's securities pursuant to an effective registration statement under the Securities Act. "Securities Act" means the Securities Act of 1933, as amended. "Subsequent Offering" means a sale of Common Stock or any Common Stock Equivalent of the Corporation in a Public Offering after an IPO. "Subsidiary" means (i) any Person of which 50% or more of the securities having ordinary voting power for the election of directors are at the time owned directly or indirectly by the Corporation or any Subsidiary thereof, (ii) any person of which 50% or more of the joint venture, limited partnership or partnership interests are at the time owned directly or indirectly by the Corporation or any Subsidiary thereof or (iii) any Person which is a limited partnership in which the Corporation or any Subsidiary is at the time the general partner or at the time owns 50% or more of the general partner of such Person. -11- CERTIFICATE OF DESIGNATIONS of SERIES E CUMULATIVE REDEEMABLE PREFERRED STOCK of CCC INFORMATION SERVICES GROUP INC. (Pursuant to Section 151 of the Delaware General Corporation Law) ____________ Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be designated as Series E Cumulative Redeemable Preferred Stock (the "Series E Preferred Stock") and the number of shares constituting the Series E Preferred Stock shall be 500 shares. The stated value of each share of Series E Preferred Stock (the "Stated Value") shall be $1,000. The Series E Preferred Stock shall rank prior to the common stock, par value $0.10 per share (the "Common Stock"), and any other capital stock of the Corporation which by its terms is junior to the Series E Preferred Stock with respect to dividend rights and with respect to the distribution of assets upon liquidation, dissolution or winding up, whether voluntary or involuntary, of the Corporation ("Junior Stock") and on a parity with the Corporation's Series C Cumulative Redeemable Preferred Stock (the "Series C Preferred Stock"), Series D Cumulative Redeemable Preferred Stock (the "Series D Preferred Stock") and any other capital stock subsequently issued by the Corporation which by its terms is on a parity with the Series E Preferred Stock with respect to dividend rights and with respect to the distribution of assets upon the liquidation, dissolution or winding up, whether voluntary or involuntary, of the Corporation ("Parity Stock"). Section 2. DIVIDENDS. (a)GENERAL. Commencing on the first Dividend Payment Date (as defined below) to occur following the fourth anniversary of the Original Issue Date (the "Dividend Rate Adjustment Date"), the holders of shares of the Series E Preferred Stock shall be entitled to receive cash dividends, when and as declared by the Board of Directors or by a duly authorized committee of said Board of Directors, out of assets legally available for such purpose, at the Dividend Rate set forth below in Section 3 applied to the Stated Value. Such dividends shall be cumulative from the date of original issue of such shares (the "Original Issue Date"), whether or not there shall have been net profits or net assets of the Corporation legally available for the payment of dividends at the time such dividends were payable, and shall be payable quarterly, when and as declared by the Board of Directors of the Corporation or by a duly authorized committee of said Board of Directors, on November 30, February 28, May 31 and August 31 of each year (each such date being hereinafter referred to as a "Dividend Payment Date"), commencing on the Dividend Rate Adjustment Date; PROVIDED, HOWEVER, in the event the Corporation shall fail to redeem shares of the Series E Preferred Stock in accordance with Section 7(b)(ii), dividends shall be payable commencing on the first Dividend Payment Date following the 90th day after the consummation of the IPO (as defined in Section 9). Each such dividend shall be payable to the holders of record of shares of the Series E Preferred Stock as they appear on the stock register of the Corporation on such record date, not more than 60 days preceding the payment date thereof, as shall be fixed by the Board of Directors or by a duly authorized committee of said Board of Directors, PROVIDED THAT such record date shall not precede the date upon which the resolution fixing the record date is adopted. Dividends on account of arrears for any past Dividend Periods (as defined in subsection (b) of this Section 2) may be declared and paid at any time, without reference to any regular Dividend Payment Date, to holders of record on such record date, not exceeding 60 days preceding the payment date thereof, as may be fixed by the Board of Directors or a duly authorized committee of said Board of Directors. (b) DIVIDEND PERIODS. Dividend periods (hereinafter called "Dividend Periods") shall commence on December 1, March 1, June 1 and September 1 of each year and shall end on and include the calendar day next preceding the first day of the next Dividend Period (other than the initial Dividend Period which shall commence on the Original Issue Date and shall end on and include the Dividend Rate Adjustment Date). The amount of dividends payable for each Dividend Period or portion thereof for the Series E Preferred Stock shall be computed by multiplying the Stated Value by a fraction, (i) the numerator of which is (A) the applicable Dividend Rate multiplied by (B) the number of calendar days elapsed during such Dividend Period or portion thereof and (ii) the denominator of which is 365. If more than one Dividend Rate applies to any Dividend Period or portion thereof, the calculation in the preceding sentence shall be applied for each period of time during which a given Dividend Rate is applicable. The dividend payable to each holder of Series E Preferred Stock shall be rounded to the nearest one cent with $.005 being rounded upward. (c) DIVIDENDS ON PARITY STOCK. So long as any shares of the Series E Preferred Stock are outstanding, no full dividends shall be declared on any Parity Stock for any period unless full cumulative dividends have been or contemporaneously are declared on the Series E Preferred Stock for all Dividend Periods terminating on or prior to the date of payment of such full cumulative dividends. When dividends are not declared to be paid in full, as described above, upon the shares of the Series E Preferred Stock and any Parity Stock, all dividends declared upon shares of the Series E Preferred Stock and any Parity Stock shall be declared pro rata so that the amount of dividends declared per share on the Series E Preferred Stock and such Parity Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the shares of the Series E Preferred Stock and such Parity Stock of the Corporation bear to each other. (d) DIVIDENDS ON JUNIOR STOCK. So long as any shares of the Series E Preferred Stock are outstanding, no dividend (other than dividends or distributions paid in shares of, or options, -2- warrants or rights to subscribe for or purchase shares of Junior Stock) shall be declared or paid or set aside for payment or other distribution declared or made upon any Junior Stock, or upon any Parity Stock except as provided in subsection (c) of this Section 2, nor shall any Junior Stock or Parity Stock (other than the Series C Preferred Stock and the Series D Preferred Stock) be redeemed, purchased or otherwise acquired for any consideration (or any monies be paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the Corporation (except by conversion into or exchange for Junior Stock). (e) NO ADDITIONAL DIVIDENDS. Holders of shares of the Series E Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full cumulative dividends, as herein provided, on the Series E Preferred Stock. No interest, or sum of money in lieu of interest, shall be payable in respect to any dividend payment or payments on the Series E Preferred Stock. Section 3. DIVIDEND RATE. The Dividend Rate on the shares of Series E Preferred Stock shall be 2.75% per annum for the period from the Original Issue Date to and including the EARLIER of the (i) date of the consummation of the IPO or (ii) the Dividend Rate Adjustment Date and shall be 8.0% per annum for each Dividend Period or portion thereof thereafter occurring, subject to adjustment as follows: (a) If the Corporation completes an IPO prior to the Dividend Rate Adjustment Date and redeems the Series E Preferred Stock, in accordance with the terms set forth in Section 7(b)(i) or (b)(ii), then the Dividend Rate shall be 0% per annum from the date of consummation of the IPO to the Dividend Rate Adjustment Date. (b) If, prior to the date for mandatory redemption of all outstanding shares of Series E Preferred Stock established pursuant to Section 7(a), 7(b)(i) or 7(b)(ii), the Corporation offers in good faith to repurchase on a pro rata basis all or a portion of the outstanding shares of each of the Series C Preferred Stock, the Series D Preferred Stock and the Series E Preferred Stock at a repurchase price per share equal to at least the Stated Value, together with accrued and unpaid dividends thereon to (and including) the date fixed for such repurchase, the Dividend Rate applicable to the shares of Series E Preferred Stock which the Corporation offered to repurchase and which the holders thereof refused such offer to repurchase shall, after the date fixed for such repurchase of the Series E Preferred Stock, be the LESSER of 1% and any Dividend Rate calculated pursuant to subsection (a) of this Section 3. Section 4. VOTING RIGHTS. In addition to any voting rights provided by law, the holders of shares of the Series E Preferred Stock shall have the following voting rights: (a) So long as any shares of the Series E Preferred Stock are outstanding, each share of Series E Preferred Stock beneficially owned by White River Ventures, Inc., a Delaware corporation ("White River") or any Affiliate thereof, shall entitle the holder thereof to vote together with the holders of Common Stock and all other securities entitled to vote on all matters voted on -3- by holders of Common Stock at all meetings of the stockholders of the Corporation. With respect to any such vote, each share of Series E Preferred Stock beneficially owned by White River or any Affiliate thereof shall entitle the holder thereof to cast the number of votes determined pursuant to the following formula: Votes per share = A/B and A = [(C-(C*D))/(1-(E+D))] - C and E = (B/F * .51) - G and G = [(B/F * .51) + D] - .51 Where: A is equal to: The total number of votes the Series E Preferred Stock may exercise in any vote with the Common Stock. B is equal to: The number of shares of Series E Preferred Stock beneficially owned by White River and its Affiliates on a particular record date. C is equal to: The total number of shares of Common Stock outstanding on a particular record date. D is equal to: The percentage (expressed as a fraction) of the Corporation's outstanding shares of Common Stock beneficially owned by White River and its Affiliates on a particular record date. E is equal to: The percentage (expressed as a fraction which cannot be greater than .51 or less than 0) of the Company's total voting power attributable to the aggregate number of shares of the Series E Preferred Stock beneficially owned by White River and its Affiliates on a particular record date; PROVIDED, HOWEVER, such voting percentage shall automatically be 0% if White River together with its Affiliates already beneficially owns at least 51% of the outstanding shares of Common Stock on such record date. F is equal to: The total number of shares of Series E Preferred Stock originally issued. -4- G is equal to: The automatic voting reduction percentage (expressed as a fraction which cannot be less than 0) necessary if White River an its Affiliates beneficially own shares of Common Stock. (b) In addition to any class votes required by law, the affirmative vote of the holders of at least 66-2/3% of the outstanding shares of the Series E Preferred Stock, voting separately as a class, in person or by proxy, at a special or annual meeting of stockholders called for the purpose, shall be necessary to (i) authorize, create, increase the authorized or issued number of shares of, or issue (including on conversion or exchange of any convertible or exchangeable securities or by reclassification), any shares of any class or classes or series of Parity Stock or the Corporation's capital stock having rights senior to or on a parity with the Series E Preferred Stock with respect to dividend rights and with respect to the distribution of assets upon the liquidation, dissolution or winding up, whether voluntary or involuntary, or the Corporation ("Senior Stock") or (ii) amend, alter or repeal (whether by merger, consolidation or otherwise) any of the provisions of the Certificate of Incorporation of the Corporation or the Certificate of Designations of the Series E Preferred Stock which would materially and adversely affect any right, preference, privilege or voting power of the Series E Preferred Stock or the holders thereof; PROVIDED, HOWEVER, that the creation and issuance of any Junior Stock, shall not be deemed to materially and adversely affect such rights, preferences or voting powers. For the taking of any action as provided in this paragraph (b) by the holders of shares of the Series E Preferred Stock, each such holder shall have one vote for each share of Series E Preferred Stock standing in his or her name on the transfer books of the Corporation as of any record date fixed for such purpose or, if no such date has been fixed, at the close of business on the Business Day (as defined in Section 9) next preceding the day on which notice is given, or if notice is waived, at the close of business on the Business Day next preceding the day on which the meeting is held. At each meeting of stockholders at which the holders of shares of the Series E Preferred Stock shall have the right, voting separately as a single class, to take any action pursuant to this paragraph (b), the presence in person or by proxy of the holders of record of 50% of the total number of shares of the Series E Preferred Stock then outstanding and entitled to vote on the matter shall be necessary and sufficient to constitute a quorum. At any such meeting or at any adjournment thereof, (i) the absence of a quorum of the holders of shares of any other class or series of capital stock of the Corporation shall not prevent the taking of any action as provided in this paragraph (b) and (ii) in the absence of a quorum of the holders of shares of the Series E Preferred Stock, the holders of a majority of such shares present in person or by proxy shall have the power to adjourn the meeting as to the actions to be taken by the holders of shares of the Series E Preferred Stock from time to time and place to place without notice other than announcement at the meeting until a quorum shall be present. (c) The foregoing rights of holders of shares of the Series E Preferred Stock to take any actions as provided in this Section 4 may be exercised at any annual meeting of stockholders or at a special meeting of stockholders held for such purpose or at any adjournment thereof, or by the written consent, delivered to the Secretary of the Corporation, of the holders of the minimum number of shares required to take such action. -5- Section 5. REACQUIRED SHARES. Any shares of Series E Preferred Stock redeemed, purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of preferred stock, par value $1.00 per share, of the Corporation and may be reissued as part of another series of preferred stock, par value $1.00 per share, of the Corporation subject to the conditions or restrictions on authorizing or creating any class or series, or any shares of any class or series as set forth herein. Section 6. LIQUIDATION, DISSOLUTION, WINDING UP. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary and subject to the rights of the holders of shares of any series or class or classes of Senior Stock, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for the holders of shares of any series or class or classes of Junior Stock, the holders of the shares of the Series E Preferred Stock shall be entitled to receive the Stated Value per share plus an amount equal to all dividends (whether or not earned or declared) accrued and unpaid thereon to the date of final distribution to such holders; but such holders shall not be entitled to any further payment. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of the shares of the Series E Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payment on any Parity Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of shares of Series E Preferred Stock and any Parity Stock ratably in accordance with the respective amounts which would be payable on such shares of Series E Preferred Stock and any Parity Stock if all amounts payable thereon were paid in full. For the purposes of this Section 6, a consolidation or merger of the Corporation with one or more corporations shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary. (b) Subject to the rights of the holders of shares of any series or class or classes of Parity Stock or Senior Stock, upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of the Series E Preferred Stock as provided in this Section 6, but not prior thereto, any other series or class or classes of Junior Stock shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Series E Preferred Stock shall not be entitled to share therein. Section 7. REDEMPTION. (a) MANDATORY FIVE YEAR REDEMPTION. Unless redeemed pursuant to Sections 7(b), 7(c) and 7(d) prior to June 16, 1999, the Corporation shall, on such date and to the extent the Corporation has funds legally available therefor, redeem all shares of Series E Preferred Stock then outstanding at a redemption price per share equal to the Stated Value, together with accrued and unpaid dividends thereon to (and including) such redemption date, without interest. -6- (b) MANDATORY REDEMPTION EVENTS. (i) Concurrent with the consummation of an IPO having net proceeds to the Corporation less than or equal to $40,000,000, the Corporation shall, to the extent the Corporation has funds legally available therefor redeem the LESSER of (A) the number of shares of Series E Preferred Stock then outstanding and (B) that number of shares of Series E Preferred Stock having an aggregate Stated Value and accrued and unpaid dividends equal to $256,410 at a redemption price per share equal to the Stated Value, together with accrued and unpaid dividends thereon to (and including) such redemption date, without interest, employing a Dividend Rate of 8.0% on the portion to be so redeemed for the period from the date of the consummation of such IPO to (and including) such redemption date; PROVIDED, HOWEVER, that to the extent that the Corporation after making any required payments under the Loan Agreement (as defined in Section 9) from the net proceeds of the IPO shall not have sufficient funds available to so redeem shares of Series E Preferred Stock in accordance with this subsection (b)(i) and any Parity Stock entitled to redemption in accordance with the terms of such Parity Stock, the Corporation shall redeem concurrent with the consummation of the IPO that number of shares of Series E Preferred Stock and Parity Stock entitled to redemption having an aggregate Stated Value equal to the balance of the net proceeds of the IPO remaining after any such payments under the Loan Agreement and shall redeem the remaining shares of Series E Preferred Stock to be redeemed pursuant to this subsection (b)(i) and Parity Stock entitled to redemption within 120 calendar days after the consummation of the IPO; PROVIDED, FURTHER, that to the extent that all shares of Series E Preferred Stock to be redeemed pursuant to this subsection (b)(i) have not been redeemed within such 120 calendar day period, the Corporation shall, to the extent the Corporation has funds legally available therefor, redeem all shares of Series E Preferred Stock then outstanding at a redemption price per share equal to the Stated Value, together with accrued and unpaid dividends thereon to (and including) such redemption date, without interest, employing a Dividend Rate of 8.0% for the period from the date of the consummation of the IPO to (and including) such redemption date. (ii) Concurrent with the consummation of an IPO having net proceeds to the Corporation in excess of $40,000,000, the Corporation shall, to the extent the Corporation has funds legally, available therefor, redeem the LESSER of (1) the number of shares of Series E Preferred Stock then outstanding and (2) the number of shares of Series E preferred Stock having an aggregate Stated Value and accrued and unpaid dividends at least equal to .64% of the net proceeds to the Corporation from the IPO, at a redemption price per share equal to the Stated Value, together with accrued and unpaid dividends thereon to (and including) such redemption date, without interest, employing a Dividend Rate of 8.0% for the period from the date of the consummation of such IPO to (and including) such redemption date; PROVIDED, HOWEVER, that to the extent that the Corporation after giving effect to any required payments under the Loan Agreement would not have sufficient funds available to so redeem shares of Series E Preferred Stock in accordance with this subsection (b)(ii) and any Parity Stock entitled to redemption in accordance with the terms of such Parity Stock, the Corporation shall redeem concurrent with the consummation of the IPO that number of shares of Series E Preferred Stock and Parity Stock entitled to redemption having an aggregate stated value equal to the balance of the net proceeds of the IPO remaining after any such payments under the Loan Agreement and shall redeem the remaining shares of Series E Preferred Stock to be redeemed pursuant to this subsection (b)(ii) and Parity Stock entitled to redemption within 90 calendar days -7- after the consummation of the IPO; PROVIDED, FURTHER, that to the extent that shares of the Series E Preferred Stock to be redeemed pursuant to this subsection (b)(ii) having an aggregate Stated Value and accrued and unpaid dividends of at least $256,410 have not been redeemed within such 90 calendar day period, the Corporation shall, to the extent the Corporation has funds legally available therefor redeem all shares of Series E Preferred Stock then outstanding at a redemption price per share equal to the Stated Value, together with accrued and unpaid dividends thereon to (and including) such redemption date, without interest, employing a Dividend Rate of 8.0% for the period from the date of the consummation of the IPO to (and including) such redemption date and; PROVIDED, FURTHER, to the extent that the Corporation has redeemed shares of the Series E Preferred Stock to be redeemed pursuant to this subsection (b)(ii) having an aggregate Stated Value and accrued and unpaid dividends of at least $256,410, but less than the full amount of shares of Series E Preferred Stock required by this subsection (b)(ii), the Corporation shall on June 15, 1998, to the extent the Corporation has funds legally available therefor, redeem all shares of Series E Preferred Stock then outstanding at a redemption price per share equal to the Stated Value together with accrued and unpaid dividends thereon to (and including) such redemption date, without interest. (iii) In the event that the Corporation fails to use at least .64% of the net proceeds received by the Corporation from any Subsequent Offering (as defined in Section 9) to redeem any outstanding shares of Series E Preferred Stock on the date of the consummation of such Subsequent Offering, the Series E Preferred Stock shall be subject to redemption, in whole or in part, in cash, as determined by the holders of a majority of the outstanding shares of the Series C Preferred Stock at a redemption price per share equal to the Stated Value, together with accrued and unpaid dividends thereon to (and including) the redemption date, without interest. On the redemption date, the Corporation shall redeem all shares of Series E Preferred Stock tendered for redemption pursuant to this subsection (b)(iii). (c) REDEMPTION IN THE EVENT OF ACCELERATION OF INDEBTEDNESS. In the event that the Corporation or any Subsidiary shall fail to perform or observe any term, covenant or condition related to any Indebtedness (as defined in Section 9) of the Corporation or any Subsidiary (other than any Indebtedness of Phone Bass Systems, Inc. ("Phone Base") which is non-recourse to the Corporation or any Subsidiary, other than Phone Base) and the effect of such failure to perform or observe is (i) a failure by the Corporation or any Subsidiary to pay any principal or interest on any Indebtedness when due or during any applicable grace period therefor or (ii) receipt of notice by the Corporation or any Subsidiary of the acceleration of the maturity or required prepayment (other than by a regularly scheduled required prepayment) prior to the stated maturity of any Indebtedness and demand for payment with respect therefor, in respect to Indebtedness in an aggregate amount in excess of $500,000 (the "Accelerated Redemption Date"), the Series E Preferred Stock shall be subject to redemption, in whole or in part, in cash, as determined by the holders of a majority of the outstanding shares of the Series C Preferred Stock after the Accelerated Redemption Date at a redemption price per share equal to the Stated Value, together with accrued and unpaid dividends thereon to (and including) the redemption date, without interest. On the redemption date, the Corporation shall redeem all shares of Series E Preferred Stock tendered for redemption pursuant to this subsection (c). -8- (d) REDEMPTION IN THE EVENT OF CERTAIN BUSINESS COMBINATION. For so long as White River or any of its Affiliates shall own any shares of Series E Preferred Stock (A) neither the Corporation nor its Material Subsidiaries (as defined in Section 9) shall engage in any merger, reorganization or consolidation (other than transactions involving the merger, reorganization or consolidation of a Subsidiary of the Corporation with or into the Corporation or with or into a wholly owned Subsidiary of the Corporation) and (B) the Corporation shall not sell or otherwise transfer, in a single transaction or series of transactions, all or substantially all or a material part of the assets or shares of the Common Sock of the Corporation to or with any Person (as defined in Section 9) other than in connection with the sale of the Faneuil Group or to or with the Corporation or a wholly owned Subsidiary of the Corporation unless on or prior to the consummation of the transactions described in clauses (A) and (B) all shares of the Series E Preferred Stock shall have been redeemed at a redemption price per share equal to the Stated Value, together with accrued and unpaid dividends thereon to (and including) such redemption date, without interest. (e) RIGHTS OF SERIES E PREFERRED STOCK FOLLOWING REDEMPTION. On and after any date fixed for redemption, PROVIDED THAT the redemption price (including any accrued and unpaid dividends to (and including) the date fixed for redemption) has been duly paid or segregated and held in trust by a duly authorized independent paying agent for the benefit of the Persons entitled thereto, dividends shall cease to accrue on the Series E Preferred Stock called for redemption, such shares shall no longer be deemed to be outstanding and all rights of the holders of such shares as stockholders of the Corporation shall cease and the right to receive the moneys payable upon such redemption, without interest thereon, upon surrender of the certificates evidencing such shares. (f) NOTICE OF ANY REDEMPTION. Notice of any redemption pursuant to Section 7(e) shall be given to the holders of shares of Series E Preferred Stock not less than 30 nor more than 60 days prior to the redemption. Notice of redemption shall be given by first class mail to such holders' respective addresses as shown on the stock books of the Corporation and will specify (A) the date fixed for redemption, (B) the applicable redemption price and (C) in the case of a partial redemption, the number of shares of Series E Preferred Stock to be redeemed and the aggregate number of shares of Series E Preferred Stock which will be outstanding after such redemption. If less than all shares of Series E Preferred Stock then outstanding are to be redeemed, the shares of Series E Preferred Stock will be redeemed pro rata from among the holders of shares of Series E Preferred Stock then outstanding. (g) FINAL REDEMPTION OBLIGATIONS. If the Corporation shall fail at any time to discharge its obligation to redeem shares of Series E Preferred Stock pursuant to this Section 7 (the "Final Redemption Obligation"), such Final Redemption Obligation shall be discharged as soon as the Corporation is able to discharge such Final Redemption Obligation using funds legally available therefor. (h) REDEMPTION OF PARITY STOCK PRO-RATA. If, upon the occurrence of any event requiring redemption of the shares of Series E Preferred Stock pursuant to this Section 7, the assets of the Corporation, or net proceeds thereof, shall be insufficient to redeem in full the applicable -9- amount of Series E Preferred Stock and any Parity Stock required to be redeemed by the Corporation, then the Corporation shall redeem shares of Series E Preferred Stock and any Parity Stock ratably in accordance with the respective amounts which would be redeemable if the Series E Preferred Stock and the Parity Stock required to be redeemed by the Corporation were redeemed in full. (i) REDEMPTION EXCEPTION. Notwithstanding anything in this Certificate of Designation to the contrary, at least one share of the Series E Preferred Stock shall remain issued and outstanding until such time as no shares of the Series C Preferred Stock remain issued and outstanding. Section 8. CERTAIN COVENANTS. Any registered holder of the Series E Preferred Stock may proceed to protect and enforce its rights and the rights of such holders by any available remedy by proceeding at law or in equity to protect and enforce any such rights, whether for the specific enforcement of any provision or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. Section 9. DEFINITION. For the purposes of this Certificate of Designations of Series E Redeemable Preferred Stock, the following terms shall have the meanings indicated: "Affiliate" means a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another Person. "Business Day" means any day other than a Saturday, Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "Capital Lease" means any lease of any property (whether real, personal or mixed) by the Corporation or any of the Subsidiaries as lessee which, in conformity with generally accepted accounting principles, is accounted for as a capital lease on the balance sheet of the Corporation or any of the Subsidiaries; PROVIDED, HOWEVER, any such lease which is nonrecourse to the Corporation or any of the Subsidiaries shall not constitute a Capital Lease. "Common Stock Equivalents" means all options, warrants and other rights to acquire Common Stock or securities convertible into or exchangeable for Common Stock. "Contingent Obligation" means any contractual obligation, contingent or otherwise, of one Person with respect to any Indebtedness, obligation or liability of another, including, without limitation; direct or indirect guaranties, endorsements (except for collection or deposit in the ordinary course of business), notes co-made or discounted, recourse agreements, keep-well agreements, agreements to purchase or repurchase such indebtedness, obligation or liability or any security therefor or to provide funds for the payment or discharge thereof, agreements to maintain solvency, -10- assets, level of income, or other financial condition, and agreements to make payment other than for value received. "Faneuil Group" means GIS Information Systems, Inc., an Illinois corporation, Equitel Corp., a Virginia corporation, Original Research II Corporation, a Delaware corporation, and Credit Card Service Corporation, a Delaware corporation, collectively. "Indebtedness" means, with respect to the Corporation or any of the Subsidiaries, at any time, (a) all indebtedness, obligations or other liabilities of the Corporation or any of the Subsidiaries (i) for borrowed money or evidenced by debt securities, debentures, acceptances, notes or other similar instruments, (ii) with respect to letters of credit issued for the Corporation's or any of the Subsidiaries' account, (iii) in respect of Capital Leases and (iv) which are contingent obligations, (b) all indebtedness, obligations or other liabilities of the Corporation or any of the Subsidiaries or others secured by a Lien on any property of the Corporation or any of the Subsidiaries, whether or not such indebtedness, obligations or liabilities are assumed by the Corporation or any of the Subsidiaries, all as of such time, (c) all indebtedness, obligations or other liabilities or the Corporation or any of its subsidiaries in respect of Interest Rate Contracts and currency hedging agreements, net of liabilities owed to the Corporation or any of the Subsidiaries by the counterparties thereon, and (d) all preferred stock subject (upon the occurrence of any contingency or otherwise) to mandatory redemption, other than the Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock. "Interest Rate Contracts" means interest rate exchange, collar or cap or similar agreements providing interest rate protection. "IPO" means the initial public offering of Common Stock on a firm commitment basis pursuant to an effective registration statement under the Securities Act. "Lien" means any mortgage, deed of trust, pledge, security interest, encumbrancer lien or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any lease in the nature thereof, and the filling of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction in connection with any of the foregoing). "Loan Agreement" means (i) the Loan Agreement, dated as of April 29, 1994, among CCC Information Services Inc. and CCC Development Company, as Borrowers, the financial institutions party thereto, as Lenders and Canadian Imperial Bank of Commerce, as Agent, (ii) the Security Agreement, dated as of April 29, 1994, among CCC Information Services Inc., Canadian Imperial Bank of Commerce, as Agent and Canadian Imperial Bank of Commerce, as Collateral Agent, (iii) the Guaranty, dated as of April 29, 1994, made by the Corporation in favor of the Lenders party to the Loan Agreement and Canadian Imperial Bank of Commerce, as Agent, (iv) the Pledge and Security Agreement, dated as of April 29, 1994, among the Corporation, Canadian Imperial Bank -11- of Commerce, as Agent and Canadian Imperial Bank of Commerce, as Collateral Agent and (v) each other agreement, document or instrument delivered in connection with the foregoing. "Material Subsidiary" means any subsidiary which produces or represents 20% or more of (i) consolidated net assets of the Corporation, (ii) consolidated gross revenues of the Corporation or (iii) consolidated net income of the Corporation. "Person" means an individual or a corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company or any other entity or organization, including a government or political subdivision or agency or instrumetality thereof. "Public Offering" means a sale of any of the Corporation's securities pursuant to an effective registration statement under the Securities Act. "Securities Act" means the Securities Act of 1933, as amended. "Subsequent Offering" means a sale of Common Stock or any Common Stock Equivalent of the Corporation in a Public Offering after an IPO. "Subsidiary" means (i) any Person of which 50% or more of the securities having ordinary voting power for the election of directors are at the time owned directly or indirectly by the Corporation or any Subsidiary thereof (ii) any Person of which 50% or more of the joint venture, limited partnership or partnership interests are at the time owned directly or indirectly by the Corporation or any Subsidiary thereof or (iii) any Person which is a limited partnership in which the Corporation or any Subsidiary in at the time the general partner or at the time owns 50% or more of the general partner of such Person. -12- EX-3.2 3 EXHIBIT 3.2 EXHIBIT B SECOND AMENDED AND RESTATED BY-LAWS OF CCC INFORMATION SERVICES GROUP INC. (A Delaware Corporation) ARTICLE I OFFICES The registered office of the Corporation shall be in the City of Dover, County of Kent, State of Delaware. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II STOCKHOLDERS Section 1. TIME AND PLACE OF MEETINGS. All meetings of the stockholders for the election of directors or for any other purpose shall be held at such time and place, within or without the State of Delaware, as shall be designated by the Board of Directors. In the absence of a designation of a place for any such meeting by the Board of Directors, each such meeting shall be held at the principal office of the Corporation. Section 2. ANNUAL MEETINGS. An annual meeting of stockholders shall be held for the purpose of electing directors and transacting such other business as may properly be brought before the meeting. The date of the annual meeting shall be determined by the Board of Directors. Section 3. SPECIAL MEETINGS. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by the Amended and Restated Certificate of Incorporation, as amended from time to time (the "CERTIFICATE OF INCORPORATION"), or by law, may be called by the Chairman of the Board or the President and shall be called by the Secretary at the direction either of a majority of the Board of Directors or stockholders holding not less than twenty-five percent of the stock issued and outstanding and entitled to vote at such meeting. Section 4. NOTICE OF MEETINGS. Written notice of each meeting of the stockholders stating the place, date and time of the meeting shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting, to each stockholder entitled to vote at such meeting. The notice of any special meeting of stockholders shall state the purpose or purposes for which the meeting is called. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Neither the business to be transacted at, nor the purpose of, an annual or special meeting of stockholders need be specified in any written waiver of notice. Section 5. QUORUM: ADJOURNMENTS. