-----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, RFa1ZqQbjXbvpZ4XTJsuJkipx+wcijBpEpyySdjmkltqgK2BT6yo/2szOeC6rKxS hRgNDtl8ph5tMpBkotT/xw== 0000950144-01-505848.txt : 20010815 0000950144-01-505848.hdr.sgml : 20010815 ACCESSION NUMBER: 0000950144-01-505848 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHOICEPOINT INC CENTRAL INDEX KEY: 0001040596 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-CONSUMER CREDIT REPORTING, COLLECTION AGENCIES [7320] IRS NUMBER: 582309650 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13069 FILM NUMBER: 1710899 BUSINESS ADDRESS: STREET 1: 1000 ALDERMAN DR CITY: ALPHARETTA STATE: GA ZIP: 30005 BUSINESS PHONE: 7707526000 MAIL ADDRESS: STREET 1: CHOICEPOINT INC STREET 2: 1000 ALDERMAN DR CITY: ALPHARETTA STATE: GA ZIP: 30005 10-Q 1 g71227e10-q.txt CHOICEPOINT, INC. 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended JUNE 30, 2001 ---------------------------------------- or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________________ to _________________ Commission File Number: 1-13069 CHOICEPOINT INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Georgia 58-2309650 - ---------------------------------------------- ------------------------------- (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) 1000 Alderman Drive, Alpharetta, Georgia 30005 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (770) 752-6000 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Class Outstanding at July 31, 2001 ----- ---------------------------- Common Stock, $.10 Par Value 62,647,587
2 CHOICEPOINT INC. FORM 10-Q QUARTER ENDED JUNE 30, 2001 INDEX
Page No. -------- Part I. FINANCIAL INFORMATION - ------------------------------ Item 1. Financial Statements Consolidated Statements of Income (unaudited) - Three Months Ended June 30, 2001 and 2000 and Six Months Ended June 30, 2001 and 2000 ............................. 3 Consolidated Balance Sheets June 30, 2001 (unaudited) and December 31, 2000 ......................... 4 Consolidated Statement of Shareholders' Equity (unaudited)- Six Months Ended June 30, 2001 .......................................... 5 Consolidated Statements of Cash Flows (unaudited) - Six Months Ended June 30, 2001 and 2000 ................................. 6 Notes to Consolidated Financial Statements ................................. 7 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition......................... 12 Item 3. Quantitative and Qualitative Disclosures about Market Risk ......... 17 Part II. OTHER INFORMATION Item 1. Legal Proceedings .................................................. 17 Item 2. Changes in Securities and Use of Proceeds .......................... 17 Item 3. Defaults Upon Senior Securities .................................... 17 Item 4. Submission of Matters to a Vote of Security Holders ................ 17 Item 5. Other Information................................................... 18 Item 6. Exhibits and Reports on Form 8-K ................................... 18 Signatures ................................................................. 19 Exhibit Index .............................................................. 20
2 3 CHOICEPOINT INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Six Months Ended June 30, June 30, (In thousands, except per share data) 2001 2000 2001 2000 ================================================================================================ Revenue $162,806 $ 148,486 $318,487 $295,206 Costs and expenses: Cost of services 93,849 84,247 185,129 174,448 Selling, general and administrative 33,376 36,049 64,332 68,268 Merger-related costs & unusual items -- 28,949 18,009 28,949 -------- --------- -------- -------- Total costs and expenses 127,225 149,245 267,470 271,665 Operating income (loss) 35,581 (759) 51,017 23,541 Interest expense, net 2,544 3,228 5,099 6,205 -------- --------- -------- -------- Income (loss) before income taxes 33,037 (3,987) 45,918 17,336 Provision for income taxes 13,116 1,791 18,784 10,513 -------- --------- -------- -------- Net income (loss) $ 19,921 $ (5,778) $ 27,134 $ 6,823 ======== ========= ======== ======== Earnings per share - basic (Notes 5 & 6) $ 0.32 $ (0.10) $ 0.44 $ 0.11 Weighted average shares - basic 61,540 59,631 61,375 59,559 Earnings per share - diluted (Notes 5 & 6) $ 0.31 $ (0.10) $ 0.42 $ 0.11 Weighted average shares - diluted 65,155 59,631 64,927 62,315
The accompanying notes are an integral part of these consolidated statements. 3 4 CHOICEPOINT INC. CONSOLIDATED BALANCE SHEETS
June 30, 2001 December 31, (In thousands, except par values) (Unaudited) 2000 ============================================================================================================ ASSETS Current assets: Cash and cash equivalents $ 25,297 $ 44,909 Accounts receivable, net of allowance for doubtful accounts of $4,919 in 2001 and $5,787 in 2000 129,613 109,709 Deferred income tax assets 8,374 7,788 Other current assets 15,068 15,923 --------- --------- Total current assets 178,352 178,329 Property and equipment, net 68,977 68,792 Goodwill, net 412,581 370,232 Deferred income tax assets 17,721 10,244 Other 78,212 76,842 --------- --------- Total Assets $ 755,843 $ 704,439 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term debt and current maturities of long-term debt $ 639 $ 638 Accounts payable 29,618 31,123 Accrued salaries and bonuses 24,193 29,919 Other current liabilities 53,746 44,659 --------- --------- Total current liabilities 108,196 106,339 Long-term debt, less current maturities 141,817 141,638 Postretirement benefit obligations 44,184 45,844 Other long-term liabilities 14,454 9,549 --------- --------- Total liabilities 308,651 303,370 --------- --------- Shareholders' equity: Preferred stock, $.01 par value; 10,000 shares authorized, no shares issued or outstanding -- -- Common stock, $.10 par value; shares authorized - 100,000; issued and outstanding - 62,450 in 2001 and 61,566 in 2000 6,245 6,157 Paid-in capital 280,996 258,796 Retained earnings 174,760 147,626 Accumulated other comprehensive loss (2,539) (92) Stock held by employee benefit trusts, at cost, 723 shares in 2001 and 701 shares in 2000 (12,270) (11,418) --------- --------- Total shareholders' equity 447,192 401,069 --------- --------- Total Liabilities and Shareholders' Equity $ 755,843 $ 704,439 ========= =========
The accompanying notes are an integral part of these consolidated statements. 4 5 CHOICEPOINT INC. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
| Stock | Accumulated Held By | Other Employee Comprehensive | Common Paid-in Retained Comprehensive Benefit (In thousands) Income | Stock Capital Earnings Loss Trusts Total - ------------------------------------------------|-------------------------------------------------------------------------------- | Balance, December 31, 2000 | $ 6,157 $ 258,796 $ 147,626 $ (92) $ (11,418) $ 401,069 Net Income $ 27,134 | -- -- 27,134 -- -- 27,134 Translation adjustments (11) | -- -- -- (11) -- (11) Unrealized derivative losses on | cash flow hedges (net of taxes of | $1,600) (2,436) | -- -- -- (2,436) -- (2,436) -------- | Comprehensive income $ 24,687 | ======== | Restricted stock plans, net | -- 852 -- -- -- 852 Stock purchased by employee | benefit trusts | 2 (2) (852) (852) Stock options exercised | 86 15,008 -- -- -- 15,094 Tax benefit of stock options | exercised | -- 6,342 -- -- -- 6,342 | --------- --------- --------- -------- --------- --------- Balance, June 30, 2001 | $ 6,245 $ 280,996 $ 174,760 $ (2,539) $ (12,270) $ 447,192 | ========= ========= ========= ======== ========= =========
The accompanying notes are an integral part of these consolidated statements. 5 6 CHOICEPOINT INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended June 30, (In thousands) 2001 2000 - ---------------------------------------------------------------------------------------- Cash flows from operating activities: Net income $ 27,134 $ 6,823 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 28,604 26,779 Merger-related costs and unusual items 18,009 28,949 Compensation recognized under employee stock plans 852 78 Tax benefit of stock options exercised 6,342 2,500 Changes in assets and liabilities, excluding effects of acquisitions and divestiture: Accounts receivable, net (15,524) (12,879) Deferred income taxes (6,320) (4,037) Other current assets 659 2,034 Current liabilities, excluding debt (14,300) (22,942) Other long-term liabilities, excluding debt (916) (1,198) -------- -------- Net cash provided by operating activities 44,540 26,107 Cash flows from investing activities: Acquisitions, net of cash acquired (51,209) (80,692) Cash proceeds from sale of businesses -- 1,500 Additions to short-term investments -- 16,198 Additions to property and equipment, net (10,130) (8,692) Additions to other assets, net (16,752) (10,062) -------- -------- Net cash used by investing activities (78,091) (81,748) Cash flows from financing activities: Proceeds from long-term debt -- 75,000 Payments on long-term debt -- (55,254) Net short-term borrowings (292) (14) Purchases of stock held by employee benefit trust (852) -- Proceeds from exercise of stock options 15,094 4,900 -------- -------- Net cash provided by financing activities 13,950 24,632 -------- -------- Effect of foreign currency exchange rates on cash (11) (37) -------- -------- Net decrease in cash and cash equivalents (19,612) (31,046) Cash and cash equivalents, beginning of period 44,909 73,101 -------- -------- Cash and cash equivalents, end of period $ 25,297 $ 42,055 ======== ========
The accompanying notes are an integral part of this consolidated statement. 6 7 CHOICEPOINT INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2001 (UNAUDITED) 1. ORGANIZATION ChoicePoint Inc., a Georgia corporation ("ChoicePoint" or the "Company"), is a leading provider of identification and credential verification services for making smarter decisions in today's fast-paced world. ChoicePoint's businesses are focused on two primary markets - Insurance Services and Business & Government Services. The Insurance Services group provides information products and services used in the underwriting, claims and marketing processes by property and casualty and life insurers. Major offerings to the personal lines property and casualty market include claims history data, motor vehicle records, credit information, marketing services and modeling services. Additionally, ChoicePoint provides customized policy rating and issuance software and property inspections and audits to the commercial insurance market and laboratory testing services and related technology solutions to the life and health insurance market. The Business & Government Services group provides information products and services and direct marketing to Fortune 1000 corporations, consumer finance companies, asset-based lenders, legal and professional service providers, health care service providers and federal, state and local government agencies. Major offerings include pre-employment background screenings and drug testing administration services, public record searches, credential verification, due diligence information, Uniform Commercial Code searches and filings, database marketing services and people and shareholder locator information searches. 2. BASIS OF PRESENTATION ChoicePoint Inc. was established through the combination of the businesses that comprised the Insurance Services Group of Equifax Inc. ("Equifax") within a separate company and the subsequent spinoff on August 8, 1997 (the "Spinoff") of the Company's outstanding stock by Equifax as a stock dividend to the shareholders of Equifax. On May 16, 2000, ChoicePoint completed a merger (the "Merger") with DBT Online, Inc. ("DBT") by exchanging approximately 15.9 million shares (adjusted for stock split - Note 6) of its common stock for all of the common stock of DBT. Each share of DBT was exchanged for .525 shares of ChoicePoint common stock (pre-split). In addition, outstanding DBT stock options were converted at the same exchange ratio into options to purchase approximately 2.7 million shares of ChoicePoint common stock. DBT is a leading nationwide provider of online public records data and other publicly-available information. The Merger has been accounted for as a pooling of interests, and accordingly, all prior period consolidated financial statements have been restated to include the combined results of operations, financial position and cash flows of DBT. There were no material transactions between ChoicePoint and DBT prior to the Merger. No material adjustments were required to conform the accounting policies of the two companies. The consolidated financial statements include the accounts of ChoicePoint and its subsidiaries. All material transactions between entities included in the consolidated financial statements have been eliminated. The consolidated financial statements have been prepared on the historical cost basis, and reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the 7 8 financial position of ChoicePoint as of June 30, 2001 and the results of operations for the three months and six months ended June 30, 2001 and 2000, and the cash flows for the six months ended June 30, 2001 and 2000. The adjustments have been of a normal recurring nature. Certain prior period amounts have been reclassified to conform with the current period presentation. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. These financial statements should be read in conjunction with the notes to the financial statements included in ChoicePoint's Consolidated Financial Statements for the year ended December 31, 2000 as filed with the Securities and Exchange Commission in the Annual Report on Form 10-K (File No. 1-13069). The current period's results are not necessarily indicative of results to be expected for a full year. The Company recorded merger-related costs and unusual items of $18.0 million during the first quarter of 2001 and $28.9 million in the second quarter of 2000. The categories of costs incurred and the accrued balances at June 30, 2001 are summarized below:
Remaining Accrual at (In thousands) June 30, 2001 2000 2001 Expense Expense ---------- ------- ------- Transaction costs $ -- $ -- $11,579 Personnel-related costs 596 1,832 3,780 Other merger integration costs 2,180 2,433 3,629 Asset impairments -- 12,693 6,954 Non-merger severance 548 982 2,353 Other one-time charges 94 69 654 ------- ------- ------- $ 3,418 $18,009 $28,949 ======= ======= =======
In the first quarter of 2001, the personnel-related costs of $1.8 million consisted primarily of stay bonuses for services rendered through March 31, 2001 and severance and termination benefit costs primarily related to the integration of the two public records platforms and related sales and marketing departments. Other merger integration costs of $2.4 million consisted primarily of duplicate data and lease exit costs. Asset impairments of $12.7 million primarily reflected the write-down of equipment and other long-lived assets deemed to be impaired based on the integration plan for the two public records platforms which was finalized in the first quarter of 2001. In the second quarter of 2000, transaction costs of approximately $11.6 million included investment banking, legal and printing fees and other costs directly related to the Merger. Personnel-related costs of approximately $3.8 million consisted of benefit conversions and stay bonuses for services rendered through June 30, 2000 and severance. Other merger integration costs primarily include the elimination of duplicate data costs. Asset impairments of approximately $7.0 million represent the write-down of goodwill and other long-lived assets. 3. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. 4. REVENUE AND EXPENSE RECOGNITION ChoicePoint recognizes revenue when an agreement exists, prices are determinable, service and products are delivered and collectibility is reasonably assured. Revenues from software license and maintenance agreements are recognized in accordance with Statement of Position 97-2, "Software Revenue Recognition." Motor vehicle records registry revenue (the fee charged by states for motor vehicle records), material, shipping and postage charges in the Company's direct marketing business and other costs that are 8 9 passed on by ChoicePoint to its customers ("pass-through revenue") are excluded from revenue and recorded as a reduction to cost of services in the consolidated financial statements. For the three months ended June 30, pass-through revenue was $114.2 million in 2001 and $98.2 million in 2000 and for the six months ended June 30, pass-through revenue was $223.4 million in 2001 and $202.4 million in 2000. 5. EARNINGS PER SHARE The income amount used in the numerator of the Company's earnings per share calculations is the same for both basic and diluted earnings per share. The average outstanding shares used in the denominator of the calculation for diluted earnings per share includes the dilutive effect of stock options. The diluted share base for the quarter ended June 30, 2000 excludes 2.9 million incremental shares related to employee stock options due to their antidilutive effect as a result of the Company's reported net loss. 6. STOCK SPLIT On March 7, 2001, ChoicePoint effected a three-for-two stock split in the form of a stock dividend payable to shareholders of record as of February 16, 2001. Unless otherwise stated, share and per share data for all periods presented have been adjusted to reflect the split. 7. DEBT In August 1997, ChoicePoint entered into a $250 million unsecured revolving credit facility (the "Credit Facility") with a group of banks. The Credit Facility bears interest at variable rates and is expandable to $300 million, subject to approval of the lenders. The commitment termination date and final maturity of the Credit Facility will occur in August 2002. Total borrowings under the Credit Facility were $139 million at June 30, 2001. In addition, there was $3.5 million of other long-term debt outstanding at June 30, 2001. There were no short-term borrowings at June 30, 2001. 8. DERIVATIVE FINANCIAL INSTRUMENTS Effective January 1, 2001, ChoicePoint adopted Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"), and its corresponding amendments under SFAS No. 138. SFAS 133 requires the Company to measure all derivatives at fair value and to recognize them in the Consolidated Balance Sheet as an asset or liability, depending on ChoicePoint's rights or obligations under the applicable derivative contract. ChoicePoint's derivative instruments include interest rate swap agreements which have been designated as cash flow hedges and, as such, the effective portions of changes in fair value are reported in other comprehensive income ("OCI") and are subsequently reclassified into earnings when the hedged item affects earnings. These interest rate swap agreements have been entered into to hedge the variability of cash flows to be paid related to the Credit Facility and an operating lease. Changes in the fair value of derivative instruments not designated as hedging instruments and ineffective portions of hedges are recognized in earnings in the current period. The adoption of SFAS 133 as of January 1, 2001, resulted in a charge to OCI of $2.8 million, net of taxes. As of June 30, 2001, the cumulative change in OCI related to these derivatives is $2.4 million, net of taxes. For the three months and six months ended June 30, 2001, the Company recorded the ineffectiveness related to these cash flow hedges to net interest expense. These amounts were not material. 9. STOCK OPTIONS During the first six months of 2001, stock options to purchase approximately 1.7 million shares of ChoicePoint common stock were granted under the ChoicePoint Inc. 1997 Omnibus Stock Incentive Plan. Exercise prices of these options are equal to the fair market value on the date of grant. 9 10 10. COMPREHENSIVE INCOME Total comprehensive income for the three months and six months ended June 30, 2001 and 2000 was as follows (in thousands):
Three Months Ended Six Months Ended June 30, June 30, ---------------------- ----------------------- 2001 2000 2001 2000 ------- ------- -------- ------ Net income (loss) $19,921 $(5,778) $ 27,134 $6,823 Translation adjustments 99 (41) (11) 157 Change in unrealized net loss on investments -- 285 -- 255 Unrealized derivative gain (loss) on cash flow hedges (net of taxes) 343 -- (2,436) -- ------- ------- -------- ------ Comprehensive income $20,363 $(5,534) $ 24,687 $7,235 ======= ======= ======== ======
11. ACQUISITIONS During the six months ended June 30, 2001, the Company acquired BTi Employee Screening Services, Inc., a pre-employment background screening organization, ABI Consulting, Inc., a third-party administrator of employee drug testing programs, Insurity Solutions Inc., a provider of Internet-based rating, underwriting and policy-servicing tools, The Bode Technology Group, Inc., a premier provider of DNA identification services, and certain assets of National Medical Review Offices, Inc., a large provider of Medical Review Office services. The total purchase price of the acquisitions, which were accounted for using the purchase method, was approximately $51.4 million, with approximately $51.1 million of that amount allocated to goodwill. As of June 30, 2001, ChoicePoint has accrued approximately $2.8 million for transaction-related costs including lease terminations and personnel-related costs related to these acquisitions. 12. SEGMENT DISCLOSURES ChoicePoint operates primarily in two reportable segments: Insurance Services ("Insurance") and Business & Government Services ("B&G"). See Note 1 for a description of each segment. Revenues and operating income for the three months and six months ended June 30, 2001 and 2000 for the two segments, laser technology patents held by the Company ("Royalty") and the divested and discontinued lines were as follows:
Three months ended Three months ended June 30, 2001 June 30, 2000 ----------------------------------------- ----------------------------------------- Operating Income Operating before Operating Income before Operating Acquisition Income Acquisition Income (In thousands) Revenue Amortization (Loss) Revenue Amortization (Loss) -------- ----------------- ---------- -------- ------------- ---------- Insurance $ 83,934 $ 35,484 $ 33,990 $ 72,904 $ 29,051 $ 27,872 B&G 77,065 18,677 14,329 71,026 13,878 10,118 Royalty 1,807 1,191 1,191 1,648 1,017 1,017 Divested & Discontinued -- -- -- 2,908 847 847 Corporate and Shared Expenses -- (13,929) (13,929) -- (11,664) (11,664) Merger-related Costs and Unusual Items (Note 2) -- -- -- -- (28,949) (28,949) -------- -------- -------- -------- -------- -------- Total $162,806 $ 41,423 $ 35,581 $148,486 $ 4,180 $ (759) ======== ======== ======== ======== ======== ========
10 11
Six months ended Six months ended June 30, 2001 June 30, 2000 ----------------------------------------- ----------------------------------------- Operating Income Operating before Operating Income before Operating Acquisition Income Acquisition Income (In thousands) Revenue Amortization (Loss) Revenue Amortization (Loss) -------- -------- --------- -------- ------------- -------- Insurance $163,998 $ 67,372 $ 64,543 $148,621 $ 57,124 $ 54,814 B&G 151,025 35,439 27,013 137,167 21,466 13,983 Royalty 3,464 2,242 2,242 3,191 1,902 1,902 Divested & Discontinued -- -- -- 6,227 2,115 1,908 Corporate and Shared Expenses -- (24,772) (24,772) -- (20,117) (20,117) Merger-related Costs and Unusual Items (Note 2) -- (18,009) (18,009) -- (28,949) (28,949) -------- -------- -------- -------- -------- -------- Total $318,487 $ 62,272 $ 51,017 $295,206 $ 33,541 $ 23,541 ======== ======== ======== ======== ======== ========
As a result of the Merger and integration of the two public records businesses, the Company has discontinued certain product lines which were duplicative in nature or contrary to ChoicePoint's strategic goals. Corporate and shared expenses represent costs of support functions, research and development initiatives, incentives and profit sharing that benefit both segments. Acquisition amortization includes goodwill and other intangible amortization related to acquisitions. Depreciation and amortization for the three months and six months ended June 30, 2001 and 2000 were as follows:
Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2001 2000 2001 2000 ------- ------- ------- ------- Insurance $ 4,219 $ 3,913 $ 8,325 $ 7,884 B&G 8,891 7,605 17,607 15,845 Royalty 425 426 850 852 Divested & Discontinued -- 311 -- 829 Corporate 949 676 1,822 1,369 ------- ------- ------- ------- Total $14,484 $12,931 $28,604 $26,779 ======= ======= ======= =======
Substantially all of the Company's operations are located in the United States and no customer represents more than 10% of total operating revenue. 13. SUBSEQUENT EVENTS In July 2001, the Company acquired the pre-employment and drug testing businesses of Pinkerton Services Corporation, a unit of Securitas AB of Sweden, and Marketing Information and Technology, Inc., a provider of large-scale direct marketing systems for FORTUNE 500 clients for aggregate consideration of approximately $106 million. These acquisitions will be accounted for using the purchase method. In June 2001, the Financial Accounting Standards Board issued SFAS No. 141, "Business Combinations" effective July 1, 2001 and SFAS No. 142, "Goodwill and Other Intangible Assets" effective for the Company on January 1, 2002. SFAS No. 141 prohibits pooling of interests accounting for acquisitions initiated after June 30, 2001. SFAS No. 142 requires companies to cease amortizing goodwill that existed at June 30, 2001 on December 31, 2001. Any goodwill resulting from acquisitions completed after June 30, 2001 will not be amortized. SFAS No. 142 also broadens the criteria for recording intangible assets separate from goodwill and establishes a new method of testing goodwill for impairment on an annual basis or on an interim basis if an event occurs or circumstances change that would reduce the fair value of a 11 12 reporting unit below its carrying value. The provisions of SFAS No. 142 which apply to goodwill and intangible assets acquired prior to June 30, 2001 will be adopted by ChoicePoint on January 1, 2002. We expect the adoption of these accounting standards will result in certain of our intangibles being subsumed into goodwill and will result in the discontinuation of amortization of these assets and goodwill; however, impairment reviews may result in future periodic write-downs. In July 2001, the Company and certain of its subsidiaries entered into an agreement (the "Receivables Facility") with a financial institution whereby it may sell on a continuous basis and, without recourse, an undivided interest in all eligible trade accounts receivable subject to limitations. The Company will maintain the balance in the designated pool of accounts receivable sold by selling undivided interests in new receivables as existing receivables are collected. The Receivables Facility permits the advance of up to $100 million on the sale of accounts receivable. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION INTRODUCTION ChoicePoint Inc., a Georgia corporation ("ChoicePoint" or the "Company"), is a leading provider of identification and credential verification services for making smarter decisions in today's fast-paced world. ChoicePoint's businesses are focused on two primary markets - Insurance Services and Business & Government Services. See Note 1 to the Consolidated Financial Statements for a description of each market. On May 16, 2000, ChoicePoint completed a merger (the "Merger") with DBT Online, Inc. ("DBT"). The Merger has been accounted for as a pooling of interests and, accordingly, all prior period consolidated financial statements have been restated to include the combined results of operations, financial position and cash flows of DBT. See Note 2 to the Consolidated Financial Statements for a description of the Merger. On March 7, 2001, ChoicePoint effected a three-for-two stock split in the form of a stock dividend payable to shareholders of record as of February 16, 2001. Unless otherwise stated, share and per share data for all periods presented have been adjusted to reflect the stock split. RESULTS OF OPERATIONS REVENUE The Company's total revenue for the second quarter of 2001 was $162.8 million, an increase of 10% over the second quarter of 2000. For the first six months of 2001, revenue was $318.5 million, an increase of 8% over the first six months of 2000. Consolidated internal revenue growth, which excludes the effect of revenue from purchased acquisitions and divestitures, was approximately 6% for the second quarter of 2001 and 6% for the six months ended June 30, 2001. Our revenue growth was driven primarily from continued strong unit performances in all of the Insurance Services' product lines, except Osborn Laboratories, and Business & Government Services' workplace solutions and public records businesses. SEGMENT REVENUE Insurance Services' major offerings include claims history data, motor vehicle records, credit information and marketing and modeling services to the personal lines property and casualty market; customized policy rating and issuance software and property inspections and audits to the commercial insurance market; and laboratory testing services and related technology solutions to the life and health insurance market. In the second quarter of 2001, Insurance Services revenue was $83.9 million, up 15%, or $11.0 million, from $72.9 million in 2000. For the first six months of 2001, Insurance Services revenue grew 10%, or $15.4 million, to $164.0 million from $148.6 million in the prior year. This growth was driven by strong unit performance in personal lines products, our field-based commercial property inspection, modeling and 12 13 marketing, and customized rating and issuance software businesses. This growth was partially offset by a decline in laboratory services due to tough economic conditions in the life and health insurance market and the continuing effect of Triple-X legislation on the life insurance market which was effective January 1, 2000. Triple-X is an insurance regulation dealing with reserve requirements for guaranteed premium term life insurance policies and was passed by most states as of January 1, 2000. This legislation drove laboratory services volume significantly higher in the first quarter of 2000. As the laboratory services' business continues to struggle amidst tough economic conditions in the life and health insurance market, the Company has retained an investment banker to help us identify strategic alternatives for this business. We have identified several acceptable alternatives and are presently reviewing specific proposals. We anticipate a conclusion to this process during the third quarter of 2001. During the six months ended June 30, 2001, the Company acquired Insurity Solutions Inc. and, after June 30, 2000, the Company acquired RRS Police Records Management, Inc. and the assets of VIS'N Service Corporation. Excluding acquisitions, internal revenue growth in Insurance Services was 12% from the three months ended June 30, 2000 to the three months ended June 30, 2001. Excluding the effect of laboratory services, internal revenue growth in Insurance Services for the second quarter was 15%. Business & Government Services' major offerings include pre-employment background screenings and drug testing administration services, public record searches, credential verification, due diligence information, uniform commercial code searches and filings, database marketing services and people and shareholder locator information services. Business & Government Services' revenue for the second quarter increased $6.1 million, or 8%, to $77.1 million from $71.0 million in the second quarter of 2000. For the six months ended June 30, 2001, Business & Government Services' revenue was $151.0 million up 10%, or $13.8 million, from $137.2 million in the prior year. This growth was driven primarily by the integration of recent acquisitions in workplace solutions, offset by slower growth in public records and direct marketing due to economic conditions. During the first six months of 2001, the Company acquired BTi Employee Screening Services, Inc., ABI Consulting, Inc., The Bode Technology Group, Inc., and certain assets of National Medical Review Offices, Inc., and after June 30, 2000, acquired certain assets of Cat Data Group, LLC and Drug Free Consortium, Inc. Excluding acquisitions, internal revenue growth for Business & Government Services was 1% for the second quarter of 2001. Second quarter royalty revenue from laser technology patents held by the Company increased slightly to $1.8 million in 2001 from $1.6 million in 2000. For the six months ended June 30, royalty revenue was $3.5 million in 2001 compared with $3.2 million in 2000. The remaining patents underlying this revenue expire between November 2004 and May 2005. Divested and discontinued product lines include the operating results from certain product lines which were, as a result of the Merger and integration of the two public records businesses, determined to be duplicative in nature or contrary to ChoicePoint's strategic goals and, hence, discontinued. MERGER-RELATED COSTS AND UNUSUAL ITEMS Merger-related costs and unusual items of $18.0 million in the first quarter of 2001 and $28.9 million in the second quarter of 2000 primarily related to the Merger in May 2000 and related integration of the Company's two public records businesses in connection with this Merger, the plan for which was finalized in the first quarter of 2001. Merger-related costs and unusual items include asset impairments, stay bonuses, severance and termination benefits, and duplicate data and lease exit costs (See Note 2 to the Consolidated Financial Statements). OPERATING INCOME The Company's operating income was $35.6 million or 21.9% as a percent of revenue in the second quarter of 2001, up from an operating loss of $.8 million in the second quarter of the prior year. Excluding merger-related costs and unusual items in the second quarter of 2000, operating income was $28.2 million or 19.0% 13 14 of revenue. For the first six months of 2001, operating income was $51.0 million, up from $23.5 million for the first six months of 2000. Excluding merger-related costs and unusual items, for the first six months of 2001 operating income was $69.0 million or 21.7% as a percent of revenue, up from $52.5 million or 17.8% of revenue in the prior year. The improvement in operating margins from 2000 to 2001 was primarily as a result of cost synergies realized in the integration of DBT into the Company's public records business and our continued focus on improving cost efficiencies. Acquisition amortization, which includes goodwill and other intangible amortization related to acquisitions, was $5.8 million in the second quarter of 2001 and $4.9 million for the second quarter of the prior year. For the first six months of 2001, acquisition amortization was $11.3 million, an increase of $1.3 million over the prior year due to acquisitions in the second half of 2000 and the first half of 2001. SEGMENT OPERATING INCOME Insurance Services had second quarter 2001 operating income of $34.0 million, resulting in an operating margin of 40.5%, compared with 38.2% in the second quarter of 2000. The margin increase is primarily a result of the revenue growth discussed above and continued focus on improving cost efficiencies. Excluding acquisition amortization, second quarter operating margins were 42.3% in 2001 and 39.8% in 2000. Business & Government Services had second quarter 2001 operating income of $14.3 million, resulting in an operating margin of 18.6% compared with 14.2% in the second quarter of 2000. The margin increase is primarily a result of the revenue growth discussed above and cost synergies realized in the integration of DBT into the Company's public records business. Excluding acquisition amortization, second quarter operating margins were 24.2% in 2001 and 19.5% in 2000. Corporate and shared expenses represent costs of support functions, research and development initiatives, incentives and profit sharing that benefit both Insurance Services and Business & Government Services. Corporate and shared expenses were $13.9 million for the second quarter of 2001, up from $11.7 million in 2000. For the six months ended June 30, corporate and shared expenses were $24.8 million in 2001, up from $20.1 million in 2000. The increase in corporate and shared expenses is primarily due to the increase in compensation expense recognized under employee stock plans and incentives and additional resources to support the growth of the Company. INTEREST EXPENSE, NET Interest expense, net was $2.5 million for the second quarter of 2001, down from $3.2 million for the second quarter of 2000. For the six months ended June 30, 2001, interest expense, net was $5.1 million, a decrease of $1.1 million from the first six months of 2000 due to lower debt levels and interest rates. Interest expense for 2000 is net of interest income from short-term investments of $464,000 for the second quarter and $882,000 for the first six months. INCOME TAXES ChoicePoint's overall effective tax rate was 39.7% for the second quarter of 2001, down from 40.7%, excluding merger-related costs and unusual items, for the three months ended June 30, 2000. For the first six months of 2001, our effective tax rate was 40.9% compared with 60.6% for the first six months of the prior year. Excluding merger-related costs and unusual items, our effective tax rate for the six months ended June 30, 2001 was 39.7%, down from 40.8% for the same period of 2000. The decrease in effective tax rates excluding merger-related costs and unusual items from 2000 to 2001 is primarily due to implementation of state and local tax planning initiatives. FINANCIAL CONDITION AND LIQUIDITY Cash and cash equivalents totaled $25.3 million as of June 30, 2001. Cash provided by operations was $44.5 million for the first six months of 2001 compared to $26.1 million for the first six months of 2000. The increase in cash provided by operations was primarily attributable to increased revenue and a reduction in Days Sales Outstanding as compared to June 30, 2000. During the first six months of 2001, ChoicePoint continued to invest in future growth. Cash used by investing activities was $78.1 million, consisting of $51.2 million for acquisitions, $10.1 million for property and equipment and $16.8 million for other asset 14 15 additions, primarily software developed for internal use, purchased data files and software, and software developed for external use. In the first six months of 2000, cash used by investing activities was $81.7 million, including $80.7 million for acquisitions, $8.7 million for additions to property and equipment and $10.1 million for additions to other assets, offset by additions to short-term investments of $16.2 million. The Company anticipates full-year capital expenditures in the range of $50 million to $55 million for 2001, which will be used primarily for the development of a new public records technology platform, system upgrades and other assets, including capitalized software development, purchased data files and software. Cash provided by financing activities of $14.0 million in the first six months of 2001 consisted of $15.1 million of proceeds from the exercise of stock options offset by purchases of stock held by our employee benefit trust of $1.0 million. Cash provided by financing activities of $24.6 million in the first six months of 2000 included $19.7 million of net proceeds from long-term debt and $4.9 million of proceeds from the exercise of stock options. The Company's short-term and long-term liquidity depends primarily upon its level of net income and working capital management (accounts receivable, accounts payable and accrued expenses) and long-term debt. In August 1997, ChoicePoint entered into a $250 million unsecured revolving credit facility (the "Credit Facility") with a group of banks (See Note 7 to the Consolidated Financial Statements) which expires in August 2002. Borrowings under the Credit Facility were $139 million at June 30, 2001 and December 31, 2000. In connection with the acquisitions discussed in Note 13 to the Consolidated Financial Statements, in July 2001, the Company borrowed an additional $90 million under its Credit Facility. ChoicePoint may use additional borrowings under the Credit Facility to finance acquisitions and for general corporate cash requirements. In addition, there was $3.5 million of other long-term debt outstanding at June 30, 2001. ChoicePoint may also utilize lines of credit with two banks for overnight borrowings. As of June 30, 2001, there were no amounts outstanding under a line of credit. We believe that our existing cash balance and cash flow from operations will be sufficient to meet our working capital and capital expenditure requirements for the next twelve months. However, any material variance of our operating results from our projections or the investments in or acquisitions of businesses, products or technologies could require us to obtain additional equity or debt financing. Earnings before interest, taxes, depreciation and amortization ("EBITDA"), excluding merger-related costs and unusual items, increased $8.9 million in the second quarter of 2001, or 22% from the second quarter of 2000, to $50.1 million. For the first six months ended June 30, EBITDA increased $18.4 million, or 23%, to $97.6 million in 2001. EBITDA margins increased from 27.7% for the second quarter of 2000 to 30.8% for the second quarter of 2001 due to ChoicePoint's strong operating performance. The Company has included EBITDA data (which is not a measure of financial performance under generally accepted accounting principles) because such data is used by certain investors to analyze and compare companies on the basis of operating performance, leverage and liquidity and to determine a company's ability to service debt. EBITDA is not presented as a substitute for income from operations, net income or cash flows from operating activities. Economic Value Added ("EVA") measures the value created in excess of the cost of capital used to run the business. The Company uses EVA as a performance measure to make operational, capital and compensation decisions. EVA increased $2.8 million in the second quarter of 2001 and $7.5 million for the six months ended June 30, 2001 due primarily to strong operating results. EVA for the quarter includes a charge for "pooling goodwill" related to the Merger of approximately $8.1 million. The Company uses cash generated to invest in growing the business and to fund acquisitions and operations. Therefore, no cash dividends have been paid and the Company does not anticipate paying any cash dividends on its common stock in the near future. NEW ACCOUNTING PRONOUNCEMENTS In June 2000, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 138 that amends the accounting and reporting of derivatives under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," ("SFAS No. 133") to 15 16 exclude, among other things, contracts for normal purchases and sales (See Note 8 to the Consolidated Financial Statements). Effective January 1, 2001, ChoicePoint adopted SFAS No. 133. The adoption of SFAS No. 133 as of January 1, 2001, resulted in a charge to Other Comprehensive Income of $2.8 million, net of taxes. For the three months and six months ended June 30, 2001, the Company recorded the ineffectiveness related to these cash flow hedges to net interest expense. These amounts were not material. In June 2001, the Financial Accounting Standards Board issued SFAS No. 141, "Business Combinations" effective July 1, 2001 and SFAS No. 142, "Goodwill and Other Intangible Assets" effective for the Company on January 1, 2002. SFAS No. 141 prohibits pooling of interests accounting for acquisitions initiated after June 30, 2001. SFAS No. 142 requires companies to cease amortizing goodwill that existed at June 30, 2001 on December 31, 2001. Any goodwill resulting from acquisitions completed after June 30, 2001 will not be amortized. SFAS No. 142 also broadens the criteria for recording intangible assets separate from goodwill and establishes a new method of testing goodwill for impairment on an annual basis or on an interim basis if an event occurs or circumstances change that would reduce the fair value of a reporting unit below its carrying value. The provisions of SFAS No. 142 which apply to goodwill and intangible assets acquired prior to June 30, 2001 will be adopted by ChoicePoint on January 1, 2002. We expect the adoption of these accounting standards will result in certain of our intangibles being subsumed into goodwill and will result in the discontinuation of amortization of these assets and goodwill; however, impairment reviews may result in future periodic write-downs. SUBSEQUENT EVENTS In July 2001, the Company acquired the pre-employment and drug testing businesses of Pinkerton Services Corporation, a unit of Securitas AB of Sweden, and Marketing Information and Technology, Inc., a provider of large-scale direct marketing systems for FORTUNE 500 clients for aggregate consideration of approximately $106 million. These acquisitions will be accounted for using the purchase method. In July 2001, the Company and certain of its subsidiaries entered into an agreement (the "Receivables Facility") with a financial institution whereby it may sell on a continuous basis and, without recourse, an undivided interest in all eligible trade accounts receivable subject to limitations. The Company will maintain the balance in the designated pool of accounts receivable sold by selling undivided interests in new receivables as existing receivables are collected. The Receivables Facility permits the advance of up to $100 million on the sale of accounts receivable. FORWARD-LOOKING STATEMENTS Certain written and oral statements made by or on behalf of the Company may constitute "forward-looking statements" as defined under the Private Securities Litigation Reform Act of 1995. Words or phrases such as "should result," "are expected to," "we anticipate," "we estimate," "we project," or similar expressions are intended to identify forward-looking statements. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in any forward-looking statements. These risks and uncertainties include, but are not limited to, the following important factors: demand for the Company's services, product development, maintaining acceptable margins, ability to control costs, the impact of federal, state and local regulatory requirements on the Company's business, specifically the public records market and privacy matters affecting the Company, the impact of competition and the uncertainty of economic conditions in general. Additional information concerning these risks and uncertainties is contained in the Company's filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ended December 31, 2000. Readers are cautioned not to place undue reliance on forward-looking statements, since the statements speak only as of the date that they are made, and the Company undertakes no obligation to publicly update these statements based on events that may occur after the date of this report. 16 17 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is exposed to market risk from changes in interest rates. The information below summarizes the Company's market risk associated with its debt obligations as of June 30, 2001. The information below should be read in conjunction with Note 7 to the Consolidated Financial Statements. As of June 30, 2001, $139 million was outstanding under the Credit Facility. The Company has also entered into an interest rate swap agreement (the "Swap Agreement") to reduce the impact of changes in interest rates on its Credit Facility. The Swap Agreement had a notional amount of $125 million at June 30, 2001 and matures in August 2002. The Swap Agreement involves the exchange of variable rate for fixed rate payments and effectively changes the Company's interest rate exposure to a weighted average fixed rate of approximately 6.3%. Based on the Company's overall interest rate exposure at June 30, 2001, a near-term change in interest rates would not materially affect the consolidated financial position, results of operations or cash flows of the Company. As noted above, as of July 2001, $229 million is outstanding under the Credit Facility, of which $125 million is hedged with interest rate swaps. A one percent change in interest rates would result in a $1.0 million change in annual interest expense. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS ChoicePoint is involved in litigation from time to time in the ordinary course of its business. The Company does not believe that the outcome of any pending or threatened litigation will have a material adverse effect on the financial position or results of operations of ChoicePoint. However, as is inherent in legal proceedings where issues may be decided by finders of fact, there is a risk that unpredictable decisions adverse to the Company could be reached. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS Not Applicable. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not Applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On May 2, 2001 the Company held its regular Annual Meeting of Shareholders. The following matters were submitted to a vote of security holders: (a) Votes cast for or withheld regarding the re-election of two Directors for terms expiring in 2003:
FOR WITHHELD Douglas C. Curling 52,413,668 337,545 Kenneth G. Langone 52,407,687 343,526
Votes cast for or withheld regarding the re-election of one Director for a term expiring in 2004:
FOR WITHHELD Derek V. Smith 46,629,299 6,121,914
17 18 Votes cast for or withheld regarding the election of two Directors for terms expiring in 2004:
FOR WITHHELD Thomas M. Coughlin 52,382,258 368,955 Bonnie G. Hill 52,394,882 356,331
Directors whose terms of office continue after the meeting are as follows:
Terms expiring in 2002 Terms expiring in 2003 Terms expiring in 2004 Ron D. Barbaro Douglas C. Curling Thomas M. Coughlin Charles G. Betty James M. Denny Bonnie G. Hill Bernard Marcus Charles I. Story Derek V. Smith Kenneth G. Langone
(b) Votes cast to amend the ChoicePoint Inc. 1997 Omnibus Stock Incentive Plan to increase the number of shares of common stock that may be issued under the plan from 12 million to 15 million:
FOR AGAINST ABSTAIN 32,090,803 20,509,120 151,290
(c) Ratification of the appointment of Arthur Andersen LLP as independent public accountants of the Company for the fiscal year ending December 31, 2001:
FOR AGAINST ABSTAIN 52,493,613 123,902 133,698
ITEM 5. OTHER INFORMATION Not Applicable. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 10.1 Loan Agreement, dated as of July 2, 2001, among ChoicePoint Financial Inc., as Borrower, ChoicePoint Inc., as Initial Servicer, Three Pillars Funding Corporation, as Lender, and SunTrust Equitable Securities Corporation, as Administrator. 10.2 Receivables Sale and Contribution Agreement, dated as of July 2, 2001, among ChoicePoint Services Inc., PRC Corporation, ChoicePoint Business and Government Services Inc., ChoicePoint Direct Inc., Statewide Data Services, Inc., I.R.S.C., Inc., ChoicePoint Public Records Inc., Patlex Corporation, National Safety Alliance, Incorporated, BTi Employee Screening Services, Inc. and each other subsidiary of ChoicePoint Inc. that hereafter becomes a party hereto, as Originators, and ChoicePoint Capital Inc., as Buyer. 10.3 Receivables Sale Agreement, dated as of July 2, 2001, among ChoicePoint Capital Inc., as Seller, and ChoicePoint Financial Inc., as Purchaser.
(b) Reports on Form 8-K Registrant did not file any reports on Form 8-K during the quarter for which this report was filed. 18 19 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. CHOICEPOINT INC. ------------------ (Registrant) August 10, 2001 /s/ Derek V. Smith - -------------------- ------------------------------------------- Date Derek V. Smith, Chairman and Chief Executive Officer August 10, 2001 /s/ Michael S. Wood - -------------------- ------------------------------------------- Date Michael S. Wood, Chief Financial Officer 19 20 EXHIBIT INDEX
Exhibit Description of Exhibit - ------- ---------------------- 10.1 Loan Agreement, dated as of July 2, 2001, among ChoicePoint Financial Inc., as Borrower, ChoicePoint Inc., as Initial Servicer, Three Pillars Funding Corporation, as Lender, and SunTrust Equitable Securities Corporation, as Administrator. 10.2 Receivables Sale and Contribution Agreement, dated as of July 2, 2001, among ChoicePoint Services Inc., PRC Corporation, ChoicePoint Business and Government Services Inc., ChoicePoint Direct Inc., Statewide Data Services, Inc., I.R.S.C., Inc., ChoicePoint Public Records Inc., Patlex Corporation, National Safety Alliance, Incorporated, BTi Employee Screening Services, Inc. and each other subsidiary of ChoicePoint Inc. that hereafter becomes a party hereto, as Originators, and ChoicePoint Capital Inc., as Buyer. 10.3 Receivables Sale Agreement, dated as of July 2, 2001, among ChoicePoint Capital Inc., as Seller, and ChoicePoint Financial Inc., as Purchaser.
20 EX-10.1 3 g71227ex10-1.txt LOAN AGREEMENT, DATED AS OF JULY 2, 2001 1 EXHIBIT 10.1 LOAN AGREEMENT DATED AS OF JULY 2, 2001 AMONG CHOICEPOINT FINANCIAL INC., AS BORROWER, CHOICEPOINT INC., AS INITIAL SERVICER, THREE PILLARS FUNDING CORPORATION, AS LENDER, AND SUNTRUST EQUITABLE SECURITIES CORPORATION, AS ADMINISTRATOR 2 TABLE OF CONTENTS
PAGE ---- ARTICLE I. DEFINITIONS....................................................................................... 1 Section 1.1 Defined Terms................................................................................... 1 Section 1.2 Other Definitional Provisions................................................................... 19 Section 1.3 Other Terms..................................................................................... 20 Section 1.4 Computation of Time Periods..................................................................... 20 ARTICLE II. THE LENDER'S COMMITMENT, BORROWING PROCEDURES AND LENDER NOTE...................................... 20 Section 2.1 Lender's Commitment............................................................................. 20 Section 2.2 Borrowing Procedures............................................................................ 20 Section 2.3 Funding......................................................................................... 20 Section 2.4 Representation and Warranty..................................................................... 21 Section 2.5 Extension of Lender's Commitment................................................................ 21 Section 2.6 Voluntary Termination of Lender's Commitment; Reduction of Facility Limit....................... 21 Section 2.7 Note............................................................................................ 22 ARTICLE III. INTEREST, FEES, ETC................................................................................. 22 Section 3.1 Interest Rates.................................................................................. 22 Section 3.2 Interest Payment Dates.......................................................................... 23 Section 3.3 Interest Allocations............................................................................ 23 Section 3.4 Fees............................................................................................ 23 Section 3.5 Computation of Interest and Fees................................................................ 23 ARTICLE IV. REPAYMENTS AND PREPAYMENTS; DISTRIBUTION OF COLLECTIONS.............................................. 24 Section 4.1 Repayments and Prepayments...................................................................... 24 Section 4.2 Application of Collections...................................................................... 24 Section 4.3 Application of Certain Payments................................................................. 25 Section 4.4 Due Date Extension.............................................................................. 26 Section 4.5 Making of Payments.............................................................................. 26 ARTICLE V. SECURITY INTEREST.................................................................................. 26 Section 5.1 Grant of Security............................................................................... 26 Section 5.2 Administrator Appointed Attorney-in-Fact........................................................ 27 Section 5.3 Administrator May Perform....................................................................... 28 Section 5.4 Release of Collateral........................................................................... 28
ii 3 ARTICLE VI. INCREASED COSTS, ETC............................................................................... 28 Section 6.1 Increased Costs................................................................................. 28 Section 6.2 Funding Losses.................................................................................. 29 Section 6.3 Withholding Taxes............................................................................... 29 ARTICLE VII. CONDITIONS TO BORROWING............................................................................ 30 Section 7.1 Initial Loan.................................................................................... 30 7.1.1 Resolutions........................................................................... 30 7.1.2 Consents, etc......................................................................... 30 7.1.3 Incumbency and Signatures............................................................. 30 7.1.4 Good Standing Certificates............................................................ 30 7.1.5 Financing Statements.................................................................. 30 7.1.6 Search Reports........................................................................ 31 7.1.7 Fee Letter; Payment of Fees........................................................... 31 7.1.8 First Step Sale Agreement and Receivables Sale Agreement.............................. 31 7.1.9 Opinions of Counsel................................................................... 31 7.1.10 Lender Note........................................................................... 31 7.1.11 Borrowing Base Certificate............................................................ 32 7.1.12 Lock Box and Blocked Account Agreements............................................... 32 7.1.13 Releases.............................................................................. 32 7.1.14 Performance Undertaking............................................................... 32 7.1.15 Other................................................................................. 32 Section 7.2 All Loans....................................................................................... 32 7.2.1 No Default, etc....................................................................... 32 7.2.2 Borrowing Request, etc................................................................ 32 7.2.3 Commitment Termination Date........................................................... 32 7.2.4 Collateral Review..................................................................... 32 7.2.5 Accounts.............................................................................. 32 ARTICLE VIII. REPRESENTATIONS AND WARRANTIES..................................................................... 33 Section 8.1 Existence and Power............................................................................. 33 Section 8.2 Power and Authority; Due Authorization, Execution and Delivery.................................. 33 Section 8.3 No Conflict..................................................................................... 33 Section 8.4 Governmental Authorization...................................................................... 33 Section 8.5 Actions, Suits.................................................................................. 33 Section 8.6 Binding Effect.................................................................................. 34 Section 8.7 Accuracy of Information......................................................................... 34 Section 8.8 Margin Regulations; Use of Proceeds............................................................. 34 Section 8.9 Good Title...................................................................................... 34 Section 8.10 Perfection...................................................................................... 34 Section 8.11 Chief Executive Office.......................................................................... 35 Section 8.12 Accounts........................................................................................ 35 Section 8.13 No Material Adverse Effect...................................................................... 35 Section 8.14 Names........................................................................................... 35
iii 4 Section 8.15 Ownership of Borrower; No Subsidiaries......................................................... 35 Section 8.16 Not a Holding Company or an Investment Company................................................. 35 Section 8.17 Compliance with Credit and Collection Policy................................................... 35 Section 8.18 Solvency....................................................................................... 35 Section 8.19 Eligible Receivables........................................................................... 35 Section 8.20 Sales by Originator............................................................................ 36 ARTICLE IX. COVENANTS OF BORROWER AND SERVICER................................................................. 36 Section 9.1 Affirmative Covenants........................................................................... 36 9.1.1 Compliance with Laws, Etc............................................................. 36 9.1.2 Preservation of Corporate Existence................................................... 36 9.1.3 Performance and Compliance with Receivables........................................... 36 9.1.4 Credit and Collection Policy.......................................................... 36 9.1.5 Reporting Requirements................................................................ 36 (a) Financial Statements......................................................... 36 (b) Borrowing Base Certificates and Monthly Reports.............................. 37 (c) Significant Events........................................................... 37 (d) Servicing Certificate........................................................ 38 (e) Collateral Review............................................................ 38 (f) Other........................................................................ 38 9.1.6 Use of Proceeds....................................................................... 38 9.1.7 Separate Legal Entity................................................................. 38 9.1.8 Adverse Claims on Receivables......................................................... 40 9.1.9 Further Assurances.................................................................... 40 9.1.10 Servicing............................................................................. 40 9.1.11 Inspection............................................................................ 41 9.1.12 Cooperation........................................................................... 41 9.1.13 Facility.............................................................................. 41 9.1.14 Accounts.............................................................................. 41 Section 9.2 Negative Covenants.............................................................................. 42 9.2.1 Sales, Liens, Etc..................................................................... 42 9.2.2 Mergers, Acquisitions, Sales, Subsidiaries, etc....................................... 42 9.2.3 Change in Business; Change in Credit and Collection Policy............................ 42 9.2.4 Other Debt............................................................................ 43 9.2.5 Certificate of Incorporation and By-Laws.............................................. 43 9.2.6 Chief Executive Office................................................................ 43 9.2.7 Financing Statements.................................................................. 43 9.2.8 Business Restrictions................................................................. 43 9.2.9 Other Agreements; Performance Undertaking............................................. 43 ARTICLE X. SIGNIFICANT EVENTS AND THEIR EFFECT................................................................ 44 Section 10.1 Events of Default.............................................................................. 44 10.1.1 Non-Payment of Loans, Etc............................................................. 44 10.1.2 Non-Compliance with Other Provisions.................................................. 44 10.1.3 Breach of Representations and Warranties.............................................. 44