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise required by these By-laws, the Certificate of Incorporation, or the Delaware General Corporation Law as from time to time in effect (the "DELAWARE LAW"). If a quorum is not represented, the holders of the stock present in person or represented by proxy at the meeting and entitled to vote thereat shall have power, by the affirmative vote of the holders of a majority of such stock, to adjourn the meeting to another time and/or place, without notice other than announcement at the meeting, except as hereinafter provided, until a quorum shall be present or represented. At such adjourned meeting, at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Withdrawal of stockholders from any meeting shall not cause the failure of a duly constituted quorum at such meeting. Section 6. VOTING. (a) At all meetings of the stockholders, each stockholder shall be entitled to vote, in person, or by proxy appointed in an instrument in writing subscribed by the stockholder or otherwise appointed in accordance with Section 212 of the Delaware Law, each share of voting stock owned by such stockholder of record on the record date for the meeting. Each stockholder shall be entitled to one vote for each share of voting stock held by such stockholder, unless otherwise provided in the Delaware Law or the Certificate of Incorporation (including, without limitation, in any certificate of designations setting forth the terms of any preferred stock of the Corporation outstanding at any time). (b) When a quorum is present at any meeting, the affirmative vote of the holders of at least fifty percent (50%) of the total voting power of all shares of stock of the Corporation entitled to vote in the election of directors present in person or represented by proxy and voting shall decide any question brought before such meeting, unless the question is one upon which, by express provision of law or of the Certificate of Incorporation, a different vote is required, in which case such express provision shall govern and control the decision of such question. Any stockholder who is in attendance at a meeting of stockholders either in person or by proxy, but who abstains from the vote on any matter, shall not be deemed present or represented at such meeting for purposes of the preceding sentence with respected to such vote, but shall be deemed present or represented at such meeting for all other purposes. Section 7. ORGANIZATION. At every meeting of the stockholders, the Chairman of the Board, if there be one, or in the case of a vacancy in the office or absence of the Chairman of the Board, one of the following persons present in the order stated: the Vice Chairman, if one has been appointed, the President, the Vice Presidents in their order or rank, a chairman designated by the Board of Directors or a chairman chosen by the stockholders entitled to cast a majority of the votes which all stockholders present in person or by proxy are entitled to cast, shall act as chairman, and the Secretary, or, in his absence, an Assistant Secretary, or in the absence of the Secretary and the Assistant Secretaries, a person appointed by the chairman, shall act as secretary of the meeting. -2- Section 8. STOCKHOLDERS ACTION WITHOUT MEETINGS. Any action required to be taken, or any action which may be taken, at any annual or special meeting of stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of the outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. GENERAL POWERS. The business and affairs of the Corporation shall be managed and controlled by or under the direction of its Board of Directors, which may exercise all such powers of, and do all such acts and things as may be done by, the Corporation and do all such lawful acts and things as are not by law or by the Certificate of Incorporation or by these By-laws directed or required to be exercised or done by the stockholders. Section 2. NUMBER, QUALIFICATION AND TENURE. The number of directors shall be determined from time to time by resolution of the Board of Directors adopted by a majority of the total number of authorized directors (whether or not there exist any vacancies in the previously authorized directorships at the time any such resolution is presented to the Board of Directors for adoption), subject to the provisions of the Certificate of Incorporation. The directors shall be elected at the annual meeting of the stockholders, except as provided in the Certificate of Incorporation or SECTION 3 of this Article, and each director elected shall hold office until his or her successor is elected and qualified or until his or her earlier death, termination, resignation or removal from office. Directors need not be stockholders. Section 3. VACANCIES AND NEWLY-CREATED DIRECTORSHIPS. Vacancies and newly-created directorships resulting from any increase in the number of directors may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director, and each director so chosen shall hold office until his or her successor is elected and qualified or until his or her earlier death, termination, resignation, retirement, disqualification or removal from office. If there are no directors in office, then an election of directors may be held in the manner provided by law. Section 4. REMOVAL. Any director may be removed from the Board of Directors for or without cause by the holders of shares of stock having a majority of the voting power of the Corporation, and the office of such director shall forthwith become vacant. Section 5. PLACE OF MEETINGS. The Board of Directors may hold meetings, both regular and special, either within or without the State of Delaware. -3- Section 6. MEETINGS. The Board of Directors shall hold a regular meeting, to be known as the annual meeting, immediately following each annual meeting of the stockholders. Other regular meetings of the Board of Directors shall be held at such time and place as shall from time to time be determined by the Board. No notice of regular meetings need be given, other than by announcement at the immediately preceding regular meeting. Special meetings of the Board may be called by the President or by the Secretary on the written request of a majority of the Board of Directors. Notice of any special meeting of the Board shall be given at least two (2) days prior thereto, either in writing, or telephonically if confirmed promptly in writing, to each director at the address shown for such director on the records of the Corporation. Section 7. WAIVER OF NOTICE: BUSINESS AND PURPOSE. Notice of any meeting of the Board of Directors may be waived in a writing signed by the person or persons entitled to such notice either before or after the time of the meeting. The attendance of a director at any meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened and at the beginning of the meeting records such objection with the person acting as secretary of the meeting and does not thereafter vote on any action taken at the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting, unless specifically required by the Delaware Law. Section 8. QUORUM AND MANNER OF ACTING. At all meetings of the Board of Directors a majority of the total number of directors shall constitute a quorum for the transaction of business. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. The act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by the Delaware Law or by the Certificate of Incorporation. Section 9. ORGANIZATION. The Chairman of the Board, if elected, shall act as chairman at all meetings of the Board of Directors. If the Chairman of the Board is not elected or, if elected, is not present, a director chosen by a majority of the directors present shall act as chairman at such meeting of the Board of Directors. Section 10. COMMITTEES. The Board of Directors, by resolution adopted by a majority of the whole Board of Directors, may create one or more other committees and appoint one or more directors to serve on such committee or committees. Each director appointed to serve on any such committee shall serve, unless the resolution designating the respective committee is sooner amended or rescinded by the Board of Directors, until the next annual meeting of the Board of Directors or until their respective successors are designated. The Board of Directors, by resolution adopted by a majority of the whole Board of Directors, may also designate additional directors as alternate members of any committee to serve as members of such committee in the place and stead of any regular member or members thereof who may be unable to attend a meeting or otherwise unavailable -4- to act as a member of such committee. In the absence or disqualification of a member and all alternate members designated to serve in the place and stead of such member, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another director to act at the meeting in the place and stead of such absent or disqualified member. A committee of the Board of Directors may exercise the power and authority of the Board of Directors to the extent specified by the resolution establishing such committee, or the Certificate of Incorporation or these By-laws; PROVIDED, HOWEVER, that no committee may take any action that is expressly required by the Delaware Law or the Certificate of Incorporation or these By-laws to be taken by the Board of Directors and not by a committee thereof. Each committee shall keep a record of its acts and proceedings, which shall form a part of the records of the Corporation in the custody of the Secretary, and all actions of each committee shall be reported to the Board of Directors at the next meeting of the Board. Meetings of committees may be called at any time by the Chairman of the Board, if any, the President or the chairman of the respective committee. A majority of the members of the committee shall constitute a quorum for the transaction of business and, except as expressly limited by this section, the act of a majority of the members present at any meeting at which there is a quorum shall be the act of such committee. Except as expressly provided in this section or in the resolution designating the committee, a majority of the members of any such committee may select its chairman, fix its rules of procedure, fix the time and place of its meetings and specify what notice of meetings, if any, shall be given. Section 11. ACTION WITHOUT MEETINGS. Unless otherwise specifically prohibited by the Certificate of Incorporation of these By-laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or such committee, as the case may be, execute a consent thereto in writing setting forth the action so taken, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or such committee. Section 12. ATTENDANCE BY TELEPHONE. Members of the Board of Directors, or any committee thereof, may participate in and act at any meeting of the Board of Directors, or such committee, as the case may be, through the use of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other. Participation in such meeting shall constitute attendance and presence in person at the meeting of the person or persons so participating. Section 13. COMPENSATION. By resolution of the Board of Directors, irrespective of any personal interest of any of the members, the directors may be paid their reasonable expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum of attendance at meetings or a stated salary as directors. These payments shall not preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. -5- ARTICLE IV OFFICERS Section 1. ENUMERATION. The officers of the Corporation shall be chosen by the Board of Directors and shall include a President, one or more Vice Presidents, a Treasurer and a Secretary. The Board of Directors may also elect a Chairman of the Board, a Chief Financial Officer, a Chief Executive Officer, one or more Assistant Secretaries and Assistant Treasurers, and such other officers and agents as it may deem appropriate. Any number of offices may be held by the same person. Section 2. TERM OF OFFICE. The officers of the Corporation shall be elected at the annual meeting of the Board of Directors and shall hold office until their successors are elected and qualified, or until their earlier death, termination, resignation or removal from office. Any officer or agent of the Corporation may be removed at any time by the Board of Directors, with or without cause. Any vacancy in any office because of death, resignation, termination, removal, disqualification or otherwise, may be filled by the Board of Directors for the unexpired portion of the term. Section 3. CHAIRMAN OF THE BOARD. The Chairman of the Board, when and if elected, shall preside at meetings of the Board of Directors and of stockholders and shall have such other functions, authority and duties as customarily appertain to the office of the Chairman of a business corporation or as may be prescribed by the Board of Directors. The Chairman of the Board, if any, shall be a member of the Board of Directors of the Corporation. Section 4. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer, when and if elected, shall have general supervision, direction and control of the business and affairs of the Corporation, subject to the control of the Board of Directors, and shall have such other functions, authority and duties as customarily appertain to the office of Chief Executive Officer of a business corporation or as may be prescribed by the Board of Directors. Section 5. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall have general supervision, direction and control over the treasury and the finances of the Company, including but not limited to the authority over finance, treasury and accounting personnel and functions of the Company, to act as agent for the Company in respect of its dealings with creditors and stockholders on financial matters, and the authority to negotiate all financial matters of the Company on its behalf, subject to the control of the Board of Directors. The Chief Financial Officer shall have such other functions, authority and duties as customarily appertain to the office of the Chief Financial Officer of a business corporation or as may be prescribed by the Board of Directors. Section 6. PRESIDENT. The President shall be the chief operating officer of the Corporation and shall have such functions, authority and duties as may be prescribed by the Board of Directors. -6- Section 7. VICE PRESIDENT. Each Vice President, if any, shall perform such duties and have such other powers as may from time to time be prescribed by the Board of Directors, the Chairman of the Board, or the President. Section 8. SECRETARY. The Secretary shall: (a) keep a record of all proceedings of the stockholders, the Board of Directors and any committees thereof in one of more books provided for that purpose; (b) give, or cause to be given, all notices that are required by law or these By-laws to be given by the Secretary; (c) be custodian of the corporate records and, if the Corporation has a corporate seal, of the seal of the Corporation; (d) have authority to affix the seal of the Corporation to all instruments the execution of which requires such seal and to attest such affixing of the seal; (e) keep a register of the post office address of each stockholder which shall be furnished to the Secretary by such stockholder; (f) sign, with the Chairman of the Board, President or any Vice President, or any other officer thereunto authorized by the Board of Directors, any certificates for shares of the Corporation, or any deeds, mortgages, bonds, contracts or other instruments which the Board of Directors has authorized to be executed by the signature of more than one officer; (g) have general charge of the stock transfer books of the Corporation; (h) have authority to certify as true and correct, copies of the By-laws, or resolutions of the stockholders, the Board of Directors and committees thereof, and of other documents of the Corporation; and (i) in general, perform the duties incident to the office of secretary and such other duties as from time to time may be prescribed by the Board of Directors, the Chairman of the Board or the President. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation to attest such affixing of the seal. Section 9. TREASURER. The Treasurer shall have the care and custody of the corporate funds, and other valuable effects, including securities, and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and directors, at the regular meetings of the Board of Directors, or whenever they may require it, an account of all his transactions as Treasurer and of the financial condition of the Corporation. If required by the Board of Directors, the Treasurer shall give the Corporation a bond for such term in such sum and with such surety or sureties as shall be satisfactory to the Board for the faithful performance of the duties of his office and for the restoration to the Corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Corporation. Section 10. OTHER OFFICERS AND AGENTS. Any officer or agent who is elected or appointed from time to time by the Board of Directors and whose duties are not specified in these By-laws shall perform such duties and have such powers as may from time to time be prescribed by the Board of Directors, the Chairman of the Board or the President. -7- ARTICLE V CERTIFICATES OF STOCK AND THEIR TRANSFER Section 1. FORM. The shares of the Corporation shall be represented by certificates. Each certificate for shares shall be consecutively numbered or otherwise identified. Certificates of stock in the Corporation shall be signed by or in the name of the Corporation by the Chairman of the Board or the President and by the Secretary of the Corporation. Where a certificate is countersigned by a transfer agent, other than the Corporation or an employee of the Corporation, or by a registrar, the signatures of one or more officer of the Corporation may be facsimiles. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, the certificate may be issued by the Corporation with the same effect as if such officer, transfer agent or registrar were such officer, transfer agent or registrar at the date of its issue. Section 2. TRANSFER. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue a new certificate of stock or uncertificated shares in place of any certificate theretofore issued by the Corporation to the person entitled thereto, cancel the old certificate and record the transaction in its stock transfer books. Section 3. REPLACEMENT. In case of the loss, destruction, mutilation or theft of a certificate for any stock of the Corporation, a new certificate of stock or uncertificated shares in place of any certificate theretofore issued by the Corporation may be issued upon the surrender of the mutilated certificate or, in the case of loss, destruction or theft of a certificate, upon satisfactory proof of such loss, destruction or theft and upon such terms as the Board of Directors may prescribe. The Board of Directors may in its discretion require the owner of the lost, destroyed or stolen certificate, or his legal representative, to give the Corporation a bond, in such sum and in such form and with such surety or sureties as it may direct, to indemnify the Corporation against any claim that may be made against it with respect to the certificate alleged to have been lost, destroyed or stolen. ARTICLE VI INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS Section 1. THIRD PARTY ACTIONS. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative, including all appeals (other than an action, suit or proceeding by or in the right of the Corporation) by reason of the fact that he is or was a director or officer of the Corporation (and the Corporation, in the discretion of the Board of Directors, may so indemnify a person by reason of the fact that he is or was an employee or agent of the Corporation or is or was serving at the request of the Corporation in any other capacity for or on behalf of the Corporation), against expenses (including attorneys' fees), judgments, decrees, fines, penalties, and amounts paid in settlement actually and reasonably incurred by him in connection with -8- such action, suit or proceeding if he acted in good faith and in a manner which he reasonably believed to be in, or not opposed to, the best interests of the Corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful; PROVIDED, HOWEVER, the Corporation shall be required to indemnify an officer or director in connection with an action, suit or proceeding initiated by such person only if such action, suit or proceeding was authorized by the Board of Directors. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith or in a manner which he reasonably believed to be in, or not opposed to, the best interests of the Corporation and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Section 2. ACTIONS BY OR IN THE RIGHT OF THE CORPORATION. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action of suit, including all appeals, by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director or officer of the Corporation (and the Corporation, in the discretion of the Board of Directors, may so indemnify a person by reason of the fact that he is or was an employee or agent of the Corporation or is or was serving at the request of the Corporation in any other capacity for or on behalf of the Corporation), against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been finally adjudged to be liable for negligence or misconduct in the performance of his duty to the Corporation unless and only to the extent that the court in which such action or suit was brought, or any other court of competent jurisdiction, shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as such court shall deem proper. Notwithstanding the foregoing, the Corporation shall be required to indemnify an officer or director in connection with an action, suit or proceeding initiated by such person only if such action, suit or proceeding was authorized by the Board of Directors. Section 3. INDEMNITY IF SUCCESSFUL. To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in SECTION 1 or 2 of this Article, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. Section 4. STANDARD OF CONDUCT. Any indemnification under SECTION 1 and 2 of this Article (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in SECTION 1 or 2, as applicable, of this Article. Such determination shall be made (i) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or -9- (ii) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (iii) by the stockholders. Section 5. EXPENSES. Expenses (including attorneys' fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding or threat thereof shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this Article. Such expenses (including attorneys' fees) incurred by other employees and agents may be so paid upon the receipt of the aforesaid undertaking and such terms and conditions, if any, as the Board of Directors deems appropriate. Section 6. NONEXCLUSIVITY. The indemnification and advancement of expenses provided by, or granted pursuant to, other Sections of this Article shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may now or hereafter be entitled under any law, by-law, agreement, vote of stockholders or directors who are not parties to the action, suit or proceeding or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. Section 7. INSURANCE. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another Corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of the Delaware Law. Section 8. DEFINITIONS. For purposes of this Article, references to "the Corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had the power and authority to indemnify any or all of its directors, officers, employees and agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation in any other capacity, shall stand in the same position under the provisions of this Article with respect to the resulting or surviving corporation as such person would have had with respect to such constituent corporation if its separate existence had continued. For purposes of this Article, references to "other capacities" shall include serving as a trustee or agent for any employee benefit plan; references to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by such director, officer, employee, or agent with respect to any employee benefit plan, its participants, or beneficiaries; and a person who acted in good -10- faith and in a manner he or she reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this Article. Section 9. SEVERABILITY. If any provision hereof is invalid or unenforceable in any jurisdiction, the other provisions hereof shall remain in full force and effect in such jurisdiction, and the remaining provisions hereof shall be liberally construed to effectuate the provisions hereof, and the invalidity of any provision hereof in any jurisdiction shall not affect the validity or enforceability of such provision in any other jurisdiction. Section 10. AMENDMENT. The right to indemnification conferred by this Article shall be deemed to be a contract between the Corporation and each person referred to therein until amended or repealed, but no amendment to or repeal of these provisions shall apply to or have any effect on the right to indemnification of any person with respect to any liability or alleged liability of such person for or with respect to any act or omission of such person occurring prior to such amendment or repeal. ARTICLE VII GENERAL PROVISIONS Section 1. FISCAL YEAR. The fiscal year of the Corporation shall be fixed from time to time by resolution of the Board of Directors. Section 2. CORPORATION SEAL. The corporate seal, if any, of the Corporation shall be in such form as may be approved from time to time by the Board of Directors. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced. Section 3. NOTICES AND MAILING. Except as otherwise provided in the Act, the Certificate of Incorporation or these By-laws, all notices required to be given by any provision of these By-laws shall be deemed to have been given (i) when received, if given in person, (ii) on the date of acknowledgment of receipt, if sent by telex, facsimile or other wire transmission, (iii) one day after delivery, properly addressed, to a reputable courier for same day or overnight delivery or (iv) three (3) days after being deposited, properly addressed, in the U.S. Mail, certified or registered mail, postage prepaid. Section 4. WAIVER OF NOTICE. Wherever any notice is required to be given under the Delaware Law or the provisions of the Certificate of Incorporation or these By-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to notice. -11- Section 5. INTERPRETATION. In these By-laws, unless a clear contrary intention appears, the singular number includes the plural number and VICE VERSA, and reference to either gender includes the other gender. ARTICLE VIII AMENDMENTS These By-laws may be altered, amended or repealed or new By-laws may be adopted by the holders of at least 50% of the total voting power of all shares of stock of the Corporation entitled to vote in the election of directors, considered for the purposes of this Article VIII as one class, at any regular meeting of the stockholders or at any special meeting of the stockholders if notice of such alteration, amendment, repeal or adoption of new By-laws be contained in the notice of such special meeting. -12- EX-10.1 4 EXHIBIT 10.1 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- CREDIT FACILITY AGREEMENT BY AND AMONG CCC INFORMATION SERVICES INC. (AND CERTAIN OF ITS DIRECT AND INDIRECT SUBSIDIARIES) AND THE LENDERS THAT ARE PARTIES HERETO AND SIGNET BANK (AS ADMINISTRATIVE AGENT) Executed as of August 22, 1996 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- TABLE OF CONTENTS ARTICLE 1: THE CREDIT FACILITIES............................................ 1 1.1. Line of Credit Facility............................................. 1 1.1.1. Establishment of Credit Facility.......................... 1 1.1.2. Facility Maturity......................................... 2 1.1.3. Use of Proceeds........................................... 2 1.1.4. Line of Credit Note....................................... 2 1.1.5. Interest.................................................. 2 1.1.5.1. Establishment of Portions..................... 2 1.1.5.2. Interest Rate Determination................... 3 1.1.5.3. Selection of Rate Index....................... 3 1.1.5.4. Applicable Rate Margins....................... 3 1.1.5.5. Calculation of Interest....................... 4 1.1.5.6. Special LIBO Rate Provisions.................. 4 1.1.6. Repayment and Prepayment.................................. 6 1.1.6.1. Periodic Interest Payments.................... 6 1.1.6.2. Principal Payments -- Commitment Reduction.... 6 1.1.6.3. Principal Payments -- Periodic Sweep of Excess Cash Flow.............................. 6 1.1.6.4. At Maturity or Termination.................... 6 1.1.6.5. Prepayments................................... 6 1.1.6.6. Principal Repayment -- Automatic.............. 7 1.1.6.7. Default Interest Payment...................... 7 1.1.6.8. Application of Payments....................... 7 1.1.6.9. Availability For Reborrowing.................. 7 1.2. Term Loan Facility.................................................. 8 1.2.1. Establishment of Credit Facility.......................... 8 1.2.2. Facility Maturity......................................... 8 1.2.3. Use of Proceeds........................................... 8 1.2.4. Term Loan Note............................................ 8 1.2.5. Interest.................................................. 9 1.2.5.1. Intentionally Blank........................... 9 1.2.5.2. Establishment of Portions..................... 9 1.2.5.3. Interest Rate Determination................... 9 1.2.5.4. Selection of Rate Index....................... 9 1.2.5.5. Applicable Rate Margins....................... 10 1.2.5.6. Calculation of Interest....................... 10 -i- 1.2.5.7. Special LIBO Rate Provisions.................. 10 1.2.6. Repayment and Prepayment.................................. 12 1.2.6.1. Periodic Interest Payments.................... 12 1.2.6.2. Principal Payments -- Amortization............ 12 1.2.6.3. Principal Payments -- Periodic Sweep of Excess Cash Flow.............................. 12 1.2.6.4. At Maturity or Termination.................... 12 1.2.6.5. Prepayments................................... 13 1.2.6.6. Default Interest Payment...................... 14 1.2.6.7. Application of Payments....................... 14 1.2.6.8. Availability For Reborrowing.................. 14 1.3. Determination of Commitment Amounts................................. 14 1.3.1. Initial Commitments....................................... 14 1.3.2. Mandatory Commitment Reductions for the Line of Credit Facility.................................................. 14 1.3.3. Voluntary Reduction of Commitment......................... 15 1.4. Advances............................................................ 15 1.4.1. Requesting Advances....................................... 15 1.4.2. Funding Advances.......................................... 15 1.4.3. Automatic Line of Credit Advances......................... 16 1.4.4. Obligation to Advance..................................... 16 1.4.5. Indemnification for Revocation or Failure to Satisfy Conditions................................................ 16 1.5. Payments in General................................................. 16 1.5.1. Manner and Place.......................................... 16 1.5.2. Special Payment Timing Issues............................. 16 1.5.3. Application of Payments................................... 16 1.5.4. Debiting Accounts......................................... 17 1.5.5. Default Interest.......................................... 17 1.5.6. Usury Savings Provision................................... 17 1.6. Release of Security................................................. 17 1.7. Fees and Other Compensation......................................... 17 1.7.1. Commitment Fee............................................ 17 1.7.2. Periodic Facility Fee..................................... 18 1.8. Issuance of Letters of Credit....................................... 18 -ii- ARTICLE 2: CONDITIONS PRECEDENT.............................................. 18 2.1. Closing Conditions.................................................. 18 2.1.1. Compliance................................................ 18 2.1.1.1. Fees and Expenses............................. 18 2.1.1.2. Representations............................... 18 2.1.1.3. No Default.................................... 18 2.1.1.4. No Material Change............................ 18 2.1.2. Documents................................................. 19 2.1.2.1. Credit Agreement.............................. 19 2.1.2.2. Fee Agreement................................. 19 2.1.2.3. Solvency Certificates......................... 19 2.1.2.4. Compliance Certificates....................... 19 2.1.2.5. Opinions of Counsel........................... 19 2.1.2.6. Authorization Documents -- Each Borrower...... 19 2.1.2.7. Other Documents............................... 19 2.2. Conditions to Initial Advance....................................... 19 2.2.1. Compliance................................................ 20 2.2.1.1. Fees and Expenses............................. 20 2.2.1.2. Representations............................... 20 2.2.1.3. No Default.................................... 20 2.2.1.4. No Material Change............................ 20 2.2.2. Documents................................................. 20 2.2.2.1. Amendment to Credit Agreement................. 20 2.2.2.2. Update to Credit Agreement Schedules.......... 20 2.2.2.3. Advance Request............................... 21 2.2.2.4. Promissory Notes.............................. 21 2.2.2.5. Security Agreement and Related Documents...... 21 2.2.2.6. Intellectual Property Security Agreements..... 21 2.2.2.7. Assignment of Material Contracts.............. 21 2.2.2.8. Pledge and Security Agreement (By Top Level Borrower)..................................... 21 2.2.2.9. Pledge and Security Agreement (By Guarantor).. 22 2.2.2.10. Guaranty Agreement............................ 22 2.2.2.11. Insurance..................................... 22 2.2.2.12. Solvency Certificates......................... 22 2.2.2.13. Compliance Certificates....................... 22 -iii- 2.2.2.14. Opinions of Counsel........................... 22 2.2.2.15. Payoff Instructions for Prior Indebtedness.... 23 2.2.2.16. Authorization Documents -- Each Borrower...... 23 2.2.2.17. Authorization Documents -- Guarantor.......... 23 2.2.2.18. Officer's Certificates........................ 23 2.2.2.19. Other Documents............................... 24 2.2.3. Consummation of Guarantor's IPO........................... 24 2.2.4. Satisfaction of Existing Indebtedness..................... 24 2.2.5. Cash Flow Leverage........................................ 25 2.3. Line of Credit Advances (After the Initial Advances)................ 25 2.3.1. Advance Request........................................... 25 2.3.2. Cash Flow Leverage........................................ 25 2.3.3. Other Documents........................................... 25 2.3.4. Compliance................................................ 25 2.3.4.1. Fees and Expenses............................. 25 2.3.4.2. Representations............................... 25 2.3.4.3. No Default.................................... 25 2.3.4.4. No Material Change............................ 26 ARTICLE 3: REPRESENTATIONS AND WARRANTIES.................................... 26 3.1. Organization and Good Standing...................................... 26 3.2. Power and Authority................................................. 26 3.3. Validity and Legal Effect........................................... 26 3.4. No Violation of Laws or Agreements.................................. 26 3.5. Title to Assets; Existing Encumbrances; Intellectual and Real Property............................................................ 27 3.6. Capital Structure and Equity Ownership.............................. 27 3.7. Subsidiaries, Affiliates and Investments............................ 27 3.8. Material Contracts.................................................. 28 3.9. Licenses and Authorizations......................................... 28 3.10. Taxes and Assessments............................................... 28 3.11. Litigation and Legal Proceedings.................................... 28 3.12. Accuracy of Financial Information................................... 29 3.13. Accuracy of Other Information....................................... 29 3.14. Compliance with Laws Generally...................................... 29 3.15. ERISA Compliance.................................................... 29 3.16. Environmental Compliance............................................ 30 3.17. Margin Rule Compliance.............................................. 31 3.18. Fees and Commissions................................................ 31 3.19. Solvency............................................................ 31 -iv- ARTICLE 4: AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . 32 4.1. Financial Covenants and Ratios . . . . . . . . . . . . . . . . 32 4.1.1. Total Charge Coverage Ratio . . . . . . . . . . . . 32 4.1.2. Cash Flow Leverage Ratio . . . . . . . . . . . . . . 32 4.2. Periodic Financial Statements . . . . . . . . . . . . . . . . 33 4.2.1. Monthly Financial Statements . . . . . . . . . . . . 33 4.2.2. Quarterly Financial Statements . . . . . . . . . . . 33 4.2.3. Annual Financial Statements . . . . . . . . . . . . 33 4.3. Other Financial and Specialized Reports. . . . . . . . . . . . 34 4.4. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . 34 4.5. Books and Records . . . . . . . . . . . . . . . . . . . . . . 34 4.6. Existence and Good Standing . . . . . . . . . . . . . . . . . 34 4.7. Deposit Accounts . . . . . . . . . . . . . . . . . . . . . . . 34 4.8. Insurance; Maintenance of Properties; Disaster Contingency . . 35 4.8.1. General Insurance Provisions . . . . . . . . . . . . 35 4.8.2. Disaster Recovery and Contingency Program . . . . . 35 4.9. Loan Purpose . . . . . . . . . . . . . . . . . . . . . . . . . 35 4.10. Litigation; Occurrence of Defaults . . . . . . . . . . . . . . 35 4.11. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 4.12. Management Changes . . . . . . . . . . . . . . . . . . . . . . 36 4.13. Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . 36 4.14. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . 36 4.14.1. General . . . . . . . . . . . . . . . . . . . . . . 36 4.14.2. ERISA . . . . . . . . . . . . . . . . . . . . . . . 36 4.14.3. Environmental . . . . . . . . . . . . . . . . . . . 37 4.15. Further Actions . . . . . . . . . . . . . . . . . . . . . . . 37 4.15.1. Additional Collateral . . . . . . . . . . . . . . . 37 4.15.2. Further Assurances . . . . . . . . . . . . . . . . . 37 4.15.3. Estoppel Certificate . . . . . . . . . . . . . . . . 37 4.15.4. Waivers and Consents . . . . . . . . . . . . . . . . 38 4.15.5. Additional Material Contracts, Licenses and Authorizations . . . . . . . . . . . . . . . . . . 38 4.16. Post Closing Items . . . . . . . . . . . . . . . . . . . . . . 38 4.17. Other Information . . . . . . . . . . . . . . . . . . . . . . 39 -v- ARTICLE 5: NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . 39 5.1. Capital Expenditures . . . . . . . . . . . . . . . . . . . . . 39 5.2. Additional Indebtedness . . . . . . . . . . . . . . . . . . . 40 5.3. Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . 41 5.4. Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 5.5. Liens and Encumbrances; Negative Pledge . . . . . . . . . . . 41 5.6. Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . 43 5.7. Acquisitions and Investments . . . . . . . . . . . . . . . . . 43 5.8. New Ventures; Mergers . . . . . . . . . . . . . . . . . . . . 44 5.9. Transactions with Affiliates . . . . . . . . . . . . . . . . . 44 5.10. Distributions or Dividends . . . . . . . . . . . . . . . . . . 45 5.11. Payment of Subordinated Indebtedness . . . . . . . . . . . . . 45 5.12. Payment of Management Fees . . . . . . . . . . . . . . . . . . 45 5.13. Issuance of Additional Equity . . . . . . . . . . . . . . . . 45 5.14. Removal of Assets . . . . . . . . . . . . . . . . . . . . . . 45 5.15. Modifications to Organic Documents . . . . . . . . . . . . . . 46 5.16. Modifications to Material Relationships and Agreements . . . . 46 5.17. Margin Stock Restrictions; Other Federal Statutes . . . . . . 46 ARTICLE 6: ADDITIONAL COLLATERAL AND RIGHT OF SET OFF . . . . . . . . . . 47 6.1. Additional Collateral . . . . . . . . . . . . . . . . . . . . 47 6.2. Right of Set-Off . . . . . . . . . . . . . . . . . . . . . . . 47 6.3. Additional Rights . . . . . . . . . . . . . . . . . . . . . . 47 ARTICLE 7: DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . 47 7.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . 47 7.1.1. Payment Obligations . . . . . . . . . . . . . . . . 47 7.1.2. Representations and Warranties . . . . . . . . . . . 47 7.1.3. Financial Covenants . . . . . . . . . . . . . . . . 48 7.1.4. Other Covenants in Loan Documents . . . . . . . . . 48 7.1.5. Default Under Other Agreements with Lenders . . . . 48 7.1.6. Default Under Material Agreements with Other Parties . . . . . . . . . . . . . . . . . . . . . 