iv 5 10.1.4 Bankruptcy............................................................................ 44 10.1.5 Tax Liens............................................................................. 44 Section 10.2 Amortization Events............................................................................ 45 10.2.1 Servicer Event of Default............................................................. 45 10.2.2 Borrowing Base Deficit................................................................ 45 10.2.3 Default Ratio......................................................................... 45 10.2.4 Delinquency Ratio..................................................................... 45 10.2.5 Dilution Ratio........................................................................ 45 10.2.6 Accounts Receivable Turnover Ratio.................................................... 45 10.2.7 Event of Default...................................................................... 45 10.2.8 Validity of Transaction Documents..................................................... 45 10.2.9 Termination Date...................................................................... 45 10.2.10 Performance Undertaking................................................................ 45 Section 10.3 Effect of Significant Event.................................................................... 46 ARTICLE XI. THE SERVICER....................................................................................... 46 Section 11.1 ChoicePoint as Initial Servicer................................................................ 46 Section 11.2 Certain Duties of the Servicer................................................................. 46 11.2.1 Authorization to Act as Borrower's Agent.............................................. 46 11.2.2 Servicer to Act as Servicer; Originators as Permitted Sub-Servicers................... 47 11.2.3 Collections........................................................................... 48 11.2.4 Depository Accounts................................................................... 49 Section 11.3 Servicing Compensation......................................................................... 50 Section 11.4 Agreement Not to Resign........................................................................ 50 Section 11.5 Designation of Servicer........................................................................ 50 Section 11.6 Termination.................................................................................... 50 Section 11.7 Servicer Events of Default..................................................................... 50 11.7.1 Failure to Make Payments and Deposits................................................. 50 11.7.2 Non-Compliance with Other Provisions.................................................. 51 11.7.3 Delegation............................................................................ 51 11.7.4 Breach of Representations and Warranties.............................................. 51 11.7.5 Consolidated Tangible Net Worth....................................................... 51 11.7.6 Bankruptcy............................................................................ 51 11.7.7 Judgments............................................................................. 51 11.7.8 Cross-Default to Material Debt........................................................ 51 ARTICLE XII. ADMINISTRATOR....................................................................................... 52 Section 12.1 Authorization and Action....................................................................... 52 Section 12.2 Administrator and Affiliates................................................................... 52 ARTICLE XIII. ASSIGNMENTS........................................................................................ 52 Section 13.1 Restrictions on Assignments.................................................................... 52 Section 13.2 Documentation.................................................................................. 53
v 6 Section 13.3 Rights of Assignee............................................................................. 53 Section 13.4 Notice of Assignment........................................................................... 53 ARTICLE XIV. INDEMNIFICATION..................................................................................... 53 Section 14.1 General Indemnity of Borrower.................................................................. 53 Section 14.2 Indemnity of Servicer.......................................................................... 54 ARTICLE XV. MISCELLANEOUS...................................................................................... 54 Section 15.1 No Waiver; Remedies............................................................................ 54 Section 15.2 Amendments, Etc................................................................................ 54 Section 15.3 Notices, Etc................................................................................... 55 Section 15.4 Costs, Expenses and Taxes...................................................................... 55 Section 15.5 Binding Effect; Survival....................................................................... 55 Section 15.6 Captions and Cross References.................................................................. 56 Section 15.7 Severability................................................................................... 56 Section 15.8 Governing Law.................................................................................. 56 Section 15.9 Counterparts................................................................................... 56 Section 15.10 Submission to Jurisdiction; Waiver of Trial by Jury............................................ 56 Section 15.11 Limitation on Recourse......................................................................... 57 Section 15.12 No Proceedings................................................................................. 57 Section 15.13 Confidentiality................................................................................ 58 Section 15.14 Entire Agreement............................................................................... 58
EXHIBITS AND SCHEDULES EXHIBIT A Form of Borrowing Request EXHIBIT B Form of Lender Note EXHIBIT C Form of Monthly Report EXHIBIT D Form of Borrowing Base Certificate EXHIBIT E Form of LockBox and Blocked Account Agreement EXHIBIT F Form of Performance Undertaking SCHEDULE 8.12 LockBoxes and LockBox Accounts SCHEDULE 9.1.5 Collateral Review Requirements SCHEDULE 15.3 Notice Addresses vi 7 LOAN AGREEMENT THIS LOAN AGREEMENT is made and entered into as of July 2, 2001, among CHOICEPOINT FINANCIAL INC., a Delaware corporation ("BORROWER"), CHOICEPOINT INC., a Georgia corporation, in its capacity as the initial servicer (in such capacity, together with its successors and permitted assigns in such capacity, the "SERVICER"), THREE PILLARS FUNDING CORPORATION, a Delaware corporation (together with its successors and permitted assigns, "LENDER"), and SUNTRUST EQUITABLE SECURITIES CORPORATION, a Tennessee corporation, as agent and administrator for Lender (in such capacity, together with its successor and assigns in such capacity, the "ADMINISTRATOR"). BACKGROUND 1. Borrower desires that Lender extend financing to Borrower on the terms and subject to the conditions set forth herein. 2. Lender is willing to provide such financing on the terms and subject to the conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the parties hereto agree as follows: ARTICLE I. DEFINITIONS Section 1.1 Defined Terms. As used in this Agreement, (a) capitalized terms used and not otherwise defined herein are used with the meanings attributed thereto in the Receivables Sale Agreement (hereinafter defined) or if not defined therein, in the First Step Sale Agreement (hereinafter defined) regardless of whether those capitalized terms are listed below, and (b) the following terms have the following meanings: "ACCOUNTS RECEIVABLE TURNOVER RATIO" means, on any date of determination, the ratio computed as of the most recent Calculation Date by dividing (a) the aggregate amount of Credit Sales during the 12 months ending on such Calculation Date by (b) the average month-end amount of the aggregate Unpaid Balance of Receivables during the 12 months ending on such Calculation Date. "ADMINISTRATOR" has the meaning set forth in the preamble to this Agreement. "ADMINISTRATOR'S ACCOUNT" has the meaning set forth in Section 4.5. "ADVANCE RATE" means the percentage equal to (a) 100% minus (b) the Reserve Percentage. "ADVERSE CLAIM" has the meaning specified in the First Step Sale Agreement. "AFFECTED PARTY" means each of Lender, any Liquidity Bank, any permitted assignee of Lender or any Liquidity Bank, any Support Provider and any holder of a participation 1 8 interest in the rights and obligations of any Liquidity Bank or Credit Bank under the Liquidity Agreement or the Credit Agreement, as the case may be, Administrator and any holding company of Bank. "AFFILIATE" of any Person means any other Person that (i) directly or indirectly controls, is controlled by or is under common control with such Person or (ii) is an officer or director of such Person. A Person shall be deemed to be "controlled by" another Person if such other Person possesses, directly or indirectly, power (a) to vote 5% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managing partners of such other Person, or (b) to direct or cause the direction of the management and policies of such other Person whether by contract or otherwise. The word "AFFILIATED" has a correlative meaning. "AGGREGATE ELIGIBLE BALANCE" means, on any date of determination, the aggregate Unpaid Balance of all Eligible Receivables at such time. "AGREEMENT" means this Loan Agreement, as it may be amended, supplemented, restated or otherwise modified from time to time in accordance with the terms hereof. "ALLOCATIONS" has the meaning set forth in Section 3.3. "ALTERNATIVE RATE" means, for any Interest Period, an interest rate per annum equal to either (a) the LIBOR Rate or (b) if the LIBOR Rate is unavailable for any reason or there is less than two (2) Business Days' prior notice to the Liquidity Banks of any funding by them, the Base Rate. "ALTERNATIVE RATE ALLOCATION" has the meaning set forth in Section 3.3. "AMORTIZATION EVENT" means any of the events described in Section 10.2. "APPLICABLE MARGIN" has the meaning specified in the Fee Letter. "BANK" means SunTrust Bank, a Georgia banking corporation. "BANKRUPTCY CODE" means the United States Bankruptcy Code, 11 U.S.C.ss.101, et seq., as amended. "BASE RATE" means, on any date of determination, a fluctuating rate of interest per annum equal to the higher of (i) the Prime Rate, or (ii) the Federal Funds Rate most recently determined by Bank plus 0.50% per annum. "BORROWER" has the meaning set forth in the preamble to this Agreement. "BORROWING BASE" means, on any date of determination, an amount equal to the product of (a) the Advance Rate as of the most recent Calculation Date times (b) the excess, if any, of (i) the Aggregate Eligible Balance as of the last Business Day of the two-week period then most recently ended over (ii) the Excess Concentration Amount for all Obligors as of the last Business Day of the two-week period then most recently ended. 2 9 "BORROWING BASE CERTIFICATE" means a certificate, substantially in the form of Exhibit D hereto, duly executed by an authorized officer of Servicer. "BORROWING BASE DEFICIT" means, on any date of determination, an amount equal to (i) the excess, if any, of (a) the aggregate principal amount of all outstanding Loans at such time over (b) the sum of the Borrowing Base (as reflected in the most recent Borrowing Base Certificate) plus (ii) all Collections on deposit in the Depository Accounts at such time. "BORROWING REQUEST" has the meaning set forth in Section 2.2. "BUSINESS DAY" means any day on which (a) Bank is not authorized or required to be closed for business in Atlanta, Georgia, and The Depository Trust Company of New York is open for business, and (b) commercial banks in New York City are not authorized or required to be closed and, in the case of a Rate Setting Date for Loans bearing interest by reference to the LIBOR Rate, banks are open for business in London, England. "CALCULATION DATE" means the last Business Day of each Calculation Period. "CALCULATION PERIOD" means a calendar month. "CHARGE-OFF" means a Receivable not previously deemed a Defaulted Receivable that is written-off by the Servicer or should, in accordance with the Credit and Collection Policy, be written-off. "CHOICEPOINT" means ChoicePoint Inc., a Georgia corporation. "CLOSING DATE" means the date of the first Loan hereunder. "COLLATERAL" has the meaning set forth in Section 5.1(a). "COLLATERAL REVIEW" means a report of the independent certified public accountants of ChoicePoint which satisfies the requirements set forth on Schedule 9.1.5. "COLLECTIONS" has the meaning set forth in the First Step Sale Agreement. "COMMERCIAL PAPER NOTES" means short-term promissory notes issued by Lender to fund its Loans or investments in receivables or other financial assets. "COMMERCIAL PAPER RATE" means, for any Interest Period for all or any portion of the related CP Allocation, a rate per annum equal to the sum of (i) the rate or, if more than one rate, the weighted average of the rates, determined by converting to an interest-bearing equivalent rate per annum the discount rate (or rates) at which Commercial Paper Notes outstanding during such Interest Period have been or may be sold by any placement agent or commercial paper dealer selected by Administrator, plus (ii) the commissions and charges charged by such placement agent or commercial paper dealer with respect to such Commercial Paper Notes, expressed as a percentage of the face amount thereof and converted to an interest-bearing equivalent rate per annum. 3 10 "COMMITMENT TERMINATION DATE" means the earliest to occur of (i) the Scheduled Commitment Termination Date, (ii) the date of any termination of the Lender's Commitment pursuant to Section 2.6, (iii) the effective date on which the Lender's Commitment is terminated pursuant to Section 10.3, (iv) the Liquidity Termination Date, (v) termination of the Credit Banks' commitments under the Credit Agreement, and (vi) the date on which any purchase or other funding is made pursuant to the Liquidity Agreement. "CONCENTRATION LIMIT" means: (a) for any Obligor whose short term unsecured debt ratings are not less than both "A-1" from S&P and "P-1" from Moody's, 8.0% of the Aggregate Eligible Balance; or (b) for any Obligor whose short term unsecured debt ratings are not less than both "A-3" from S&P and "P-3" from Moody's but are less than both "A-1" by S&P and "P-1" by Moody's, 5.0% of the Aggregate Eligible Balance; or (c) for any Obligor who does not have short term unsecured debt ratings from both S&P and Moody's but has long term unsecured debt ratings from both S&P and Moody's which are greater than or equal to both "A" by S&P and "A2" by Moody's, 8.0% of the Aggregate Eligible Balance; or (d) for any Obligor who does not have short term unsecured debt ratings from both S&P and Moody's but has long term unsecured debt ratings from both S&P and Moody's which are greater than or equal to both "BBB-" by S&P and "Baa3" by Moody's but less than both "A" by S&P and "A2" by Moody's, 5.0% of the Aggregate Eligible Balance; or (e) for any Obligor who (i) does not have short term unsecured debt ratings or long term unsecured debt ratings from both S&P and Moody's or (ii) has such ratings but does not meet the test in any of clauses (a)-(d) above, 3.0% of the Aggregate Eligible Balance; PROVIDED that (1) the limitations set forth in the foregoing clauses (a)-(e) shall apply to each specified Obligor and its Affiliates, considered as if they were one and the same Person, and (2) in the event that any Obligor has both long-term and short-term unsecured debt ratings from both S&P and Moody's, the short-term debt ratings under clause (a) or (b) above, as applicable, shall control. "CONSOLIDATED TANGIBLE NET WORTH" means at any date, with respect to any Person, the consolidated stockholders' equity of such Person and its consolidated Subsidiaries, plus the principal amount of subordinated debt of such Person, minus (to the extent reflected in determining such consolidated stockholders' equity) all intangible assets (determined in accordance with GAAP) as reported in the audited consolidated financial statements of such Person for the fiscal year in question. "CONTRACT" has the meaning set forth in the First Step Sale Agreement. 4 11 "COVERED TAXES" means Taxes other than Excluded Taxes. "CP ALLOCATION" has the meaning set forth in Section 3.3. "CP TRANCHE PERIOD" means, with respect to all or any portion of the CP Allocation, a period of days not to exceed 90 days commencing on a Business Day which period is either (a) requested by Borrower and agreed to by Lender (or by Administrator on Lender's behalf) or (b) in the absence of such request and agreement, selected by Lender (or by Administrator on Lender's behalf). "CREDIT ADVANCE" means a drawing under a letter of credit issued pursuant to a Credit Agreement for the account of Lender, a loan to Lender under a Credit Agreement or any other advance or disbursement of funds to Lender or for Lender's account pursuant to a Credit Agreement or any such letter of credit, in each case to the extent such drawing, loan, advance or disbursement has not been repaid or reimbursed to Credit Bank in accordance with the related Credit Agreement. "CREDIT AGREEMENT" means and includes any program-wide agreement entered into by any Credit Bank providing for the issuance of one or more letters of credit for the account of Lender, the issuance of one or more surety bonds for which Lender is obligated to reimburse the applicable Credit Bank for any drawings hereunder, the sale by Lender to any Credit Bank of receivables or other financial assets owned or held by Lender (or portions thereof) and/or the making of loans and/or other extensions of credit to Lender in connection with its commercial paper program, together with any cash collateral agreement, letter of credit, surety bond or other agreement or instrument executed and delivered in connection therewith (but excluding the Liquidity Agreement, or similar agreement, or any voluntary advance agreement). "CREDIT AND COLLECTION POLICY" has the meaning set forth in the First Step Sale Agreement "CREDIT BANK" means and includes Bank and any other or additional bank or other Person (other than Borrower or other customer of Lender or any liquidity provider as such) now or hereafter extending credit or a purchase commitment to or for the account of Lender or issuing a letter of credit, surety bond or other instrument, in each case to support any obligations arising under or in connection with Lender's commercial paper program. "CREDIT SALES" means, for any period of determination, the aggregate amount of all trade receivables with credit terms of any kind originated by the Originators during such period, regardless of whether the same have been invoiced. "DAYS SALES OUTSTANDING RATIO" means, on any date of determination, the ratio computed as of the most recent Calculation Date by dividing (a) 360 by (b) the Accounts Receivable Turnover Ratio for the Calculation Period ending on such Calculation Date. "DEBT" of any Person means, without duplication, (i) all indebtedness of such Person for borrowed money, (ii) all indebtedness of such Person for the deferred purchase price of property or services (other than property and services purchased, and expense accruals and deferred compensation items arising, in the ordinary course of business), (iii) all obligations of 5 12 such Person evidenced by notes, bonds, debentures or other similar instruments (other than performance, surety and appeal bonds arising in the ordinary course of business), (iv) all indebtedness of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (v) all obligations of such Person under leases which have been or should be, in accordance with GAAP, recorded as capital leases, to the extent required to be so recorded, (vi) all reimbursement, payment or similar obligations of such Person, contingent or otherwise, under acceptance, letter of credit or similar facilities (other than letters of credit in support of trade obligations or in connection with workers' compensation, unemployment insurance, old-age pensions and other social security benefits in the ordinary course of business), (vii) all net obligations of such Person in respect of interest rate swap, cap, collar, swaption, option or similar agreements, (viii) all obligations arising in connection with a sale or other transfer of any of such Person's financial assets which are, or are intended to be, classified as loans for federal tax purposes, (ix) all Debt referred to in clauses (i) through (viii) above guaranteed directly or indirectly by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (A) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (B) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss in respect of such Debt, (C) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (D) otherwise to assure a creditor against loss in respect of such Debt, and (x) all Debt referred to in clauses (i) through (viii) above secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any lien, security interest or other charge or encumbrance upon or in property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Debt. "DEFAULT RATE" has the meaning set forth in Section 3.1(c). "DEFAULT RATIO" means, on any date of determination, the ratio (expressed as a percentage) computed as of the most recent Calculation Date by dividing (a) the sum (without double counting) of (i) the Unpaid Balance of Receivables that became Defaulted Receivables during the Calculation Period ending on such Calculation Date, plus (ii) the Unpaid Balance of Receivables that became Charge-Offs during the Calculation Period ending on such Calculation Date by (b) Credit Sales for the Calculation Period ending four (4) months prior to such Calculation Date. "DEFAULTED RECEIVABLE" means, as of any date of determination, any Receivable (i) which the Servicer has or should have charged-off or deemed uncollectible in accordance with the Credit and Collection Policy after taking a reasonable time to apply Collections received to applicable invoices and reconcile the amount of such Receivable, (ii) as to which, as of such date of determination, any payment, or part thereof, remains unpaid for 91 days or more past the due date for such payment, determined by reference to the original contractual payment terms of such Receivable or (iii) as to which the Obligor thereon has suffered an Event of Bankruptcy. 6 13 "DELINQUENCY RATIO" means, on any date of determination, the ratio (expressed as a percentage) computed as of the most recent Calculation Date by dividing (i) the Unpaid Balance of Receivables which are Delinquent Receivables as of such Calculation Date by (ii) an amount equal to the Aggregate Eligible Balance as of such Calculation Date, minus the aggregate Excess Concentration Amount as of such Calculation Date. "DELINQUENT RECEIVABLE" means a Receivable (other than a Defaulted Receivable) as to which all or any part of a scheduled payment remains unpaid for 61 days or more from the original due date for such payment. "DEPOSIT DATE" has the meaning set forth in Section 11.2.4(b). "DEPOSITORY ACCOUNT" means a deposit account (other than a LockBox Account) into which Collections are deposited. "DILUTION HORIZON RATIO" means, on any date of determination, the ratio (expressed as a percentage) computed as of the most recent Calculation Date by dividing (a) the sum of (i) Credit Sales for the Calculation Period ending on such Calculation Date plus (ii) 50% of Credit Sales for the Calculation Period ending one (1) month prior to such Calculation Date by (b) an amount equal to the Aggregate Eligible Balance as of such Calculation Date, minus the aggregate Excess Concentration Amount as of such Calculation Date. "DILUTION RATIO" means, on any date of determination, the ratio (expressed as a percentage) computed as of the most recent Calculation Date by dividing (a) Dilutions for the Calculation Period ending on such Calculation Date by (b) Credit Sales for the Calculation Period ending one (1) month prior to such Calculation Date. "DILUTION RESERVE" means, on any date of determination, the product computed as of the most recent Calculation Date, of (a) the sum of (i) the product of (x) the Stress Factor times (y) the Expected Dilution Ratio plus (ii) the product of (x) the positive difference, if any, between (1) the Dilution Spike Rate less (2) the Expected Dilution Ratio times (y) a ratio computed by dividing (1) the Dilution Spike Rate by (2) the Expected Dilution Ratio times (b) the Dilution Horizon Ratio. "DILUTION SPIKE RATE" means, on any date of determination, the highest Dilution Ratio over the 12-month period ending on the most recent Calculation Date. "DILUTIONS" means, for any period of determination, the aggregate amount of returns, allowances, net credits and any other non-cash reductions to the Credit Sales during such period. "DISTRIBUTION DATE" means the 20th day of each month after the Closing Date (or, if any such day is not a Business Day, the next succeeding Business Day thereafter). "DOCUMENTS" means all documentation relating to the Receivables including, without limitation, the Contracts, billing statements and computer records and programs. 7 14 "DOLLAR(S)" and the sign "$" shall mean lawful money of the United States of America. "ELIGIBLE ORIGINATOR" means (a) any Originator party to the First Step Sale Agreement on the Closing Date, and (b) any Originator who becomes a party to the First Step Sale Agreement after the Closing Date with respect to which the Rating Agencies have received written notice of such Originator's addition and a certificate from the Administrator regarding perfection of Borrower's ownership interest and Administrator's security interest in such new Originator's Receivables and Related Security; PROVIDED, HOWEVER, that if such Originator is a Material Originator, such Originator shall not be an Eligible Originator unless Administrator has otherwise agreed in writing and the Rating Agency Condition has been satisfied. "ELIGIBLE RECEIVABLE" means each Receivable that meets the following criteria: (a) that was created by an Eligible Originator in compliance, in all material respects, with its Credit and Collection Policy, in the regular and ordinary course of the business of such Eligible Originator; (b) that was documented in all material respects in compliance with the applicable Eligible Originator's standard administration and documentation policies and procedures; (c) is not a Delinquent Receivable or a Defaulted Receivable; (d) as to which, at the time of the sale or contribution of such Receivable to Parent SPE, the applicable Eligible Originator was the sole owner thereof and had good and marketable title thereto, free and clear of all Adverse Claims, and as to which, at the time of the sale or contribution of such Receivable to Borrower, Parent SPE was the sole owner thereof and had good and marketable title thereto, free and clear of all Adverse Claims, and which was sold or contributed to Parent SPE pursuant to the First Step Sale Agreement, and then sold or contributed to Borrower pursuant to the Receivables Sale Agreement, free and clear of all Adverse Claims other than in favor of Administrator; (e) the assignment of which by the applicable Eligible Originator to Parent SPE pursuant to the First Step Sale Agreement and by Parent SPE to Borrower pursuant to the Receivables Sale Agreement does not contravene or conflict with any law, rule or regulation or any contractual or other restriction, limitation or encumbrance, and the sale or assignment of which does not require the consent of the Obligor thereof; (f) which is denominated and payable in Dollars and is only payable in the United States of America; (g) the Obligor of which is a resident of the United States; (h) the Obligor of which is not an officer, director or Affiliate of any Originator, Parent SPE or Borrower; 8 15 (i) the Obligor of which is not a Governmental Authority; (j) that is in full force and effect and constitutes the legally valid and binding payment obligation of the Obligor with respect thereto, enforceable against such Obligor in accordance with its terms and is not subject to any right of rescission, setoff, counterclaim or defense (including the defense of usury) or to any repurchase obligation or return right; (k) that does not contravene any applicable requirements of law (including without limitation all laws, rules and regulations relating to truth in lending, fair credit billing, fair credit reporting, fair debt collection practices and privacy) and which complies with all applicable requirements of law and with respect to which all consents, licenses, approvals or authorizations of, or registrations or declarations with, any Governmental Authority required to be obtained, effected or given by the related Eligible Originator in connection with the creation or the execution, delivery and performance of such Receivable, have been duly obtained, effected or given and are in full force and effect; (l) that complies with all applicable requirements of the applicable Credit and Collection Policy; (m) as to which each of Parent SPE's, Borrower's and Administrator's (for the benefit of the Secured Parties) first priority security interest in such Receivable has been perfected under the applicable Uniform Commercial Code and other applicable laws; (n) as to which the Servicer is in possession of the related Receivable File; (o) which is invoiced no less frequently than once per month and has been outstanding, on any date of determination, not more than 60 days after the creation of such invoice; (p) the terms of which have not been modified or waived except as permitted under the applicable Credit and Collection Policy and this Agreement; (q) which constitutes an "account" under and as defined in Article 9 of the Uniform Commercial Code of all applicable jurisdictions; (r) which is not subject to any dispute, right of rescission, set-off, counterclaim or any other defense (including defenses arising out of violations of usury laws) of the applicable Obligor against the applicable Originator or any other Adverse Claim, and the Obligor thereon holds no right as against the applicable Eligible Originator to cause the applicable Eligible Originator to repurchase the goods the sale of which shall have given rise to such Receivable (except with respect to sale discounts effected pursuant to the Contract, or goods returned in accordance with the terms of the Contract); and 9 16 (s) the applicable Eligible Originator has satisfied and fully performed all obligations on its part with respect to such Receivable required to be fulfilled by it, and no further action is required to be performed by any Person with respect thereto other than payment thereon by the applicable Obligor. "EVENT OF BANKRUPTCY" shall be deemed to have occurred with respect to a Person if either: (a) a case or other proceeding shall be commenced, without the application or consent of such Person, in any court, seeking the liquidation, reorganization, debt arrangement, dissolution, winding up, or composition or readjustment of debts of such Person, the appointment of a trustee, receiver, custodian, liquidator, assignee, sequestrator or the like for such Person or all or substantially all of its assets, or any similar action with respect to such Person under any law relating to bankruptcy, insolvency, reorganization, winding up or composition or adjustment of debts; or an order for relief in respect of such Person shall be entered in an involuntary case under the Bankruptcy Code or other similar laws now or hereafter in effect; or (b) such Person shall commence a voluntary case or other proceeding under any applicable bankruptcy, insolvency, reorganization, debt arrangement, dissolution or other similar law now or hereafter in effect, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) for such Person or for any substantial part of its property, or shall make any general assignment for the benefit of creditors, or shall fail to, or admit in writing its inability to, pay its debts generally as they become due, or, if a corporation or similar entity, its board of directors shall vote to implement any of the foregoing. "EVENT OF DEFAULT" means any of the events described in Section 10.1. "EXCESS CONCENTRATION AMOUNT" means, on any date of determination, with respect to any Obligor and its Affiliates considered as if they were one and the same Obligor, the amount, if any, by which the Aggregate Eligible Balance of such Obligor and its Affiliates at such time exceeds the Concentration Limit for such Obligor and its Affiliates at such time. "EXCLUDED TAXES" means, in the case of any Indemnified Party, taxes imposed on its overall net income, and franchise taxes and branch profit taxes based on net income, imposed on it by (i) the jurisdiction under the laws of which such Indemnified Party is incorporated or organized or (ii) the jurisdiction in which such Indemnified Party's principal executive office is located. "EXECUTIVE OFFICER" means, as to any Person, such Person's chief executive office, president, chief financial officer, chief legal officer, treasurer, assistant treasurer, and any individual holding comparable offices or duties. 10 17 "EXPECTED DILUTION RATIO" means, on any date of determination, the rolling twelve-month average Dilution Ratio for the 12-month period ending on the most recent Calculation Date. "FACILITY LIMIT" means $100,000,000 (as such amount may be reduced from time to time in accordance with Section 2.6). "FEDERAL FUNDS RATE" means, for any period, the per annum rate set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Board (including any such successor, "H.15(519)") for such day opposite the caption "Federal Funds (Effective)." If on any relevant day such rate is not yet published in H.15(519), the rate for such day will be the rate set forth in the daily statistical release designated as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any successor publications, published by the Federal Reserve Bank of Atlanta (including any such successor, the "COMPOSITE 3:30 P.M. QUOTATIONS") for such day under the caption "Federal Funds Effective Rate." If on any relevant day the appropriate rate for such previous day is not yet published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day will be the arithmetic mean as determined by Bank of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York time) on that day by each of three leading brokers of Federal funds transactions in New York City selected by Bank. "FEE LETTER" has the meaning set forth in Section 3.4. "FEES" means all fees and other amounts payable by Borrower to Administrator or Lender pursuant to the Fee Letter. "FIRST STEP NOTE" has the meaning set forth in the Receivables Sale Agreement. "FIRST STEP SALE AGREEMENT" has the meaning set forth in the Receivables Sale Agreement. "GAAP" has the meaning set forth in the First Step Sale Agreement. "GOVERNMENTAL AUTHORITY" has the meaning set forth in the First Step Sale Agreement. "INDEMNIFIED AMOUNTS" has the meaning set forth in Section 14.1. "INDEMNIFIED PARTY" has the meaning set forth in Section 14.1. "INTEREST PERIOD" means: (a) with respect to any CP Allocation, its CP Tranche Period; (b) with respect to any Alternative Rate Allocation, (i) initially, the period commencing on the date of the initial establishment of such Allocation and ending on (but excluding) the Business Day immediately preceding the next following Scheduled Interest Payment Date, and (ii) thereafter, each period 11 18 commencing on (and including) the Business Day immediately preceding a Scheduled Interest Payment Date and ending on (but excluding) the Business Day immediately preceding the next following Scheduled Interest Payment Date; PROVIDED, HOWEVER, that if any Interest Period for any Allocation that commences before the Commitment Termination Date would otherwise end on a date occurring after such Commitment Termination Date, such Interest Period shall end on such Commitment Termination Date and the duration of each such Interest Period that commences on or after the Commitment Termination Date, if any, shall be of such duration as shall be selected by Administrator. "LENDER" has the meaning set forth in the preamble to this Agreement. "LENDER NOTE" has the meaning set forth in Section 2.7. "LENDER'S COMMITMENT" has the meaning set forth in Section 2.1. "LIABILITIES" means, with respect to any Person, all obligations of such Person which would, in accordance with GAAP, be classified on a balance sheet as liabilities, including, without limitation, (i) Debt secured by liens against property of such Person whether or not such Person is liable for the payment thereof and (ii) deferred liabilities. "LIBOR RATE" means, for any Interest Period, the rate per annum on the Rate Setting Day of such Interest Period shown on page 3750 of Telerate or any successor page as the composite offered rate for London interbank deposits for one month, as shown under the heading "USD" as of 11:00 a.m. (London time); PROVIDED that in the event no such rate is shown, the LIBOR Rate shall be the rate per annum (rounded upwards, if necessary, to the nearest 1/16th of one percent) based on the rates at which Dollar deposits for one month are displayed on page "LIBOR" of the Reuters Screen as of 11:00 a.m. (London time) on the Rate Setting Day (it being understood that if at least two (2) such rates appear on such page, the rate will be the arithmetic mean of such displayed rates); PROVIDED FURTHER, that in the event fewer than two (2) such rates are displayed, or if no such rate is relevant, the LIBOR Rate shall be the rate per annum equal to the average of the rates at which deposits in Dollars are offered by Administrator at approximately 11:00 a.m. (London time) on the Rate Setting Day to prime banks in the London interbank market for a one month. "LIQUIDITY AGREEMENT" means and includes (a) the Liquidity Asset Purchase Agreement (regarding ChoicePoint Financial Inc.), dated as of July 2, 2001, among Lender, as borrower, Bank, as liquidity agent for the Liquidity Banks, Administrator, and the Liquidity Banks, or (b) any other agreement hereafter entered into by Lender providing for the sale by Lender of Loans (or portions thereof), or the making of loans or other extensions of credit to Lender secured by security interests in the Loans (or portions thereof), to support all or part of Lender's payment obligations under the Commercial Paper Notes or to provide an alternate means of funding Lender's investments in accounts receivable or other financial assets, in each case as amended, supplemented, restated or otherwise modified from time to time. "LIQUIDITY BANK" means and includes Bank and the various financial institutions as are, or may become, parties to the Liquidity Agreement, as purchasers thereunder. 12 19 "LIQUIDITY TERMINATION DATE" means the earlier to occur of (a) July 1, 2002, as such date may be extended from time to time by the Liquidity Banks in accordance with the Liquidity Agreement, and (b) the occurrence of an Event of Bankruptcy with respect to Lender. "LOAN" means any amount disbursed as principal by Lender to Borrower under this Agreement. "LOCKBOX" means a postal box maintained on behalf of Borrower or the Servicer for the purpose of receiving checks and money orders constituting Collections of the Receivables. "LOCKBOX ACCOUNT" means any of those bank accounts described on Schedule 8.12 hereto and any additional or replacement account to which Mail Payments are deposited for clearing. "LOCKBOX AND BLOCKED ACCOUNT AGREEMENT" means an agreement among an Originator and/or Servicer, Borrower, Administrator and the bank holding any LockBox Account, in substantially the form of Exhibit E attached hereto. "LOSS HORIZON RATIO" means, on any date of determination, the ratio computed as of the most recent Calculation Date by dividing (a) the sum of (i) Credit Sales for the Calculation Period ending on such Calculation Date, plus (ii) Credit Sales for the Calculation Period ending one (1) month prior to such Calculation Date, plus (iii) Credit Sales for the Calculation Period ending two (2) months prior to such Calculation Date, plus (iv) 50% of Credit Sales for the Calculation Period ending three (3) months prior to such Calculation Date, by (b) an amount equal to the Aggregate Eligible Balance as of such Calculation Date, minus the aggregate Excess Concentration Amount as of such Calculation Date. "LOSS RESERVE" means, on any date of determination, the product of (i) the highest rolling 3-month average Default Ratio over the 12 months ending on the most recent Calculation Date, times (ii) the Loss Horizon Ratio as of such Calculation Date, times (iii) the Stress Factor. "MAIL PAYMENTS" has the meaning specified in Section 11.2.3(a). "MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) on the business, property, condition (financial or otherwise) or results of operations of (i) Servicer and its Subsidiaries taken as a whole, or (ii) Borrower, (b) the ability of Borrower, Servicer or Performance Guarantor to perform its respective obligations under the Agreement or any other Transaction Document to which it is a party, (c) the legality, validity or enforceability of the Agreement or any other Transaction Document, (d) the existence, validity, perfection or priority of (i) Administrator's (for the benefit of the Secured Parties) security interest in the Collateral, or (ii) Borrower's ownership interest in the Receivables, or (e) the validity, enforceability or collectibility of the Receivables generally or of any material portion of the Receivables. "MATERIAL DEBT" has the meaning specified in Section 11.7.8. 13 20 "MATERIAL ORIGINATOR" means any Subsidiary of ChoicePoint that becomes an Originator under the First Step Sale Agreement after the Closing Date whose Receivables represent more than 10% of the aggregate Unpaid Balance of all Receivables immediately prior to such Subsidiary's addition as an Originator. "MONTHLY REPORT" means a report, substantially in the form of Exhibit C or in such other form acceptable to Administrator, prepared by Servicer as of the Calculation Date then most recently occurring signed by an authorized officer of Servicer. "MOODY'S" means Moody's Investors Service, Inc. "NET WORTH" with respect to the Borrower has the meaning specified in the Receivables Sale Agreement. "OBLIGATIONS" means all obligations (monetary or otherwise) of Borrower to Lender, Administrator, any Affected Party or any Indemnified Party and their respective successors, permitted transferees and assigns arising under or in connection with this Agreement, the Lender Note and each other Transaction Document, in each case however created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due. "OBLIGOR" means, with respect to any Receivable, each Person obligated to make payments with respect to such Receivable, including any guarantor thereof. "ORIGINATOR" means (a) ChoicePoint Services Inc., a Georgia corporation, PRC Corporation, a Georgia corporation, ChoicePoint Business and Government Services Inc., a Georgia corporation, ChoicePoint Direct Inc., an Illinois corporation, Statewide Data Services, Inc., a Florida corporation, I.R.S.C., Inc., a California corporation, ChoicePoint Public Records Inc., a Georgia corporation, Patlex Corporation, a Pennsylvania corporation, National Safety Alliance Incorporated, a Tennessee corporation, and BTi Employee Screening Services Inc., a Texas corporation , in its capacity as a seller under the First Step Sale Agreement, and (b) any Subsidiary of ChoicePoint that hereafter becomes a seller under the First Step Sale Agreement. "OUTSTANDING BALANCE" has the meaning specified in the First Step Sale Agreement. "PARENT SPE" means ChoicePoint Capital Inc., a Delaware corporation, and its successors. "PERFORMANCE GUARANTOR" means ChoicePoint. "PERFORMANCE UNDERTAKING" means a Performance Undertaking in the form of Exhibit F hereto, duly executed by the Performance Guarantor in favor of the Borrower. "PERMITTED INVESTMENT" means, at any time: (i) marketable obligations issued by, or the full and timely payment of which is directly and fully guaranteed or insured by, the United States 14 21 government or any other government with an equivalent rating, or any agency or instrumentality thereof when such marketable obligations are backed by the full faith and credit of the United States government or such other equivalently rated government, as the case may be, but excluding any securities which are derivatives of such obligations; (ii) time deposits, bankers' acceptances and certificates of deposit of any domestic commercial bank or any United States branch or agency of a foreign commercial bank which (x) has capital, surplus and undivided profits in excess of $100,000,000 and which has a commercial paper or certificate of deposit rating meeting the requirements specified in clause (iii) below (or equivalent rating from the Rating Agencies) or (y) is set forth in a list (which may be updated from time to time) (A) approved by Administrator and (B) with respect to which a written statement has been obtained from each of the Rating Agencies to the effect that the rating of the Commercial Paper Notes will not be downgraded or withdrawn solely as a result of the acquisition of such investments; (iii) commercial paper which is (x) rated at least as high as the Commercial Paper Notes by the Rating Agencies, or (y) set forth in a list (which may be updated from time to time) (A) approved by Administrator and (B) with respect to which a written statement has been obtained from each of the Rating Agencies to the effect that the rating of the Commercial Paper Notes will not be downgraded or withdrawn solely as a result of the acquisition of such investments; (iv) secured repurchase obligations for underlying securities of the types described in clauses (i) and (ii) above entered into with any bank of the type described in clause (ii) above; and (v) freely redeemable shares in money market funds which invest solely in obligations, bankers' acceptances, time deposits, certificates of deposit, repurchase agreements and commercial paper of the types described in clauses(i) through (iv) above, without regard to the limitations as to the maturity of such obligations, bankers' acceptances, time deposits, certificates of deposit, repurchase agreements or commercial paper set forth below, which are rated at least "AAm" or "AAmg" or their equivalent by at least one Rating Agency, PROVIDED that there is no "r-highlighter" affixed to such rating. "PERSON" has the meaning set forth in the First Step Sale Agreement "PRIME RATE" means as of any date of determination, the rate of interest most recently announced by Bank at its principal office in Atlanta, Georgia as its prime rate (it being understood that at any one time there shall exist only one such prime rate so announced, which rate is not necessarily intended to be the lowest rate of interest determined by Bank in connection with extensions of credit). 