48 7.1.7. Security Interest . . . . . . . . . . . . . . . . . 49 7.1.8. Change of Control . . . . . . . . . . . . . . . . . 49 7.1.9. Government Action . . . . . . . . . . . . . . . . . 49 7.1.10. Insolvency . . . . . . . . . . . . . . . . . . . . . 49 7.1.11. Loss or Revocation of Guaranty . . . . . . . . . . . 49 7.1.12. Additional Liabilities . . . . . . . . . . . . . . . 50 7.1.13. Material Adverse Change . . . . . . . . . . . . . . 50 -vi- 7.2. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 7.2.1. General; Acceleration . . . . . . . . . . . . . . . 50 7.2.2. Other . . . . . . . . . . . . . . . . . . . . . . . 50 ARTICLE 8: THE ADMINISTRATIVE AGENT . . . . . . . . . . . . . . . . . . . 50 8.1. Appointment, Authorization and Grant of Authority . . . . . . 50 8.2. Acceptance of Appointment . . . . . . . . . . . . . . . . . . 51 8.3. Administrative Agent's Relationship with Borrowers . . . . . . 51 8.4. Non-Reliance on Administrative Agent and Other Lenders . . . . 51 8.5. Reliance by Administrative Agent . . . . . . . . . . . . . . . 52 8.6. Delegation of Duties; Additional Reliance by Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 8.7. Acting on Instructions of Lenders . . . . . . . . . . . . . . 52 8.8. Actions Upon Occurrence of Default or Event of Default . . . . 53 8.9. Administrative Agent's Rights as Lender in Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . 53 8.10. Advances By Administrative Agent . . . . . . . . . . . . . . . 53 8.11. Payments to Lenders . . . . . . . . . . . . . . . . . . . . . 54 8.12. Pro-Rata Sharing of Setoff Proceeds . . . . . . . . . . . . . 54 8.13. Limitation on Liability of Administrative Agent . . . . . . . 54 8.14. Indemnification . . . . . . . . . . . . . . . . . . . . . . . 55 8.15. Resignation; Successor Administrative Agent . . . . . . . . . 55 ARTICLE 9: DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 56 9.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 56 9.2. Rules of Construction . . . . . . . . . . . . . . . . . . . . 68 9.2.1. Plural; Gender . . . . . . . . . . . . . . . . . . . 68 9.2.2. Financial and Accounting Terms . . . . . . . . . . . 68 ARTICLE 10: MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 68 10.1. Indemnification, Reliance and Assumption of Risk Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 68 10.2. Assignment; Disclosure of Information to Third Parties . . . . 69 10.3. Binding Effect and Governing Law . . . . . . . . . . . . . . . 70 10.4. No Waiver; Delay . . . . . . . . . . . . . . . . . . . . . . . 70 10.5. Modifications and Amendments . . . . . . . . . . . . . . . . . 71 10.6. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 10.7. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 10.8. Time of Day . . . . . . . . . . . . . . . . . . . . . . . . . 73 10.9. Relationship with Prior Agreements . . . . . . . . . . . . . . 73 10.10. Severability . . . . . . . . . . . . . . . . . . . . . . . . . 73 -vii- 10.11. Termination and Survival . . . . . . . . . . . . . . . . . . . 74 10.12. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . 74 10.13. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 74 10.14. Conflict Provision . . . . . . . . . . . . . . . . . . . . . . 74 10.15. Waiver of Suretyship Defenses . . . . . . . . . . . . . . . . 74 10.16. Waiver of Liability . . . . . . . . . . . . . . . . . . . . . 74 10.17. Forum Selection; Consent to Jurisdiction . . . . . . . . . . . 75 10.18. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . 76 -viii- SCHEDULES AND EXHIBITS: SCHEDULES: - --------- Schedule A List of Borrowers Schedule 3.1 Good Standing / Foreign Qualification Jurisdictions Schedule 3.2 Missing Consents Schedule 3.5 Existing Encumbrances Schedule 3.5A Intellectual Property Schedule 3.5B Real Property Interests Schedule 3.5C Operating Names / Trade Names Schedule 3.6 Capital Structure / Equity Ownership Schedule 3.7 Subsidiaries, Affiliates & Investments Schedule 3.8 Material Contracts Schedule 3.9 Licenses and Authorizations Schedule 3.10 Taxes and Assessments Schedule 3.11 Material Litigation Schedule 3.18 Fees and Commissions Schedule 4.7 Existing Deposit Accounts Schedule 5.2 Permitted Additional Indebtedness Schedule 5.5 Permitted Additional Liens EXHIBITS: - -------- Exhibit 1.4.1 Form of Advance Request Exhibit 4.2.1 Form of Monthly Financial Statements Exhibit 4.2 Form of Periodic Compliance Certificate -ix- CREDIT FACILITY AGREEMENT THIS CREDIT FACILITY AGREEMENT (as defined in Article 9 hereof, along with all other defined terms, this "Agreement") is made and effective as of August 22, 1996, by and among CCC INFORMATION SERVICES INC. ("CCC"), AND EACH DIRECT AND INDIRECT SUBSIDIARY OF CCC (IF ANY) THAT ARE LISTED ON SCHEDULE A HERETO (as more fully defined in Article 9 hereof, CCC and each such Subsidiary are sometimes referred to herein individually as a "Borrower" and collectively as the "Borrowers"), AND EACH FINANCIAL INSTITUTION THAT FROM TIME TO TIME IS A "LENDER" HEREUNDER (as more fully defined in Article 9 hereof, individually a "LENDER"; collectively, the "Lenders"), AND SIGNET BANK (as more fully defined in Article 9 hereof, "Administrative Agent"). R E C I T A L S - - - - - - - - WHEREAS, Borrowers desire and have applied to Lenders for a credit facility (to be administered by the Administrative Agent) consisting of (a) a line of credit arrangement pursuant to which up to $20 million can be borrowed from time to time on a senior secured basis, AND (b) (under certain circumstances and conditions described herein) a term loan credit arrangement pursuant to which up to $15 million can be borrowed on a senior secured bases; AND WHEREAS, Lenders are willing to accommodate the request for credit upon and subject to the terms, conditions and provisions of the Loan Documents; NOW, THEREFORE, in consideration of the covenants and agreements contained in the Loan Documents, and other good and valuable consideration, receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, each Lender and Administrative Agent hereby agree as follows: ARTICLE 1: THE CREDIT FACILITIES 1.1. LINE OF CREDIT FACILITY. 1.1.1. ESTABLISHMENT OF CREDIT FACILITY. Subject to the terms and conditions of and in reliance upon the representations and warranties contained in the Loan Documents, if each of the conditions precedent under Section 2.2 hereof is satisfied (on or before October 31, 1996), THEN each Lender will lend funds to Borrowers on a senior secured basis from time to tome prior to the Line of Credit Maturity Date (as determined in accordance with Section 1.1.2 hereof) in an aggregate amount at any time outstanding not to exceed its Line of Credit Commitment Percentage (on a Pro Rata basis) of the Available Credit Portion (as determined in accordance with Section 1.3 hereof). -1- 1.1.2. FACILITY MATURITY. The Line of Credit Facility will mature on October 1, 2001 (as may be extended from time to time in Lender's sole discretion, "Line of Credit Maturity Date"). 1.1.3. USE OF PROCEEDS. The funds advanced under this Line of Credit Facility may be used exclusively as follows (BUT ONLY to the extent not otherwise advanced for such purpose under Section 1.2.3 hereof): a. To satisfy and refinance the indebtedness owed by CCC to a group of lenders the agent for which is Canadian Imperial Bank of Commerce, AND b. The balance of the Available Credit Portion (if any) to pay (i) for closing costs and fees associated with consummating and documenting the transactions contemplated by this Agreement, AND (ii) for acquisitions of assets and Capital Expenditures otherwise permitted for Borrower under the Loan Documents, AND (iii) for general working capital and other legitimate corporate expenditures (including, without limitation, payment of lawful dividends and distributions permitted under Section 5.10 hereof), AND (iv) for such other purposes as specifically authorized hereunder or in writing by Administrative Agent (in the sole and absolute discretion of the Required Lenders). 1.1.4. LINE OF CREDIT NOTE. The indebtedness under the Line of Credit Facility and the corresponding obligation of each Borrower (jointly and severally) to repay Lenders with interest in accordance with the terms hereof will be evidenced by one or more Line of Credit Notes (each, as amended, restated, replaced, supplemented, extended or renewed hereafter, "Line of Credit Note"; collectively, the "Line of Credit Notes") payable to the order of each Lender in accordance with its Line of Credit Commitment Percentage. The Line of Credit Notes will be due and payable in full on the Line of Credit Maturity Date. The aggregate stated principal amount of the Line of Credit Notes will be the Line of Credit Commitment established as of the Closing Date pursuant to Section 1.3 hereof; PROVIDED, HOWEVER, that the maximum liability under such Line of Credit Notes will be limited at all times to the actual amount of indebtedness (including principal, interest, fees and expenses) then outstanding under the Line of Credit Facility. Each Lender is authorized to note or endorse the date and amount of each Advance and payment under the Line of Credit Facility on a schedule annexed to and constituting a part of its Line of Credit Note. Such notations or endorsements, if made without manifest error, will constitute PRIMA FACIA evidence of the information noted or endorsed on such schedule, but the absence of any such notation or endorsement will not limit or otherwise affect the obligations and liabilities of Borrowers thereunder of hereunder. 1.1.5. INTEREST. Interest under the Line of Credit Facility (and with respect to any other amounts advanced to or on behalf of Borrowers under the Loan Documents) will be determined and imposed in accordance with the following provisions (and, as applicable, Section 1.5.5 hereof and Section 1.5.6 hereof): 1.1.5.1. ESTABLISHMENT OF PORTIONS. for purposes of determining interest, Borrowers may designate and subdivide the aggregate outstanding balance under the Line of -2- Credit Facility (including any other amounts advanced to or on behalf of any Borrower under the Loan Documents) into a maximum of eight (8) Portions (inclusive of the number of Portions permitted under the Term Loan Facility). No Portion may be less than $500,000 (unless it is designated as $0.00), AND all Portions collectively must total the aggregate outstanding balance under the Line of Credit Facility. If there is less than $1,000,000 outstanding under the Line of Credit Facility, then only one Portion will be permitted. 1.1.5.2. INTEREST RATE DETERMINATION. The aggregate outstanding principal balance under each Portion will bear interest (computed daily until paid, whether prior to or after the Line of Credit Maturity Date) at the applicable Rate Index (as determined in accordance with Section 1.1.5.3 hereof) PLUS the applicable Rate Margin (as determined in accordance with Section 1.1.5.4 hereof). If the Prime Rate is the applicable Rate Index for a Portion, the interest rate on such Portion will change when and as the Prime Rate or Rate Margin changes; AND if an Adjusted LIBO Rate is the applicable Rate Index for a Portion, the interest rate on such Portion will be established on the first day of each Interest Period for such Portion and will not change during such Interest Period, except to the extent the Rate Margin changes during the Interest Period or as otherwise permitted under Section 1.1.5.6 hereof. NOTWITHSTANDING THE FOREGOING, the applicable interest rate for the entire outstanding balance under the Line of Credit Facility from the Settlement Date on which the initial Advance under the Line of Credit Facility is made until the first date on which the Rate Index may be changed under Section 1.1.5.3 hereof will be the Prime Rate as of such Settlement Date PLUS a Rate Margin determined as of such Settlement Date in accordance with Section 1.1.5.4 hereof using an amount for Funded Debt as of such Settlement Date (and inclusive of such Advance). 1.1.5.3. SELECTION OF RATE INDEX. The applicable Rate Index for each Portion will be either the Prime Rate or an Adjusted LIBO Rate. The applicable Rate Index for each Portion may be changed (at the election of the Borrowers) as of the first calendar day after the end of the applicable Interest Period for such Portion. At least two (2) Business Days but not more than ten (10) Business Days before any day on which the Rate Index may be changed, Borrowers (through an Authorized Officer) must notify Administrative Agent in writing of (a) the dollar amount of each Portion (if more than one exists) AND (b) the selected Rate Index for each Portion during the subsequent rate period (including, if applicable, the selected length of the Interest Period for balances accruing interest at the Adjusted LIBO Rate). If Administrative Agent does not timely receive such written notification as to any Portion, the Prime Rate will be the applicable Rate Index for the entire outstanding balance of such unspecified Portion during the subsequent rate period. NOTWITHSTANDING THE FOREGOING, with respect to the proceeds of each Advance under the Line of Credit Facility, unless Borrowers otherwise request the Adjusted LIBO Rate at the time of such Advance (and an otherwise unallocated Portion then exists), THEN the Prime Rate will be the applicable Rate Index from the corresponding Settlement Date for such Advance until the next date on which the Rate Index may be changed hereunder. 1.1.5.4. APPLICABLE RATE MARGINS. The Rate Margin applicable to the Line of Credit Facility will be established as of the initial Settlement Date and as of the first calendar day of the first calendar month of each fiscal quarter and will be based upon the Leverage Ratio of (a) Funded Debt as of the date of establishment of such Rate Margin TO (b) OFC (I.E., Operating Cash Flow) for the four consecutive fiscal quarter period ended on the last -3- day of the most recent fiscal quarter reflected on the most recent quarterly financial statements delivered to Administrative Agent in accordance with Section 4.2 hereof, AND will be determined according to the following schedule: Adjusted Prime Rate LIBO Rate Leverage Ratio Margin Margin -------------- ------ ------ LESS THAN 2.0 0.00% 1.50% GREATER THAN OR EQUAL TO 2.0 but LESS THAN 3.0 1.00% 2.00% GREATER THAN OR EQUAL TO 3.0 2.00% 3.00% In determining the amount of Funded Debt as of the date of establishing such Rate Margin, unless Borrowers otherwise provide Administrative Agent with evidence of such amount in a form acceptable to Administrative Agent, THEN Administrative Agent may use and rely on the amount of Funded Debt as reflected on the most recent quarterly financial statements delivered to Administrative Agent in accordance with Section 4.2 hereof. NOTWITHSTANDING THE FOREGOING, if Administrative Agent does not timely receive acceptable quarterly financial statements in accordance with Section 4.2 hereof, THEN Administrative Agent (in its sole and absolute discretion) may deem the applicable Rate Margin to be the highest Rate margin for the applicable Rate Index reflected in the chart above, retroactive to the first calendar day of the then-current fiscal quarter. FURTHER NOTWITHSTANDING THE FOREGOING (or any other provision hereof regarding the timing of establishing the applicable Rate Margin), upon the funding of any Advance after the Closing Date for a purpose set forth in Section 1.1.3 hereof that results in the outstanding balance under the Line of Credit Facility exceeding the outstanding balance as of the most recent change in the Rate Margin by $1,000,000 or more, THEN the applicable Rate Margin hereunder (at the option of the Required Lenders) may be adjusted to reflect the additional amount of Funded Debt thereby outstanding. 1.1.5.5. CALCULATION OF INTEREST. Interest under the Line of Credit Facility will be calculated, accrued, imposed and payable on the basis of a 360-day year for the actual number of days elapsed. Interest will begin to accrue on the outstanding principal amount of the Line of Credit Facility (and on any other amounts advanced to or on behalf of any Borrower under the Loan Documents) on and as of the date such funds are advanced. 1.1.5.6. SPECIAL LIBO RATE PROVISION. The following provisions will apply with respect to the Adjusted LIBO Rate, notwithstanding any other provision hereof: a. CHANGE IN ADJUSTED LIBO RATE. The Adjusted LIBO Rate may be automatically adjusted by any Lender from time to time on a prospective basis to account for any additional or increased cost of maintaining any necessary reserves for Eurodollar deposits (including, without limitation, any increase in the Reserve Percentage) or increased costs due to changes in the applicable law occurring subsequent to the commencement of the then-applicable Adjusted LIBO Rate Interest Period. Such Lender will give Administrative Agent notice of any such determination and adjustment within a reasonable period of time thereafter. Upon receipt of any such notice, Administrative Agent will provide a copy thereof to -4- Borrowers, AND (upon Borrowers' written request through Administrative Agent) such Lender will furnish a statement to Administrative Agent and Borrowers setting forth the basis for adjusting such Adjusted LIBO Rate and the method for determining the amount of such adjustment. A determination by any Lender hereunder will be conclusive absent manifest error. If any Lender provides any such notice of adjustment under this Subsection, THEN Borrowers may elect to change the then-applicable Rate Index (using the same Rate Margin category) to the Prime Rate for any Portion then subject to an adjusted LIBO Rate. Such election to change the Rate Index may be made by providing Administrative Agent written notice thereof at any time within the first 10 Business Days after receipt of the notice of adjustment from such Lender through Administrative Agent (notwithstanding the restriction hereunder limiting such Rate Index changes to certain dates, BUT subject to the requirement to pay actual costs incurred by such Lender as described in Section 1.1.6.5.e hereof). Upon Administrative Agent's receipt of such a written election, the identified Portion will thereupon begin to accrue interest at the Prime Rate plus the Rate Margin (as applicable for the same Leverage Ratio level as was previously applicable for the Adjusted LIBO Rate) for the remainder of the then-current Interest Period for such Portion. NOTWITHSTANDING THE FOREGOING, no Lender shall be entitled to adjust the Adjusted LIBO Rate under this Clause "A" to account for such additional or increased cost pursuant to Section 4.13 hereof. b. UNAVAILABILITY OF EURODOLLAR FUNDS. An Adjusted LIBO Rate will not be available for Portions under the Line of Credit Facility if any Lender at any time prior to the commencement of the relevant Interest Period determines or reasonably believes that (1) Eurodollar deposits equal to the principal amount of such Portion for the applicable Interest Period are unavailable, OR (2) an Adjusted LIBO Rate will not adequately and fairly reflect the cost of maintaining balances under the Line of Credit Facility, OR (3) by reason of circumstances affecting Eurodollar markets, adequate and reasonable means do not then exist for ascertaining an Adjusted LIBO Rate. Such Lender will give Administrative Agent notice of any such event within a reasonable time thereafter. Upon receipt of any such notice, Administrative Agent will provide a copy thereof to Borrowers, AND (upon borrowers' written request through Administrative Agent) such Lender will furnish a statement to Administrative Agent and Borrowers setting forth the basis for such determination or reasonable belief. A determination or belief by any Lender hereunder will be conclusive absent manifest error. c. ILLEGALITY. An Adjusted LIBO Rate will also not be available for the Line of Credit Facility in any Lender at any time determines or reasonably believes that it is unlawful or impossible to fund or maintain sufficient Eurodollar liabilities for the Line of Credit Facility under an Adjusted LIBO Rate. Such Lender will give Administrative Agent notice of any such event within a reasonable time thereafter. Upon receipt of any such notice, Administrative Agent will provide a copy thereof to Borrowers, AND (upon Borrowers' written request through Administrative Agent) such Lender will furnish a statement to Administrative Agent and Borrowers setting forth the basis for such determination or reasonable belief. A determination or belief by any Lender hereunder will be conclusive absent manifest error. -5- d. ALTERNATIVE RATE. During the occurrence of an event contemplated by either Clause "b" of this Subsection or Clause "c" of this Subsection, each Lender's obligation hereunder to fund or maintain balances under an Adjusted LIBO Rate will be suspended, and during such period, the outstanding balances under the Line of Credit Facility will bear interest at the Prime Rate plus the appropriate Rate Margin (determined in accordance with Section 1.1.5.4 hereof). 1.1.6. REPAYMENT AND PREPAYMENT. Each Borrower (jointly and severally) hereby promise to pay to Administrative Agent (for the benefit of Lenders) the aggregate indebtedness under the Line of Credit Facility (and other Loan Document) in accordance with the following provisions: 1.1.6.1. PERIODIC INTEREST PAYMENT. Interest accrued under the Line of Credit Facility will be due and payable monthly in arrears on the first calendar day following the end of each such month and on the first calendar day following the end of each Interest Period for any Portion accruing interest at an Adjusted LIBO Rate, commencing on the first such date after the Closing Date. 1.1.6.2 PRINCIPAL PAYMENTS--COMMITMENT REDUCTION. Intentionally Blank. 1.1.6.3. PRINCIPAL PAYMENTS--PERIODIC SWEEP OF EXCESS CASH FLOW. Intentionally Blank. 1.1.6.4. AT MATURITY OR TERMINATION. The entire aggregate outstanding indebtedness under the Line of Credit Facility (including principal, interest, fees and expenses) is due and payable in its entirety in immediately available funds on the Line of Credit Maturity Date. NOTWITHSTANDING THE FOREGOING, the entire aggregate outstanding indebtedness under the Line of Credit Facility (INCLUDING all principal, interest, fees and expenses) will be due and payable in its entirety in immediately available funds upon any earlier termination of either the Line of Credit Commitment, the Line of Credit Facility or this Agreement, in each instance, in accordance with the terms hereof. 1.1.6.5. PREPAYMENTS. a. VOLUNTARY PREPAYMENTS. The outstanding principal balance under the Line of Credit Facility may be prepaid in whole or in part at any time without premium or penalty, EXCEPT as a provided in Clause "e" of this Subsection. b. MANDATORY PREPAYMENTS--EXCESSIVE BALANCE. If the aggregate outstanding indebtedness under the Line of Credit Facility at any time exceeds the Available Credit Portion (as determined in accordance with Section 1.3 hereof), THEN such excess amount outstanding must be prepaid immediately to Administrative Agent for the Benefit of Lenders (without necessity of notice or demand by Administrative Agent). -6- c. MANDATORY PREPAYMENTS--EQUITY OFFERINGS AND ASSET SALES. If any Borrower engages in an offering of its equity securities or if any Borrower sells, transfers or otherwise disposes of any assets (other than inventory or other assets sold in the ordinary course of business with the proceeds thereof promptly reinvested in similar assets at similar locations) exceeding an aggregate fair market value of $1,000,000 in any transaction or series of related transactions, THEN (unless the Administrative Agent otherwise consents with the concurrence of the Lenders) a prepayment must be immediately made on the outstanding indebtedness under the Line of Credit Facility (UNLESS a balance then exists under the Term Loan Facility and such prepayment is made under Section 1.2.6.5.c hereof). The amount of any such mandatory prepayment will be the higher of the cash proceeds or the cash equivalent of the fair market value of any such equity offering or asset dispositions NET OF (1) reasonable commissions and expenses actually incurred to unrelated third parties in connection with such transactions AND (2)taxes actually due as a direct result of such transactions (as such taxes are estimated and certified to Administrative Agent by a certified public accountant or financial officer of such Borrower, in either instance, acceptable to Administrative Agent). d. IN GENERAL. Any prepayment under the Line of Credit Facility mush include all accrued but unpaid interest under the Line of Credit Facility allocable to the amount prepaid through the date of such prepayment. e. ADJUSTED LIBO RATE PREPAYMENTS. In connection with any prepayment of all or any portion of the outstanding balance under the Line of Credit Facility upon which an Adjusted LIBO Rate is then applicable on any day other than the last day of an Interest Period--whether such prepayment is voluntary, mandatory, by demand, acceleration or otherwise--Borrowers must pay Administrative Agent for the benefit of Lenders all costs, losses and expenses (including funding costs) that any arise or be incurred as a result of or in connection with such prepayment, as such costs, losses and expenses may be calculated by each such Lender. Upon written request to Lenders (through Administrative Agent), each such Lender will furnish a statement setting forth the basis for such calculation. A determination or calculation by any Lender hereunder will be conclusive absent manifest error. 1.1.6.6. PRINCIPAL REPAYMENT--AUTOMATIC. [Intentionally Blank] 1.1.6.7. DEFAULT INTEREST PAYMENT. Any payment hereunder or under the Line of Credit Note during the existence of a Default or an Event of Default hereunder must include the payment of any default interest due pursuant to Section 1.5.5 hereof. 1.1.6.8. APPLICATION OF PAYMENTS. Payments hereunder (including prepayments) will be applied in accordance with Section 1.5.3 hereof. NOTWITHSTANDING THE FOREGOING, payments and prepayments allocable to principal under the Line of Credit Facility will be applied to repay Portions accruing interest at the Prime Rate first and then to repay Portions accruing interest at the Adjusted LIBO Rate (applying first to Portions having an Interest Period with the longest remaining time to maturity). 1.1.6.9. AVAILABILITY FOR REBORROWING. Principal amounts repaid or prepaid under the Line of Credit Facility prior to the Line of Credit Maturity Date will be -7- available for reborrowing pursuant to and in accordance with the terms hereof up to the Available Credit Portion. 1.2 TERM LOAN FACILITY. 1.2.1. ESTABLISHMENT OF CREDIT FACILITY. Subject to the terms and conditions of and in reliance upon the representations and warranties contained in the Loan Documents, if each of the conditions precedent under Section 2.2 hereof is satisfied (on or before October 31, 1996), THEN each Lender will lend funds to Borrowers on a senior secured basis through a single set of Advances on the Closing Date in an aggregate principal amount advanced not to exceed its Term Loan Commitment Percentage (on a Pro Rata basis) of the Term Loan Commitment (as determined in accordance with Section 1.3 hereof). 1.2.2. FACILITY MATURITY. The Term Loan Facility will mature on October 1, 2001 (as may be extended from time to time in Lenders' sole and absolute discretion, "Term Loan Maturity Date"). 1.2.3 USE OF PROCEEDS. The funds advanced under this Term Loan Facility may be used exclusively as follows (BUT ONLY to the extent not otherwise advanced for such purpose under Section 1.1.3 hereof): a. To satisfy and refinance the indebtedness owed by CCC to a group of lenders the agent for which is Canadian Imperial Bank of Commerce, AND b. The balance of the Term Loan Commitment (if any) to pay (i) for closing costs and fees associated with consummating and documenting the transactions contemplated by this Agreement, AND (ii) for such other purposes as specifically authorized hereunder or in writing by Lender (in the sole and absolute discretion of the Required Lenders). 1.2.4. TERM LOAN NOTE. The indebtedness under the Term Loan Facility and the corresponding obligation of each Borrower (jointly and severally) to repay Lenders with interest in accordance with the terms hereof will be evidenced by one or more Term Loan Notes (each, as amended, restated, replaced, supplemented, extended or renewed hereafter, "Term Loan Note"; collectively, the "Term Loan Notes") payable to the order of each Lender in accordance with its Term Loan Commitment Percentage. The Term Loan Notes will be due and payable in full on the Term Loan Maturity Date. The aggregate stated principal amount of the Term Loan Note will be the Term Loan Commitment established as of the Closing Date pursuant to Section 1.3 hereof; PROVIDED, HOWEVER, that the maximum liability under such Term Loan Notes will be limited at all times to the actual amount of indebtedness (including principal, interest, fees and expenses) then outstanding under the Term Loan Facility. Each Lender is authorized to note or endorse the date and amount of each Advance and each payment under the Term Loan Facility on a schedule annexed to and constituting a part of its Term Loan Note. Such notations or endorsements, if made without manifest error, will constitute PRIMA FACIE evidence of the information noted or endorsed on such schedule, but the absence of any such notation or -8- endorsement will not limit or otherwise affect the obligations or liabilities of Borrowers thereunder and hereunder. 1.2.5. INTEREST. Interest under the Term Loan Facility (and with respect to any other amounts advanced to or on behalf of Borrowers under the Loan Documents) will be determined and imposed in accordance with the following provisions (and, as applicable, Section 1.5.5 hereof and Section 1.5.6 hereof): 1.2.5.1. INTENTIONALLY BLANK. 1.2.5.2. ESTABLISHMENT OF PORTIONS. For purposes of determining interest, Borrowers may designate and subdivide the aggregate outstanding balance under the Term Loan Facility (including any other amounts advanced to or on behalf of any Borrower under the Loan Documents) into a maximum of eight (8) Portions (inclusive of the number of Portions permitted under the Line of Credit Facility). No Portion may be less than $500,000 (unless it is designated as $0.00), AND all Portions collectively must total the aggregate outstanding balance under the Term Loan Facility. If there is less than $1,000,000 outstanding under the Term Loan Facility, then only one Portion will be permitted. 1.2.5.3. INTEREST RATE DETERMINATION. The aggregate outstanding principal balance under each Portion will bear interest (computed daily until paid, whether prior to or after the Term Loan Maturity Date) at the applicable Rate Index (as determined in accordance with Section 1.2.5.4 hereof) PLUS the applicable Rate Margin (as determined in accordance with Section 1.2.5.5 hereof). If the Prime Rate is the applicable Rate Index for a Portion, the interest rate on such Portion will change when and as the Prime Rate or Rate Margin changes; AND if an Adjusted LIBO Rate is the applicable Rate Index for a Portion, the interest rate on such Portion will be established on the first day of each Interest Period for such Portion and will not change during such Interest Period, except to the extent the Rate Margin changes during the Interest Period or as otherwise permitted under Section 1.2.5.7 hereof. NOTWITHSTANDING THE FOREGOING, the applicable interest rate for the entire outstanding balance under the Term Loan Facility from the Settlement Date on which the Advance under the Term Loan Facility is made until the first date on which the Rate Index may be changed under Section 1.2.5.4 hereof will be the Prime Rate as of such Settlement Date PLUS a Rate Margin determined as of such Settlement Date in accordance with Section 1.2.5.5 hereof using an amount for Funded Debt as of such Settlement Date (and inclusive of such Advance). 1.2.5.4. SELECTION OF RATE INDEX. The applicable Rate Index for each Portion will be either the Prime Rate or an Adjusted LIBO Rate. The applicable Rate Index for each Portion may be changed (at the election of Borrowers) as of the first calendar day after the end of the applicable Interest Period for such Portion. At least two (2) Business Days but not more than ten (10) Business Days before any day on which the Rate Index may be changed, Borrowers (through an Authorized Officer) must notify Administrative Agent in writing of (a) the dollar amount of each Portion (if more than one exists) AND (b) the selected Rate Index for each Portion during the subsequent rate period (including, if applicable, the selected length of the Interest Period for balances accruing interest at the Adjusted LIBO Rate). If Administrative Agent does not timely receive such written notification as to any Portion, the Prime Rate will be -9- the applicable Rate Index for the entire outstanding balance of such unspecified Portion during the subsequent rate period. NOTWITHSTANDING THE FOREGOING, with respect to the proceeds of each Advance under the Term Loan Facility, (unless Borrowers otherwise request the Adjusted LIBO Rate at the time of such Advance and an otherwise unallocated Portion then exists) the Prime Rate will be the applicable Rate Index from the corresponding Settlement Date for such Advance until the next date on which the Rate Index may be changed hereunder. 1.2.5.5. APPLICABLE RATE MARGINS. The Rate Margin applicable to the Term Loan Facility will be established as of the initial Settlement Date and as of the first calendar day of each fiscal quarter and will be based upon the Leverage Ratio of (a) Funded Debt as of the date of establishment of such Rate Margin TO (b) OFC (I.E., Operating Cash Flow) for the four consecutive fiscal quarter period ending on the last day of the most recent fiscal quarter reflected on the most recent quarterly financial statements delivered to Administrative Agent in accordance with Section 4.2 hereof, AND will be determined according to the following schedule: Adjusted Prime Rate LIBO Rate Leverage Ratio Margin Margin -------------- ---------- --------- LESS THAN 2.0 0.00% 1.50% GREATER THAN OR EQUAL TO 2.0 but LESS THAN 3.0 1.00% 2.00% GREATER THAN OR EQUAL TO 3.0 2.00% 3.00% In determining the amount of Funded Debt as of the date of establishing such Rate Margin, unless Borrowers otherwise provide Administrative Agent with evidence of such amount in a form acceptable to Administrative Agent, THEN Administrative Agent may use and rely on the amount of Funded Debt as reflected on the most recent quarterly financial statements delivered to Administrative Agent in accordance with Section 4.2 hereof. NOTWITHSTANDING THE FOREGOING, if Administrative Agent does not timely receive acceptable quarterly financial statements in accordance with Section 4.2 hereof, THEN Administrative Agent (in its sole and absolute discretion) may deem the applicable Rate Margin to be the highest Rate Margin for the applicable Rate Index reflected in the chart above, retroactive to the first calendar day of the then-current fiscal quarter. 1.2.5.6. CALCULATION OF INTEREST. Interest under the Term Loan Facility will be calculated, accrued, imposed and payable on the basis of a 360-day year for the actual number of days elapsed. Interest will begin to accrue on the outstanding principal amount of the Term Loan Facility (and on any other amounts advanced to or on behalf of any Borrower under the Loan Documents) on and as of the date such funds are advanced. 1.2.5.7. SPECIAL LIBO RATE PROVISIONS. The following provisions will apply with respect to the Adjusted LIBO Rate, notwithstanding any other provision hereof. a. CHANGE IN ADJUSTED LIBO RATE. The Adjusted LIBO Rate may be automatically adjusted by any Lender from time to time on a prospective basis to account -10- for any additional or increased cost of maintaining any necessary reserves for Eurodollar deposits (including, without limitation, any increase in the Reserve Percentage) or increased costs due to changes in the applicable law occurring subsequent to the commencement of the then-applicable Adjusted LIBO Rate Interest Period. Such Lender will give Administrative Agent notice of any such determination and adjustment within a reasonable period of time thereafter. Upon receipt of any such notice, Administrative Agent will provide a copy thereof to Borrowers, AND (upon Borrowers' written request through Administrative Agent) such Lender will furnish a statement to Administrative Agent and Borrowers setting forth the basis for adjusting such Adjusted LIBO Rate and the method for determining the amount of such adjustment. A determination by any Lender hereunder will be conclusive absent manifest error. If any Lender provides any such notice of adjustment under this Subsection, Borrowers may elect to change the then-applicable Rate Index (using the same Rate Margin category) to the Prime Rate for any Portion then subject to an Adjusted LIBO Rate. Such election to change the Rate Index may be made by providing Administrative Agent written notice thereof at any time within the first 10 Business Days after receipt of the notice of adjustment from such Lender through Administrative Agent (notwithstanding the restriction hereunder limiting such Rate Index changes to certain dates, BUT subject to the requirement to pay actual costs incurred by such Lender as described in Section 1.2.6.5.e hereof). Upon Administrative Agent's receipt of such a written election, the identified Portion will thereupon begin to accrue interest at the Prime Rate plus the Rate Margin (as applicable for the same Leverage Ratio level as was previously applicable for the Adjusted LIBO Rate) for the remainder of the then-current Interest Period for such Portion. NOTWITHSTANDING THE FOREGOING, no Lender shall be entitled to adjust the Adjusted LIBO Rate under this Clause "a" to account for such additional or increased costs to the extent that such Lender has already been compensated for such additional or increased cost pursuant to Section 4.13 hereof. b. UNAVAILABILITY OF EURODOLLAR FUNDS. An adjusted LIBO Rate will not be available for Portions under the Term Loan Facility if any Lender at any time prior to the commencement of the relevant Interest Period determines or reasonably believes that (1) Eurodollar deposits equal to the principal amount of such Portion for the applicable Interest Period are unavailable, OR (2) an Adjusted LIBO Rate will not adequately and fairly reflect the cost of maintaining balances under the Term Loan Facility, OR (3) by reason of circumstances affecting Eurodollar markets, adequate and reasonable means do not then exist for ascertaining an Adjusted LIBO Rate. Such Lender will give Administrative Agent notice of any such event within a reasonable time thereafter. Upon receipt of any such notice, Administrative Agent will provide a copy thereof to Borrowers, AND (upon Borrowers' written request through Administrative Agent) such Lender will furnish a statement to Administrative Agent and Borrowers setting forth the basis for such determination or reasonable belief. A determination or belief by any Lender hereunder will be conclusive absent manifest error. c. ILLEGALITY. An Adjusted LIBO Rate will also not be available for the Term Loan Facility if any Lender at any time determines or reasonably believes that it is unlawful or impossible to fund or maintain sufficient Eurodollar liabilities for the Term Loan Facility under an Adjusted LIBO Rate. Such Lender will give Administrative Agent notice of any such event within a reasonable time thereafter. Upon receipt of any such notice, Administrative Agent will provide a copy thereof to Borrowers, AND (upon Borrowers' written -11- request through Administrative Agent) such Lender will furnish a statement to Administrative Agent and Borrowers setting forth the basis for such determination or reasonable belief. A determination or belief by any Lender hereunder will be conclusive absent manifest error. d. ALTERNATIVE RATE. During the occurrence of an event contemplated by either Clause "b" of this Subsection or Clause "c" of this Subsection, each Lender's obligation hereunder to fund or maintain balances under an Adjusted LIBO Rate will be suspended, and during such period, the outstanding balance under the Term Loan Facility will bear interest at the Prime Rate plus the appropriate Rate Margin (determined in accordance with Section 1.2.5.5 hereof). 