15 22 "PROGRAM DOCUMENTS" means the Liquidity Agreement, the Credit Agreement, the Voluntary Advance Agreement, the documents under which Administrator performs its obligations with respect to Lender's commercial paper program and the other documents to be executed and delivered in connection therewith, as amended, supplemented, restated or otherwise modified from time to time. "PURCHASE PRICE CREDIT" means any "PURCHASE PRICE CREDIT" as defined in the First Step Sale Agreement or the Receivables Sale Agreement "RATE SETTING DAY" means, for any Interest Period, two (2) Business Days prior to the commencement of such Interest Period. In the event such day is not a Business Day, then the Rate Setting Day shall be the immediately preceding Business Day. "RATING AGENCIES" means S&P and Moody's. "RATING AGENCY CONDITION" means that Lender has received written notice from each of the Rating Agencies that an amendment, a change or a waiver will not result in a withdrawal or downgrade of the then current ratings on Lender's Commercial Paper Notes. "RECEIVABLE" has the meaning specified in the Receivables Sale Agreement. "RECEIVABLE FILE" means with respect to a Receivable, (i) the Contract giving rise to the Receivable and other evidences of the Receivable including, without limitation, tapes, discs, punch cards and related property and rights and (ii) each UCC financing statement related thereto, if any. "RECEIVABLES SALE AGREEMENT" means the Receivables Sale Agreement, dated as of July 2, 2001, by and between Parent SPE, as seller, and Borrower, as purchaser, as such Receivables Sale Agreement may be amended, supplemented, restated or otherwise modified from time to time with the prior written consent of Administrator. "REGULATORY CHANGE" means, relative to any Affected Party: (a) any change in (or the adoption, implementation, change in the phase-in or commencement of effectiveness of) any: (i) United States Federal or state law or foreign law applicable to such Affected Party, (ii) regulation, interpretation, directive, requirement or request (whether or not having the force of law) applicable to such Affected Party of (A) any court or government authority charged with the interpretation or administration of any law referred to in clause (a)(i), or of (B) any fiscal, monetary or other authority having jurisdiction over such Affected Party, or (iii) GAAP or regulatory accounting principles applicable to such Affected Party and affecting the application to such Affected Party of any law, regulation, interpretation, directive, requirement or request referred to in clause (a)(i) or (a)(ii) above; (b) any change in the application to such Affected Party of any existing law, regulation, interpretation, directive, requirement, request or accounting principles referred to in clause (a)(i), (a)(ii) or (a)(iii) above; or 16 23 (c) the issuance, publication or release of any regulation, interpretation, directive, requirement or request of a type described in clause (a)(ii) above to the effect that the obligations of any Liquidity Bank under the Liquidity Agreement are not entitled to be included in the zero percent category of off-balance sheet assets for purposes of any risk-weighted capital guidelines applicable to such Liquidity Bank or any related Affected Party. "RELATED SECURITY" has the meaning specified in the Receivables Sale and Contribution Agreement. "REQUIRED CAPITAL AMOUNT" has the meaning specified in the Receivables Sale Agreement. "REQUIREMENTS OF LAW" for any Person or any of its property shall mean the certificate of incorporation or articles of association and by-laws or other organizational or governing documents of such Person or any of its property, and any statute, law, treaty, rule or regulation, or determination of an arbitrator or Governmental Authority, in each case applicable to or binding upon such Person or any of its property or businesses or to which such Person or any of its property or businesses is subject, whether federal, state or local. "RESERVE FLOOR" means for any Calculation Period, 19%. "RESERVE PERCENTAGE" means the percentage equal to the greater of (a) the sum of (i) the Loss Reserve, (ii) the Dilution Reserve, (iii) the Yield Reserve, and (iv) the Servicing Reserve and (b) the Reserve Floor. "S&P" means Standard & Poor's Ratings Group, a division of The McGraw-Hill Companies, Inc. "SCHEDULED COMMITMENT TERMINATION DATE" means July 1, 2002, as extended from time to time by mutual agreement of the parties hereto. "SCHEDULED INTEREST PAYMENT DATE" means each Distribution Date hereafter commencing with July 20, 2001. "SECURED OBLIGATIONS" has the meaning set forth in Section 5.1(b). "SECURED PARTIES" means Lender, Administrator and each Indemnified Party, and the successors and permitted assigns of each of the foregoing. "SERVICER" means ChoicePoint, or any successor Servicer appointed as provided in Section 11.5. "SERVICER EVENT OF DEFAULT" shall have the meaning specified in Section 11.7. "SERVICING FEE" means, for each day in a Calculation Period, an amount equal to (i) the Servicing Fee Rate (or, at any time while ChoicePoint Inc. or one of its Affiliates is the Servicer, such lesser percentage as may be agreed between Borrower and the Servicer on an 17 24 arms' length basis based on then prevailing market terms for similar services), TIMES (ii) the aggregate Outstanding Balance of all Receivables as of the close of business on the cut-Off Date immediately preceding such Calculation Period, TIMES (iii) 1/360. The Servicing Fee for any successor Servicer that is not an Affiliate of ChoicePoint Inc. shall be equal to the fee reasonably agreed to by Administrator and such successor Servicer but in no event shall such fee exceed 110% of such successor Servicer's actual costs of servicing the Receivables. "SERVICING FEE RATE" means 2.40%. "SERVICING RESERVE" means, on any date of determination, the product of: (a) the highest Day Sales Outstanding Ratio during the 12 months ending on the most recent Calculation Date, (b) the Stress Factor, (c) the Servicing Fee Rate, and (d) 1/360. "SIGNIFICANT EVENT" means any Amortization Event or Event of Default. "SOLVENT" means with respect to any Person that as of the date of determination both (A)(i) the then fair saleable value of the property of such Person is (y) greater than the total amount of liabilities (including contingent liabilities) of such Person and (z) not less than the amount that will be required to pay the probable liabilities on such Person's then existing debts as they become absolute and matured considering all financing alternatives and potential asset sales reasonably available to such Person; (ii) such Person's capital is not unreasonably small in relation to its business or any contemplated or undertaken transaction; and (iii) such Person does not intend to incur, or believe (nor should it reasonably believe) that it will incur, debts beyond its ability to pay such debts as they become due; and (B) such Person is "solvent" within the meaning given that term and similar terms under applicable laws relating to fraudulent transfers and conveyances. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. "STRESS FACTOR" means 2.0. "SUBORDINATED NOTE" has the meaning specified in the Receivables Sale Agreement. "SUBSIDIARY" means, with respect to any Person, a corporation of which such Person and/or its other Subsidiaries own, directly or indirectly, such number of outstanding shares as have more than 50% of the ordinary voting power for the election of directors. "SUPPORT PROVIDER" means and includes any entity now or hereafter extending credit or liquidity support or having a commitment to extend credit or liquidity support to or for the account of, or to make loans to or purchases from, Lender or issuing a letter of credit, surety bond or other instrument to support any obligations arising under or in connection with the commercial paper program of Lender. "TAXES" means any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, and any and all liabilities (including but not limited to interest and penalties) with respect to the foregoing, imposed by any Governmental Authority. 18 25 "TELERATE PAGE 3750" shall mean the display designated as "Page 3750" on the Telerate Service (or such other page as may replace "Page 3750" on that service or another service as may be nominated by the British Bankers' Association as the information vendor for the purpose of displaying British Bankers' Association Interest Settlement Rate for Dollars). "TRANSACTION DOCUMENTS" means this Agreement, the Receivables Sale Agreement, the First Step Sale Agreement, the Lender Note, the Fee Letter, the Subordinated Note, the First Step Notes, the Performance Undertaking, and the other instruments, certificates, agreements, reports and documents to be executed and delivered under or in connection with this Agreement or the Receivables Sale Agreement (except the Program Documents), as any of the foregoing may be amended, supplemented, amended and restated, or otherwise modified from time to time in accordance with this Agreement. "UCC" means the Uniform Commercial Code as from time to time in effect in the applicable jurisdiction or jurisdictions. "UNMATURED SERVICER EVENT OF DEFAULT" means any event that, if it continues uncured, will, with lapse of time or notice or lapse of time and notice, constitute a Servicer Event of Default. "UNMATURED SIGNIFICANT EVENT" means any event that, if it continues uncured, will, with lapse of time or notice or lapse of time and notice, constitute a Significant Event. "UNPAID BALANCE" means, with respect to any Receivable, the sum of (a) the Outstanding Balance thereof, plus (without duplication), (b) the aggregate amount required to repay in full all interest, finance, prepayment and other fees or charges of any kind payable in respect of, such Outstanding Balance. "VOLUNTARY ADVANCE AGREEMENT" means the Voluntary Advance Agreement, dated as of March 11, 1999, among Lender, Administrator and Bank, as it may be amended, supplemented, restated or otherwise modified from time to time. "YIELD RESERVE" means, on any date of determination, the product of (a) the highest Day Sales Outstanding Ratio during the 12 months ending on the most recent Calculation Date, (b) the Stress Factor, (c) the Prime Rate as in effect on such Calculation Date and (d) 1/360. Section 1.2 Other Definitional Provisions. (a) Unless otherwise specified therein, all terms defined in this Agreement have the meanings as so defined herein when used in the Lender Note or any other Transaction Document, certificate, report or other document made or delivered pursuant hereto. (b) Each term defined in the singular form in Section 1.1 or elsewhere in this Agreement shall mean the plural thereof when the plural form of such term is used in this Agreement, the Lender Note or any other Transaction Document, certificate, report or other document made or delivered pursuant hereto, and each term defined in the plural 19 26 form in Section 1.1 shall mean the singular thereof when the singular form of such term is used herein or therein. (c) The words "HEREOF," "HEREIN," "HEREUNDER" and similar terms when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, subsection, schedule and exhibit references herein are references to articles, sections, subsections, schedules and exhibits to this Agreement unless otherwise specified. Section 1.3 Other Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP. All terms used in Article 9 of the UCC and not specifically defined herein, are used herein as defined in such Article 9. Section 1.4 Computation of Time Periods. Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word "FROM" means "FROM AND INCLUDING" and the words "TO" and "UNTIL" each means "TO BUT EXCLUDING." ARTICLE II. THE LENDER'S COMMITMENT, BORROWING PROCEDURES AND LENDER NOTE Section 2.1 Lender's Commitment. On the terms and subject to the conditions set forth in this Agreement, Lender agrees to make loans to Borrower on a revolving basis from time to time (the "LENDER'S COMMITMENT") before the Commitment Termination Date in such amounts as may be from time to time requested by Borrower pursuant to Section 2.2; PROVIDED, HOWEVER, that the aggregate principal amount of all Loans from time to time outstanding hereunder shall not exceed the lesser of (a) the Facility Limit and (b) the Borrowing Base. Within the limits of the Lender's Commitment, Borrower may borrow and (subject to Section 4.1(a)) prepay and reborrow under this Section 2.1. Section 2.2 Borrowing Procedures. Borrower (or the Servicer on its behalf) may request a Loan hereunder by giving notice to Administrator of a proposed borrowing not later than 2:00 p.m. (New York City time), two (2) Business Days prior to the proposed date of such borrowing (or such lesser period of time as Lender may consent); PROVIDED that Borrower shall not request, and Lender shall not make, Loans more than once per calendar week. Each such notice (herein called a "BORROWING REQUEST") shall be in the form of Exhibit A (or, if acceptable to Administrator, the information required therein may be given by telephone) and shall include the date and amount of such proposed borrowing. Any Borrowing Request given by Borrower (or the Servicer on its behalf) pursuant to this Section 2.2 shall be irrevocable and binding on Borrower. Section 2.3 Funding. Subject to the satisfaction of the conditions precedent set forth in Article VII with respect to such Loan and the limitations set forth in Section 2.1, Lender shall make the proceeds of such requested Loan available to Administrator at its office in Atlanta, Georgia in immediately available funds on the proposed date of borrowing. Upon 20 27 receipt by Administrator of such funds, Administrator will make such funds available to Borrower at such office on such date. Each borrowing shall be on a Business Day and shall be in an amount of at least $1,000,000 and in integral multiples of $500,000 (or in such other amounts as Lender or Administrator may approve). Section 2.4 Representation and Warranty. Each request for a borrowing pursuant to Section 2.2 shall automatically constitute a representation and warranty by Borrower to Administrator and Lender that on the requested date of such borrowing (a) the representations and warranties contained in Article VIII will be true and correct as of such requested date as though made on such date, (b) no Significant Event or Unmatured Significant Event has occurred and is continuing or will result from such borrowing, and (c) after giving effect to such requested borrowing, the aggregate principal balance of the outstanding Loans hereunder will not exceed the lesser of the Borrowing Base and the Facility Limit. Section 2.5 Extension of Lender's Commitment. The Lender's Commitment shall terminate on the Commitment Termination Date. Notwithstanding the foregoing: (a) Lender or Administrator, on Lender's behalf, shall use reasonable effort to give Borrower not less than 60 days' prior notice of any scheduled termination of the Credit Banks' commitments under the Credit Agreement and shall promptly notify Borrower of any extension thereof, (b) Not more than 90 days prior to the Liquidity Termination Date in effect from time to time, Borrower may request that Lender or Administrator, on Lender's behalf, seek the Liquidity Banks' consent to extend the Liquidity Termination Date for a period which, when aggregated with the number of days remaining until the existing Liquidity Termination Date would not cause the Liquidity Banks' commitments under the Liquidity Agreement as so extended to exceed 364 days in toto, and (c) Not more than 90 days prior to the Scheduled Commitment Termination Date in effect from time to time, Borrower may request that Lender consent to extend the Scheduled Commitment Termination Date for an additional 364-day period. Administrator shall advise Borrower in writing whether each request made pursuant to the foregoing clause (b) or clause (c) has been granted within thirty (30) days after such request has been made and whether such consent is subject to satisfaction of any conditions precedent. If any such request is not granted within thirty (30) days after such request has been made, the Liquidity Termination Date or Scheduled Commitment Termination Date, as the case may be, shall remain unchanged. If any such request is granted within thirty (30) days after such request has been made, the Liquidity Termination Date or Scheduled Commitment Termination Date, as the case may be, shall be extended as provided in Administrator's written notice upon satisfaction of any conditions precedent specified therein. Section 2.6 Voluntary Termination of Lender's Commitment; Reduction of Facility Limit. Borrower may, in its sole discretion for any reason upon at least 10 days' 21 28 notice to Administrator (with a copy to Lender), terminate the Lender's Commitment in whole, or, reduce in part the unused portion of the Facility Limit; PROVIDED, HOWEVER that (a) each such partial reduction will be in a minimum amount of $5,000,000 or a higher integral multiple of $1,000,000 and shall not reduce the Facility Limit below $40,000,000, and (b) in connection therewith Borrower shall comply with Section 3.2(b) and Section 4.1(b). Section 2.7 Note. Each Loan from Lender shall be evidenced by a single promissory grid note (herein, as amended, modified, extended or replaced from time to time, called the "LENDER NOTE") substantially in the form set forth in Exhibit B, with appropriate insertions, payable to the order of Lender. Borrower hereby irrevocably authorizes Administrator in connection with the Lender Note to make (or cause to be made) appropriate notations on the grid attached to the Lender Note (or on any continuation of such grid, or at Administrator's option, in its records), which notations, if made, shall evidence, inter alia, the date of, the outstanding principal of, and the interest rate and Interest Period applicable to the Loans evidenced thereby. Such notations shall be rebuttably presumptive evidence of the subject matter thereof, absent manifest error; PROVIDED, HOWEVER, that the failure to make any such notations shall not limit or otherwise affect any Obligations of Borrower. ARTICLE III. INTEREST, FEES, ETC. Section 3.1 Interest Rates. Borrower hereby promises to pay interest on the unpaid principal amount of each Loan (or each portion thereof) for the period commencing on the date of such Loan until such Loan is paid in full, as follows: (a) at all times while the making or maintenance of such Loan (or the applicable portion thereof) by Lender is funded by the issuance of Commercial Paper Notes of Lender, during each Interest Period, at a rate per annum equal to the sum of (i) the Commercial Paper Rate applicable to such Interest Period, plus (ii) the Applicable Margin; (b) at all times while the making or maintenance of such Loan (or the applicable portion thereof) by Lender is funded during each Interest Period pursuant to the Liquidity Agreement or the Voluntary Advance Agreement, at a rate per annum equal to the sum of (i) the Alternative Rate applicable to such Interest Period, plus (ii) the Applicable Margin; and (c) notwithstanding the provisions of the preceding clauses (a) and (b), in the event that a Significant Event or an Unmatured Significant Event has occurred and is continuing, at a rate per annum (the "DEFAULT RATE") equal to the Base Rate applicable from time to time (but not less than the interest rate in effect for such Loan as at the date of such Significant Event), plus a margin of 2.00%. After the date any principal amount of any Loan is due and payable (whether on the Scheduled Commitment Termination