1.2.6. REPAYMENT AND PREPAYMENT. Each Borrower (jointly and severally) hereby promises to pay to Administrative Agent (for the benefit of Lenders) the aggregate indebtedness under the Term Loan Facility (and other Loan Documents) in accordance with the following provisions: 1.2.6.1. PERIODIC INTEREST PAYMENTS. Interest accrued under the Term Loan Facility will be due and payable monthly in arrears on the first calendar day following the end of each such month and on the first calendar day following the end of each Interest Period for any Portion accruing interest at an Adjusted LIBO Rate, commencing on the first such date after the Closing Date. 1.2.6.2. PRINCIPAL PAYMENTS -- AMORTIZATION. On the first calendar day of the first calendar month of each quarter, a payment of principal under the Term Loan Facility will be due and payable in its entirety in immediately available funds in accordance with the following schedule: Percentage of Outstanding Year Balance Due ---- ------------------------- Closing Date to December 31, 1997 0.0% per quarter (0% per year) January 1, 1998 to December 31, 1998 5.0% per quarter (20% per year) January 1, 1999 to December 31, 1999 5.0% per quarter (20% per year) January 1, 2000 to December 31, 2000 7.5% per quarter (30% per year) January 1, 2001 until Term Loan Maturity Date 7.5% per quarter (30% per year) 1.2.6.3. PRINCIPAL PAYMENTS -- PERIODIC SWEEP OF EXCESS CASH FLOW. [Intentionally Blank] 1.2.6.4. AT MATURITY OR TERMINATION. The entire aggregate outstanding indebtedness under the Term Loan Facility (including principal, interest, fees and expenses) is due and payable in its entirety in immediately available funds on the Term Loan Maturity Date. NOTWITHSTANDING THE FOREGOING, the entire aggregate outstanding indebtedness under the Term Loan Facility (INCLUDING all principal, interest, fees and expenses) will be due and payable in its entirety in immediately available funds upon any earlier termination of either the Term Loan -12- Commitment, the Term Loan Facility or this Agreement, in each instance, in accordance with the terms hereof. 1.2.6.5. PREPAYMENTS. a. VOLUNTARY PREPAYMENTS. At any time, upon prior written notice to Administrative Agent of at least two (2) Business Days, the outstanding principal balance under the Term Loan Facility may be prepaid in whole or in part without premium or penalty, except as provided in Clause "e" of this Subsection. Any voluntary partial prepayment must be in an amount of not less than $100,000 or in an integral multiple thereof. b. MANDATORY PREPAYMENTS -- EXCESSIVE BALANCE. If the aggregate outstanding indebtedness under the Term Loan Facility at any time exceeds the Term Loan Commitment, THEN such excess amount outstanding must be prepaid immediately to Administrative Agent for the benefit of Lenders (without necessity of notice or demand by Administrative Agent). c. MANDATORY PREPAYMENTS -- EQUITY OFFERINGS AND ASSET SALES. If any Borrower engages in an offering of its equity securities or if any Borrowers sells, transfers or otherwise disposes of any assets (other than inventory or other assets sold in the ordinary course of business with the proceeds thereof promptly reinvested in similar assets at similar locations) exceeding an aggregate fair market value of $1,000,000 in any transaction or series of related transactions, THEN (unless the Administrative Agent otherwise consents with the concurrence of the Lenders) a prepayment must be immediately made on the outstanding indebtedness under the Term Loan Facility. The amount of any such mandatory prepayment will be the higher of the cash proceeds or the cash equivalent of the fair market value of any such equity offering or asset dispositions NET OF (1) reasonable commissions and expenses actually incurred to unrelated third parties in connection with such transactions AND (2) taxes actually due as a direct result of such transactions (as such taxes are estimated and certified to Administrative Agent by a certified public accountant or financial officer of such Borrower, in either instance, acceptable to Administrative Agent). d. IN GENERAL. Any prepayments under the Term Loan Facility must include all accrued but unpaid interest under the Term Loan Facility allocable to the amount prepaid through the date of such prepayment. e. ADJUSTED LIBO RATE PREPAYMENTS. In connection with any prepayment of all or any portion of the outstanding balance under the Term Loan Facility upon which an Adjusted LIBO Rate is then applicable on any day other than the last day of an Interest Period -- whether such prepayment is voluntary, mandatory, by demand, acceleration or otherwise -- Borrowers must pay Administrative Agent for the benefit of Lenders all costs, losses and expenses (including funding costs) that may arise or be incurred as a result of or in connection with such prepayment, as such costs, losses and expenses may be calculated by each such Lender. Upon written request to Lenders (through Administrative Agent), each such Lender will furnish a statement setting forth the basis for such calculation. A determination or calculation by any Lender hereunder will be conclusive absent manifest error. -13- 1.2.6.6. DEFAULT INTEREST PAYMENT. Any payment hereunder or under the Term Loan Note during the existence of a Default or an Event of Default hereunder must include the payment of any default interest due pursuant to Section 1.5.5 hereof. 1.2.6.7. APPLICATION OF PAYMENTS. Payments hereunder (including prepayments) will be applied in accordance with Section 1.5.3 hereof. NOTWITHSTANDING THE FOREGOING, (a) payments and prepayments allocable to principal under the Term Loan Facility (other than payments pursuant to Section 1.2.6.2 hereunder) will be applied to installments of principal payable under the Term Loan Facility in the inverse order of maturity, AND (b) payments and prepayments allocable to principal under the Term Loan Facility will be applied to repay Portions accruing interest at the Prime Rate first and then to repay Portions accruing interest at the Adjusted LIBO Rate (applying first to Portions having the Interest Period with the longest remaining time to maturity). 1.2.6.8 AVAILABILITY FOR REBORROWING. Principal amounts repaid or prepaid under the Term Loan Facility prior to the Term Loan Maturity Date WILL NOT be available for reborrowing hereunder. 1.3. DETERMINATION OF COMMITMENT AMOUNTS. 1.3.1. INITIAL COMMITMENTS. Upon the execution of this Agreement and satisfaction of each condition precedent set forth in Section 2.2 hereof (on or before October 31, 1996), the Line of Credit Commitment established hereunder will be $20 million ("Line of Credit Commitment"). Upon the execution of this Agreement and satisfaction of each condition precedent set forth in Section 2.2 hereof (on or before October 31, 1996), the Term Loan Commitment established hereunder will be determined in accordance with the following schedule ("Term Loan Commitment"): Gross Proceeds Term Loan of CCISG IPO Commitment ------------ ---------- LESS THAN $50 million $0.00 GREATER THAN OR EQUAL TO $50 million but LESS THAN $70 million Up to $15 million (at Borrowers' election) GREATER THAN OR EQUAL TO $70 million $0.00 - 1.3.2. MANDATORY COMMITMENT REDUCTIONS FOR THE LINE OF CREDIT FACILITY. NOTWITHSTANDING THE FOREGOING, the maximum amount of credit available at any time under the Line of Credit Facility may not exceed the amount resulting from the following formula: a. The Line of Credit Commitment, b. MINUS the then-aggregate amount of all prepayments relating to equity offerings and asset sales required to have been paid to Lenders since the Closing Date under Section 1.1.6.5.c hereof, AND -14- c. MINUS the aggregate amount of all voluntary commitment reductions requested under Section 1.3.3 hereof, AND d. MINUS the aggregate outstanding amount (at face value) of all letters of credit issued by any Lender on behalf or for the account of any Borrower under Section 1.8 hereof or otherwise. (COLLECTIVELY, the amount resulting from the equation under categories "a" through "d" above is sometimes referred to herein as the "Available Credit Portion".) On the effective date of any such reduction in the amount of available credit, a prepayment must be made to the extent required under Section 1.1.6.5.b hereof. 1.3.3. VOLUNTARY REDUCTION OF COMMITMENT. Upon giving Administrative Agent prior written notice of at least ten (10) Business Days, Borrowers at any time and from time to time may reduce the Line of Credit Commitment in multiples of $100,000. On the effective date of any such reduction, a prepayment must be made to the extent required under Section 1.1.6.5.b hereof. Any such reduction in the Line of Credit Commitment will be permanent, AND such Commitment cannot thereafter be increased without the written consent of Lenders. 1.4 ADVANCES 1.4.1. REQUESTING ADVANCES. To request an Advance (except with respect to the initial Advances on the Closing Date or as otherwise provided in Section 1.4.3 hereof), Borrowers (through an Authorized Officer) must give Administrative Agent written notice of such request (such notice, an "Advance Request"). Each Advance Request, together with certain certifications, must be substantially in the form of Exhibit 1.4.1 hereto or such other forms as Administrative Agent from time to time may reasonably request. Each Advance Request (or verbal notice by telephone with immediate written confirmation in the form of an Advance Request to follow) must be received by Administrative Agent before 11:00 a.m. Eastern Time (a) on the requested Settlement Date with respect to any Advance of funds that will accrue interest at the Prime Rate AND (b) at least two (2) Business Days prior to the requested Settlement Date with respect to any Advance of funds that will accrue interest at an Adjusted LIBO Rate. Unless Administrative Agent otherwise consents, an Advance Request will not be effective if it is delivered to Administrative Agent more than ten (10) Business Days prior to the requested Settlement Date. Each Advance under the Line of Credit Facility pursuant to an Advance Request must be in multiples of $500,000 and not greater than the un-borrowed balance of the Available Credit Portion under Section 1.3. hereof. 1.4.2. FUNDING ADVANCES. Subject to the satisfaction of and compliance with the terms and conditions hereof (including, as applicable, the conditions precedent specified in Section 2.2. hereof), Administrative Agent will make each Lender's Pro Rata Portion of each requested Advance (to the extent such funds are received by Administrative Agent) available (in immediately available funds) by crediting such amount to the Account with Administrative Agent (or by such other means as Administrative Agent may consider reasonable). At the written request and expense of Borrowers, Administrative Agent will wire transfer all or any portion of an Advance in accordance with such written instructions therefor. -15- 1.4.3. AUTOMATIC LINE OF CREDIT ADVANCES. [Intentionally Blank] 1.4.4. OBLIGATION TO ADVANCE. No Lender (nor Administrative Agent) will be obligated to make any Advance under the following circumstances: (a) if the principal amount of such Advance plus the aggregate amount outstanding under the Line of Credit Facility or Term Loan Facility would exceed the Available Credit Portion or Term Loan Commitment (as applicable), OR (b) during the existence of a Default or an Event of Default hereunder, OR (c) if such Advance would cause a Default or Event of Default hereunder, OR (d) after the Line of Credit Maturity Dates, OR (e) prior to satisfaction of each condition precedent under Section 2.2 hereof. 1.4.5. INDEMNIFICATION FOR REVOCATION OR FAILURE TO SATISFY CONDITIONS. Borrowers (jointly and severally) will indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any revocation of any requested Advance or any failure to fulfill the applicable conditions precedent to such advance on or before the requested Settlement Date specified in an Advance Request. Such indemnification will include, without limitation, any loss, cost or expense incurred by reason of the liquidation or reemployment of funds required by such Lender to fund the Advance when such Advance, as a result of such failure, is not made on the requested Settlement Date. Such Lender's calculation of such losses, costs and expenses will be conclusive absent manifest error. NOTWITHSTANDING THE FOREGOING, no Lender shall be entitled to indemnification under this Section with respect to a loss, cost or expense to the extent that such Lender has already been compensated for such loss, cost or expense pursuant to Section 4.13 hereof. 1.5. PAYMENTS IN GENERAL. 1.5.1. MANNER AND PLACE. All payments of principal, interest, fees and other amounts due under the Loan Documents must be received by Administrative Agent in immediately available funds in U.S. dollars on or before Two O'Clock (2:00) p.m. Eastern Time ("ET") on the due date therefor at the principal office of Administrative Agent set forth in Section 10.7 hereof or at such other place as Administrative Agent may designate from time to time. 1.5.2. SPECIAL PAYMENT TIMING ISSUES. Whenever any payment to be made under any Loan Document is due on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time will be included in the computation of interest under such Loan Document. Any funds received by Administrative Agent after 2:00 p.m. ET on any day will be deemed to be received on the next succeeding Business Day. 1.5.3. APPLICATION OF PAYMENTS. All payments and other funds received by Administrative Agent hereunder (for the benefit of Lenders) will be applied by Administrative Agent and each Lender in the following order: (a) first to the payment of any fees and charges due under the Loan Documents, AND (b) then to any obligations for the payment of expenses due under the Loan Documents, AND (c) then to the payment of interest due and owing hereunder, AND (d) then to the principal indebtedness due and owing under the Term Loan Facility and then -16- to principal outstanding under the Line of Credit Facility, AND (e) then to any other interest accrued but not yet owing hereunder, AND (f) then to principal outstanding but not yet due and owing under the Term Loan Facility, AND (g) then to any other indebtedness of any Borrower or other Obligor then due and owing to Administrative Agent of any Lender. 1.5.4. DEBITING ACCOUNTS. [Intentionally Blank] 1.5.5. DEFAULT INTEREST. During the existence of a Default or an Event of Default hereunder, each Borrower (jointly and severally) hereby agrees (to the maximum extent not prohibited by applicable law) to pay to each Lender (upon Administrative Agent's request) interest on any indebtedness outstanding hereunder at the rate of TWO PERCENT (2%) per annum in excess of the rate then otherwise applicable to such indebtedness. NOTWITHSTANDING THE FOREGOING, if the relevant Default is under Section 7.1.10 hereof, THEN such rate increase (to the maximum extent not prohibited by applicable law) will occur automatically without any request by Administrative Agent. 1.5.6. USURY SAVINGS PROVISION. Notwithstanding any provision of any Loan Document to the contrary, no Borrower is or will be required to pay interest at a rate or any fee in an amount prohibited by applicable law. If interest or any fee payable to Administrative Agent or any Lender on any date would be in a prohibited amount, such interest or fee will be automatically reduced to the maximum amount that is not prohibited, and any interest or fee for subsequent periods, to the extent not prohibited, will be increased accordingly until Administrative Agent and each Lender receives payment of the full amount of each such reduction. To the extent that any prohibited amount is actually received by Administrative Agent or any Lender, such amount will be automatically deemed to constitute a repayment of principal indebtedness hereunder. 1.6. RELEASE OF SECURITY. Under (a) repayment to each Lender in full (unconditionally and indefeasibly) of the entire indebtedness hereunder and of all other amounts then due and owing to any Lender or Administrative Agent under the Loan Documents, AND (b) the termination of the Loan Documents (an all Facilities thereunder), AND (c) return and cancellation of any effective letters of credit issued by any Lender or Administrative Agent for the account of any Borrower (or delivery to Administrative Agent (for the ratable benefit of Lenders) of cash or readily marketable collateral in an amount and subject to a pledge agreement that are acceptable to Administrative Agent in its sole discretion), THEN Administrative Agent and each Lender (at the written request and expense of Borrowers) will release the Obligors and the property serving as Collateral hereunder from all the Loan Documents. 1.7. FEES AND OTHER COMPENSATION. 1.7.1. COMMITMENT FEE. On the initial Settlement Date, Borrowers must pay Administrative Agent (for its own account) in immediately available funds a Credit Commitment Fee in the amount provided for pursuant to a separate Fee Agreement with Signet Bank dated as of the Closing Date. -17- 1.7.2. PERIODIC FACILITY FEE. Borrowers will also pay Administrative Agent (for the ratable benefit of Lenders) in immediately available funds a Periodic Facility Fee at the rate of ONE QUARTER OF ONE PERCENT (0.25%) per annum on the average daily unborrowed portion of the Available Credit Portion (adjusting by adding, for purpose of this calculation, any amounts subtracted under Section 1.3.2.d hereof). Such fee will be calculated by Administrative Agent on the basis of a 360-day year and will be due and payable in immediately available funds quarterly in arrears on the first calendar day of each January, April, July and October. 1.8. ISSUANCE OF LETTERS OF CREDIT. With the prior consent the Lenders, Administrative Agent or any Lender (or any Affiliate of Administrative Agent or any Lender) may issue one or more letters of credit on behalf of or for the account of any Borrower. So long as any such letter of credit is effective and outstanding, the face amount thereof will be deducted from the Line of Credit Commitment in determining the Available Credit Portion (under Section 1.3 hereof) at any time, BUT such amounts will be considered "unborrowed" for purposes of calculating the Facility Fee under Section 1.7.2 hereof. ARTICLE 2: CONDITIONS PRECEDENT 2.1. CLOSING CONDITIONS. The obligation of Administrative Agent and each Lender to execute and perform under this Agreement are subject to the following conditions precedent (unless and except to the extent expressly waived by such Lender in its sole and absolute discretion): 2.1.1. COMPLIANCE. 2.1.1.1. FEES AND EXPENSES. Borrowers must have paid (or made acceptable arrangements with such Lender to pay) all reasonable fees, costs, expenses and taxes due and payable hereunder, including without limitation, any fees due and payable pursuant to Section 1.7 hereof and the reasonable fees, costs and expenses of the law firm of Bryan Cave LLP with respect to the preparation, negotiation and execution of the Loan Documents. 2.1.1.2. REPRESENTATIONS. Each, and all, representations and warranties contained in this Agreement (including those in Article 3 hereof) and in each certificate or other writing delivered to such Lender pursuant hereto or thereto on or prior to the Closing Date must be true, correct and complete in all material respects on and as of the Closing Date, EXCEPT for such deviations disclosed in writing and acceptable to such Lender. 2.1.1.3. NO DEFAULT. There must not be any Default or Event of Default hereunder on the Closing Date, AND there must not be any such Default or Event of Default occurring as a result of executing this Agreement, EXCEPT for such defaults disclosed in writing and acceptable to the Required Lenders. 2.1.1.4. NO MATERIAL CHANGE. There must not have been (in such Lender's reasonable opinion) any Material Adverse Change between December 31, 1995 (I.E., -18- the "as of" date for the most recent audited financial statements delivered to such Lender) and the Closing Date. 2.1.2. DOCUMENTS. Such Lender must have received the following documents, agreements and certificates (together with all exhibits and schedules thereto), each duly executed, in form, substance and amount satisfactory to such Lender and, when applicable, recorded or filed in the appropriate public office: 2.1.2.1. CREDIT AGREEMENT. This Agreement. 2.1.2.2. FEE AGREEMENT. The Fee Agreement referenced in Section 1.7.1 hereof. 2.1.2.3. SOLVENCY CERTIFICATES. A certificate from a financial officer of EACH BORROWER (acceptable to such Lender) to such Lender dated as of the Closing Date and certifying as to the solvency of each Borrower immediately prior to and after giving effect to the execution and delivery of this Agreement. 2.1.2.4. COMPLIANCE CERTIFICATES. A certificate from an Authorized Officer of EACH BORROWER to such Lender dated as of the Closing Date and certifying as to compliance with the matters described under Section 2.1.1 hereof. 2.1.2.5. OPINIONS OF COUNSEL. One or more written opinions from legal counsel to Borrowers addressed to such Lender and its counsel and dated as of the Closing Date opining as to such matters under Delaware, Illinois and Virginia law as such Lender may request. 2.1.2.6. AUTHORIZATION DOCUMENTS -- EACH BORROWER. A certificate of an Authorized Officer of EACH BORROWER delivering true, accurate and complete versions of (a) its Articles of Incorporation and all amendments thereto, AND (b) its Bylaws and all amendments thereto, AND (c) the resolutions authorizing its execution, delivery and full performance of the Loan Documents and all other documents, certificates and actions required hereunder or in connection herewith, AND (d) an incumbency certificate setting forth its officers (together with the corresponding signatures), AND (e) a long-form good standing and qualification certificate with respect to each jurisdiction listed on Schedule 3.1 hereto. 2.1.2.7. OTHER DOCUMENTS. Such Lender must have received any additional agreements, documents and certificates as such Lender or its counsel may reasonably request. 2.2. CONDITIONS TO INITIAL ADVANCE. The obligation of Administrative Agent and each Lender to execute and perform the Loan Documents (other than this Agreement), AND to establish the Facilities hereunder, AND to fund the initial Advances hereunder are subject to the following conditions precedent that must be satisfied on or prior to October 31, 1996 (unless and except to the extent expressly waived by Administrative Agent in its sole and absolute discretion, but with the concurrence of the Required Lenders): -19- 2.2.1. COMPLIANCE. 2.2.1.1. FEES AND EXPENSES. Each Borrower must have paid (or made acceptable arrangements with Administrative Agent to pay) all reasonable fees, costs, expenses and taxes due and payable hereunder, including without limitation, any fees due and payable pursuant to Section 1.7 hereof and the reasonable fees, costs and expenses of the law firm of Bryan Cave LLP with respect to the preparation, negotiation and execution of the Loan Documents. 2.2.1.2. REPRESENTATIONS. Each, and all, representations and warranties contained in this Agreement (including those in Article 3 hereof) and in each other Loan Document, certificate or other writing delivered to Administrative Agent pursuant hereto or thereto on or prior to such Settlement Date must be true, correct and complete in all material respects on and as of such Settlement Date, EXCEPT such deviations disclosed in writing and in good faith reasonably acceptable to Administrative Agent (which disclosure will not constitute Lenders' waiver or acceptance thereof). 2.2.1.3. NO DEFAULT. There must not be any Default or Event of Default hereunder or any default under any other Loan Document on such Settlement Date, AND there must not be any such Default or Event of Default occurring as a result of executing or advancing funds under the Loan Documents, EXCEPT for such defaults disclosed in writing and in good faith reasonably acceptable to the Required Lenders (which disclosure will not constitute Lenders' waiver or acceptance thereof). 2.2.1.4. NO MATERIAL CHANGE. There must not have been (in Administrative Agent's reasonable opinion, but with concurrence of the Required Lenders) any Material Adverse Change between the Closing Date and such Settlement Date. 2.2.2. DOCUMENTS. Administrative Agent must have received the following documents, agreements and certificates (together with all exhibits and schedules thereto), each duly executed, in form, substance and amount mutually satisfactory to Administrative Agent and Borrowers and, when applicable, recorded or filed in the appropriate public office: 2.2.2.1. AMENDMENT TO CREDIT AGREEMENT. If Administrative Agent requests, THEN an amendment to this Agreement (or an amendment and restatement hereof) in order to accommodate the inclusion of an additional Lender hereunder (which amendments will focus on incorporating terms and conditions reasonably believed by Administrative Agent to be customary in a multi-lender facility with an agent, and without limitation, will make the obligations of the lenders to advance hereunder several (rather than joint) among such lenders). This Agreement will also be modified to accommodate necessary changes as a result of negotiations of the other Loan Documents described under this Section 2.2 hereof. 2.2.2.2. UPDATE TO CREDIT AGREEMENT SCHEDULES. Unless otherwise updated in connection with an amendment hereto (or an amendment and restatement hereof), THEN a certificate from an appropriate Authorized Officer of EACH BORROWER to Administrative -20- Agent (for the benefit of Lenders) dated as such Settlement Date that updates the Schedules hereto as of such Settlement Date. 2.2.2.3. ADVANCE REQUEST. Administrative Agent must have received an Advance Request under and in accordance with Section 1.4.1 hereof that includes (a) amounts and wiring instructions for each payment requested on such Settlement Date, AND (b) a statement (if applicable) of the requested amount of the Term Loan Commitment (in accordance with Section 1.3.1 hereof). 2.2.2.4. PROMISSORY NOTES. The Line of Credit Note(s) as described in Section 1.1.4 hereof, AND the Term Loan Note(s) as described in Section 1.2.4 hereof. 2.2.2.5. SECURITY AGREEMENT AND RELATED DOCUMENTS. A security agreement by each Borrower in favor of Administrative Agent (for the benefit of Lenders) granting a security interest in all of such grantor's tangible and intangible personal property assets and fixtures (whether now owned or hereafter acquired) and the proceeds and products thereof (other than the Excluded Assets), as collateral security for the indebtedness and obligations hereunder, TOGETHER WITH all necessary financing statements and termination statements (each as filed), waivers and consents, and evidence of any other recordations required by applicable law or by Administrative Agent to perfect such first lien security interests. 2.2.2.6. INTELLECTUAL PROPERTY SECURITY AGREEMENTS. One or more separate intellectual property security agreements by each Borrower in favor of Administrative Agent (for the benefit of Lenders) covering all of such grantor's copyrights, patents, trade names, trademarks, service names, service marks and other intellectual property (including any and all applications and licenses therefor), all as now owned or hereafter acquired and the proceeds and goodwill thereof, TOGETHER WITH all appropriate financing statements and termination statements (each as filed), waivers and consents, and any other documents or recordations required by applicable law or by Administrative Agent to perfect such interests. 2.2.2.7. ASSIGNMENT OF MATERIAL CONTRACTS. One or more separate assignments in favor of Administrative Agent (for the benefit of Lenders) of the Material Contracts of EACH BORROWER (as such contracts are defined in Section 3.8 hereof), TOGETHER WITH all necessary financing statements and termination statements, estoppel certificates, waivers and consents, and any other documents required by applicable law or by Administrative Agent to perfect such interests. With respect to obtaining waivers and consents of third parties requested by Administrative Agent in connection with any such assignment, such Borrower's obligation under this Subsection will be limited to using its best efforts. 2.2.2.8. PLEDGE AND SECURITY AGREEMENT (BY TOP LEVEL BORROWER). A pledge and security agreement executed by CCC in favor of Administrative Agent (for the benefit of Lenders) pledging a first priority interest in (among other things) all of the outstanding capital stock (common and preferred stock; including options and warrants therefor) of each other Borrower owned by CCC, as collateral security for the indebtedness and obligations hereunder and under such pledgor's guaranty in favor of Administrative Agent (for the benefit of -21- Lenders), TOGETHER WITH the certificates therefor, powers executed in blank, and all necessary financing statements. 2.2.2.9. PLEDGE AND SECURITY AGREEMENT (BY GUARANTOR). A pledge and security agreement executed by CCC INFORMATION SERVICES GROUP INC. in favor of Administrative Agent (for the benefit of Lenders) pledging a first priority interest in (among other things) all of the outstanding capital stock (common and preferred stock; including options and warrants therefor) of CCC, as collateral security for the indebtedness and obligations under the Loan Documents, TOGETHER WITH the certificates therefor, powers executed in blank, and all necessary financing statements. 2.2.2.10. GUARANTY AGREEMENT. A guaranty agreement by CCC INFORMATION SERVICES GROUP INC. in favor of Administrative Agent (for the benefit of Lenders) absolutely and unconditionally guaranteeing (a) the payment of all indebtedness hereunder and under the other Loan Documents AND (b) the performance of all other obligations hereunder and under the other Loan Documents. 2.2.2.11. INSURANCE. Current proof of insurance with an indication of loss payee and additional insured endorsements in favor of Administrative Agent (for the benefit of Lenders) with respect to all of the insurance coverages required under Section 4.8 hereof. Such proof of insurance (unless Administrative Agent otherwise agrees) must be indicated pursuant to one or more certificates on (a) an ACORD 27 from (3/93) for property-related insurance coverages AND (b) a modified version of an ACORD 25-S form (3/93) permitting Administrative Agent's reliance and requiring cancellation notification for general liability and all other types of insurance coverages. 2.2.2.12. SOLVENCY CERTIFICATES. A certificate from a financial officer of EACH BORROWER (acceptable to Administrative Agent) to Administrative Agent (for the benefit of Lenders) dated as of such Settlement Date and certifying as to the solvency of each Borrower immediately prior to and after giving effect both (a) to the execution and delivery of the Loan Documents AND (b) to the disbursement of the Advances scheduled to be funded on such Settlement Date. 2.2.2.13. COMPLIANCE CERTIFICATES. A certificate from an Authorized Officer of EACH BORROWER to Administrative Agent (for the benefit of Lenders) dated as of such Settlement Date and certifying as to compliance with the matters described under Section 2.2.1 hereof (with specific reconciled calculations demonstrating compliance with the financial covenants under Section 4.1 hereof as of such Settlement Date). 2.2.2.14. OPINIONS OF COUNSEL. One or more written opinions (or supplements thereto) from legal counsel to Borrower addressed to Administrative Agent and each Lender and dated as of such Settlement Date opining as to such matters (under the laws of the jurisdictions in which any Borrower is organized and the laws of the jurisdictions in which any Borrower has Collateral) as Administrative Agent may reasonably request. -22- 2.2.2.15. PAYOFF INSTRUCTIONS FOR PRIOR INDEBTEDNESS. A letter from Borrowers to Administrative Agent, consistent with the requirements of Section 1.1.3 hereof, Section 1.4 hereof and Section 2.2.1 hereof, instructing Administrative Agent how to disburse the proceeds of the initial Advance, TOGETHER WITH appropriate payoff and release letters. 2.2.2.16. AUTHORIZATION DOCUMENTS -- EACH BORROWER. A certificate of an Authorized Officer of EACH BORROWER delivering true, accurate and complete versions of (a) its Articles of Incorporation and all amendments thereto (but only to the extent not previously delivered in connection with the execution of this Agreement), AND (b) its Bylaws and all amendments thereto (but only to the extent not previously delivered in connection with the execution of this Agreement), AND (c) the resolutions authorizing its execution, delivery and full performance of the Loan Documents and all other documents, certificates and actions required hereunder or in connection herewith, AND (d) an incumbency certificate setting forth its officers (together with the corresponding signatures), AND (e) a long-form good standing and qualification certificate with respect to each jurisdiction listed on Schedule 3.1 hereto. 2.2.2.17. AUTHORIZATION DOCUMENTS -- GUARANTOR. A certificate of an Authorized Officer of GUARANTOR delivering true, accurate and complete versions of (a) its Articles of Incorporation and all amendments thereto, AND (b) its Bylaws and all amendments thereto, AND (c) the resolutions authorizing its execution, delivery and full performance of the Loan Documents and all other documents, certificates and actions required hereunder or in connection herewith, AND (d) an incumbency certificate setting forth its officers (together with the corresponding signatures), AND (e) a long-form good standing and qualification certificate with respect to each jurisdiction listed on Schedule 3.1 hereto. 2.2.2.18. OFFICER'S CERTIFICATES. One or more certificates of an Authorized Officer of EACH BORROWER delivering true, accurate and complete copies of the following documents and agreements (together with all amendments, exhibits and schedules thereto): a. LIEN SEARCHES -- Searches satisfactory to Administrative Agent with respect to consensual liens, tax liens, judgments and bankruptcy, listing respectively (a) all effective UCC financing statements that name each Borrower or Guarantor (including any predecessor thereto and any operating or tradenames thereof) as "debtor" that are filed in the States of Illinois, Texas, California, or any other U.S. jurisdiction in which such debtor currently operates or has had assets at any time within the immediately preceding 12 calendar months (TOGETHER WITH copies of such financing statements), AND (b) all tax liens against any Obligor (or the assets thereof), AND (c) all outstanding judgments against any Obligor (or the assets thereof), AND (d) whether any Obligor has filed bankruptcy within the preceding 5 years. b. FINANCIAL STATEMENTS -- A set of (a) the quarterly financial statements covering Borrowers for fiscal quarter ending March 31, 1996 (or, if prepared, June 30, 1996) (and otherwise consistent with the requirements of Section 4.2 hereof) AND (b) the audited financial statements covering -23- Borrowers for fiscal year ending December 31, 1995 (as otherwise consistent with the requirements of Section 4.2 hereto). c. EQUITYHOLDER AGREEMENTS -- Each shareholder agreement, voting agreement, buy-sell agreement, option, warrant, put, call, right of first refusal, and any other agreement or instrument with conversion rights into equity of any Borrower either (a) between any Borrower AND any holder or prospective holder of any equity interest of any Borrower (including interests convertible into such equity) OR (b) otherwise between any two or more such holders of equity interests. d. EMPLOYMENT AND NON-COMPETE AGREEMENTS -- Each employment agreement between any Borrower AND any director or executive officer of any Borrower, AND each non-compete agreement between any Borrower AND any former owner of any Borrower. e. INTER-AFFILIATE AGREEMENTS. Each written agreement (not otherwise delivered under this Section) between any Borrower AND any Affiliate of any Borrower (other than officers or directors of such Borrower). f. DISASTER RECOVERY AND CONTINGENCY PROGRAM. A description of the currently effective disaster recovery and contingency program of each Borrower, as required to be delivered under Section 4.8 hereof. g. LEASES AS LESSEE -- Each lease between any Borrower AND any owner or landlord of real or personal property used in connection with any Borrower's business for which it has an annual rent obligation in excess of $36,000. h. LEASES AS LESSOR -- Each lease (other than with respect to Customer Equipment) between any Borrower AND any lessee of real or personal property owned or leased by any Borrower, BUT ONLY TO THE EXTENT the lessee thereunder has an annual rent obligation in excess of $12,000. 2.2.2.19. OTHER DOCUMENTS. Administrative Agent must have received any additional agreements, documents and certificates as Administrative Agent, any Lender or counsel to Administrative Agent may reasonably request. 2.2.3. CONSUMMATION OF GUARANTOR'S IPO. Guarantor simultaneously (or prior to such Settlement Date) must consummate and complete an initial public offering of its stock raising at least $50 million in gross proceeds (and having a consolidated market capitalization of at least $200 million). 2.2.4. SATISFACTION OF EXISTING INDEBTEDNESS. CCC simultaneously (or prior hereto) must satisfy its entire indebtedness owed to (and terminate all related rights of and -24- agreements with) a group of lenders the agent for which is Canadian Imperial Bank of Commerce. 2.2.5. CASH FLOW LEVERAGE. As of such Settlement Date, Borrowers must be in compliance with the Leverage Ratio requirement under Section 4.1 hereof using an amount for Funded Debt that is as of such Settlement Date and inclusive of the proposed Advance. 2.3. LINE OF CREDIT ADVANCES (AFTER THE INITIAL ADVANCES). The obligation of Administrative Agent and each Lender to fund any request for an Advance under the Line of Credit Facility is subject to the following conditions precedent (unless and except to the extent expressly waived by Administrative Agent in its sole and absolute discretion, but with the concurrence of the Required Lenders): 2.3.1. ADVANCE REQUEST. Administrative Agent must have received an Advance Request under and in accordance with Section 1.4.1 hereof. 2.3.2. CASH FLOW LEVERAGE. As of the Settlement Date for such Advance (and in addition to any other requirements and covenants hereunder), Borrowers must be in compliance with the Leverage Ratio requirement under Section 4.1 hereof using an amount for Funded Debt that is as of such Settlement Date and inclusive of the proposed Advance. 2.3.3. OTHER DOCUMENTS. Administrative Agent must have received any additional documents, certificates and opinions as Administrative Agent, any Lender or counsel to Administrative Agent may reasonably request, including without limitation, UCC-1 financing statements, fixture filings and leasehold mortgages regarding new locations for other assets of any Borrower. 2.3.4. COMPLIANCE. 2.3.4.1. FEES AND EXPENSES. Borrowers must have paid (or made acceptable arrangements with Administrative Agent to pay) all reasonable fees, costs, expenses and taxes due and payable hereunder, including, without limitation, all reasonable costs and expenses incurred in connection with or as a result of reviewing and funding such Advance Request. 2.3.4.2. REPRESENTATIONS. Each, and all, representations and warranties contained in the Loan Documents (including those in Article 3 hereof) and in each other certificate or other writing delivered to Administrative Agent pursuant hereto or thereto on or prior to the Settlement Date must be true, correct and complete in all material respects on and as of the Settlement Date, EXCEPT for such deviations disclosed in writing and in good faith reasonably acceptable to Administrative Agent (which disclosure will not constitute Lenders' waiver or acceptance thereof). 2.3.4.3. NO DEFAULT. There must not be any Default or Event of Default hereunder or any default under any other Loan Document on the Settlement Date, AND there must not be any such Default or Event of Default occurring as a result of funding such Advance, -25- EXCEPT for such defaults disclosed in writing and in good faith reasonably acceptable to the Required Lenders (which disclosure will not constitute Lenders' waiver or acceptance thereof). 2.3.4.4. NO MATERIAL CHANGE. There must not have been (in Administrative Agent's reasonable opinion, but with concurrence of the Required Lenders) any Material Adverse Change between the Closing Date and the Settlement Date. ARTICLE 3: REPRESENTATIONS AND WARRANTIES Each Borrower, as of the Closing Date and the Settlement Date for each Advance hereunder, hereby represents and warrants as follows: 3.1. ORGANIZATION AND GOOD STANDING. Each Borrower (a) is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, AND (b) has all requisite power and authority (corporate and otherwise) to own its properties and to conduct its business as now conducted and as currently proposed to be conducted, AND (c) is duly qualified to conduct business as a foreign organization and is currently in good standing in each state and jurisdiction in which it conducts business (except where the failure to be so qualified and in good standing could not reasonably be expected to have or cause a Material Adverse Effect). Guarantor is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization. Each state and jurisdiction in which any Borrower and/or Guarantor is organized or is (or should be) qualified to conduct business is listed on Schedule 3.1 hereto (except where the failure to be so qualified and in good standing could not reasonably be expected to have or cause a Material Adverse Effect). 3.2. POWER AND AUTHORITY. Each Borrower has all requisite power and authority under applicable law and under its Organic Documents, Authorizations and Licenses to execute, deliver and perform the obligations under applicable law to execute, deliver and perform the obligations under the Loan Documents to which it is a party. Except as disclosed on Schedule 3.2 hereto, all actions, waivers and consents (corporate, regulatory and otherwise) necessary or appropriate for each Borrower and Guarantor to execute, deliver and perform the Loan Documents to which it is a party have been taken and/or received. 3.3. VALIDITY AND LEGAL EFFECT. This Agreement constitutes, and the other Loan Documents to which any Borrower or Guarantor is a party constitute (or will constitute when executed and delivered), the legal, valid and binding obligations of Borrowers and Guarantor (jointly and severally) enforceable against each in accordance with the terms thereof, except to the extent enforceability thereof is limited by applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally. 3.4. NO VIOLATION OF LAWS OR AGREEMENTS. The execution, delivery and performance of the Loan Documents (a) will not violate or contravene any material provision of any material law, rule, regulation, administrative order or judicial decree (federal, state or local), AND (b) will not violate or contravene any provision of the Organic Documents of any Borrower or -26- Guarantor, AND (c) will not result in any material breach or violation of (or constitute a material default under) any agreement or instrument by which any Borrower or Guarantor or any of its property are bound the breach or violation of which could reasonably be expected to have or cause a Material Adverse Effect, AND (d) will not result in or require the creation of any Lien (other than pursuant to or as permitted by the Loan Documents) upon or with respect to any properties of any Borrower, whether such properties are now owned or hereafter acquired. 3.5. TITLE TO ASSETS; EXISTING ENCUMBRANCES; INTELLECTUAL AND REAL PROPERTY. Each Borrower (a) has good and marketable title to all of its owned real and personal property assets that are essential and required in conducting its operations or that otherwise have a fair market value in excess of $25,000, AND (b) has the right to possess and use all of its leased or licensed real and personal property assets that are essential and required in conducting its operations or that otherwise have a fair market value in excess of $25,000. Guarantor has good and marketable title to all of the equity of CCC, AND CCC has good and marketable title to all of the equity of each other Borrower (EXCEPT as disclosed on Schedule 3.6 hereto). All such property interests are free and clear of any Liens, EXCEPT for Permitted Liens (as defined in Section 5.5 hereof) and Liens described on Schedule 3.5 hereto. Schedule 3.5A hereto lists each trademark, service mark, copyright, patent, database, customized application software and systems integration software, trade secret and other intellectual property owned, licensed, leased, controlled or applied for by any Borrower, TOGETHER WITH relevant identifying information with respect to such intellectual property describing, among other things, the date of creation and the method of protection against adverse claims. Schedule 3.5B hereto lists each real property interest owned, leased or otherwise used by any Borrower, TOGETHER WITH relevant identifying information describing, among other things, the location and use of each such real property interest, whether such interest is owned or leased, and the estimated appraised value thereof. Each such property and asset that is used or useful in connection with any Borrower's business or operations is in good order and repair (ordinary wear and tear excepted) and is fully covered by the insurance required under Section 4.8 hereof. Each such property and asset owned by any Borrower that is used or useful in connection with any Borrower's business or operations is titled in the current legal name of such Borrower. Schedule 3.5C hereto identifies each legal, operating and trade name that any Borrower has used (or permitted the filing of a UCC financing statement under) at any time during the twelve (12) consecutive calendar years immediately preceding the Closing Date. 3.6. CAPITAL STRUCTURE AND EQUITY OWNERSHIP. Schedule 3.6 hereto accurately and completely discloses (a) the number of shares and classes of equity ownership rights and interests of each Borrower (whether existing as common or preferred stock, or warrants, options or other instruments convertible into such equity), AND (b) the ownership thereof. Schedule 3.6 hereto also accurately and completely discloses (a) the number of shares and classes of equity ownership rights and interests of Guarantor (whether existing as common or preferred stock, or warrants, options or other instruments convertible into such equity), AND (b) the ownership thereof (except with respect to the new shares of Guarantor issued in connection with its IPO). All such shares and interests are validly existing, fully paid and non-assessable. 3.7. SUBSIDIARIES, AFFILIATES AND INVESTMENTS. Schedule 3.7 hereto accurately and completely discloses (a) each Subsidiary and Affiliate of each Borrower (other than its officers -27- and directors) AND (b) each investment in or loan to any other Person by any Borrower (to the extent that such investment or loan exceeds $50,000). 3.8. MATERIAL CONTRACTS. Schedule 3.8 hereto accurately and completely discloses each material contract (as defined below) of each Borrower and indicates (or as of and after the initial Settlement Date will indicate) any stated restrictions on assignments thereof. Subsection "a" of Schedule 3.8 hereto lists those material contracts of each Borrower that Administrative Agent and such Borrower have mutually agreed in good faith to be required and essential in the operation of such Borrower, AND Subsection "b" of Schedule 3.8 hereto lists all other material contracts. No Borrower has committed any unwaived breach or default under any material contract (whether or not listed on Schedule 3.8 hereto), AND after due inquiry and investigation, no Borrower has any knowledge or reason to believe that any other party to any such material contract (whether or not listed on Schedule 3.8 hereto) has or might have committed any unwaived breach or default thereof. For purposes of this Section 3.8 hereof, a "material contract" of a Borrower includes the following types of agreements to which such Borrower is a party: (1) any contract (other than customer contracts) either with annual compensation, consideration or payments in excess of $400,000 OR with aggregate compensation, consideration or payments in excess of $800,000, AND (2) any lease of real estate or office space from which CCC conducts its primary business operations, AND (3) any other agreement or contract the loss or breach of which could reasonably be expected to have or cause a Material Adverse Effect. 3.9. LICENSES AND AUTHORIZATIONS. Each Borrower possesses all Licenses and other Authorizations necessary or required in the conduct of its businesses and/or the operation of its properties. Each material Authorization is valid, binding and enforceable on, against and by such Borrower. Each material Authorization is subsisting without any defaults thereunder or enforceable adverse limitations thereon, AND (to the best of each Borrower's knowledge, after reasonable inquiry) no material Authorization is subject to any proceedings or claims opposing the issuance, renewal, development or use thereof or contesting the validity thereof. Schedule 3.9 hereto accurately and completely lists each material Authorization of each Borrower, TOGETHER WITH relevant identifying information describing such Authorizations. 3.10. TAXES AND ASSESSMENTS. Except as disclosed on Schedule 3.10 hereto, each Borrower has timely filed all required tax returns and reports (federal, state and local) or has properly and timely filed for extensions of the time for the filing thereof, EXCEPT to the extent that the failure to so timely file could not reasonably be expected to have or cause a Material Adverse Effect. No Borrower has knowledge of any deficiency, penalty or additional assessment due or appropriate in connection with any such returns or reports. All taxes (federal, state and local) imposed upon any Borrower or any of its properties, operations or income have been paid and discharged prior to the date when any interest or penalty would accrue for the nonpayment thereof, EXCEPT for those taxes (a) being contested in good faith by appropriate proceedings diligently prosecuted and with adequate reserves reflected on the financial statements in accordance with GAAP (all as also disclosed on Schedule 3.10 hereto) OR (b) as to which the failure to pay could not reasonably be expected to have or cause a Material Adverse Effect. 3.11. LITIGATION AND LEGAL PROCEEDINGS. Except as disclosed on Schedule 3.11 hereto, there is no litigation, claim, investigation, administrative proceeding, labor controversy or -28- similar action that is pending or, to the best of each Borrower's knowledge and information after due inquiry, threatened against any Borrower or its properties that in each instance, if adversely resolved, could reasonably be expected to have or cause a Material Adverse Effect. 3.12. ACCURACY OF FINANCIAL INFORMATION. All financial statements previously furnished to Administrative Agent or any Lender concerning the financial condition and operations of any Borrower for periods as of and after January 1, 1995 (a) have been prepared in accordance with GAAP consistently applied, AND (b) fairly present the financial condition of the organization covered thereby as of the dates and for the periods covered thereby. In addition, all written information previously furnished to Administrative Agent or any Lender concerning the then-current financial condition and past operations of any Borrower are true, accurate and complete in all material respects. 3.13. ACCURACY OF OTHER INFORMATION. All written information contained in any application, schedule, report, certificate, or any other document furnished to Administrative Agent or any Lender by any Borrower or Guarantor in connection with the Loan Documents is in all material respects true, accurate and complete, AND no such Person has omitted to state therein (or failed to include in any such document) any material fact or any fact necessary to make such information not misleading. All written projections furnished to Administrative Agent or any Lender by any Borrower or any other Person on behalf of any Borrower have been prepared in good faith based upon estimates and assumptions believed by such Borrower to be reasonable at the time made, making use of such information as was available at the date such projection was made. 3.14. COMPLIANCE WITH LAWS GENERALLY. Each Borrower is in compliance in all material respects with all laws, rules, regulations, administrative orders and judicial decrees (federal, state, local and otherwise) applicable to it, its operations and its properties the breach or violation of which could reasonably be expected to have or cause a Material Adverse Effect. 3.15. ERISA COMPLIANCE. Each Borrower is in compliance in all respects with all applicable provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and all rules, regulations and orders implementing ERISA, EXCEPT to the extent that the failure to be in such compliance could not reasonably be expected to have or cause a Material Adverse Effect. 3.15.1. Neither any Borrower nor any ERISA Affiliate thereof maintains or contributes to (or has maintained or contributed to) any multiemployer plan (as defined in Section 4001 of ERISA) under which any Borrower or any ERISA Affiliate thereof could reasonably be expected to have any withdrawal liability. 3.15.2. Neither any Borrower nor any ERISA Affiliate thereof sponsors or maintains any defined benefit pension plan under which there is an accumulated funding deficiency within the meaning of Section 412 of the Code, whether or not waived. 3.15.3. The liability for accrued benefits under each defined benefit pension plan that is sponsored or maintained by any Borrower or any ERISA Affiliate thereof (determined on -29- the basis of the actuarial assumptions utilized by the PBGC) does not exceed the aggregate fair market value of the assets under each such defined benefit pension plan. 3.15.4. The aggregate liability of each Borrower and each ERISA Affiliate thereof arising out of or relating to a failure of any employee benefit plan within the meaning of Section 3(2) of ERISA to comply with provisions of ERISA or the Code will not have a Material Adverse Effect. 3.15.5. There does not exist any unfunded liability (determined on the basis of actuarial assumptions utilized by the actuary for the plan in preparing the most recent annual report) of any Borrower or any ERISA Affiliate thereof under any plan, program or arrangement providing post-retirement, life or health benefits. 3.15.6. No Reportable Event and no Prohibited Transaction (as defined in ERISA) has occurred or is occurring with respect to any plan with which any Borrower is associated to the extent that such event could reasonably be expected to have or cause a Material Adverse Effect. 3.16. ENVIRONMENT COMPLIANCE. 3.16.1. Each Borrower has received all permits and filed all notifications necessary under and is otherwise in compliance in all respects (EXCEPT to the extent that the failure to obtain such permit, file such notification or be in such compliance could not reasonably be expected to have or cause a Material Adverse Effect) with all applicable federal, state and local laws, rules, ordinances and regulations governing the control, removal, storage, transportation, spill, release or discharge of hazardous or toxic wastes, substances and petroleum products, INCLUDING, WITHOUT LIMITATION, as provided in the provisions of (a) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendment and Reauthorization Act of 1986, AND (b) the Solid Waste Disposal Act, AND (c) the Clean Water Act, AND (d) the Clean Air Act, AND (e) the Hazardous Materials Transportation Act, AND (f) the Resource Conservation and Recovery Act of 1976, AND (g) the Federal Water Pollution Control Act Amendments of 1972 (all of the foregoing enumerated and nonenumerated statutes, regulations, rules and ordinances, all as amended from time to time, collectively, the "Environmental Control Statutes"). 3.16.2. No Borrower has given any written or oral notice to the Environmental Protection Agency ("EPA") or any state or local agency with regard to any actual or imminently threatened removal, storage, transportation, spill, release or discharge of hazardous or toxic wastes, substances or petroleum products either (a) on properties owned or leased by such Borrower OR (b) otherwise in connection with the conduct of its business and operations. 3.16.3. No Borrower has received notice that it is potentially responsible for costs of clean-up of any actual or imminently threatened spill, release or discharge of hazardous or toxic wastes or substances or petroleum products pursuant to any Environmental Control Statute. -30- 3.17. MARGIN RULE COMPLIANCE. No Borrower owns or has any present intention of acquiring any "Margin Stock" within the meaning of the following Margin Regulations of the FRB: Regulation G at 12 C.F.R. Pt. 207, AND Regulation T at 12 C.F.R. Pt. 220, AND Regulation U at 12 C.F.R. Pt. 221, AND Regulation X at 12 C.F.R. Pt. 224. The credit extended under this Agreement does not constitute "Purpose Credit" within the meaning of the FRB's Margin Regulations. 3.18. FEES AND COMMISSIONS. Except as disclosed on Schedule 3.18 hereto or as required by Section 1.7 hereof, no Borrower owes any fees or commissions of any kind in connection with this Agreement, AND no Borrower knows of any claim (or any basis for any claim) for any fees or commissions in connection with this Agreement. 3.19. SOLVENCY. Immediately prior to and upon the execution of this Agreement and the funding of each Advance hereunder, CCC (independently) and all Borrowers (as a whole, including CCC) was, is and will be solvent such that: 3.19.1 The fair saleable value of its or their assets (including, without limitation, the fair saleable value of its or their goodwill and other intangible property) is greater than the total amount of its or their liabilities, including without limitation, all contingent liabilities; and 3.19.2 The present fair saleable value of its or their assets (including, without limitation, the fair saleable value of its or their goodwill and other intangible property) is not less than the amount that will be required to pay the probable liability on its or their debts as such debts become absolute and matured; and 3.19.3 It or they will be able to realize upon its or their assets and will have sufficient cash flow from operations to enable it or them to pay its or their debts and other liabilities, contingent obligations and other commitments as such debts, obligations, liabilities and commitments mature in the normal and ordinary course of business; and 3.19.4 The sum of its or their debts is not greater than all of its or their property at a fair valuation (including, without limitation, the fair valuation of its goodwill and other intangible property). Neither CCC nor Borrowers (as a whole, including CCC) intends to (or believes that it or they will) incur debts or liabilities beyond its or their ability to pay such debts and liabilities as such debts and liabilities become due and mature. No Borrower is engaged in a business or transaction, or about to engage in a business or transaction, for which the property of CCC or of all Borrowers would constitute unreasonably small capital or assets after giving due consideration to the prevailing practice and industry in which it or they are engaged. No Borrower has incurred any obligations under the Loan Documents or has made any conveyance pursuant hereto or in connection herewith with the actual intent to hinder, delay or defraud present or future creditors of it or any of its Affiliates. For purposes of this Section, in computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual mature liability. -31- ARTICLE 4: AFFIRMATIVE COVENANTS Each Borrower hereby covenants and agrees that, so long as any indebtedness remains outstanding hereunder, each Borrower will comply with the following affirmative covenants: 4.1. FINANCIAL COVENANTS AND RATIOS. As of the end of each fiscal quarter, Borrowers (on a consolidated basis, including consolidated joint ventures) will satisfy and comply with each of the following financial ratios and characteristics, each of which will be determined using GAAP consistently applied, except as otherwise expressly provided: 4.1.1. TOTAL CHARGE COVERAGE RATIO. A ratio of OCF TO Total Charges of NOT LESS THAN the following: a. 1.10-to-1.0, from the Closing Date through September 30, 1996; and b. 1.15-to-1.0, from October 1, 1996 through December 31, 1996; and c. 1.20-to-1.0, from January 1, 1997 through June 30, 1997; and d. 1.25-to-1.0, after June 30, 1997. 4.1.2. CASH FLOW LEVERAGE RATIO. A ratio of Funded Debt TO OCF of NOT MORE THAN the following: a. If the Term Loan Commitment determined pursuant to Section 1.3.1 hereof as of the first Settlement Date hereunder (and the initial Advance of funds hereunder) is $0.00, THEN: (1) 3.50-to-1.0, from the Closing Date through December 31, 1996; and (2) 3.00-to-1.0, from January 1, 1997 through December 31, 1997; and (3) 2.50-to-1.0, from January 1, 1998 through December 31, 1999; and (4) 2.00-to-1.0, after December 31, 1999; OR b. If the Term Loan Commitment determined pursuant to Section 1.3.1 hereof as of the first Settlement Date hereunder (and the initial Advance of funds hereunder) is greater than $0.00, THEN: -32- (1) 2.50-to-1.0, from the Closing Date through December 31, 1997; and (2) 2.00-to-1.0, after December 31, 1997. 4.2. PERIODIC FINANCIAL STATEMENTS. 4.2.1. MONTHLY FINANCIAL STATEMENTS. Within forty-five (45) calendar days of the end of each calendar month (or, if finalized sooner, then within 5 Business Days of finalizing such financial statements), Borrowers must prepare and deliver to each Lender and Administrative Agent a complete set of unaudited consolidated internal monthly financial statements similar in form and content with the form of monthly financial statements attached as Exhibit 4.2.1 hereto (which form may be revised by Borrowers from time to time to reflect changes made to the form of monthly financial reporting provided by Borrowers to the executives and directors of CCC Information Services Group, Inc.). TOGETHER WITH the monthly financial statements, each Lender and Administrative Agent must also receive a certificate executed by a financial officer of CCC as is acceptable to Administrative Agent stating that the financial statements fairly present the financial condition of each Borrower as of the date thereof and for the periods covered thereby. 4.2.2. QUARTERLY FINANCIAL STATEMENTS. Within forty-five (45) calendar days of the end of each fiscal quarter, Borrowers must prepare and deliver to each Lender and Administrative Agent unaudited quarterly consolidating financial statements. Such financial statements must include, without limitation, a balance sheet and an income statement (with appropriate external notes and schedules, if prepared). Such financial statements must be prepared in accordance with GAAP consistently applied (except as approved by Administrative Agent in its sole and absolute discretion). TOGETHER WITH the quarterly financial statements, each Lender and Administrative Agent must also receive a certificate executed by the President, the Chief Financial Officer, the Treasurer or such other senior executive officer of CCC as is acceptable to Administrative Agent (a) stating that the financial statements fairly present the financial condition of each Borrower as of the date thereof and for the periods covered thereby, AND (b) providing a reconciled calculation demonstrating compliance with each financial covenant and ratio under Section 4.1 hereof (using the form attached as Exhibit 4.2 hereto), AND (c) calculating, as of the end of such fiscal period, the then-current amount for the Available Credit Portion and the year-to-date amounts under Sections 5.7(e) and 5.10(a) hereof, AND (d) certifying that as of the date of such certificate there is not any existing Default or Event of Default. 4.2.3. ANNUAL FINANCIAL STATEMENTS. Within one hundred and twenty (120) calendar days after the close of each fiscal year, Borrowers must prepare and deliver to each Lender and Administrative Agent a complete set of audited annual consolidated financial statements of Guarantor (with accompanying notes and consolidating schedules). Such financial statements (a) must include the types of financial statements and information required on a quarterly basis under this Section 4.2 hereof as well as a cash flow statement and a reconciliation of consolidated net worth and capital accounts, AND (b) must be prepared in accordance with GAAP consistently applied, AND (c) must be certified without qualification by an independent certified public accounting firm satisfactory to Administrative Agent. TOGETHER WITH the annual -33- financial statements, each Lender and Administrative Agent must also receive all related management letters prepared by such accountants and an audit report or opinion signed by such accountants stating that the financial statements fairly present the consolidated financial condition of Guarantor as of the date thereof and for the periods covered thereby. 4.3. OTHER FINANCIAL AND SPECIALIZED REPORTS. 4.3.1. FINANCIAL FORECASTS. Within 15 Business Days of completing or materially revising any periodic budgets or financial forecasts, Borrowers must deliver a complete copy thereof to each Lender and Administrative Agent. 4.3.2. SEC FILINGS BY GUARANTOR. Within 15 Business Days of the date that Guarantor makes any filing with the Securities Exchange Commission (whether on Form 8-K, Form 10-K, Form 10-Q, or otherwise), Borrowers must deliver a complete copy thereof to each Lender and Administrative Agent. 4.4. FISCAL YEAR. CCC will maintain a fiscal year that has a December 31st year end. 4.5. BOOKS AND RECORDS. Each Borrower (a) will keep and maintain satisfactory and adequate books and records of account in which entries are made in accordance with GAAP AND (b) will make or cause the same to be made available to each Lender and Administrative Agent (or agents or nominees thereof) at any reasonable time upon reasonable notice for inspection and to make extracts therefrom. 4.6. EXISTENCE AND GOOD STANDING. Each Borrower will preserve and maintain (a) its existence as a corporation under the laws of its jurisdiction of organization, AND (b) its good standing in all jurisdictions where it conducts business, AND (c) the validity of all its Authorizations and Licenses required in the conduct of its businesses (EXCEPT, with respect to Clause "c", to the extent that the failure to preserve and maintain could not reasonably be expected to have or cause a Material Adverse Effect). 4.7. DEPOSIT ACCOUNTS. Each Borrower will maintain all of its operating and deposit accounts at financial institutions THAT are federally insured depository institutions rated as "well capitalized" by their primary federal regulators. All such accounts (and the balances therein) shall reside in the United States of America, OTHER THAN accounts established in the ordinary course of business for collection purposes in foreign countries and operating accounts established in the ordinary course of business used for foreign operations as to which the balances therein in the aggregate among all such collection and operating accounts does not at any time exceed $500,000 for any five (5) consecutive Business Days. Within twenty (20) calendar days of opening or acquiring any new such account, Borrowers must provide Administrative Agent with written notice of the institution's name and location and the account name and number with respect to each such account. The institution's name and location and the account name and number for each such account currently in existence, as well as an approximate current balance (I.E., a current balance at any time within the preceding thirty (30) calendar days), are listed on Schedule 4.7 hereto. -34- 4.8 INSURANCE; MAINTENANCE OF PROPERTIES; DISASTER CONTINGENCY. 4.8.1. GENERAL INSURANCE PROVISIONS. Each Borrower will keep, maintain and preserve all of its property and assets in good order and repair (ordinary wear and tear excepted). Such property must be fully covered by insurance with reputable and financially sound insurance companies (reasonably acceptable to Administrative Agent). Such insurance must insure against such hazards in such amounts and with such deductibles as is customary in the relevant industry (and as reasonably acceptable to Administrative Agent). Each such policy must name Administrative Agent (for the benefit of Lenders) as loss payee and as additional insured. Each such policy must also require the insurer to furnish Administrative Agent with written notice at least 25 calendar days prior to any termination of coverage and must provide Administrative Agent (on behalf of Lenders) with the right (but not the obligation) to cure any non-payment of premium. Upon Administrative Agent's request, each Borrower will furnish Administrative Agent with proof of such insurance (in form and substance acceptable to Administrative Agent) and will cause Administrative Agent (for the benefit of Lenders) to be reflected thereon as additional insured and the loss payee thereof. 4.8.2. DISASTER RECOVERY AND CONTINGENCY PROGRAM. Each Borrower will maintain (and at least annually review the sufficiency of) a disaster recovery and contingency plan that addresses such Borrower's plans for continuing operations upon the occurrence of a natural disaster or other event that destroys or prevents the use of or access to such Borrower's primary mainframe computer systems. Within 180 calendar days after the Closing Date (and at all times thereafter), such plan must also address events that destroy or prevent the use of or access to such Borrower's other material computer systems, material information databases and records, and primary operations facility. Such contingency plan and any material changes thereto must be in form and substance reasonably acceptable to Administrative Agent. Upon request, each Borrower will provide Administrative Agent with a current copy of such plan. 4.9 LOAN PURPOSE. Borrowers will use the proceeds of each Advance under the Facilities exclusively as set forth in Section 1.1.3 hereof or Section 1.2.3 hereof. 4.10 LITIGATION; OCCURRENCE OF DEFAULTS. Each Borrower will notify Administrative Agent and each Lender in writing immediately upon (a) the institution or commencement of any litigation, legal or administrative proceeding, or labor controversy that could reasonably be expected to have or cause a Material Adverse Effect, OR (b) the happening of any event or the assertion or threat of any claim that could reasonably be expected to have or cause a Material Adverse Effect, OR (c) the occurrence of any Default or Event of Default hereunder, OR (d) the occurrence of any default under any other Loan Document. 4.11 TAXES. Each Borrower will pay and discharge all taxes, assessments or other governmental charges or levies imposed on it or any of its property or assets prior to the date upon which any penalty for non-payment or late payment is incurred, UNLESS (a) the same are then being contested in good faith by appropriate proceedings diligently prosecuted, AND (b) adequate reserves therefor in accordance with GAAP have been established, AND (c) Administrative Agent has been notified thereof in writing if such non-paid or non-discharged item exceeds $50,000, AND (d) the consequences of such non-payment could not reasonably be -35- expected to have or cause a Material Adverse Effect (the determination of which, to the extent that such non-paid or non-discharged item exceeds $50,000, will be subject to Administrative Agent's reasonable judgement). 4.12. MANAGEMENT CHANGES. Borrowers will notify Administrative Agent in writing within thirty (30) calendar days after any change (including, without limitation, any dismissal or change in title or status) in the executive personnel of any Borrower. 4.13. COSTS AND EXPENSES. Borrowers (jointly and severally) will pay or reimburse Administrative Agent and each Lender for all protective advances made by Administrative Agent or any Lender under the Loan Documents. Borrower (jointly and severally) will also pay or reimburse Administrative Agent and each Lender for all other out-of-pocket costs and expenses (including, without limitation, all reasonable attorneys' fees and disbursements) that Administrative Agent or such Lender may pay or incur in connection with (a) the preparation, negotiation and review of any waivers, consents and amendments in connection herewith and all other documentation related thereto, AND (b) the funding of the indebtedness hereunder, AND (c) the collection or enforcement of any of the Loan Documents, AND (d) the periodic examination of the books and records of any Borrower at any time during the occurrence of a Default, AND (e) Administrative Agent's release of its interests in the Collateral in accordance with the terms of the Loan Documents. Borrowers (jointly and severally) will pay any and all recordation taxes or other fees due upon the filing of the financing statements or documents of similar effect required to be filed under the Loan Documents, and will provide Administrative Agent with a copy of nay receipt or other evidence reflecting such payments if so requested in writing by Administrative Agent. All obligations provided for in this Section shall survive the termination of this Agreement and/or the repayment of indebtedness hereunder. 4.14. COMPLIANCE WITH LAWS. 4.14.1 GENERAL. Each Borrower will comply in all material respects (a) with all material laws, rules, regulations, and orders (federal, state, local and otherwise) applicable to its business, AND (b) with the provisions and requirements of all Authorizations. Each Borrower will notify Administrative Agent immediately in detail (upon obtaining knowledge thereof) of (a) any actual or alleged material failure to comply with or violation of any such laws, rules, regulations or orders, or under the terms of any of such Authorizations, OR (b) the occurrence or existence of any facts or circumstances that with the passage of time, the giving of notice or otherwise could create such a failure to comply or violation or could reasonably be expected to occasion the termination of any of such Authorization. 4.14.2 ERISA. Each Borrower will comply in all respects with the provisions of ERISA to the extent applicable to any Plan maintained by it or for the benefit of its employees, EXCEPT to the extent that the failure to be in such compliance could not reasonably be expected to have or cause a Material Adverse Effect. No Borrower will (a) incur any material accumulated funding deficiency (without the meaning of ERISA and the regulations thereunder), or any material liability to the PBGC established by ERISA OR (b) permit any reportable event (as defined in ERISA) to occur or the occurrence of any other event which could reasonably be expected to be the basis for PBGC to assert a material liability against it or which could -36- reasonably be expected to result in the imposition of a Lien on its properties or assets. Each Borrower will notify Administrative Agent in writing promptly after any assertion or threat of any of the following: the occurrence of any reportable event or the occurrence of any other event which indicates that a Plan may not be financially sound or which could reasonably be expected to be the basis for PBGC to assert a material liability against it or impose a Lien on any of its properties or assets. 4.14.3. ENVIRONMENTAL. Each Borrower will comply in all respects with the Environmental Control Statutes, EXCEPT to the extent that the failure to be in such compliance could be reasonably be expected to have or cause a Material Adverse Effect. Each Borrower (a) will notify Administrative Agent when the EPA, any state or local agency or any other Person provides oral or written notification to it with regard to an actual or imminently threatened removal, spill, release or discharge of hazardous or toxic wastes, hazardous or toxic substances or petroleum products in violation of any Environmental Control Statute, AND (b) will notify Administrative Agent in detail immediately upon the receipt by it of an assertion of liability under the Environmental Control Statutes, or any actual or alleged failure to comply with or perform, breach or violation under any such laws or regulations. 4.15. FURTHER ACTIONS. 4.15.1. ADDITIONAL COLLATERAL. Each Borrower will execute, deliver and record (or, as appropriate, cause the execution, delivery and recordation) at any time upon Administrative Agent's request and in form and substance reasonably satisfactory to Administrative Agent, any of the following instruments in favor of Administrative Agent (for the benefit of Lenders) as additional Collateral hereunder (other than with respect to Excluded Assets): (a) mortgages, deeds of trust and/or assignments on or of any real or personal property owned, leased or licensed by it, AND (b) certificates of title encumbrances against any of its titled vehicles, AND (c) any other like assignments or agreements specifically covering any of its properties or assets (including, without limitation, assignments of any patents, trademarks, copyrights, databases, trade secrets and other forms of intellectual property), AND (f) any financing or continuation statements requested by Administrative Agent. 4.15.2. FURTHER ASSURANCES. From time to time, each Borrower will execute and deliver (or will cause to be executed and delivered) such supplements and amendments to the Loan Documents and such further instruments as may be reasonably required to effectuate the intention of the parties to (or to otherwise facilitate the performance of) the Loan Documents. 4.15.3. ESTOPPEL CERTIFICATE. Upon Administrative Agent's reasonable request, CCC will consent (which consent will not be unreasonably withheld) to execute, acknowledge and deliver (or, as appropriate, to cause the execution, acknowledgement and delivery) to such Person as Administrative Agent may request a statement in writing certifying as follows (to the best of its knowledge, after due inquiry): (a) that the Loan Documents (as amended, if applicable) are unmodified and in full force and effect, AND (c) the then unpaid principal balance of Facilities hereunder, AND (d) whether or not any Default is then occurring under any of the Loan Documents and, if so, specifying each such Default of which the signer may have -37- knowledge. Unless CCC otherwise consents (which consent will not be unreasonably withheld delayed or conditioned), Administrative Agent must give CCC at lease ten (10) Business Days to complete and deliver any such certificate. Each Borrower understands and agrees that any such certificate delivered pursuant to this Section may be relied upon by Administrative Agent, each Lender and, if any different, by the recipient thereof. 