Date, upon acceleration or otherwise) or after any other monetary Obligation of Borrower arising under this Agreement shall become due and payable, Borrower shall pay (to the extent permitted by law, if in respect of any unpaid amounts representing interest) interest (after as well as 22 29 before judgment) on such amounts at a rate per annum equal to the Default Rate. No provision of this Agreement or the Lender Note shall require the payment or permit the collection of interest in excess of the maximum permitted by applicable law. Section 3.2 Interest Payment Dates. Interest accrued on each Allocation shall be payable, without duplication: (a) on each Scheduled Interest Payment Date prior to the Scheduled Commitment Termination Date, for the period since the creation of such Allocation (in the case of the first Scheduled Interest Payment Date thereafter) or since the prior Scheduled Interest Payment Date (in the case of any subsequent Scheduled Interest Payment Date); (b) on the date of any payment or prepayment (in whole or in part) of principal outstanding in such Allocation, on the amount paid or prepaid (it being understood that any prepayment shall be accompanied by any amounts owing under Section 6.2); (c) in full, on the Scheduled Commitment Termination Date (whether at scheduled maturity or upon acceleration thereof pursuant to Section 10.3); and (d) from and after the Scheduled Commitment Termination Date, upon demand. Section 3.3 Interest Allocations. Administrator shall from time to time and in its sole discretion determine whether interest in respect of the Loans then outstanding, or any portion thereof, shall be calculated by reference to the Commercial Paper Rate (such portion being herein called a "CP ALLOCATION") or an Alternative Rate (such portion being herein called an "ALTERNATIVE RATE ALLOCATION", and together with a CP Allocation individually called an "ALLOCATION", and collectively, "ALLOCATIONS"); PROVIDED, HOWEVER, that, Administrator shall use its reasonable efforts to allocate all or substantially all of the Loans from Lender to a CP Allocation (it being understood that if Lender is not able to issue sufficient Commercial Paper Notes to fund all of its assets at such time and no Significant Event or Unmatured Significant Event has occurred and is continuing, Lender and Administrator shall, at least, fund the Loans pro rata with its other non-defaulted assets with Commercial Paper Notes); PROVIDED FURTHER, HOWEVER, that Administrator may determine, at any time and in its sole discretion, that the Commercial Paper Rate is unavailable or otherwise not desirable, in which case the Loans from Lender will be allocated to an Alternative Rate Allocation (unless the Default Rate is in effect). Section 3.4 Fees. Borrower agrees to pay (or cause to be paid to) Administrator and Lender certain Fees in the amounts and on the dates set forth in the letter agreement executed in connection herewith between Borrower and Administrator (as the same may be amended, supplemented, restated or otherwise modified, the "FEE LETTER"). Section 3.5 Computation of Interest and Fees. All interest, Fees and Servicing Fees shall be computed on the basis of the actual number of days (including the first day but 23 30 excluding the last day) occurring during the period for which such interest or Fee is payable over a year comprised of 360 days. ARTICLE IV. REPAYMENTS AND PREPAYMENTS; DISTRIBUTION OF COLLECTIONS Section 4.1 Repayments and Prepayments. Borrower shall repay in full the unpaid principal amount of each Loan on the Scheduled Commitment Termination Date. Prior thereto, Borrower: (a) may, from time to time on any Business Day, make a prepayment, in whole or in part, of the outstanding principal amount of any Loans; PROVIDED, HOWEVER, that, (i) unless otherwise consented to by Administrator, all such voluntary prepayments shall require at least two (2) Business Days' (or, in the case of a voluntary prepayment of $10,000,000 or more, at least seven (7) Business Days') prior written notice to Administrator, (ii) unless otherwise consented to by Administrator, all such voluntary partial prepayments shall be in a minimum amount of $1,000,000 and an integral multiple of $100,000, and (iii) unless and until the aggregate outstanding principal balance of the Loans hereunder is less than 10% of the highest amount ever borrowed hereunder, no such prepayment may be made with any funds other than (A) Collections and (B) the Borrower's initial paid-in cash capital (if any then remains); (b) shall, on each date when any reduction in the Facility Limit shall become effective pursuant to Section 2.6, make a prepayment of the Loans in an amount equal to the excess, if any, of the aggregate outstanding principal amount of the Loans over the Facility Limit as so reduced; (c) shall, immediately upon any acceleration of the Scheduled Commitment Termination Date of any Loans pursuant to Section 10.3, repay all Loans, unless, pursuant to Section 10.3(a), only a portion of all Loans is so accelerated, in which event Borrower shall repay the accelerated portion of the Loans; and (d) shall, immediately upon discovering that a Borrowing Base Deficit exists, make a prepayment of the Loans in an amount equal to such Borrowing Base Deficit. Each such prepayment shall be subject to the payment of any amounts required by Section 6.2. Section 4.2 Application of Collections. (a) All Collections shall be distributed by the Servicer at such times and in the order of priority set forth in this Section 4.2. (b) On each Distribution Date, prior to payment in full of all Secured Obligations, the Servicer shall distribute from Collections on deposit in the Depository Accounts on such Distribution Date, if any, the following amounts, without duplication in the following order of priority: 24 31 FIRST, to the extent due and owing under this Agreement or any other Transaction Document, the accrued Servicing Fee payable for the prior Calculation Period (plus, if applicable, the amount of Servicing Fee payable for any prior Calculation Period to the extent such amount has not been distributed to Servicer); SECOND, interest accrued on the Loans during the period from the most recent Distribution Date to the current Distribution Date (plus, if applicable, the amount of interest on the Loans accrued for any prior period to the extent such amount has not been paid, and to the extent permitted by law, interest thereon); THIRD, to the extent due and owing under any Transaction Document, all Fees accrued during the prior Calculation Period (plus, if applicable, the amount of Fees accrued for any prior Calculation Period to the extent such amount has not been distributed to Lender or Administrator); FOURTH, as a repayment of principal of the Loans, an amount equal to the Borrowing Base Deficit, if any; FIFTH, to the extent due and owing under any Transaction Document on such Distribution Date, all other Secured Obligations owed to any Secured Party; SIXTH, to the extent due and owing under this Agreement or any other Transaction Document on such Distribution Date, all other obligations then payable by Borrower to Administrator or Lender; and SEVENTH, the balance, if any, to Borrower. (c) On and after the Commitment Termination Date and the payment in full of all Secured Obligations, the Servicer shall distribute from Collections on deposit in the Depository Accounts on such Distribution Date, if any, the following amounts, without duplication in the following order of priority: FIRST, the accrued but unpaid Servicing Fee due and owing on such Distribution Date; SECOND, all other obligations payable by Borrower under this Agreement due and owing on such Distribution Date; and THIRD, once all amounts described in clauses FIRST and SECOND above have been paid in full, the balance, if any, to Borrower. Section 4.3 Application of Certain Payments. Each payment of principal of the Loans shall be applied to such Loans as Borrower shall direct or, in the absence of such notice or during the existence of a Significant Event or after the Commitment Termination Date, as Administrator shall determine in its discretion. 25 32 Section 4.4 Due Date Extension. If any payment of principal or interest with respect to any Loan falls due on a day which is not a Business Day, then such due date shall be extended to the next following Business Day, and additional interest shall accrue at the applicable interest rate and be payable for the period of such extension. Section 4.5 Making of Payments. All payments of principal of, or interest on, the Loans and of all Fees, and all amounts to be deposited by Borrower or Servicer hereunder, shall be made by Borrower or Servicer, as applicable, no later than 12:00 noon (New York City time), on the day when due in lawful money of the United States of America in immediately available funds to Bank, as Administrator, Reference: Three Pillars Funding Corporation/ChoicePoint Financial Inc., a Delaware corporation, Transaction, Account No. 880171236, ABA No. 061000104, at Bank's office at 25 Park Place, in Atlanta, Georgia, Attn: Mary Hinsberg (the "ADMINISTRATOR'S ACCOUNT"). Funds received by Administrator after 12:00 noon (New York City time), on the date when due, will be deemed to have been received by Administrator on its next following Business Day. ARTICLE V. SECURITY INTEREST Section 5.1 Grant of Security. (a) Borrower hereby assigns and pledges to Administrator (for the benefit of the Secured Parties), and hereby grants to Administrator (for the benefit of the Secured Parties) a security interest in all of Borrower's right, title and interest in and to the following, whether now or hereafter existing and wherever located: (i) all Receivables, Related Security and Receivable Files; (ii) all of Borrower's rights, remedies, powers and privileges in respect of the Receivables Sale Agreement, including, without limitation, its rights to receive Purchase Price Credits and indemnity payments thereunder; (iii) all of Borrower's rights, remedies, powers and privileges in respect of the Performance Undertaking, including, without limitation, its right to demand performance thereunder; (iv) the LockBox Accounts and the Depository Accounts and all funds on deposit therein, together with all certificates and instruments, if any, from time to time evidencing such accounts and funds on deposit; and (v) all products and proceeds (including, without limitation, insurance proceeds) of, and additions, improvements and accessions to, and books and records describing or used in connection with, all and any of the property described above; (items (i) through (v) are collectively referred to as the "COLLATERAL"). 26 33 (b) This grant of security secures the payment and performance of all Obligations of Borrower now or hereafter existing or arising under, or in connection with, this Loan Agreement, the Lender Note and each other Transaction Document, whether for principal, interest, costs, Fees, Indemnified Amounts, expenses or otherwise (all such Obligations of Borrower being called the "SECURED OBLIGATIONS"). (c) This grant of security shall create a continuing security interest in the Collateral and shall: (i) remain in full force and effect until Administrator's (for the benefit of the Secured Parties) interest in the Collateral shall have been released in accordance with Section 5.4; (ii) be binding upon Borrower, its successors, transferees and assigns; and (iii) inure, together with the rights and remedies of Administrator (for the benefit of the Secured Parties) hereunder, to the benefit of Administrator and each Secured Party and their respective successors, transferees and assigns. Section 5.2 Administrator Appointed Attorney-in-Fact. Borrower hereby irrevocably appoints Administrator (for the benefit of the Secured Parties) as Borrower's attorney-in-fact, with full authority in the place and stead of Borrower and in the name of Borrower or otherwise, from time to time in Administrator's discretion, after the occurrence and during the continuation of a Significant Event to take any action and to execute any instrument which Administrator may deem necessary or advisable to accomplish the purposes of the Transaction Documents, including, without limitation: (a) to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral; (b) to receive, endorse, and collect any drafts or other instruments, documents and chattel paper, in connection with clause (a) above; (c) to file any claims or take any action or institute any proceedings which Administrator may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of Administrator (for the benefit of the Secured Parties) with respect to any of the Collateral; (d) to sell, transfer, assign or otherwise deal in or with the Collateral or any part thereof pursuant to the terms and conditions hereunder; and (e) to perform the affirmative obligations of Borrower under the Transaction Documents. Administrator agrees to give Borrower and Servicer written notice of the taking of any such action, but the failure to give such notice shall not affect the rights, power or authority of Administrator with respect thereto. Borrower hereby acknowledges, consents and agrees that the power of 27 34 attorney granted pursuant to this Section 5.2 is irrevocable and coupled with an interest. Section 5.3 Administrator May Perform. If Borrower fails to perform any agreement contained herein, Administrator (for the benefit of the Secured Parties) may itself perform, or cause performance of such agreement, and the expenses of Administrator incurred in connection therewith shall be payable by Borrower. Section 5.4 Release of Collateral. Administrator's (for the benefit of the Secured Parties) right, title and interest in the Collateral shall be released effective on the date occurring after the Commitment Termination Date on which all Secured Obligations shall have been finally and fully paid and performed. ARTICLE VI. INCREASED COSTS, ETC. Section 6.1 Increased Costs. If any change in Regulation D of the Board of Governors of the Federal Reserve System, or any Regulatory Change, in each case occurring after the date hereof: (a) shall subject any Affected Party to any tax, duty or other charge with respect to any Loan made or funded by it, or shall change the basis of taxation of payments to such Affected Party of the principal of or interest on any Loan owed to or funded by it or any other amounts due under this Agreement in respect of any Loan made or funded by it (except for changes in the rate of tax on the overall net income of such Affected Party imposed by the jurisdiction in which such Affected Party's principal executive office is located); or (b) shall impose, modify or deem applicable any reserve (including, without limitation, any reserve imposed by the Board of Governors of the Federal Reserve System, but excluding any reserve included in the determination of interest rates pursuant to Section 3.1), special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Affected Party; (c) shall change the amount of capital maintained or required or requested or directed to be maintained by any Affected Party; or (d) shall impose on any Affected Party any other condition affecting any Loan made or funded by any Affected Party; and the result of any of the foregoing is or would be to (i) increase the cost to or to impose a cost on (I) an Affected Party funding or making or maintaining any Loan (including extensions of credit under the Liquidity Agreement, the Voluntary Advance Agreement or any Credit Advance, or any commitment of such Affected Party with respect to any of the foregoing), or (II) Administrator for continuing its or Borrower's relationship with Lender, (ii) to reduce the amount of any sum received or receivable by an Affected Party under this Agreement, the Lender Note, the Liquidity Agreement, the Voluntary Advance Agreement or the Credit Agreement with respect thereto, or (iii) in the good faith determination of such Affected Party, to reduce the rate of return on the capital of an Affected Party as a consequence of its obligations hereunder, or under the Liquidity Agreement, the Voluntary Advance Agreement or Credit 28 35 Agreement, or arising in connection herewith or therewith to a level below that which such Affected Party could otherwise have achieved, then after demand by such Affected Party to Borrower (which demand shall be accompanied by a written statement setting forth the basis of such demand), Borrower shall pay such Affected Party such additional amount or amounts as will (in the reasonable determination of such Affected Party) compensate such Affected Party for such increased cost or such reduction. Such written statement (which shall include calculations in reasonable detail) shall, in the absence of manifest error, be rebuttably presumptive evidence of the subject matter thereof. Section 6.2 Funding Losses. Borrower hereby agrees that upon demand by any Affected Party (which demand shall be accompanied by a statement setting forth the basis for the calculations of the amount being claimed), Borrower will indemnify such Affected Party against any net loss or expense which such Affected Party may sustain or incur (including, without limitation, any net loss or expense (not including lost profits) incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Affected Party to fund or maintain any Allocation made by Lender to Borrower), as reasonably determined by such Affected Party, as a result of (a) any payment or prepayment (including any mandatory prepayment) of any Allocation on a date other than the last day of the Interest Period for such Allocation, or (b) any failure of Borrower to borrow any Loan on a date specified therefor in a related Borrowing Request. Such written statement shall, in the absence of manifest error, be rebuttably presumptive evidence of the subject matter thereof. Section 6.3 Withholding Taxes. (a) All payments made by Borrower hereunder (or by Servicer, on behalf of Borrower, hereunder) shall be made free and clear of, and without reduction or withholding for or on account of, any present or future Covered Taxes, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority or other taxing authority. If any Covered Taxes are required to be withheld from any amounts payable to Administrator or Lender, the amounts so payable to Administrator or Lender shall be increased to the extent necessary to yield to Administrator or Lender (after payment of all such Covered Taxes) all such amounts payable hereunder at the rates or in the amounts specified herein. Whenever any Covered Taxes are payable by Borrower, as promptly as possible thereafter, Borrower shall send to Administrator for its own account or for the account of Lender, as the case may be, a certified copy of an original official receipt received by Borrower showing payment thereof. If Borrower fails to pay any Covered Taxes when due to the appropriate taxing authority or fails to remit to Administrator the required documentary evidence, Borrower shall indemnify Administrator and Lender for such Covered Taxes and any incremental taxes that may become payable by Administrator or Lender as a result of any such failure. (b) At least five (5) Business Days prior to the first date on which any payments, including discount or Fees, are payable hereunder for the account of Lender, if Lender is not incorporated under the laws of the United States, Lender agrees to deliver to each of Borrower and Administrator two (2) duly completed copies of (i) United States Internal Revenue Service 29 36 Form W-8BEN or W-8ECI (or successor applicable form) certifying that such Lender is entitled to receive payments hereunder without deduction or withholding of any United States federal income taxes or (ii) United States Internal Revenue Service Form W-8 or W-9 (or successor applicable form) to establish an exemption from United States backup withholding tax. Lender shall replace or update such forms as is necessary or appropriate to maintain any applicable exemption or as is requested by Administrator or Borrower. If Lender does not deliver the forms described in this Section 6.3(b), Borrower or Administrator shall withhold United States federal income taxes from any payments made hereunder at the statutory rate applicable to payments made to Lender. Lender agrees to indemnify and hold Borrower and Administrator harmless for any United States federal income taxes, penalties, interest and other costs and losses incurred or payable by Borrower or Administrator as a result of either (x) Lender's failure to submit any form required to be provided pursuant to this Section 6.3(b) or (y) Borrower's or Administrator's reliance on any form that Lender has provided pursuant to this Section 6.3(b). ARTICLE VII. CONDITIONS TO BORROWING Section 7.1 Initial Loan. The obligation of Lender to make the initial Loan hereunder is subject to the conditions precedent that Administrator shall have received all of the following, each duly executed and dated the date of such Loan (or such earlier date as shall be satisfactory to Administrator), in form and substance satisfactory to Administrator: 7.1.1 Resolutions. Certified copies of resolutions of the Board of Directors of Borrower, Servicer, Performance Guarantor, Parent SPE and each Originator authorizing or ratifying the execution, delivery and performance, respectively, of the Transaction Documents to which it is a party, together with a certified copy of its Organization Documents. 7.1.2 Consents, etc. Certified copies of all documents evidencing any necessary corporate action, consents and governmental approvals (if any) with respect to the Transaction Documents. 7.1.3 Incumbency and Signatures. A certificate of the Secretary or an Assistant Secretary of Borrower, Servicer, Performance Guarantor, Parent SPE and each Originator certifying the names of its officer or officers authorized to sign the Transaction Documents to which it is a party. 7.1.4 Good Standing Certificates. Good standing certificates for Borrower, Servicer, Performance Guarantor, Parent SPE and each Originator issued as of a recent date acceptable to Administrator by the Secretary of State of the jurisdiction of such Person's incorporation or organization. 