4.15.4. WAIVERS AND CONSENTS. Upon Administrative Agent's request, each Borrower will use its best efforts to obtain and deliver (in form and substance reasonably satisfactory to Administrative Agent) a waiver or consent to the assignment to Administrative Agent (for the benefit of Lenders) of any contract, lease, Authorization or other agreement to which it is a party (other than with respect to Customer Equipment). 4.15.5 ADDITIONAL MATERIAL CONTRACTS, LICENSES AND AUTHORIZATIONS. Each Borrower (a) will notify Administrative Agent in writing within 90 calendar days after executing or becoming bound by any contract, agreement, License or other Authorization that should have been listed on Schedule 3.5A hereto, Schedule 3.8 hereto or Schedule 3.9 hereto if it had existed as of the Closing Date, AND (b) will concurrently update Schedule 3.5A hereto, Schedule 3.8 hereto or Schedule 3.9 hereto (as appropriate). To the extent that any Borrower at any time updates the material contracts listed on Schedule 3.8 hereto, THEN such Borrower and Administrative Agent will concurrently agree in good faith as to whether such contract should appropriately be listed under Subsection "a" or Subsection "b" of such Schedule. 4.16. POST CLOSING ITEMS. Borrowers must accomplish, perform and (as appropriate) deliver to Administrative Agent the following items on or before the designated dates: a. On or before October 1, 1996, Borrowers must use their best efforts to obtain a landlord estoppel and consent in form and substance reasonably acceptable to Administrative Agent with respect to Borrowers' office space in Illinois, California and Texas. b. On or before December 1, 1996, Borrowers EITHER (1) Must deliver to Administrative Agent a legal opinion of Canadian counsel (in form and substance reasonably acceptable to Administrative Agent) addressing (a) the due authorization and enforceability of the Loan Documents by and against Certified Collateral Corporation of Canada, Ltd. ("CCC Canada") and (b) the attachment and perfection of Administrative Agent's lien for the benefit of Lenders on the equity of CCC Canada and the other Collateral in which CCC Canada has an interest (and must promptly thereafter assist Administrative Agent in perfecting such liens in accordance with such opinion), OR (2) Execute an amendment to the Loan Documents (which shall be negotiated in good faith by Borrowers, Administrative Agent and the -38- Required Lenders) that will either remove CCC Canada as a Borrower or will appropriately restrict transactions with CCC Canada. The only effect of Borrowers' failure to satisfy the provisions of either clause (1) or (2) above by December 1, 1996, is that CCC Canada will be deemed automatically thereafter not to be a Borrower. After the Closing Date and prior to satisfying the requirements of this clause "b" of this Section, the operations of CCC Canada will not materially change, and no other Borrower will engage in any material transaction with CCC Canada. c. On or before March 1, 1997, Borrowers must prepare and deliver to Administrative Agent a written disaster recovery and contingency plan in accordance with Section 4.8.2 hereof. 4.17. OTHER INFORMATION. Each Borrower will provide Administrative Agent with any other documents and information (financial or otherwise) reasonably requested by Administrative Agent or its counsel from time to time. ARTICLE 5: NEGATIVE COVENANTS Each Borrower hereby covenants and agrees that, so long as any indebtedness remains outstanding hereunder, each Borrower will comply with the following negative covenants (unless the Required Lenders otherwise consent in writing, which consent will not be unreasonably withheld while no Default is occurring): 5.1. CAPITAL EXPENDITURES. Borrowers (on a consolidated basis) will not incur Capital Expenditures in any fiscal year in excess of the following designated amounts: Permitted Fiscal Year Capital Ending Expenditures ----------- ------------ 12/31/96 $4 million Thereafter $4 million plus the Cashflow Adjustment For purposes of this Section, Capital Expenditures (a) will include all capitalized software costs, BUT (b) exclude Customer Equipment purchases and up to $900,000 in leasehold improvements to be incurred prior to December 31, 1997. For purposes of this Section, the "Cashflow Adjustment" for any fiscal year will be an amount equal to the result of multiplying $4 million by the following ratio: OCF for fiscal year in question DIVIDED BY 100 ------------------------------- OCF for fiscal year 1996 -39- If the result of the foregoing ratio is a negative number, THEN the Cashflow Adjustment for the applicable period will equal $0.00. NOTWITHSTANDING THE FOREGOING, to the extent that the permitted Capital Expenditures (referenced above) exceed the actual Capital Expenditures for any fiscal year, THEN the excess may be carried over and used during the immediately succeeding fiscal year as additional permitted amounts of Capital Expenditures in such subsequent fiscal year after Borrowers have first exhausted the otherwise permitted amounts of Capital Expenditures for such fiscal year determined in accordance with the above schedule. FURTHER NOTWITHSTANDING THE FOREGOING, no Borrower may make such Capital Expenditure that otherwise violates any covenant under the Loan Documents or otherwise causes a Default hereunder. 5.2. ADDITIONAL INDEBTEDNESS. No Borrower will borrow any monies or create, incur or assume any additional indebtedness, or any other monetary obligations or liabilities (including, without limitation, monetary obligations under non-compete arrangements) EXCEPT AS FOLLOWS (collectively, the "Permitted Indebtedness"): a. Borrowings from Lenders hereunder; AND b. Trade indebtedness and indebtedness in respect of endorsement of negotiable instruments for collection, each in the normal and ordinary course of business for value received; AND c. Indebtedness and obligations incurred TO PURCHASE FIXED OR CAPITAL ASSETS (other than Customer Equipment), consistent with the restrictions in Section 5.1 hereof and Section 5.5 hereof, PROVIDED, HOWEVER, that (1) the aggregate amount of such asset acquisition indebtedness outstanding at any time may not exceed $2,000,000, AND (2) no such transaction otherwise causes a Default hereunder, AND (3) such indebtedness is immediately included in the calculation of Funded Debt, AND (4) such fixed or capital assets being purchased do not constitute customized application software or systems integration software or any asset the loss of which could reasonably be expected to have or cause a Material Adverse Effect; AND d. Indebtedness and obligations incurred UNDER CAPITAL LEASES, consistent with the restrictions in Section 5.1 hereof and Section 5.5 hereof, PROVIDED, HOWEVER, that (1) no such transaction otherwise causes a Default hereunder, AND (2) such indebtedness (including leases of Customer Equipment) is immediately included in the calculation of Funded Debt, AND (3) such fixed or capital assets being leased do not constitute customized application software or systems integration software or any asset the loss of which could reasonably be expected to have or cause a Material Adverse Effect; AND e. Indebtedness TO PURCHASE OR LEASE CUSTOMER EQUIPMENT, consistent with the restrictions in Section 5.5 hereof, PROVIDED, HOWEVER, that (1) no such transaction otherwise causes a Default hereunder, AND (2) such indebtedness is immediately included in the calculation of Funded Debt; AND -40- filed naming Administrative Agent (for the benefit of Lenders) as "secured party" with respect to such assets. NOTWITHSTANDING THE FOREGOING, each Borrower may remove the following types of assets under the following conditions: (a) temporary removal of equipment for repair or replacement PROVIDED THAT Administrative Agent has received prior written notice thereof indicating the type of equipment, its approximate fair market value, the destination location and an estimate of the length of time that such equipment will be removed from the relevant jurisdiction, AND (b) booths, displays and related accompanying equipment of such Borrower being used temporarily in connection with marketing any Borrower's business at trade shows or otherwise (provided that the aggregate fair market value thereof does not exceed $1 million), AND (c) portable computers and related accompanying equipment being used by the officers, employees and independent representatives of a Borrower in connection with accomplishing any Borrower's business activities at home offices or otherwise (provided that the aggregate fair market value thereof does not exceed $1 million). 5.15. MODIFICATIONS TO ORGANIC DOCUMENTS. No Borrower will (a) amend or otherwise modify any of its Organic Documents, OR (b) change its official name, its operating names or the names under which it executes contracts and conducts business. 5.16. MODIFICATIONS TO MATERIAL RELATIONSHIPS AND AGREEMENTS. No Borrower will (or will permit any other party to) amend, modify, cancel, terminate or otherwise alter (a) any Subordinated Indebtedness (if and when any such indebtedness exists), OR (b) any agreement regarding the provision of management services to a Borrower by a Person who is not a Borrower (including, without limitation, the Management Agreement, once executed). No Borrower will (or will permit any other party to) cancel, terminate or permit the expiration of any material contract listed (or contract that should be listed) under Subsection "a" of Schedule 3.8 hereto UNLESS the services or products provided under such material contract are replaced by such Borrower with comparable services or products under a new contract with another Person. In addition, Borrowers will notify Administrative Agent in writing within 30 calendar days after any cancellation, termination, expiration, amendment, modification or other alteration of or to any material contract listed (or contract that should be listed) on Schedule 3.8 hereto (OTHER THAN with respect to immaterial or non-substantive modifications). 5.17. MARGIN STOCK RESTRICTIONS; OTHER FEDERAL STATUES. No Borrower will use any of the proceeds hereunder, directly or indirectly, to purchase or carry, or to reduce or retire any indebtedness that was originally incurred to purchase or carry, any Margin Stock or for any other purpose that might constitute the transactions contemplated hereby as a "Purpose Credit" within the meaning of the FRB's Margin Regulations. In addition, no Borrower will engage as its principal business in the extension of credit for purchasing or carrying Margin Stock. No Borrower will cause or permit any Loan Document to violate any other regulation of the FRB or the SEC or any provision of the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940 or the Small Business Investment Act of 1958, each as amended, or any rules or regulations promulgated under any of such statutes. -46- ARTICLE 6: ADDITIONAL COLLATERAL AND RIGHT OF SET OFF 6.1. ADDITIONAL COLLATERAL. As additional collateral for the payment of any and all indebtedness and obligations of each Borrower to Administrative Agent and/or any Lender (whether matured or unmatured, and whether now existing or hereafter incurred or created hereunder or otherwise), each Borrower hereby grants Administrative Agent and each Lender a security interest in and a lien upon all funds, balances and other property of any kind of such Borrower, or in which such Borrower has any interest (limited to the interest of such Borrower therein), now or hereafter in the possession, custody or control of Administrative Agent or such Lender or any Affiliate of Administrative Agent or such Lender, OTHER THAN Excluded Assets. 6.2. RIGHT OF SET-OFF. Administrative Agent and each Lender are hereby authorized at any time and from time to time during the occurrence and continuance of an Event of Default hereunder (unless expressly prohibited by applicable law) to set-off and apply any and all deposits (general or special, time or demand, provisional or final) and other indebtedness at any time held or owing by Administrative Agent or any Lender (or any of Affiliate of Administrative Agent or any Lender) to or for the credit or the account of any Borrower against any and all of the indebtedness and monetary obligations of any Borrower now or hereafter existing under the Loan Documents or any other evidence of indebtedness originated, acquired or otherwise held by Administrative Agent or any Lender, irrespective of whether Administrative Agent or such Lender shall have made any demand under the Loan Documents or other indebtedness and although such obligations may be unmatured. Administrative Agent and each Lender agree to notify Borrowers within a commercially reasonable time after any such set-off and application made by Administrative Agent or such Lender (as applicable); PROVIDED, HOWEVER, that the failure to give such notice shall not in any way affect the validity of such set-off and application. 6.3. ADDITIONAL RIGHTS. The rights of Administrative Agent and each Lender under this Article 6 are in addition to the other rights and remedies (including, without limitation, other rights of set-off) that Administrative Agent and Lenders may have by contract, at law, or otherwise. ARTICLE 7: DEFAULT AND REMEDIES 7.1. EVENTS OF DEFAULT. Each of the following events separately constitutes an independent Event of Default hereunder: 7.1.1. PAYMENT OBLIGATIONS. If any payment of principal, interest or other sum payable to Administrative Agent or any Lender under any Loan Document (including any Note) is not received by Administrative Agent on the date such payment is due and payable AND such failure continues for five (5) Business Days after the due date therefor. 7.1.2. REPRESENTATIONS AND WARRANTIES. If any representation, warranty or other statement made in any Loan Document, or in any written report, schedule, exhibit, certificate, agreement, or other document given by or on behalf of any Borrower or any other Obligor (or -47- otherwise furnished in connection herewith) when made was misleading or incorrect in any material respect. 7.1.3. FINANCIAL COVENANTS. If Borrowers default in or fail to observe at any time any of the covenants set forth in Section 4.1 hereof. 7.1.4. OTHER COVENANTS IN LOAN DOCUMENTS. If any Borrower or any other Obligor defaults in the full and timely performance when due of any other covenant or agreement contained in any Loan Document (or in any other document or agreement now or hereafter executed or delivered in connection herewith), AND such default remains uncured for a period of ten (10) Business Days after the earlier of the date that Administrative Agent or any Lender notifies any Borrower thereof or the date that any Borrower otherwise acquires knowledge or should have acquired knowledge thereof. 7.1.5. DEFAULT UNDER OTHER AGREEMENTS WITH LENDERS. If any event of default (as described or defined therein, which term shall include any notice and cure periods provided therein) occurs or exists under the provisions of any other credit agreement, security agreement, mortgage, deed of trust, indenture debenture, account agreement, contract, lease or other agreement between any Borrower, any Affiliate of any Borrower or any other Obligor AND Administrative Agent or any Lender (or any Affiliate of Administrative Agent or any Lender), UNLESS such default is waived by Lenders or cured to Lenders' satisfaction. 7.1.6. DEFAULT UNDER MATERIAL AGREEMENTS WITH OTHER PARTIES. If any event of default (as described or defined therein, which term shall include any notice and cure periods provided therein) occurs or exists under the provisions of any material contract listed under Subsection "a" of Schedule 3.8 hereto (or a contract that should be listed under Subsection "a" of Schedule 3.8 hereto under the terms hereof). NOTWITHSTANDING THE FOREGOING, the occurrence of such an event of default thereunder will not constitute an Event of Default hereunder IF AND SO LONG AS either: (a) (1) Administrative Agent was notified of the occurrence of such event of default in writing within 10 Business Days after the occurrence thereof, AND (2) the other Person to such agreement has not formally declared an event of default thereunder, has not accelerated any related indebtedness and is not then otherwise pursuing any remedies thereunder, AND (3) such Borrower continues to diligently pursue resolving such dispute with such other Person, AND (4) such default is ultimately cured (without incurring any material liability) to Required Lenders' satisfaction within a reasonable period of time after such 10 Business Day period (but in any event within 60 calendar days after the occurrence of such default), OR (b) Within 60 calendar days after the occurrence of such event of default, the services or products provided under such material contract are replaced by such Borrower with comparable services or products under a new contract with another Person (without incurring any material liability) in form and substance acceptable to Administrative Agent. -48- 7.1.7. SECURITY INTEREST. If the security interest or lien in any of the Collateral (with a fair market value exceeding collectively $50,000), other than Collateral consisting of equity ownership interest in subsidiaries or other securities (for which there is no permissible threshold for non-compliance), at any time does not constitute a legal, valid and enforceable security interest or lien in favor of Administrative Agent (for the benefit of Lenders). 7.1.8. CHANGE OF CONTROL. a. If CCC Information Services Group Inc. ceases to own and control 100% of each class of equity securities of CCC. b. If any Borrower other than CCC ceases to be owned and controlled 100% by CCC and/or other Borrowers. 7.1.9. GOVERNMENT ACTION. a. If custody or control of any substantial part of the property of any Borrower is assumed by any governmental agency or any court of competent jurisdiction at the instance of any governmental agency. b. If any governmental regulatory authority or judicial body makes any other final nonappealable determination that could reasonably be expected to have or cause a Material Adverse Effect. 7.1.10. INSOLVENCY. If CCC, or Borrowers (as a whole, including CCC), or any holder of equity interests of any Borrower (other than another Borrower), or any other Obligor that pledges Collateral under the Loan Documents (other than another Borrower) becomes insolvent, bankrupt or generally fails to pay its, his or her debts as such debts become due; OR if any Borrower, or any holder of equity interests of any Borrower, or any other Obligor that pledges Collateral under the Loan Documents (a) is adjudicated insolvent or bankrupt in any proceeding, OR (b) admits in writing an inability to pay its, his or her debts, OR (c) comes under the authority of a custodian, receiver or trustee (or one is appointed for substantially all of its, his or her property), OR (d) makes an assignment for the benefit of creditors, OR (e) has commenced against it, him or her any proceedings under any law related to bankruptcy, insolvency, liquidation, dissolution or the reorganization, readjustment or release of debtors that is either not contested or if contested is not dismissed or stayed within ninety (90) calendar days after the commencement thereof, OR (f) commences or institutes any proceedings under any law related to bankruptcy, insolvency, liquidation, dissolution or the reorganization, readjustment or release of debtors, OR (g) calls a meeting of creditors with a view to arranging a composition or adjustment of debt (other than a meeting solely with Administrative Agent or Lenders), OR (h) by any act or failure to act indicates consent to, approval of or acquiescence in any of the foregoing. 7.1.11. LOSS OR REVOCATION OF GUARANTY. If Guarantor at any time revokes (or attempts to revoke) the Guaranty or its continuing obligations thereunder, OR if the Guaranty at any time does not constitute a legal, valid, binding and enforceable obligation of Guarantor. -49- 7.1.12. ADDITIONAL LIABILITIES. If any judgment, writ, warrant, attachment or execution or similar process that calls for payment or presents liability in excess of $250,000 is rendered, issued or levied against any Borrower or any of its properties or assets AND such liability is not paid, waived, stayed, vacated, discharged, settled, satisfied or fully bonded within sixty (60) calendar days after it is rendered, issued or levied. 7.1.13. MATERIAL ADVERSE CHANGE. If a Material Adverse Change has occurred with respect to CCC or Borrowers (as a whole, including CCC) from the condition set forth in the financial statements furnished to Lenders for the fiscal year ended immediately prior to the Closing Date, or from the condition of Borrowers most recently disclosed to Lenders in any other manner. 7.2. REMEDIES. 7.2.1. GENERAL; ACCELERATION. Upon the occurrence of any Event of Default and at any time thereafter during the continuance of such Event of Default, at the election of Required Lenders, and by notice to any Borrower (except if an Event of Default described in Section 7.1.10 hereof has occurred, in which case acceleration shall occur automatically with respect to the entire indebtedness and without notice), Lenders may accelerate the Line of Credit Maturity Date and/or the Term Loan Maturity Date and may declare all or any portion of the indebtedness of any or all Borrowers to Lenders (hereunder or otherwise, but including the unpaid balance of principal, interest and fees hereunder) to be immediately due and payable. Upon any such declaration, Lenders and Administrative Agent (for the benefit of Lenders) will have the immediate right to enforce and realize upon any collateral security granted hereunder or in connection herewith in any manner or order that the Required Lenders or Administrative Agent (at the direction of Required Lenders) deem expedient without regard to any equitable principles of marshalling or otherwise. 7.2.2. OTHER. In addition to any rights granted hereunder or in any other Loan Document, each Lender and Administrative Agent will have all other rights and remedies granted by any applicable law (including the rights of a secured party under the Uniform Commercial Code), and all rights and remedies will be cumulative in nature. ARTICLE 8: THE ADMINISTRATIVE AGENT 8.1. APPOINTMENT, AUTHORIZATION AND GRANT OF AUTHORITY. Each Lender hereby irrevocably designates and appoints Signet Bank as the Administrative Agent of such Lender to act as specified in this Agreement and the other Loan Documents, AND each such Lender hereby irrevocably authorizes Signet Bank (in its capacity as Administrative Agent) to take actions on behalf of such Lender, to exercise such powers and to perform such other duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Loan Documents, TOGETHER WITH all such other powers and authority as are reasonably incidental thereto. Without limiting the generality of the foregoing, the Administrative Agent (on behalf of each Lender) is authorized (a) to execute each Loan Document (other than this Agreement, but including, without limitation, all financing statements, continuation statements and other -50- collateral agreements and documents) for and on behalf of each Lender, AND (b) to accept each Loan Document and all other agreements, documents, instruments, certificates and opinions reasonably required to implement the intent of the parties to this Agreement, AND (c) to file and record all financing statements, continuation statements and other collateral agreements and documents, AND (d) to receive and deliver communications and notifications to Lenders and to Borrowers, AND (e) to receive and distribute payments and Advances between Lenders and Borrowers. The duties and responsibilities of the Administrative Agent shall be ministerial and administrative in nature. NOTWITHSTANDING any provision to the contrary in any Loan Document, the Administrative Agent (a) shall not have any duties or responsibilities OTHER THAN those expressly set forth in the Loan Documents (which duties and responsibilities shall be subject to the limitations and qualifications set forth in this Article), AND (b) shall not have any fiduciary relationship with any Lender; AND no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into the Loan Documents or otherwise exist against the Administrative Agent. 8.2. ACCEPTANCE OF APPOINTMENT. Signet Bank hereby accepts such appointment and agrees to act as such Administrative Agent upon the express terms and conditions (but subject to the limitations and qualifications) set forth in this Article. 8.3. ADMINISTRATIVE AGENT'S RELATIONSHIP WITH BORROWERS. The provisions of this Article are solely for the benefit of the Administrative Agent and Lenders, AND no Borrower shall have any rights as a third party beneficiary (or otherwise) under this Article. In performing its functions and duties under the Loan Documents, the Administrative Agent shall act solely as an agent of the Lenders, AND the Administrative Agent does not assume (and shall not be deemed to have assumed) any obligation or relationship of agency or trust with or for any Borrower. 8.4. NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS. Each Lender expressly acknowledges and agrees (a) that the Administrative Agent (and its directors, officers, employees, agents, attorneys-in-fact and Affiliates) have not made any representations or warranties to such Lender AND (b) that no act by the Administrative Agent hereinafter taken (including, without limitation, any review of the affairs of any Borrower or other Obligor) shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender. Each Lender represents to the Administrative Agent that it (independently and without any reliance upon the Administrative Agent or any other Lender, and based upon such documents and information as it has deemed necessary or appropriate) has made its own appraisal, investigation and credit analysis of the business, assets, operations, properties, financial and other condition, prospects and creditworthiness of each Borrower and other Obligor and has made its own decision to make its Loans hereunder and to enter into this Agreement. Each Lender also covenants and represents that it (independently and without any reliance upon the Administrative Agent or any other Lender, and based upon such documents and information as it shall deem necessary or appropriate) will continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement, and will continue to make such investigations as it deems necessary or appropriate to inform itself as to the business, assets, operations, properties, financial and other condition, prospects and creditworthiness of each Borrower and other Obligor. Except as otherwise expressly provided in the Loan Documents, the Administrative Agent shall not have any duty or responsibility (a) to keep any -51- Lender informed as to the performance or observance by any Borrower or other Obligor of its obligations under the Loan Documents, OR (b) to inspect the books or properties of any Borrower or other Obligor, OR (c) to provide any Lender with any credit or other information concerning the business, operations, assets, properties, financial and other condition, prospects or creditworthiness of any Borrower which may come into the possession of the Administrative Agent (or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates). The Administrative Agent will make reasonable efforts to furnish to the Lenders material information concerning Borrowers of which the Administrative Agent has actual knowledge; HOWEVER, in the absence of gross negligence, willful misconduct or fraud, the Administrative Agent shall not be liable to any Lender for any failure to relay or furnish to such Lender any such information. 8.5. RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent shall be entitled to rely and act (and shall be fully protected in relying and acting) upon any note, writing, resolution, instrument, report, notice, consent, certificate, affidavit, letter, request, telecopy or other electronic facsimile transmission, telex, telegram, cable, teletype, electronic transmission by modem, computer disk or any other message, statement, order or other writing, conversation or communication believed by Administrative Agent in good faith to be genuine and correct and to have been signed, sent or made by the proper Person or Persons. The Administrative Agent shall not be bound to ascertain or inquire as to the satisfaction, performance or observance of any of the terms, provisions, covenants or conditions of or the accuracy of any statements or representations in any Loan Document on the part of any Borrower. The Administrative Agent may deem and treat the stated payee of any Note as the holder thereof for all purposes under the Loan Documents UNLESS AND UNTIL Administrative Agent has received and accepted an assignment and assumption agreement relating thereto in form and substance acceptable to the Administrative Agent. 8.6. DELEGATION OF DUTIES; ADDITIONAL RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent may consult with, employ and perform any of its duties under the Loan Document by or through agents, attorneys-in-fact, legal counsel, independent public accountants and other experts. The Administrative Agent shall not be responsible for the negligence or misconduct of any such Persons selected by Administrative Agent with reasonable care, AND the Administrative Agent shall be fully protected in any action or inaction taken by it in good faith in reliance upon or in accordance with the advice or statements of legal counsel (including, without limitation, counsel to Borrowers), independent accountants and other experts selected by Administrative Agent. 8.7. ACTING ON INSTRUCTION OF LENDERS. The Administrative Agent shall be entitled to act or refrain from acting (and shall be fully protected in acting or refraining from acting) under the Loan Documents in accordance with a written request of or written instructions from the Required Lenders. The Administrative Agent shall also be entitled to refrain from acting (and shall be fully protected in refraining from acting) under the Loan Documents UNLESS Administrative Agent first (a) receives such advice or concurrence of the Required Lenders as Administrative Agent deems appropriate OR (b) is indemnified to its satisfaction by the Lenders against any and all liability and expense which it may incur by reason of taking or continuing to take any such action. Except as otherwise expressly stated in the Loan Documents, all determinations by, requests by and other references to "Lenders" means the Required Lenders, -52- AND any requests or instructions by the Required Lenders (and any action or inaction by Administrative Agent pursuant thereto) shall be binding upon all the Lenders. 8.8. ACTIONS UPON OCCURRENCE OF DEFAULT OR EVENT OF DEFAULT. Each Lender will use its best efforts to notify the Administrative Agent immediately in writing upon becoming aware of the occurrence of any Default or Event of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent has received notice from a Lender or a Borrower referring to this Agreement, describing such Default or Event of Default, and stating that such notice is a "notice of default". If the Administrative Agent receives any such notice of default, THEN the Administrative Agent shall use its best efforts to give notice thereof to each Lender as soon as reasonably practical. Upon the occurrence of any Default or Event of Default, the Lenders shall promptly consult with one another in an attempt to agree upon a mutually acceptable course of conduct. In the absence of unanimous agreement among the Lenders as to the appropriate course of conduct, the Administrative Agent shall exercise rights and take such other action on behalf of all Lenders with respect to such Default or Event of Default as directed by the Required Lenders. Unless and until the Administrative Agent shall have received such directions from the Lenders (or, as applicable, the Required Lenders), the Administrative Agent may (but shall not be obligated to) take such action (or refrain from taking such action) with respect to such Default or Event of Default as Administrative Agent shall deem advisable in the best interests of the Lenders. 8.9. ADMINISTRATIVE AGENT'S RIGHTS AS LENDER IN INDIVIDUAL CAPACITY. The Administrative Agent (and its Affiliates) may make loans to, may accept deposits from, may issue letters of credit on behalf of, and may otherwise generally engage (and continue to engage) in any kind of business with any Borrower or other Obligor as though the Administrative Agent were not the Administrative Agent under the Loan Documents. With respect to any Loans made by Administrative Agent as a Lender hereunder and all obligations owing to it as a Lender under the Loan Documents, the Administrative Agent shall have the same rights, powers duties and obligations under the Loan Documents as any other Lender and may exercise such rights, powers duties and obligations as though it were not the Administrative Agent hereunder. To the extent that the Administrative Agent is a Lender hereunder, the terms "Lender", "Lenders" and "Required Lenders" shall include the Administrative Agent in its individual capacity. 8.10. ADVANCES BY ADMINISTRATIVE AGENT. Unless the Administrative Agent has been notified in writing by a Lender prior to the Settlement Date for any Advance or Loan that such Lender will not make the amount constituting its Pro Rata share of such Advance or Loan available to the Administrative Agent on or prior to such applicable Settlement Date, THEN the Administrative Agent may (but shall not be required to) assume that such Lender will make such amount available to the Administrative Agent in immediately available funds on or before such Settlement Date, AND in reliance upon such assumption, the Administrative Agent may make available to Borrowers a corresponding amount on behalf of such Lender. If the amount of such Pro Rata share is not made available to the Administrative Agent in immediately available funds by a Lender until after the applicable Settlement Date, THEN such Lender shall pay to the Administrative Agent on demand and in immediately available funds an amount equal to the result of the following equation (which shall be in addition to the amount of such Lender's Pro -53- Rata share of such Advance or Loan): the PRODUCT OF (a) the average (computed for the period determined under clause (c) below) of the weighted average interest rate for Federal Funds as determined by the Administrative Agent during each day included in such period, MULTIPLIED BY (b) the amount of such Lender's Pro Rata share of such Advance or Loan, MULTIPLIED BY (c) a fraction (i) the numerator of which is the number of days that elapsed from and including such Settlement Date to and including the date on which such Lender's Pro Rata share of such Advance or Loan is actually received by the Administrative Agent in immediately available funds AND (ii) the denominator of which is 360. A statement from the Administrative Agent submitted to any Lender with respect to any amounts owing under this Section shall be conclusive (absent manifest error) as to the amount owed to the Administrative Agent by such Lender. If such Lender's Pro Rata share is not actually received by the Administrative Agent in immediately available funds within three (3) Business Days after the applicable Settlement Date for such Advance or Loan, THEN the Administrative Agent shall be entitled to recover from such Lender, on demand, the amount of such Pro Rata share with interest thereon for the entire such period since the Settlement Date at the highest interest rate per annum (including the applicable Rate Margin) then applicable under the Facilities. 8.11. PAYMENTS TO LENDERS. Promptly after receipt in immediately available funds from Borrowers of any payment of principal, interest or any fees or other amounts due to any Lender under the Loan Documents, the Administrative Agent shall distribute to each Lender that Lender's Pro Rata share of such funds so received. 8.12. PRO-RATA SHARING OF SETOFF PROCEEDS. Any sums obtained by the Administrative Agent or any Lender from any Borrower or other Obligor by reason of any exercise of a right of setoff or banker's lien shall be shared Pro Rata among Lenders. NOTWITHSTANDING THE FOREGOING, neither the Administrative Agent nor any Lender shall be required to so share with any other Lender collections from any Borrower or other Obligor specifically relating to (or the proceeds of any item of collateral that is not subject to the Loan Documents) any other Indebtedness of such Borrower or other Obligor to the Administrative Agent or such Lender. 8.13. LIMITATION ON LIABILITY OF ADMINISTRATIVE AGENT. The Administrative Agent (and its directors, officers, employees, agents, attorneys-in-fact and Affiliates) shall not be liable to any Lender for any action taken or inaction by Administrative Agent or such Person under or in connection with any Loan Document, EXCEPT to the extent of foreseeable actual loses resulting directly and exclusively from Administrative Agent's own gross negligence, willful misconduct or fraud. Without limiting the generality of the foregoing, the Administrative Agent (and its directors, officers, employees, agents, attorneys-in-fact and Affiliates) shall not be liable, responsible or have any duty with respect to any of the following: (a) the genuineness, execution, authorization, validity, effectiveness, enforceability, collectibility, value or sufficiency of any Loan Document, OR (b) the collectibility of any amount owed by any Obligor to any Lender, OR (c) the accuracy, completeness or truthfulness of any recital, statement, representation or warranty made to the Administrative Agent or to any Lender in connection with any Loan Document or other certificate, affidavit, report, opinion, financial statement, document or instrument executed or furnished pursuant to or in connection with any Loan Document, OR (d) any failure of any Person to receive any notice or communication due such Person under any Loan Document or applicable law, OR (e) the assets, liabilities, financial -54- condition, results of operations, business, prospects or creditworthiness of any Borrower or other Obligor, OR (f) ascertaining or inquiring into the satisfaction, observance or performance of any condition, covenant or agreement in any Loan Document (including, without limitation, the use or proceeds by any Borrower), OR (g) the inspection of any books, records or properties of any Obligor, OR (h) the existence or possible existence of any Default or Event of Default. 8.14. INDEMNIFICATION. To the extent that Borrowers do not actually reimburse, indemnify or hold harmless Administrative Agent (in accordance with Section 10.16 hereof), THEN each Lender hereby agrees on a Pro Rata basis to indemnify and hold harmless the Administrative Agent (acting in its capacity as Administrative Agent) from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, reasonable expenses or disbursements of any kind whatsoever that at any time (including, without limitation, at any time following the payment of the Obligations of Borrowers hereunder) may be imposed upon, incurred by or asserted against the Administrative Agent in its capacity as such in any way relating to or arising out of any Loan Document, or the transactions contemplated hereby or any action or inaction taken by the Administrative Agent under or in connection with any of the foregoing; PROVIDED that no Lender shall be liable to the Administrative Agent for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting directly and exclusively from the gross negligence, willful misconduct or fraud of the Administrative Agent. If any indemnity furnished to the Administrative Agent for any purpose (in the opinion of the Administrative Agent) shall be insufficient or become impaired, THEN the Administrative Agent may require additional indemnity and cease (or not commence) to do the acts indemnified against until such additional indemnity is furnished to the satisfaction of the Administrative Agent. The agreement in this Section shall survive the payment of all Advances, Loans, fees and other Obligations of each Borrower arising hereunder. 8.15. RESIGNATION; SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent at any time may resign as the Administrative Agent under the Loan Documents by giving the Lenders and Borrowers written notice thereof at least 20 calendar days prior to the effective date of such resignation. During such notice period, the Required lenders shall appoint (from among the Lenders) a successor Administrative Agent for the Lenders, SUBJECT TO the prior approval by Borrowers and the consent of each Lender (such approval or consent, as the case may be, not to be unreasonably withheld, delayed or conditioned). Upon acceptance of such appointment by such successor agent, (a) such successor agent shall succeed to the rights, powers and duties of the Administrative Agent, AND (b) the term "Administrative Agent" shall include such successor agent effective upon its appointment, AND (c) the resigning Administrative Agent's rights, powers and duties as the Administrative Agent shall be terminated, all without any other or further act or deed on the part of such former Administrative Agent or any of the parties to the Loan Documents. NOTWITHSTANDING THE FOREGOING, after the effectiveness of the resigning Administrative Agent's resignation hereunder as the Administrative Agent, the provisions of this Article shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under the Loan Documents. -55- ARTICLE 9: DEFINITIONS 9.1. DEFINITIONS. When used in this Agreement, the following terms shall have the respective meanings set forth below: 9.1.1. "ACCOUNT" means, at any relevant time, the designated or principal deposit account of Borrowers at Administrative Agent for purposes of effecting transactions hereunder. 9.1.2. "ADJUSTED LIBO RATE" means the rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) determined pursuant to the following formula: Adjusted LIBO Rate = LIBO Rate ---------------------- 1 - Reserve Percentage For purposes of this calculation, "LIBO RATE" means the London Interbank Offered Rate per annum displayed at approximately 10:00 a.m. (local time in Richmond, Virginia) two Business Days before the first day of any Interest Period for which the Adjusted LIBO Rate is applicable on the Reuters Screen designated as the "Libo Rate" (or its equivalent or replacement) for the offering of dollar deposits by leading banks in the London interbank market for a period of approximately 3 months or 6 months (corresponding to the length of the applicable Interest Period selected by Borrowers) and an amount approximately equal to the amount outstanding hereunder to which such LIBO Rate will be applicable. For purposes of this calculation, "RESERVE PERCENTAGE" means that percentage (expressed as a decimal) prescribed by the FRB (or any other governmental or administrative agency to which any Lender is subject) for determining the reserve requirements (including, without limitation, any basic, supplemental, marginal or emergency reserves) for (a) such Lender's negotiable, non-personal time deposits in U.S. Dollars with maturities of comparable duration, OR (b) deposits of U.S. Dollars in a non-U.S. or an international banking office of such Lender used to fund loans. 9.1.3. "ADMINISTRATIVE AGENT" means Signet Bank or any successor, assignee or other transferee of Administrative Agent. 9.1.4. "ADVANCE" means any advance of funds under any Facility. 9.1.5. "ADVANCE REQUEST" has the meaning set forth in Section 1.4.1 hereof. 9.1.6. "AFFILIATE" of any Person means (a) any Person directly or indirectly owning, controlling or holding 5% or more of the outstanding beneficial interest in such Person, OR (b) any Person as to which such other Person directly or indirectly owns, controls or holds 5% or more of the outstanding beneficial interest, OR (c) any Person directly or indirectly under common control with such other Person OR (d) any executive officer, director, partner or member of such Person. 9.1.7. "AGENT" means Signet Bank, or any successor thereof, or any assignee, or other transferee or Agent hereunder. -56- 9.1.8. "AGREEMENT" means this Credit Facility Agreement and all the exhibits and schedules hereto, all as may be amended and otherwise modified from time to time hereafter. 9.1.9. "AUTHORIZED OFFICER" means any officer, employee or representative of such organization who is expressly designated as such or is otherwise authorized to borrow funds hereunder or, as appropriate, to sign loan documents and/or deliver certificates on behalf of such organization pursuant to the provisions of such organization's most recent resolution on file with Administrative Agent. 9.1.10. "AUTHORIZATION" means any License or other governmental permit, certificate and/or approval issued by an Official Body that is necessary or required in connection with the conduct of any Borrower's business or operations. 9.1.11. "AVAILABLE CREDIT PORTION" means that portion of the Current Line of Credit Commitment that is generally available in the ordinary course for borrowing at any time under the Line of Credit Facility, as such amount is determined in accordance with Section 1.3 hereof. 9.1.12. "BORROWER" means, individually and collectively, the following: a. CCC Information Services Inc., a Delaware corporation, having its principal and chief executive office at the address specified in Section 10.7 hereof, or any successor or authorized assignee thereof, AND b. Any other entity subsequently added hereto as a Borrower hereunder, or any successor or authorized assignee thereof. 9.1.13. "BUSINESS DAY" means any day that is not a Saturday, a Sunday or a day on which banks under the laws of the Commonwealth of Virginia (or, with respect to certain LIBO Rate matters, banks in London, England) are authorized or required to be closed. 9.1.14. "CAPITAL EXPENDITURES" means expenditures (a) for any fixed assets or improvements, replacements, substitutions or additions thereto that have a useful life of more than one (1) year and an individual cost in excess of $1,000 per item, including direct or indirect acquisition of such assets, OR (b) for any Capital Leases. NOTWITHSTANDING THE FOREGOING, the term Capital Expenditures does not include (1) purchases of Customer Equipment, OR (2) Permitted Investments (as defined in Section 5.7 hereof) other than as described in Section 5.7(d) hereof unless such Borrower is acquiring 100% of the assets of another Person as a going concern, OR (3) permitted transactions under Section 5.8 hereof. 9.1.15. "CAPITAL LEASES" means capital leases and subleases as defined in the Financial Accounting Standards Board Statement of Financial Accounting Standards No. 13 dated November 1976 (as amended and updated from time to time). 9.1.16. "CLOSING DATE" means the date on which all conditions precedent to the effectiveness of this Agreement under Section 2.1 hereof have been satisfied or waived by Required Lenders. -57- 9.1.17. "CODE" means the Internal Revenue Code of 1986, as amended. 9.1.18. "COLLATERAL" means the collateral security committed to Lenders or Administrative Agent (for the benefit of Lenders) under the Collateral Security Documents executed by any Borrower or any other Obligor in favor of Lenders or Administrative Agent (for the benefit of Lenders) pursuant to this Agreement from time to time and/or pursuant to all similar or related documents and agreements from time to time, all as amended from time to time. 9.1.19. "COLLATERAL SECURITY DOCUMENTS" means, individually and collectively, (a) the Security Agreements and the financing statements filed pursuant thereto, AND (b) the Pledge and Security Agreements, AND (c) any additional documents guaranteeing indebtedness, assuring performance of obligations, subordinating indebtedness, or granting security or Collateral to Lenders or Administrative Agent (for the benefit of Lenders), all as amended from time to time. 9.1.20. "COMMITMENT" means any commitment for credit pursuant to a Facility established hereunder. 9.1.21. "COMMITMENT PERCENTAGE" means, with respect to each Lender, that portion of the total Commitments as to which such Lender is obligated (I.E., the aggregate of such Lender's Line of Credit Commitment Percentage and Term Loan Commitment Percentage). 9.1.22. "CREDIT COMMITMENT FEE" means the fee due and payable to Administrative Agent in accordance with Section 1.7.1 hereof. 9.1.23. "CUSTOMER EQUIPMENT" means computers and related peripheral equipment that either are purchased or leased by a Borrower for use by its customers or are leased directly to such Borrower's customers. 9.1.24. "DEFAULT" means any event or circumstance that with the giving of notice or the passage of time would constitute an Event of Default. 9.1.25. "DOLLAR" or "$" means U.S. dollars. 9.1.26. "EBITDA" means, at the time of any determination, the sum of the following items for Borrowers during the relevant four consecutive fiscal quarter period: a. Net income from continuing operations during such period -- I.E., excluding extraordinary items and the cumulative effect of accounting changes -- determined in accordance with GAAP, AND b. PLUS Interest Expense during such period, BUT SUBTRACT interest income accrued during such period, AND c. PLUS all charges in accordance with GAAP for federal and state income taxes during such period, AND -58- d. PLUS depreciation permitted under GAAP during such period, AND e. PLUS amortization expense permitted under GAAP during such period. For purposes of this calculation, interest shall include interest accrued under Capital Leases, determined in accordance with GAAP. 9.1.27. "ENVIRONMENTAL CONTROL STATUTES" has the meaning set forth in Section 3.16 hereof. 9.1.28. "EPA" means the United States Environmental Protection Agency or any other entity that succeeds to its responsibilities and powers. 9.1.29. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and as implemented and interpreted. 9.1.30. "ERISA AFFILIATE" means any company, whether or not incorporated, which is considered a single employer with any Borrower under Titles I, II and IV of ERISA. 9.1.31. "EVENT OF DEFAULT" means each of the events described in Section 7.1 hereof. 9.1.32. "EXCLUDED ASSETS" means Customer Equipment and permissible Capital Leases. 9.1.33. "FACILITY" means any credit facility established under Article 1 hereof. 9.1.34. "FIXED CHARGES" means, at the time of any determination, the sum of the following items for Borrowers during the relevant four consecutive fiscal quarter period: a. The amount of payments of principal required under this Agreement during such period, AND b. PLUS the amount of principal required to be paid and mandatory commitment reductions on other Funded Debt (I.E., Funded Debt other than under this Agreement) during such period (BUT excluding payments on indebtedness being refinanced hereunder as of the Closing Date), AND c. PLUS Interest Expense during such period, AND d. PLUS the amount of Capital Expenditures during such period. For purposes of this calculation, interest includes interest accrued under Capital Leases, and principal includes principal obligations under Capital Leases. For purposes of this calculation, -59- Capital Expenditures (a) will include all capitalized software costs, but (b) will exclude Customer Equipment and $900,000 in leasehold improvements to be incurred prior to December 31, 1997. 9.1.35. "FRB" means the Board of Governors of the Federal Reserve System or any other entity or agency that succeeds to its responsibilities and powers. 9.1.36. "FUNDED DEBT" means, at the time of any determination, the aggregate principal amount of indebtedness of all Borrowers for the following: a. Borrowed money (including the indebtedness under the Loan Documents, but not including trade indebtedness incurred in the normal and ordinary course of business for value received), AND b. Installment purchases of real or personal property, AND c. Capital Leases, AND d. Deferred purchase price in connection with acquisitions, AND e. Guaranties, AND f. Indebtedness otherwise required to be included as part of "Funded Debt" under Section 5.2 hereof (including, without limitation, monetary obligations under non-compete arrangements). NOTWITHSTANDING THE FOREGOING, the term "Funded Debt" includes the Subordinated Indebtedness. For purposes of this calculation, Funded Debt shall also include the Funded Debt of joint ventures that are consolidated with Borrowers for financial reporting purposes in accordance with GAAP. 9.1.37. "GAAP" means generally accepted accounting principles applied on a consistent basis set forth in the Opinions of the Accounting Principles Board of the American Institute of Certified Public Accountants and/or in statements of the Financial Accounting Standards Board and/or in such other statements by such other entity as Administrative Agent may reasonably approve, which are applicable in the circumstances as of the date in question, and the requirement that such principles be applied on a consistent basis shall mean that the accounting principles observed in a current period are comparable in all material respects to those applied in a preceding period. 9.1.38. "GUARANTOR" means CCC Information Services Group Inc., and its successors and assigns (including, with respect to natural persons, such Guarantor's heirs, personal representatives, administrators and executors). 9.1.39. "HAZARDOUS MATERIALS" includes (a) any "hazardous waste" as defined by the Resource Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 ET SEQ.), as amended from time to time, and regulations promulgated thereunder; OR (b) any "hazardous substance" as -60- defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. Section 9601 ET SEQ.), as amended from time to time, and regulations promulgated thereunder; OR (c) any other substance the use or presence of which on, in, under or above any real property ever owned, controlled or used by any Borrower is similarly regulated or prohibited by any federal, state or local law, rule, ordinance, regulation or decree of any court or governmental authority as a hazardous material. 9.1.40. "INTEREST EXPENSE" means, at the time of any determination, the amount of interest and other finance charges of Borrowers required to be charged as an expense under GAAP during the relevant four consecutive fiscal quarter period. For purposes of this calculation, interest (a) includes interest accrued under Capital Leases, BUT (b) excludes the amortization of the fees under Section 1.7.1 hereof, AND any other such charges with respect to any Funded Debt that are associated with capitalized debt, AND bank service charges. 9.1.41. "INTEREST PERIOD" means (a) with respect to the Prime Rate, a period of one (1) Business Day, AND (b) with respect to the Adjusted LIBO Rate, a period (at the election of Borrowers) of 3 or 6 calendar months duration; PROVIDED, HOWEVER, that with respect to the Adjusted LIBO Rate, (1) if any Interest Period would otherwise end on a day that is not a Business Day or Business Day in London, such Interest Period will be extended to the next succeeding Business Day or Business Day in London, subject to clauses (2) and (3) below; AND (2) any Interest Period that would otherwise end on a day that is not a Business Day and a Business Day in London will be extended to the next succeeding day that is a Business Day and a Business Day in London unless such Business Day falls in another calendar month, in which case such Interest Period will end on the next preceding Business Day in London; AND (3) with respect to an Interest Period that begins on the last Business Day in London of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period), subject to clause "(2)" above, the Interest Period will end on the last Business Day in London of a calendar month. With respect to the Adjusted LIBO Rate and the Prime Rate, interest will accrue from and including the first day of each Interest Period to, but excluding, the day on which any Interest Period expires. 9.1.42. "LENDER" means, individually and collectively, the following: a. Signet Bank or any successor, assignee, participant or other transferee of such Lender hereunder, AND b. Any other entity subsequently added hereto as a Lender hereunder, or any successor, assignee, participant or other transferee thereof. 9.1.43. "LEVERAGE RATIO" means, at any time such ratio is being computed, the ratio of "Funded Debt" TO "OCF (I.E., Operating Cash Flow)" (for the immediately preceding four fiscal quarters). 9.1.44. "LIBO RATE" has the meaning set forth in the definition of "Adjusted LIBO Rate". -61- 9.1.45. "LICENSE" means any authorization, construction or other permit, consent, franchise, ordinance, registration, certificate, license, call sign, frequency designation, agreement or other right filed with, granted by, issued by or entered into with any Official Body. 9.1.46. "LIEN" means any security interest, mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or otherwise), reversionary or reclamation interest, charge against or interest in property to secure payment of a debt or performance of an obligation or other priority or preferential arrangement of any kind or nature whatsoever. 9.1.47. "LINE OF CREDIT COMMITMENT" means the Commitment established pursuant to Section 1.1. hereof and Section 1.3 hereof. 9.1.48. "LINE OF CREDIT COMMITMENT PERCENTAGE" means, with respect to each Lender, that portion of the total Line of Credit Commitment as to which such Lender is obligated. 9.1.49. "LINE OF CREDIT FACILITY" means the line of credit Facility as described in Article 1 hereof. 9.1.50. "LINE OF CREDIT MATURITY DATE" has the meaning set forth in Section 1.1.2 hereof, as may be extended from time to time in Lenders' sole and absolute discretion. 9.1.51. "LINE OF CREDIT NOTE" means that certain Note (or Notes) payable to the order of each Lender (for its Line of Credit Commitment Percentage) prepared in accordance with Section 1.1.4 hereof, as may be amended, modified, restated, replaced, supplemented, extended or renewed from time to time hereafter. 9.1.52. "LOAN" means any loan or Advance of funds under any Facility as well as any other credit extended by Administrative Agent or any Lender to any Borrower under this Agreement. 9.1.53. "LOAN DOCUMENTS" means this Agreement, any Notes, the Collateral Security Documents and any other documents, agreements and certificates entered into or delivered in connection herewith or therewith or pursuant hereto or thereto, all as may be amended, modified and supplemented from time to time. 9.1.54. "LOCAL AUTHORITIES" means, individually and collectively, the state and local governmental authorities that govern the activities of any Borrower. 9.1.55. "MARGIN REGULATION" has the meaning set forth in Section 3.17 hereof. 9.1.56. "MARGIN STOCK" has the meaning set forth in Section 3.17 hereof. -62- 9.1.57. "MATERIAL ADVERSE CHANGE" means any change that has or causes a Material Adverse Effect. 9.1.58. "MATERIAL ADVERSE EFFECT" means, relative to any occurrence of whatever nature (including, without limitation, any adverse determination in any litigation, arbitration or governmental investigation or proceeding), a material adverse change to, or, as the case may be, a materially adverse effect on: a. The business, assets, revenues, financial condition, operations, or Collateral of CCC or of Borrowers (as a whole, including CCC) or of any other Obligor (other than a Borrower); or b. The ability of Borrowers to perform any of their payment obligations under the Loan Documents when due or the ability of any Borrower to perform any other material obligations under any Loan Document; or c. Any right, remedy or benefit of Administrative Agent or any Lender under any Loan Document in any way relating to (i) Administrative Agent's or any Lender's ability or collect or entitlement to receive (or be reimbursed for) payments of principal, interest, fees, costs or expenses under the Loan Documents or (ii) Administrative Agent's or any Lender's protection of, realization upon or other rights or interest in any Collateral. 9.1.59. "NOTES" means, individually and collectively, each promissory note delivered to Administrative Agent or any Lender pursuant to any Loan Document and evidencing any indebtedness to Administrative Agent or any Lender under the Loan Documents (each as may be amended, modified, supplemented, restated, extended, renewed or replaced from time to time). 9.1.60. "OBLIGATIONS" means all of the indebtedness and obligations (monetary or otherwise) of each Borrower and any other Obligor arising under or in connection with any Loan Document as well as all indebtedness and obligations (monetary or otherwise) of any Affiliate of any Borrower or other Obligor arising under or in connection with any agreement between any such Affiliate and Administrative Agent or any Lender (or any Affiliate of Administrative Agent or any Lender). 9.1.61. "OBLIGOR" means any Borrower or any other Person (other than Administrative Agent and Lenders) obligated under any Loan Document. 9.1.62. "OCF" (or "Operating Cash Flow") means, at the time of any determination, the sum of the following items for Borrowers during the relevant four consecutive fiscal quarter period: a. EBITDA during such a period, AND -63- b. PLUS reasonable non-recurring acquisition expenses acceptable to or approved by the Required Lenders during such period (which acceptance or approval by such Lenders may not be unreasonably withheld), AND c. WITH RESPECT TO deferred revenues reflected on Borrowers' balance sheet in accordance with GAAP (BUT only to the extent that such deferred revenues exceeded $10 million during the immediately preceding reporting period): ADD the total amount by which deferred revenues increased over the immediately preceding reporting period, OR SUBTRACT the total amount by which deferred revenues decreased from the immediately preceding reporting period, AND d. WITH RESPECT TO investments by Borrowers in non- consolidated joint ventures that are reflected on Borrowers' financial statements in accordance with GAAP: ADD the amount of actual cash distributions received by each Borrower as a return on its investment in any such non-consolidated joint venture, AND e. WITH RESPECT TO other non-recurring non-cash items: ADD the total amount of other non-cash expenses recognized during such period (to the extent not already accounted for in one of the above categories), BUT SUBTRACT the total amount of other non-cash revenue (other than deferred revenue, which category is addressed under Clause "c" above and other than revenue resulting from normal trade receivables) recognized during such period (to the extent not already accounted for in one of the above categories). For purposes of this calculation, interest shall include interest accrued under Capital Leases, determined in accordance with GAAP. For purposes of this calculation, OCF shall also include the OCF of joint ventures that are consolidated with Borrowers for financial reporting purposes in accordance with GAAP. 9.1.63. "OFFICIAL BODY" means any federal, state, local, or other government of political subdivision (and any agency, authority, bureau, central bank, commission, department or instrumentality of either) and any court, tribunal, grand jury or arbitrator, in each case whether foreign or domestic. 9.1.64. "OPERATING AGREEMENT" means any consulting agreement, management agreement, employment agreement, cost allocation agreement, or other similar agreement relating to the operations of any Borrower. 9.1.65. "ORGANIC DOCUMENT" means, relative to any entity, its certificate and articles of incorporation or organization, its by-laws or operating agreements, and all equityholder agreements, voting agreements and similar arrangements applicable to any of its authorized shares of capital stock, its partnership interests or its member interests, and any other -64- arrangements relating to the control or management of any such entity (whether existing as a corporation, a partnership, an LLC or otherwise). 9.1.66. "PBGC" means the Pension Benefits Guaranty Corporation or any other entity that succeeds to its responsibilities and powers under ERISA. 9.1.67. "PERIODIC FACILITY FEE" means the fee due and payable to Administrative Agent (for the benefit of Lenders) in accordance with Section 1.7.2 hereof. 9.1.68. "PERMITTED INDEBTEDNESS" has the meaning set forth in Section 5.2 hereof. 9.1.69. "PERMITTED INVESTMENTS" has the meaning set forth in Section 5.7 hereof. 9.1.70. "PERMITTED LIENS" has the meaning set forth in Section 5.5 hereof. 9.1.71. "PERMITTED LOANS" has the meaning set forth in Section 5.4 hereof. 9.1.72. "PERMITTED TRANSFERS" has the meaning set forth in Section 5.6 hereof. 9.1.73. "PERSON" means any natural person, corporation, LLC, partnership, firm, association, trust, government, governmental agency or any other entity, whether acting in an individual, fiduciary or other capacity. 9.1.74. "PLAN" means any pension benefit or welfare benefit plan as defined in Sections 3(1), (2) or (3) of ERISA covering employees of any Borrower or any ERISA Affiliate of any Borrower. 9.1.75. "PLEDGE AND SECURITY AGREEMENTS" means, individually and collectively, each pledge and security agreement relating to a pledge of an equity interest in an enterprise (all as may be amended, modified and supplemented from time to time) required to be executed and delivered in favor of Administrative Agent (for the benefit of Lenders) pursuant to the Loan Documents. 9.1.76. "PORTION" means a designated portion of the indebtedness hereunder as to which a specified Rate Index (and a corresponding Rate Margin) has been selected or deemed to be applicable. 9.1.77. "PRIME RATE" means the rate of interest per annum publicly announced by Administrative Agent form time to time as its prime rate of interest on direct, short-term borrowings to its large business customers with high credit standings; such term, however, does not necessarily mean Administrative Agent's best or lowest rate available. 9.1.78. "PRO RATA" means from or to each Lender in proportion to its Commitment Percentage. -65- 9.1.79. "RATE INDEX" has the meaning set forth in Section 1.1.5 hereof (for purposes of the Line of Credit Facility) AND Section 1.2.5 hereof (for purposes of the Term Loan Facility). 9.1.80. "RATE MARGIN" has the meaning set forth in Section 1.1.5 hereof (for purposes of the Line of Credit Facility) AND Section 1.2.5 hereof (for purposes of the Term Loan Facility). 9.1.81. "REQUIRED LENDER" means Lenders holding at least 66% of the aggregate outstanding principal amount of the Loans (or, if no Loans at the time of such determination are outstanding, then Lenders obligated with respect to at least 66% of the Commitments). 9.1.82. "RESERVE PERCENTAGE" has the meaning set forth in the definition of "Adjusted LIBO Rate". 9.1.83. "SEC" means the Securities and Exchange Commission or any other entity that succeeds to its responsibilities and powers. 9.1.84. "SECURITIES ACTS" means, collectively, the Securities Act of 1933 and the Securities Exchange Act of 1934, each as amended, and as implemented by the SEC and interpreted by the SEC or any court of competent jurisdiction. 9.1.85. "SECURITY AGREEMENTS" means, collectively, each security agreement (as may be amended, modified and supplemented from time to time) required to be executed and delivered in favor of Administrative Agent (for the benefit of Lenders) pursuant to Article 2 hereof, and any other security agreement required or delivered in connection with the Loan Documents, including, without limitation, any intellectual property assignments or security agreements required to be delivered pursuant to Article 2 hereof. 9.1.86. "SETTLEMENT DATE" means, with respect to any Advance hereunder, the date on which funds are advanced by Administrative Agent (on behalf of Lenders). 9.1.87. "SIGNET BANK" means Signet Bank, a Virginia-chartered, federally insured commercial bank, or any successor thereof, having an office at the address specified in Section 10.7 hereof, and which is the Administrative Agent and a Lender hereunder at the time of execution hereof. 9.1.88. "SUBORDINATED INDEBTEDNESS" means all indebtedness and monetary obligations of Borrowers (other than indebtedness in favor of Lenders or indebtedness and obligations expressly excluded therefrom by the Required Lenders), including, without limitation, all indebtedness treated or defined as "Subordinated Indebtedness" under any separate Subordination Agreement by and among any Borrower, Administrative Agent (on behalf of Lenders) and another Person. NOTWITHSTANDING THE FOREGOING, the term "Subordinated Indebtedness" (unless the Required Lenders otherwise requires) does not include indebtedness permitted under Section 5.2(a or b) hereof or (to the extent consistent with Section 5.5.a hereof) under Section 5.2(c, d or e) hereof. The term "Subordinated Indebtedness" also does not include -66- CCC's contract funding or indebtedness to Canadian Imperial Bank of Commerce as listed on Schedule 5.2 hereto that existed as of the Closing Date. 9.1.89. "SUBSIDIARY" of any Person or entity means any Person as to which such other Person or entity (a) directly or indirectly owns, controls or holds 25% or more of the outstanding beneficial interest OR (b) is otherwise required in accordance with GAAP to be considered as part of a consolidated organization. 9.1.90. "TERM LOAN COMMITMENT" means the Commitment established pursuant to Section 1.2 hereof and Section 1.3 hereof. 9.1.91. "TERM LOAN COMMITMENT PERCENTAGE" means, with respect to each Lender, that portion of the total Term Loan Commitment as to which such Lender is obligated. 9.1.92. "TERM LOAN FACILITY" means the term loan Facility as described in Article 1 hereof. 9.1.93. "TERM LOAN MATURITY DATE" has the meaning set forth in Section 1.2.2 hereof, as may be extended from time to time in Lenders' sole and absolute discretion. 9.1.94. "TERM LOAN NOTE" means that certain Note (or Notes) payable to the order of each Lender (for its Line of Credit Commitment Percentage) prepared in accordance with Section 1.2.4 hereof, as may be amended, modified, restated, replaced, supplemented, extended or renewed from time to time hereafter. 9.1.95. "TOTAL CHARGES" means, at the time of any determination, the sum of the following items for Borrowers during the relevant four consecutive fiscal quarter period: a. The amount of Fixed Charges during such period, AND b. PLUS the net amount of federal and state income taxes paid during such period, AND c. PLUS investments under Section 5.7(e) hereof and dividends under Section 5.10 hereof (other than Redemption Dividends thereunder) during such period. For purposes of this calculation, interest includes interest accrued under Capital Leases, and principal includes principal obligations under Capital Leases. For purposes of this calculation, Total Charges shall also include the Total Charges of joint ventures that are consolidated with Borrowers for financial reporting purposes in accordance with GAAP. 9.1.96. "TOTAL CHARGE COVERAGE RATIO" means, at any time such ratio is being computed, the ratio of "OCF" (for the immediately preceding four fiscal quarters) TO "Total Charges" (for the immediately preceding four fiscal quarters). -67- 9.1.97. "UCC" means the Uniform Commercial Code as in effect in the applicable jurisdiction. 9.2. RULES OF CONSTRUCTION. 9.2.1. PLURAL; GENDER. Whenever used herein, (a) a singular number includes the plural, and the plural includes the singular, AND (b) use of the masculine, feminine or neuter gender includes all genders. 9.2.2. FINANCIAL AND ACCOUNTING TERMS. Except as otherwise provided herein, financial and accounting terms used in the foregoing definitions or elsewhere in this Agreement shall be defined in accordance with GAAP. ARTICLE 10: MISCELLANEOUS 10.1. INDEMNIFICATION, RELIANCE AND ASSUMPTION OF RISK PROVISIONS. Without limiting any other indemnification in any Loan Document, each Borrower (jointly and severally) hereby agrees to defend Administrative Agent and each Lender (and the directors, officers, employees, agents and Affiliates Administrative Agent and each Lender) from, and hold each of them harmless against, any and all losses, liabilities, claims, damages, interests, judgments, costs, or expenses (including without limitation, reasonable fees and disbursements of counsel) incurred by any of them arising out of or in any way connected with any Loan Document, EXCEPT for losses resulting directly and exclusively from such Person's own gross negligence, willful misconduct or fraud. In addition, each Borrower (jointly and severally) will reimburse and indemnify Administrative Agent and each Lender for all reasonable costs, expenses and losses resulting from the following: (1) any failure or refusal by any Borrower or by any Affiliate of any Borrower to provide any requested assistance or cooperation in connection with any attempt by Administrative Agent or any Lender to liquidate any Collateral in the event of any Event of Default and/or any attempt by Administrative Agent or any Lender to otherwise exercise its rights hereunder, AND (2) any misrepresentation, gross negligence, fraud or willful misconduct by any Borrower (or any of its employees or officers), or any other person or entity pledging Collateral hereunder. Moreover, with respect to any Advance Request or other communication between any Borrower and Administrative Agent or Lenders hereunder and all other matters and transactions in connection therewith, each Borrower (jointly and severally) hereby irrevocably authorizes Administrative Agent and each Lender to accept, rely upon, act upon and comply with any verbal or written instructions, requests, confirmations and orders of any Authorized Officer of any Borrower. Each Borrower, Administrative Agent and each Lender each acknowledges that the transmissions of any such instruction, request, confirmation, order or other communication involves the possibility of errors, omissions, mistakes and discrepancies, and each Borrower, Administrative Agent and each Lender each agrees to adopt such internal measures and operational procedures to protect its interest. By reason thereof, each Borrower hereby assumes all risk of loss and responsibility for -- and hereby releases and discharges Administrative Agent and each Lender from any and all risk of loss and responsibility for, and agrees to indemnify, reimburse on demand and hold Administrative Agent and each Lender harmless from -- any and all claims, actions, damages, losses, liability and expenses by reason -68- of or in any way related to (a) Administrative Agent's or any Lender's accepting, relying and acting upon, complying with or observing any such instructions, requests, confirmations or orders from or on behalf of any such Authorized Officer, and (b) any such errors, omissions, mistakes and discrepancies by (or otherwise resulting from or attributable to the actions or inactions of) any Authorized Officer or any Borrower; PROVIDED, HOWEVER, no Borrower has assumed hereby the risk of any foreseeable actual loss resulting directly and exclusively from Administrative Agent's or any Lender's own gross negligence, fraud or willful misconduct. Each Borrower's obligations provided for in this Section 10.1 will survive any termination of this Agreement, and the repayment of the outstanding balances hereunder. 10.2. ASSIGNMENT; DISCLOSURE OF INFORMATION TO THIRD PARTIES. 10.2.1. ASSIGNMENTS. No Loan Document may be assigned (in whole or in part) by any Borrower without the prior written consent of Lenders. Notwithstanding any other provision of any Loan Document, without receiving any consent of any Borrower, each Lender at any time and from time to time may syndicate, participate or otherwise transfer or assign its rights and obligations under the Loan Documents (or the indebtedness evidenced thereby) as follows: (a) up to 75% of its rights and obligations under any of the Loan Documents (or any of the indebtedness evidenced thereby) to any Person provided that the number of Lenders hereunder does not exceed three, AND (b) all (or any proportionate part of) its rights and obligations under any of the Loan Documents (or any of the indebtedness evidenced thereby) to any Affiliate of such Lender, AND (c) all (or any proportionate part of) its rights and obligations under any of the Loan Documents (or any of the indebtedness evidenced thereby) to any Person during the occurrence of any Event of Default under the Loan Documents. In addition, no Borrower will unreasonably withhold its consent to any request by any Lender to syndicate, participate or otherwise transfer or assign all or any portion of its interest in excess of 75%. Administrative Agent will make reasonable efforts to notify Borrowers of any such participation, transfer or assignment within twenty (20) Business Days thereafter; however, a failure to so notify will in no way impair any rights of Administrative Agent or any Lender or any participant, transferee or assignee thereof. Upon execution and delivery of an appropriate instrument between any such participant, transferee or assignee and such assigning Lender, at such Lender's request, such participant, transferee, or assignee will become a Lender party to this Agreement and will have all the rights and obligations of a Lender as set forth in such instrument. At Administrative Agent's request, each Borrower will execute or re-execute and deliver any documents necessary to reflect or implement any such participation, transfer or assignment and will otherwise fully cooperate in any such syndication process. 10.2.2. DISCLOSURE OF INFORMATION. Administrative Agent and each Lender will employ reasonable procedures to treat as confidential all written, non-public information delivered to Administrative Agent or such Lender (as applicable) pursuant to this Agreement concerning the property, operations and performance of Borrowers that is conspicuously designated by Borrowers as confidential information. With respect to any employee of Administrative Agent or any Lender, such procedures will be at least as protective of such confidential information of Borrowers as those established procedures of Administrative Agent or such Lender (respectively) applicable to and known by such employee for protecting Administrative Agent's or such Lender's own confidential information. NOTWITHSTANDING THE -69- FOREGOING, Administrative Agent and each Lender may furnish or disclose any information concerning any Borrower (or any of its properties or operations) in Administrative Agent's or such Lender's possession from time to time (1) to permitted participants, transferees and assignees (including prospective participants, transferees and assignees), but subject to a reasonable confidentiality agreement regarding any non-public confidential information thereby disclosed, AND (2) in response to credit inquiries consistent with general banking practices. In addition, Administrative Agent and each Lender may also furnish or disclose any such information (a) to any federal or state regulator of Administrative Agent or such Lender, AND (b) to Administrative Agent's or such Lender's Affiliates, employees, legal counsel, appraisers, accountants and agents, AND (c) to any Person pursuant to compulsory judicial process, AND (d) to any judicial or arbitration forum in connection with enforcing the Loan Documents or defending an action based upon the Loan Documents, AND (e) to any other Person with respect to the public or non-confidential information. Administrative Agent and each Lender may also include operational and performance information and data relating to any Borrower in compilations, reports and data bases assembled by Administrative Agent or such Lender (or Affiliates of Administrative Agent or such Lender) and used to conduct, support, assist in and validate portfolio, industry and credit analysis; PROVIDED, HOWEVER, that neither Administrative Agent nor any Lender may thereby disclose to other Persons any information relating to any Borrower in a manner that is attributable to such Borrower UNLESS (1) such disclosure is permitted under the standards outlined above in this Section OR (2) such Borrower otherwise consents thereto (which consent may not be unreasonably withheld). 10.3. BINDING EFFECT AND GOVERNING LAW. This Agreement and all documents executed hereunder are binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. This Agreement and all documents executed hereunder are governed as to their validity, interpretation, construction and effect by the laws of the Commonwealth of Virginia (without giving effect to the conflicts of law rules of Virginia). 10.4. NO WAIVER; DELAY. To be effective, any waiver by Lenders must be expressed in a writing executed by Administrative Agent with the approval of the Required Lenders (OTHER THAN Defaults under Section 7.1.1. hereof (payment-related Defaults) or Section 7.1.3. hereof (Financial Covenant Defaults), which must be approved by each Lender). Once an Event of Default occurs hereunder, such Event of Default will continue to exist until expressly waived by Lenders (in their sole and absolute discretion). If Administrative Agent or any Lender waives any power, right or remedy arising hereunder or under any applicable law, THEN such waiver will not be deemed to be a waiver (a) upon the later occurrence or recurrence of any events giving rise to the earlier waiver OR (b) as to any other Obligor. No failure or delay by Administrative Agent or any Lender to insist upon the strict performance of any term, condition, covenant or agreement of any of the Loan Documents, or to exercise any right, power or remedy hereunder, will constitute a waiver of compliance with any such term, condition, covenant or agreement, or preclude Administrative Agent or any Lender from exercising any such right, power, or remedy at any later time or times. By accepting payment after the due date of any amount payable under this Agreement or any other Loan Document, neither Administrative Agent nor any Lender will be deemed to waive the right either to require prompt payment when due of all other amounts payable under this Agreement or any other Loan Document or to declare an Event of Default for failure to effect such prompt payment of any such other amount. The remedies -70- provided herein are cumulative and not exclusive of each other, the remedies provided by law, and the remedies provided by the other Loan Documents. 10.5. MODIFICATIONS AND AMENDMENTS. Except as otherwise expressly provided in this Agreement, no modification or amendment to any Loan Document will be effective unless made in a writing signed by appropriate officers of Administrative Agent (with the consent of the Required Lenders) and each Borrower that is a party to such Loan Document. NOTWITHSTANDING THE FOREGOING, to the extent that any such modification or amendment attempts to implement any of the following, THEN such amendment or modification must approved by all Lenders: a. Increase the Commitments or the Commitment Percentage of any Lender, OR b. Add any additional Rate Index, alter any threshold for any Rate Margin category, reduce the amount of any Rate Margin, or otherwise alter any provision that effectively reduces that interest rate applicable to the Loans, OR c. Reduce the amount of any fees due to Lenders under any Loan Document (other than fees payable to the Administrative Agent for its own account), OR d. Reduce the amount of any payment (whether for principal, interest or any fee, other than a fee payable to the Administrative Agent for its own account), OR e. Postpone or extend the Maturity Date for any Facility or any scheduled payment date (whether for principal, interest or any fee, other than a fee payable to the Administrative Agent for its own account), OR f. Modify the definition of "Pro Rata" or "Required Lenders" or otherwise change the number or percentage of Lenders that are required to take or approve (or direct the Administrative Agent to take) any action under the Loan Documents, OR g. Modify the thresholds or time periods for any of the Financial Covenants under Section 4.1 hereof or modify any of the component definitions used in calculating such Financial Covenants, OR h. Release or discharge any Borrower as a "Borrower" under the Loan Documents or permit any Borrower to assign to another Person any of its rights or obligations under the Loan Documents, OR i. Release all or any part of any guaranty of any part of the Indebtedness under the Loan Documents or any security interest in or pledge of any Collateral (except as otherwise already expressly authorized under the Loan Documents), OR j. Amend this Section. -71- In addition, no provision of any Loan Document relating to the rights or obligations of the Administrative Agent may be modified or amended without the consent of the Administrative Agent. 10.6. HEADINGS. The various headings in this Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement or any provision hereof. 10.7. NOTICES. Any notice, request, consent, waiver or other communication required or permitted under or in connection with the Loan Documents will be deemed satisfactorily given if it is in writing and is delivered either personally to the addressee thereof, OR by prepaid registered or certified U.S. mail (return receipt requested), OR by a nationally recognized commercial courier service with next-day delivery charges prepaid, OR by telegraph, OR by facsimile (voice confirmed), OR by any other reasonable means of personal delivery to the party entitled thereto at its respective address set forth below: If to any Borrower [Party Entitled to Notice] OR ITS AFFILIATES: c/o CCC Information Services Inc. World Trade Center Chicago 444 Merchandise Mart Chicago, IL 60654 Attention: Treasurer Facsimile: (312) 527-2298 With a Copy tO (which shall not constitute notice to Borrowers): Winston & Strawn 35 W. Wacker Drive Chicago, IL 60601 Attention: Oscar A. David, Esquire Facsimile: (312) 558-5700 and CCC Information Services Inc. World Trade Center Chicago 444 Merchandise Mart Chicago, IL 60654 Attention: Legal Department Facsimile: (312) 527-2298 If to Signet Bank ADMINISTRATIVE AGENT: 7799 Leesburg Pike, Suite 500 Falls Church, VA 22043 Attention: Bryan J. Mitchell, Senior Vice President Facsimile: (703) 506-9712 -72- With a Copy To (which shall not constitute notice to Lender): Samuel G. Rubenstein, Esquire Bryan Cave LLP 700 13th Street, N.W., Suite 700 Washington, D.C. 20005 Facsimile: (202) 508-6200 IF TO ANY LENDER: Such Lender's address and facsimile set forth on the signature pages hereof Any party to a Loan Document may change its address or facsimile number for notice purposes by giving notice thereof to the other parties to such Loan Document in accordance with this Section, provided that such change shall not be effective until 2 calendar days after notice of such change. All such notices and other communications will be deemed given and effective (a) if by mail, then upon actual receipt or 5 calendar days after mailing as provided above (whichever is earlier), OR (b) if by facsimile, then upon successful transmittal to such party's designated number, OR (c) if by telegraph, then upon actual receipt or 2 Business Days after delivery to the telegraph company (whichever is earlier), OR (d) if by nationally recognized commercial courier service, then upon actual receipt or 2 Business Days after delivery to the courier service (whichever is earlier), OR if otherwise delivered, then upon actual receipt. For any and all purposes related to giving and receiving notices and communications between any Borrower and Administrative Agent or any Lender under any Loan Document, each Borrower hereby irrevocably appoints CCC's President as its agent to whom Administrative Agent and Lenders may give and from whom Administrative Agent and Lenders may receive all such notices and communications. 10.8. TIME OF DAY. All time of day restrictions imposed herein shall be calculated using Eastern Time. 10.9. RELATIONSHIP WITH PRIOR AGREEMENTS. This Agreement completely and fully supersedes all oral agreements and all other and prior written agreements by and between any Borrower, Administrative Agent and any Lender concerning the terms and conditions of this credit arrangement (other than the Fee Agreement). 10.10. SEVERABILITY. If fulfillment of any provision of or any transaction related to any Loan Document at the time performance is due involves transcending the limit of validity prescribed by applicable law, then IPSO FACTO, the obligation to be fulfilled shall be reduced to the limit of such validity. If any clause or provision of this Agreement operates or would prospectively operate to invalidate this Agreement in whole or in part, THEN such clause or provision only shall be void (as though not contained herein), and the remainder of this Agreement shall remain operative and in full force and effect; PROVIDED, HOWEVER, if any such clause or provision pertains to the repayment of any indebtedness hereunder, THEN the occurrence of any such invalidity shall constitute an immediate Event of Default hereunder. -73- 10.11. TERMINATION AND SURVIVAL. All agreements, representations, warranties and covenants of any Borrower contained herein or in any documentation required hereunder will survive the execution and delivery of this Agreement and the other Loan Documents and the funding of the Advances hereunder and will continue in full force and effect until terminated in accordance with this Section. Except as otherwise provided in Section 4.13 hereof and Section 10.1 hereof, this Agreement will terminate upon satisfaction of each of the following events: (i) payment to Administrative Agent and each Lender in full (unconditionally and indefeasibly) of the entire indebtedness and monetary obligations due hereunder and under the other Loan Documents, AND (ii) the termination of the Facilities hereunder, AND (iii) return and cancellation of any effective letters of credit issued by Administrative Agent or any Lender for the account of any Borrower (or delivery to Administrative Agent of cash or readily marketable collateral in an amount and subject to a pledge agreement that are acceptable to Administrative Agent in its sole and absolute discretion). This Agreement (and Administrative Agent's and each Lender's obligations hereunder) will also terminate if the conditions precedent under Section 2.2 hereof are not satisfied or waived by Lenders on or before October 31, 1996. 10.12. REINSTATEMENT. To the maximum extent not prohibited by applicable law, this Agreement (and the indebtedness hereunder and Collateral therefor) will be reinstated and correspondingly increased if at any time any amount received by Administrative Agent or any Lender in respect of any Loan Document is rescinded or must otherwise be restored or returned by Administrative Agent or such Lender to any Person upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of any Borrower or any other Person or upon the appointment of any receiver, intervenor, conservator, trustee or similar official for any Borrower or other Person or for any substantial part of the assets of any Borrower or any other Person, or otherwise, all as though such payments had not been made. 10.13. COUNTERPARTS. This Agreement may be executed in any number of counterparts with the same effect as if all the signatures on such counterparts appeared on one document. Each such counterpart will be deemed to be an original but all counterparts together will constitute one and the same instrument. 10.14. CONFLICT PROVISION. In the event of an irreconcilable conflict between the terms and conditions of this Agreement and the terms and conditions of any other Loan Document (other than a Note or any warrant issued to Administrative Agent or any Lender), the terms and conditions of this Agreement shall govern. 10.15. WAIVER OF SURETYSHIP DEFENSES. Each Borrower hereby waives any and all defenses and rights of discharge based upon suretyship or impairment of collateral (including, without limitation, lack of attachment or perfection with respect thereto) that it may now have or may hereafter acquire with respect to Administrative Agent or any Lender or any of its obligations hereunder, under any Loan Document or under any other agreement that it may have or may hereafter enter into with Administrative Agent or any Lender. 10.16. WAIVER OF LIABILITY. EACH BORROWER (a) AGREES THAT NEITHER ADMINISTRATIVE AGENT NOR ANY LENDER (NOR ANY DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS OF ADMINISTRATIVE AGENT OR ANY LENDER) SHALL HAVE ANY LIABILITY TO ANY BORROWER (WHETHER SOUNDING IN TORT, -74- CONTRACT OR OTHERWISE) FOR LOSSES OR COSTS SUFFERED OR INCURRED BY ANY BORROWER IN CONNECTION WITH OR IN ANY WAY RELATED TO THE TRANSACTIONS CONTEMPLATED OR THE RELATIONSHIP ESTABLISHED BY ANY LOAN DOCUMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION HEREWITH OR THEREWITH, EXCEPT FOR FORESEEABLE ACTUAL LOSSES RESULTING DIRECTLY AND EXCLUSIVELY FROM ADMINISTRATIVE AGENT'S OR SUCH LENDER'S OWN GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR FRAUD AND (b) WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY CLAIM AGAINST ADMINISTRATIVE AGENT OR ANY LENDER (OR THEIR DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS) WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE, EXCEPT FOR CLAIMS FOR FORESEEABLE ACTUAL LOSSES RESULTING DIRECTLY AND EXCLUSIVELY FROM ADMINISTRATIVE AGENT'S OR SUCH LENDER'S OWN GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR FRAUD. MOREOVER, WHETHER OR NOT SUCH DAMAGES ARE RELATED TO A CLAIM THAT IS SUBJECT TO THE WAIVER EFFECTED ABOVE AND WHETHER OR NOT SUCH WAIVER IS EFFECTIVE, UNLESS ADMINISTRATIVE AGENT OR ANY LENDER IS ADJUDGED TO BE GUILTY OF CRIMINAL CONDUCT THAT CAUSED SUCH DAMAGES, THEN NEITHER ADMINISTRATIVE AGENT NOR ANY LENDER (NOR ANY DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS OF ADMINISTRATIVE AGENT OR ANY LENDER) SHALL HAVE ANY LIABILITY WITH RESPECT TO (AND EACH BORROWER HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY CLAIM FOR) ANY SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE OR NON-FORESEEABLE DAMAGES SUFFERED BY ANY BORROWER IN CONNECTION WITH OR IN ANY WAY RELATED TO THE TRANSACTIONS CONTEMPLATED OR THE RELATIONSHIP ESTABLISHED BY ANY LOAN DOCUMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION HEREWITH OR THEREWITH; AND IF ADMINISTRATIVE AGENT OR ANY LENDER IS ADJUDGED TO BE GUILTY OF SUCH CRIMINAL CONDUCT, THEN EACH BORROWER WILL BE ENTITLED TO THE TYPES OF COMPENSATION (INCLUDING, AS APPLICABLE AND APPROPRIATE, SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE OR NON-FORESEEABLE DAMAGES) AS AND TO THE EXTENT AVAILABLE UNDER APPLICABLE LAW. 10.17. FORUM SELECTION; CONSENT TO JURISDICTION. ANY LITIGATION IN CONNECTION WITH OR IN ANY WAY RELATED TO ANY LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), ACTIONS OR INACTIONS OF ADMINISTRATIVE AGENT OR ANY LENDER OR ANY BORROWER WILL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE COMMONWEALTH OF VIRGINIA OR IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY BORROWER, ANY COLLATERAL OR ANY OTHER PROPERTY MAY ALSO BE BROUGHT (AT ADMINISTRATIVE AGENT'S OR SUCH LENDER'S OPTION) IN THE COURTS OF ANY OTHER JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND OR WHERE ADMINISTRATIVE AGENT OR SUCH LENDER MAY OTHERWISE OBTAIN PERSONAL JURISDICTION OVER ANY BORROWER. EACH BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF VIRGINIA AND OF THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL AND NON-APPEALABLE JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. EACH BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR OUTSIDE THE COMMONWEALTH OF VIRGINIA. EACH BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY BORROWER HAS OR -75- HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THEN EACH BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT. NOTWITHSTANDING THE FOREGOING, IF ADMINISTRATIVE AGENT OR ANY LENDER AT ANY TIME COMMENCES LITIGATION AGAINST BORROWERS IN A STATE COURT OF THE COMMONWEALTH OF VIRGINIA AT A TIME WHEN AND WITH RESPECT TO A CAUSE OF ACTION THAT AT THE TIME MAY ALSO BE PROPERLY MAINTAINED IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA (INCLUDING, WITHOUT LIMITATION, SATISFACTION OF PERSONAL AND SUBJECT MATTER JURISDICTION AND OTHER PROCEDURAL PREREQUISITES TO MAINTAINING SUCH ACTION), THEN NEITHER ADMINISTRATIVE AGENT NOR ANY LENDER WILL CONTEST OR OBJECT TO A TIMELY MOTION BY BORROWERS TO TRANSFER SUCH ACTION TO SUCH FEDERAL COURT PROVIDED THAT SUCH ACTION CAN AT THE TIME OF SUCH TRANSFER BE MAINTAINED WITH RESPECT TO ALL PARTIES AND ALL CAUSES OF ACTION IDENTIFIED BY ADMINISTRATIVE AGENT OR SUCH LENDER. 10.18. WAIVER OF JURY TRIAL. ADMINISTRATIVE AGENT, EACH LENDER AND EACH BORROWER EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION (WHETHER AS CLAIM, COUNTER-CLAIM, AFFIRMATIVE DEFENSE OR OTHERWISE) IN CONNECTION WITH OR IN ANY WAY RELATED TO ANY OF THE LOAN DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), ACTIONS OR INACTIONS OF ADMINISTRATIVE AGENT, ANY LENDER OR ANY BORROWER. EACH BORROWER ACKNOWLEDGES AND AGREES (a) THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY), AND (b) THAT IT HAS BEEN ADVISED BY LEGAL COUNSEL IN CONNECTION HEREWITH, AND (c) THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR ADMINISTRATIVE AGENT AND EACH LENDER ENTERING INTO THE LOAN DOCUMENTS AND FUNDING ADVANCES THEREUNDER. [BALANCE OF PAGE INTENTIONALLY BLANK] -76- IN WITNESS WHEREOF, the undersigned, by their duly authorized officers, have executed this Credit Facility Agreement, as an instrument under seal (whether or not any such seals are physically attached hereto), as of the day and year first above written. ATTEST: CCC INFORMATION SERVICES INC. By: /s/ Gerald P. Kenney By: /s/ Leonard Ciarrocchi ----------------------- --------------------------- Name: Gerald P. Kenney Name: Leonard Ciarrocchi ---------------- -------------------- Title: Secretary Title: CEO ---------------- -------------------- [CORPORATE SEAL] ATTEST: CCC VEHICLE DAMAGE ESTIMATORS, INC. By: /s/ Gerald P. Kenney By: /s/ Michael J. D'Onofro ----------------------- --------------------------- Name: Gerald P. Kenney Name: Michael J. D'Onofro ---------------- -------------------- Title: Secretary Title: Treasurer ---------------- -------------------- [CORPORATE SEAL] ATTEST: CERTIFIED COLLATERAL CORPORATION OF CANADA, LTD. By: /s/ Gerald P. Kenney By: /s/ Michael J. D'Onofro ----------------------- --------------------------- Name: Gerald P. Kenney Name: Michael J. D'Onofro ---------------- -------------------- Title: Secretary Title: Treasurer ---------------- -------------------- [CORPORATE SEAL] WITNESS: SIGNET BANK (AS ADMINISTRATIVE AGENT) By: /s/ Phyllis T. Fergonon By: /s/ Bryan J. Mitchell -------------------------- ---------------------------------- Bryan J. Mitchell, Sr. Vice President WITNESS: SIGNET BANK (AS LENDER) By: /s/ Phyllis T. Fergonon By: /s/ Bryan J. Mitchell -------------------------- ---------------------------------- Bryan J. Mitchell, Sr. Vice President Address: 7799 Leesburg Pike Suite 500 Falls Church, Virginia 22043 Facsimile: (703) 506-9712 COMMITMENT PERCENTAGES: Line of Credit: % --- Term Loan: % --- EX-10.3 5 EXHIBIT 10.3 EXHIBIT 10.3 CCC INFORMATION SERVICES GROUP INC. STOCK OPTION PLAN 1. PURPOSE The purpose of this Stock Option Plan (the "Plan") is to promote the growth and general prosperity of CCC Information Services Group Inc., a Delaware corporation ("CCCISG") and its direct and indirect subsidiaries, including CCC Information Services Inc., a Delaware corporation ("CCC"), and subsidiaries of CCC (collectively the "CCCISG Companies"). Under the Plan, certain employees of the CCCISG Companies will be eligible to receive grants of options to purchase shares of CCCISG common stock as an incentive to contribute to the success of the CCCISG Companies. 2. DEFINITIONS Unless the context clearly indicates otherwise, the following terms, when used in the Plan, shall have the meanings set forth in this Section 2. Wherever used in the Plan, words in the masculine gender shall be deemed to refer to females as well as males, and unless the context clearly indicates otherwise, words in the singular shall be deemed to refer also to the plural. (a) "Commencement Date" shall mean the date on which an Option is granted. (b) "Committee" means the Compensation Committee of the Board of Directors of CCCISG or such other committee as the Board by resolution shall designate. The Committee shall not include members who are officers or otherwise employed by CCCISG, or its subsidiaries. (c) "Common Stock" means the $.10 par value per share common stock of CCCISG. (d) "Disabled" shall have the following meaning: An individual is permanently and totally disabled if he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. An individual shall not be considered to be permanently and totally disabled unless he furnishes proof of the existence thereof in such form and manner, and at such times, as the Committee may require. The Committee shall have the final decision in determining if a party is disabled as defined herein. (e) "Employee" means an employee of at least one of the CCCISG Companies. (f) "Exercise Price" means either, as the context requires, the price per Share (not less than the greater of the stock price as quoted on NASDAQ National Market, or such other public exchange or market as designated by the Committee, as of the close of business on the Commencement Date or the fair market value as of the Commencement Date as determined by the Committee) that shall be tendered to CCCISG upon exercise of the Option, or the aggregate price that shall be tendered to CCCISG in payment for Shares upon exercise of an Option or a portion of the Option. (g) "Grantee" means an individual to whom an Option is granted under the Plan. (h) "Option" means a right granted to purchase Shares under the Plan. (i) "Stock Option Agreement" means the written instrument embodying an agreement between CCCISG and a Grantee, as provided in the Plan, evidencing the grant of an Option to the Grantee. (j) "Plan" means the CCC Information Services Group Inc. Stock Option Plan as set forth herein, as may be amended from time to time. A-1 (k) "Shares" means shares of Common Stock. 3. ADMINISTRATION The Plan shall be administered by the Committee. Subject to the provisions of the Plan, the Committee shall have authority to do everything necessary or appropriate to administer the Plan including, without limitation, interpreting the Plan. The Committee may take action only upon the agreement of a majority of its members then in office. Any action taken by the Committee through a written instrument signed by a majority of its members then in office shall be effective as though taken at a meeting duly called and held. All decisions, determinations, and interpretations of the Committee shall be final and binding on all concerned. 4. SHARES OF COMMON STOCK ELIGIBLE FOR ISSUANCE UNDER THE PLAN Subject to the provisions of Section 9, the aggregate number of Shares that may be issued upon the exercise of Options granted under the Plan shall be 675,800 Shares. Such Shares may be either authorized, but unissued Shares, or Shares issued and thereafter reacquired by CCCISG. 5. ELIGIBILITY Options shall be granted for Shares in the amounts, at the Exercise Price, and to the Employees as determined in the sole discretion of the Committee. Subject to all of the other terms and conditions hereinafter set forth, an Option may be exercised by Grantee after the respective dates of the grant, but no later than five (5) years from the date of the Option Agreement, namely: (a) One (1) year after the Commencement Date the Option may be exercised in respect of twenty five percent (25%) of the aggregate number of shares granted. (b) On or after the second (2nd) anniversary of the Commencement Date, the Option may be exercised in respect of an additional twenty five percent (25%) of the aggregate number of shares granted. Each succeeding anniversary date thereafter the option may be exercised in respect of an additional twenty five percent (25%) of the aggregate number of shares granted until all options have been fully vested. (c) If the Grantee's employment with the CCCISG Companies terminates for any reason, the Option shall not become exercisable with respect to any additional shares that the Grantee would have been entitled to purchase upon the occurrence of any anniversary date subsequent to the date of termination. (d) The maximum number of Options a Grantee can receive in any calendar year is 75,000 Options. 6. EFFECTIVE DATE AND DURATION OF THE PLAN The Plan shall become effective upon its adoption by resolution of the majority of the Board of Directors of CCCISG entitled to vote and shall continue in full force and effect until terminated. Such termination shall be no later than the day that the last option available to be exercised hereunder expires unless sooner terminated pursuant to Section 12 hereof. 7. DURATION OF OPTION (a) The proper officers of CCCISG shall execute and deliver to each Grantee a written Stock Option Agreement which shall be executed by the Grantee and which shall state the Commencement Date, the total number of Shares subject to the Option, the Exercise Price for such Shares, any provisions relating to vesting of the Option and such other provisions as the Committee in each instance shall deem appropriate and not inconsistent with any of the provisions of the Plan. (b) The maximum term of each Option granted under the Plan shall be the term set forth in the Stock Option Agreement which shall not exceed 10 years from the Commencement Date set forth in the A-2 Stock Option Agreement. Notwithstanding the maximum 10-year term, all Options granted under the Plan shall expire sooner as follows: (i) If the employment of a Grantee is terminated for any reason other than as specified in subparagraphs (ii), (iii) or (iv) hereof, then the Option will expire on the thirtieth (30th) day after the date of such termination. (ii) Subject to subparagraphs (iii) and (iv) hereof, if the Grantee retires from the CCCISG Companies at an age at which such Grantee would be eligible to receive benefits under the Federal Social Security Act or retires with the consent of the Board of Directors of CCCISG, the Option will expire three (3) months after the date of termination. (iii) Subject to subparagraph (iv) hereof, if a Grantee becomes Disabled while serving in his capacity as an Employee, the Option will expire twelve (12) months after the date of termination of the Employee's employment as the result of having become Disabled. (iv) If a Grantee dies while serving as an Employee, or if the Grantee dies within twelve (12) months after termination of service in accordance with subparagraph (iii) hereof, or if the Grantee shall die within three (3) months after termination of service in accordance with subparagraph (ii) hereof, the Option will expire twelve (12) months after the date of death. Following termination of employment for any reason, no Option shall become exercisable except to the extent such Option was exercisable on the date of such termination. 8. EXERCISE OF OPTION (a) Options shall be exercised by delivering or mailing at the time of exercise to the Secretary of CCCISG or his/her designee: (i) A notice, in the form and manner prescribed by the Committee, specifying the number of shares to be purchased under an Option, and (ii) Payment in full of the Exercise Price, and any associated withholding tax, for the Shares so purchased by (1) a money order, cashiers check or certified check payable to CCCISG, (2) shares of Common Stock owned by the Grantee (duly endorsed), or (3) such other form of payment as shall be determined by the Committee to be acceptable. Any shares delivered to CCCISG as payment for Shares upon exercise of the Option shall be valued at their fair market value as of the date of exercise of the Option as determined by (A) reference to prices quoted on NASDAQ National Market, or such other public exchange or market designated by the Committee, for the Common Stock or, (B) if no such quotation exists, as determined by the Committee in its sole discretion. (b) All Options granted under the Plan shall be subject to a vesting schedule, which shall be determined in the discretion of the Committee. (c) No Option shall be exercisable in whole or in part and no certificates representing Shares subject to the Option shall be delivered at any time that CCCISG shall determine that the satisfaction of withholding tax or other withholding liabilities is necessary or desirable, unless and until such withholding shall have been effected. (d) Options shall be exercisable only with respect to whole Shares and shall not be exercisable with respect to fractional Shares. 9. ADJUSTMENT OF AND CHANGES IN THE STOCK (a) In the event that the shares of Common Stock of CCCISG shall be changed into or exchanged for a different number or kind of shares of stock or other securities of CCCISG or of another corporation (whether by reason of merger, consolidation, recapitalization, reclassification, split-up, combination of A-3 shares, or otherwise), or if the number of shares of Common Stock of CCCISG shall be increased through a stock split or the payment of a stock dividend, then there shall be substituted for or added to each share of Common Stock of CCCISG theretofore appropriated or thereafter subject or which may become subject to an Option under the Plan, the number and kind of shares of stock or other securities into which each outstanding share of Common Stock of CCCISG shall so be changed, or for which each such share shall be exchanged, or to which each such share shall be entitled, as the case may be. Outstanding Options shall also be amended as to price and other terms if necessary to reflect the foregoing events. In the event there shall be any other change in the number or kind of the outstanding shares of Common Stock of CCCISG or any stock or other securities into which such Common Stock shall have been changed, or for which it shall have been exchanged, then if the Committee shall, in its sole discretion, determine that such change equitably requires an adjustment in any Option theretofore granted or which may be granted under the Plan, such adjustment shall be made in accordance with such determination. (b) No right to purchase fractional shares shall result from any adjustment in Options pursuant to this Section 9. In case of any such adjustment, the shares subject to the option shall be rounded down to the nearest whole share. Notice of any adjustment shall be given by CCCISG to each Grantee which shall have been so adjusted and such adjustment (whether or not notice is given) shall be effective and binding for all purposes of the Plan. (c) In the event CCCISG is a party to a merger or other reorganization, outstanding options shall not be affected if CCCISG is the surviving corporation. If CCCISG is not the surviving corporation, outstanding options subject to the agreement of merger or reorganization shall either be continued by the surviving corporation at a comparable economic value, or a cash settlement shall be provided to optionholders for all vested and unvested options. 10. ISSUANCE OF SHARES OF COMMON STOCK Upon receipt of the notice of exercise and payment of the Exercise Price, CCCISG shall, subject to the provisions of Section 8(c), issue to the Grantee a certificate or certificates for the Shares purchased, without charge to him for issue or transfer tax. Until the issuance of such certificates, no right to vote or receive dividends or other distributions nor any other rights as a stockholder of CCCISG shall exist with respect to Shares receivable notwithstanding the exercise of the Option. Except as provided in Section 9, no adjustment shall be made for distribution or other rights for which the record date is prior to the date a Common Stock certificate is issued. 11. TRANSFERABILITY OF OPTION Each Option shall be transferable only by will or the laws of descent and distribution and shall only be exercisable by the Grantee during his or her lifetime. 12. AMENDMENT OR TERMINATION OF THE PLAN (a) The Committee may amend the Plan from time to time in such respects as the Committee may deem advisable. Any such amendment may apply to any Options that were granted before the date such amendment is adopted, but that have not been exercised as of the date such amendment is adopted, provided that no such amendment shall change the number of Shares subject to, or the Exercise Price of, any such Option. No such amendment shall affect any Option that has been exercised before the date such amendment is adopted. (b) The Committee may at any time terminate the Plan. Any such termination of the Plan shall not affect Options previously granted and such Options shall remain in full force and effect as if the Plan had not been terminated. A-4 13. AGREEMENT AND REPRESENTATIONS OF GRANTEE As a condition to the exercise of any portion of an Option, CCCISG may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or otherwise distribute such Shares. The Shares shall not be offered, sold, transferred, pledged or otherwise disposed of by the person exercising the Option in the absence of registration, or the availability of an exemption from registration, under the Securities Act of 1933. No such offer, sale, transfer, pledge or other disposition may be made without prior written opinion of counsel for CCCISG that such offer, sale, transfer, pledge or other disposition will not violate the Securities Act of 1933 or other applicable securities law, rule or regulation of any jurisdiction. 14. TAX CONSIDERATIONS All options granted under the Plan are not intended to qualify, and shall not be treated as, "incentive stock options" as such term is defined in Section 422 of the Internal Revenue Code of 1986. 15. RESERVATION OF SHARES CCCISG, during the term of this Plan, shall at all times reserve and keep available, and shall seek or obtain from any regulatory body having jurisdiction any requisite authority in order to sell, such number of Shares as shall be sufficient to satisfy the requirements of the Plan. Inability of CCCISG to obtain from any regulatory body having jurisdiction the authority deemed by CCCISG's counsel to be necessary for the lawful sale of any Shares hereunder shall relieve CCCISG of any liability in respect of the failure to sell such Shares as to which such requisite authority shall not have been obtained. 16. NOTICE All notices delivered pursuant to the Plan shall be in writing, delivered by hand or by first class certified mail, return receipt requested, postage prepaid as specified in the Stock Option Agreement. 17. GOVERNING LAW The Plan shall be construed and its provisions enforced and administered in accordance with the laws of the State of Delaware, except to the extent that such laws may be superseded by any Federal law. A-5 EX-11 6 EXHIBIT 11 EXHIBIT 11 CCC INFORMATION SERVICES GROUP INC. STATEMENT RE: COMPUTATION OF NET INCOME (LOSS) PER SHARE (In Thousands) ACTUAL YEAR ENDED ---------------------------------------------------- 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 -------- -------- -------- -------- -------- Income (loss) per share from continuing operations: Income (loss) from continuing operations 15,522 1,286 (13,159) (5,774) (7,260) -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Weighted average common shares outstanding: Shares attributable to common stock outstanding 19,061 16,300 13,090 9,245 9,080 Shares attributable to common stock equivalents outstanding 1,306 577 -- -- -- Shares attributable to options pursuant to Staff Accounting Bulletin No. 8 -- 151 151 151 151 -------- -------- -------- -------- -------- 20,367 17,028 13,241 9,396 9,231 -------- -------- -------- -------- -------- Income (loss) per share from continuing operations $ 0.76 $ 0.08 $ (0.99) $ (0.61) $ (0.78) -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Income (loss) per share from discontinued operations: Income (loss) from discontinued operations -- -- 1,006 (4,357) 409 -------- -------- -------- -------- -------- Weighted average common shares outstanding: Shares attributable to common stock outstanding 19,061 16,300 13,090 9,245 9,080 Shares attributable to common stock equivalents outstanding 1,306 577 -- -- -- Shares attributable to options pursuant to Staff Accounting Bulletin No. 8 -- 151 151 151 151 -------- -------- -------- -------- -------- 20,367 17,028 13,241 9,396 9,231 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Income (loss) per share from discontinued operations $ -- $ -- $ 0.07 $ (0.47) $ 0.04 -------- -------- -------- -------- -------- Extraordinary loss on early retirement of debt, net of taxes per share: Extraordinary loss on early retirement of debt, net of taxes: (678) -- -- -- -- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Weighted average common shares outstanding: Shares attributable to common stock outstanding 19,061 16,300 13,090 9,245 9,080 Shares attributable to common stock equivalents outstanding 1,306 577 -- -- -- Shares attributable to options pursuant to Staff Accounting Bulletin No. 8 -- 151 151 151 151 -------- -------- -------- -------- -------- 20,367 17,028 13,241 9,396 9,231 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Extraordinary loss on early retirement of debt, net of taxes per share $ (0.03) $ -- $ -- $ -- $ -- -------- -------- -------- -------- -------- Dividends and accretion on mandatorily redeemable preferred stock per share: Dividends and accretion on mandatorily redeemable preferred stock (6,694) (3,003) (1,518) -- -- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Weighted average common shares outstanding: Shares attributable to common stock outstanding 19,061 16,300 13,090 9,245 9,080 Shares attributable to common stock equivalents outstanding 1,306 577 -- -- -- Shares attributable to options pursuant to Staff Accounting Bulletin No. 8 -- 151 151 151 151 -------- -------- -------- -------- -------- 20,367 17,028 13,241 9,396 9,231 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Dividends and accretion on mandatorily redeemable preferred stock per share $ (0.33) $ (0.18) $ (0.11) $ -- $ -- -------- -------- -------- -------- -------- Net income (loss) per share applicable to common stock: Net income (loss) applicable to common stock 8,150 (1,717) (13,671) (10,131) (6,851) -------- -------- -------- -------- -------- Weighted average common shares outstanding: Shares attributable to common stock outstanding 19,061 16,300 13,090 9,245 9,080 Shares attributable to common stock equivalents outstanding 1,306 577 -- -- -- Shares attributable to options pursuant to Staff Accounting Bulletin No. 8 -- 151 151 151 151 -------- -------- -------- -------- -------- 20,367 17,028 13,241 9,396 9,231 -------- -------- -------- -------- -------- Net income (loss) per share applicable to common stock $ 0.40 $ (0.10) $ (1.03) $ (1.08) $ (0.74) -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
EX-23 7 EXHIBIT 23 Exhibit 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-15207) of CCC Information Services Group Inc. of our report dated January 22, 1997 appearing on page 22 of this Form 10-K PRICE WATERHOUSE LLP April 3, 1997 Chicago, Illinois EX-27 8 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITIED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED STATEMENTS. 1,000 12-MOS DEC-31-1996 JAN-01-1996 DEC-31-1996 9,403 9,001 11,714 1,942 0 31,383 28,449 20,361 58,268 23,290 111 4,688 0 86,191 (61,898) 58,268 0 130,977 0 110,846 636 1,005 2,562 18,205 2,683 15,522 0 (678) 0 14,844 .40 0 Accumulated deficit Other income, net of expenses Loss on early retirement of debt, net of income taxes Includes dividends and accretion on mandatorily redeemable preferred stock
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