7.1.5 Financing Statements. (i) Acknowledgment copies of proper financing statements (Form UCC-1), filed on or prior to the date of the initial Loan, naming Borrower as debtor and Administrator (for the benefit 30 37 of the Secured Parties) as the secured party as may be necessary or, in the opinion of Administrator, desirable under the UCC to perfect Administrator's (for the benefit of the Secured Parties) security interest in the Collateral, (ii) acknowledgment copies of proper financing statements, filed on or prior to the date of the initial Loan, naming Parent SPE as seller/debtor, Borrower as purchaser/secured party and Administrator as assignee as may be necessary or, in the opinion of Administrator, desirable under the UCC to perfect Parent SPE's ownership interest in the Receivables, (iii) acknowledgment copies of proper financing statements (Form UCC-3), filed on or prior to the date of the initial Loan, naming each Originator as seller/debtor, Parent SPE as purchaser/secured party and Borrower as assignee, as may be necessary or, in the opinion of Administrator, desirable under the UCC to perfect Borrower's ownership interest in the Receivables, (iv) acknowledgment copies of proper financing statement assignments with respect to each of the financing statements described in clause (iii) above, filed on or prior to the date of the initial Loan, naming Administrator as assignee, and (v) executed copies of proper Uniform Commercial Code Form UCC-3 termination statements, if any, necessary to release all liens and other Adverse Claims of any Person in the Collateral granted by Borrower, Parent SPE or Originator. 7.1.6 Search Reports. A written search report provided to Administrator by a search service acceptable to Administrator listing all effective financing statements that name Borrower, Parent SPE or any Originator as debtor or assignor and that are filed in the jurisdictions in which filings were made pursuant to Section 7.1.5 above and in such other jurisdictions that Administrator shall reasonably request, together with copies of such financing statements (none of which shall cover any Collateral or interests therein or proceeds of any thereof), and tax and judgment lien search reports from a Person satisfactory to Administrator showing no evidence of such lien filed against Borrower or Originator. 7.1.7 Fee Letter; Payment of Fees. The Fee Letter, together with all outstanding Fees payable pursuant to the Fee Letter. 7.1.8 First Step Sale Agreement and Receivables Sale Agreement. (i) Duly executed and delivered counterparts of each of the Receivables Sale Agreement, the First Step Sale Agreement and all documents, agreements and instruments contemplated thereby, and (ii) evidence that each of the conditions precedent to the execution and delivery of each of the First Step Sale Agreement and the Receivables Sale Agreement has been satisfied to Administrator's satisfaction, and that the initial assignments and transfers under the First Step Sale Agreement and the Receivables Sale Agreement have been consummated. 7.1.9 Opinions of Counsel. Opinions of counsel to Borrower, Servicer, Performance Guarantor, Parent SPE and Originators in form and substance satisfactory to Administrator. 7.1.10 Lender Note. The Lender Note, duly executed by Borrower. 31 38 7.1.11 Borrowing Base Certificate. A Borrowing Base Certificate, duly executed by an officer of Servicer on Borrower's behalf showing a calculation of the Borrowing Base as of the date of such initial Loan. 7.1.12 Lock Box and Blocked Account Agreements. The Lock Box and Blocked Account Agreements, duly executed by all of the parties thereto. 7.1.13 Releases. Releases and termination statements duly executed by each Person, other than Borrower, that has an interest in the Receivables. 7.1.14 Performance Undertaking. The Performance Undertaking, duly executed by the Performance Guarantor. 7.1.15 Other. Such other documents, certificates and opinions as Administrator may request. Section 7.2 All Loans. The making of each Loan, including without limitation, the initial Loan, is subject to the conditions precedent that: 7.2.1 No Default, etc. (i) No Significant Event, Unmatured Significant Event or Servicer Event of Default has occurred and is continuing or will result from the making of such Loan, (ii) the representations and warranties of Borrower contained in Article VIII are true and correct in all material respects as of the date of such requested Loan, with the same effect as though made on the date of such Loan except for such representations and warranties that expressly refer to a different date; PROVIDED THAT the materiality threshold in the preceding clause shall not be applicable with respect to any representation or warranty which itself contains a materiality threshold, and (iii) after giving effect to such Loan, the aggregate unpaid balance of the Loans will not exceed the Borrowing Base or the Facility Limit. By making a Borrowing Request, Borrower shall be deemed to have represented and warranted that items (i), (ii) and (iii) in the preceding sentence are true and correct. 7.2.2 Borrowing Request, etc. Administrator shall have received a Borrowing Request for such Loan in accordance with Section 2.2, together with all items required to be delivered in connection therewith. 7.2.3 Commitment Termination Date. The Commitment Termination Date shall not have occurred. 7.2.4 Collateral Review. Administrator shall have received the most-recent Collateral Review pursuant to Section 9.1.5(c). 7.2.5 Accounts. The Depository Accounts and the LockBox Accounts shall have been established and shall be subject to valid and perfected first priority security interests in favor of Administrator for the benefit of the Secured Parties. 32 39 ARTICLE VIII. REPRESENTATIONS AND WARRANTIES In order to induce Lender and Administrator to enter into this Agreement and, in the case of Lender, to make Loans hereunder, Borrower hereby represents and warrants to Administrator and Lender as to itself as follows, and Servicer hereby represents and warrants to Administrator and Lender as to itself as follows: Section 8.1 Existence and Power. Servicer is a corporation duly organized under the laws of the State of Georgia. Borrower is a corporation duly organized under the laws of the State of Delaware. Each of Servicer and Borrower is validly existing and in good standing under the laws of its state of incorporation and is duly qualified to do business and is in good standing as a foreign corporation, and has and holds all corporate power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted except where the failure to so qualify or so hold could not reasonably be expected to have a Material Adverse Effect. Section 8.2 Power and Authority; Due Authorization, Execution and Delivery. The execution and delivery by each of Servicer and Borrower of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder, and Borrower's use of the proceeds of the Loans made hereunder, are within its corporate powers and authority and have been duly authorized by all necessary corporate action on its part. This Agreement and each other Transaction Document to which Servicer or Borrower is a party has been duly executed and delivered by Servicer or Borrower, as the case may be. Section 8.3 No Conflict. The execution and delivery by each of Borrower and Servicer of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder do not contravene or violate (i) its Organizational Documents, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on its assets (except as created under the Transaction Documents) except, in any case described in clauses (i)-(iv) inclusive, where such contravention or violation could not reasonably be expected to have a Material Adverse Effect; and no transaction contemplated hereby requires compliance with any bulk sales act or similar law. Section 8.4 Governmental Authorization. Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution and delivery by Servicer or Borrower of this Agreement and each other Transaction Document to which it is a party and the performance of its obligations hereunder and thereunder. Section 8.5 Actions, Suits. Except as disclosed in the SEC Filings, there is no litigation, arbitration, governmental investigation, proceeding or inquiry pending or, to the knowledge of any of their officers, threatened against or affecting Borrower, Servicer or any of 33 40 Servicer's Subsidiaries which could reasonably be expected to have a Material Adverse Effect or which seeks to prevent, enjoin or delay the making or repayment of any Loans. Other than any liability incident to any litigation, arbitration or proceeding which could not reasonably be expected to have a Material Adverse Effect, Servicer and its Subsidiaries have no material contingent obligations not provided for or disclosed in the SEC Filings. Section 8.6 Binding Effect. This Agreement and each other Transaction Document to which Servicer or Borrower is a party constitute the legal, valid and binding obligations of Servicer or Borrower, as the case may be, enforceable against it in accordance with their respective terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). Section 8.7 Accuracy of Information. All written information heretofore furnished by Borrower, Servicer or any of their respective Affiliates for purposes of or in connection with this Agreement, any of the other Transaction Documents or any transaction contemplated hereby or thereby is, and all such written information hereafter furnished by Borrower, Servicer or any of their respective Affiliates will be, true and accurate in every material respect on the date such information is stated or certified and does not and will not contain any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein, taken as a whole, not misleading. Section 8.8 Margin Regulations; Use of Proceeds. Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock, and no proceeds of any Loans, directly or indirectly, will be used for a purpose that violates, or would be inconsistent with, Regulations T, U and X promulgated by the Federal Reserve Board from time to time. No portion of the proceeds of any Loan hereunder will be used for a purpose that violates, or would be inconsistent with, any other law, rule or regulation applicable to Borrower. Section 8.9 Good Title. Borrower (i) is the legal and beneficial owner of the Receivables and (ii) is the legal and beneficial owner of the Related Security with respect thereto or possesses a valid and perfected security interest therein, in each case, free and clear of any Adverse Claim, except as created by the Transaction Documents. There have been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Borrower's ownership interest in each such Receivable, its Collections and the Related Security except for Excluded Items. Section 8.10 Perfection. This Agreement is effective to create a valid security interest in the Collateral favor of Administrator, for the benefit of the Secured Parties. There have been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Administrator's security interest, for the benefit of the Secured Parties, in the Collateral (except for Excluded Items). The Collateral is free of any Adverse Claim except as created under the Transaction Documents. 34 41 Section 8.11 Chief Executive Office. The chief executive office of Borrower is located in the State of Delaware (or at such other location, notified to Administrator in a jurisdiction where all action required to perfect or maintain the perfection of Administrator's security interest in the Collateral has been taken). Borrower's Federal Employer Identification Number is 58-2630504. Section 8.12 Accounts. Borrower represents and warrants that (a) Schedule 8.12 hereto is a complete and accurate listing, as of the Closing Date, of the LockBoxes, LockBox Accounts and Depository Accounts, and (b) each of the LockBox Accounts and Depository Accounts has been established in, or transferred into, Borrower's name. Neither Servicer nor Borrower has granted any interest in any LockBox, any LockBox Account or any Depository Account to any Person other than Administrator, and Administrator has exclusive control of the LockBox Accounts and the Depository Accounts. Section 8.13 No Material Adverse Effect. Since December 31, 2000, no event has occurred that could reasonable be expected to have a Material Adverse Effect. Section 8.14 Names. The name in which Borrower has executed this Agreement is identical to the name of Borrower as indicated on the public record of the State of Delaware. Borrower has not used any corporate name, trade name or assumed name other than the name in which it has executed this Agreement. Section 8.15 Ownership of Borrower; No Subsidiaries. All of the issued and outstanding equity interests of Borrower are owned beneficially and of record by Parent SPE, free and clear of any Adverse Claim. Such equity interests are validly issued, fully paid and nonassessable, and there are no options, warrants or other rights to acquire securities of Borrower. Borrower has no Subsidiaries. Section 8.16 Not a Holding Company or an Investment Company. Neither Borrower nor Servicer is a "holding company" or a "subsidiary holding company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended, or any successor statute. Neither Borrower nor Servicer is an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or any successor statute. Section 8.17 Compliance with Credit and Collection Policy. Each of Borrower and Servicer has complied in all material respects with the Credit and Collection Policy with regard to each Receivable and the related Contract, and has not made any change to such Credit and Collection Policy, except such material change as to which Administrator has given its prior written consent. Section 8.18 Solvency. Both before and after giving effect to each Loan, Borrower is Solvent. Section 8.19 Eligible Receivables. Each Receivable included in the Borrowing Base as an Eligible Receivable as of the date of (a) any Borrowing Base Certificate, (c) any Monthly Report or (c) the making of any Loan, is an Eligible Receivable on such date. 35 42 Section 8.20 Sales by Originator. Each sale of Receivables by Originator to Borrower shall have been effected under, and in accordance with the terms of, the Receivables Sale Agreement, including the payment by Borrower to Originator of an amount equal to the purchase price therefor as described in the Receivables Sale Agreement, and each such sale shall have been made for "reasonably equivalent value" (as such term is used under ss.548 of the Bankruptcy Code) and not for or on account of "antecedent debt" (as such term is used under ss.547 of the Bankruptcy Code) owed by Borrower to Originator. ARTICLE IX. COVENANTS OF BORROWER AND SERVICER Section 9.1 Affirmative Covenants. From the date hereof until the first day, following the Commitment Termination Date, on which all Obligations shall have been finally and fully paid and performed, each of Borrower and Servicer hereby covenants and agrees with Lender and Administrator that as to itself, as follows: 9.1.1 Compliance with Laws, Etc. Each of Borrower and Servicer will comply in all material respects with all applicable laws, rules, regulations and orders of all governmental authorities (including those which relate to the Receivables). 9.1.2 Preservation of Corporate Existence. Each of Borrower and Servicer will preserve and maintain its existence rights, franchises and privileges in the jurisdiction of its incorporation or organization, and qualify and remain qualified in good standing as a foreign entity in the jurisdiction where its principal place of business and its chief executive office are located and in each other jurisdiction where the failure to preserve and maintain such existence, rights, franchises, privileges and qualifications would have a Material Adverse Effect. 9.1.3 Performance and Compliance with Receivables. Each of Borrower and Servicer will timely and fully perform and comply with all provisions, covenants and other promises required to be observed by it under the Receivables and all other agreements related to such Receivables. 9.1.4 Credit and Collection Policy. Each of Borrower and Servicer will comply in all material respects with the Credit and Collection Policy. 9.1.5 Reporting Requirements. Each of Borrower and Servicer will furnish to Administrator and Lender: (a) Financial Statements. (i) as soon as available, and in any event within 95 days after the end of each year, a copy of the balance sheet of Borrower, in each case, as at the end of such year, together with the related statement of earnings for such year, certified by the chief executive officer, chief financial officer or controller of Borrower 36 43 (which certification shall state that such balance sheet and statement or earnings fairly present the financial condition and results of operations for such year in accordance with GAAP except for the absence of footnotes), together with a certificate of such officer stating that such officer has obtained no knowledge that a Significant Event or Unmatured Significant Event has occurred and is continuing, or if, in the opinion of such officer, such a Significant Event or Unmatured Significant Event has occurred and is continuing, a statement as to the nature thereof; (ii) as soon as available and in any event within 95 days after the end of each year, the financial statements and certificate of ChoicePoint required to be delivered under Section 4.1(a)(i) of the Receivables Sale Agreement; and (iii) as soon as available and in any event within 50 days after the end of each fiscal quarter the financial statements of ChoicePoint required to be delivered under Section 4.1(a)(ii) of the Receivables Sale Agreement, certified by the Chief Executive Officer or a Financial Officer of Choice Point, Inc. (which certification shall state that such balance sheets and statements fairly present the financial condition and results of operations for such fiscal quarter, subject to year-end audit adjustments) (it being understood that delivery of ChoicePoint's Form 10-Q filed with the Securities and Exchange Commission for such fiscal quarter will satisfy the foregoing requirement), delivery of which financial statements shall be accompanied by a certificate of such officer to the effect that no Significant Event or Unmatured Significant Event has occurred and is continuing. (b) Borrowing Base Certificates and Monthly Reports. (i) On or before the 6th Business Day and 20th calendar day of each month after the Closing Date (or if the 20th of any month is not a Business Day, the Business Day immediately thereafter), Servicer shall prepare and deliver to Administrator and Lender a Borrowing Base Certificate as of the last Business Day of the semi-monthly period then most recently ended, signed by an authorized officer of Servicer; and (ii) On or before the 20th day of each month after the Closing Date (or, if such day is not a Business Day, the Business Day immediately thereafter), Servicer shall prepare and deliver to Administrator and Lender a Monthly Report as of the last day of the month then most recently ended, signed by an authorized officer of Servicer. (c) Significant Events. As soon as possible but in any event within one (1) Business Day after any Executive Officer of Borrower or Servicer becomes aware of the occurrence of a Significant Event or an Unmatured Significant Event, Borrower or Servicer, as the case may be, will deliver to Administrator and Lender an Executive Officer's certificate of Borrower setting 37 44 forth details of such event and the action that Borrower or Servicer, as the case may be, proposes to take with respect thereto. (d) Servicing Certificate. Servicer shall deliver, or cause to be delivered, to Administrator, on or before the date that is 95 days after the end of each year, an officer's certificate signed by the president, chief executive officer or any vice president of Servicer, dated as of the last day of the preceding year, stating that (a) a review of the activities of Servicer during the preceding 12-month period and of its performance under this Agreement has been made under such officer's supervision and (b) to the best of such officer's knowledge, based on such review, Servicer has fulfilled its obligations under the Agreement throughout such year and has complied in all material respects with the Credit and Collection Policy, or, if there has been a default in the fulfillment of any such obligation, specifying each such default known to such officer and the nature and status thereof. (e) Collateral Review. As soon as possible, and in any event within sixty (60) days after the Closing Date, and after each semi-annual period thereafter, a report of the independent certified public accountants of ChoicePoint (each such report, a "COLLATERAL REVIEW") which satisfies the requirements set forth on Schedule 9.1.5. (f) Other. Promptly, from time to time, such other information, documents, records or reports respecting the Collateral, the Receivables or the condition or operations, financial or otherwise, of Borrower or Originator as Administrator may from time to time reasonably request in order to protect the interests of Administrator or Lender under or as contemplated by this Agreement or the other Transaction Documents. 9.1.6 Use of Proceeds. Borrower will use the proceeds of the Loans made hereunder solely in connection with the acquisition or funding of Receivables or the repayment of amounts owed under the Subordinated Note in connection therewith. 9.1.7 Separate Legal Entity. Borrower hereby acknowledges that Lender and Administrator are entering into the transactions contemplated by this Agreement and the other Transaction Documents in reliance upon Borrower's identity as a legal entity separate from any other Person. Therefore, from and after the date hereof, Borrower shall take all reasonable steps to continue Borrower's identity as a separate legal entity and to make it apparent to third Persons that Borrower is an entity with assets and liabilities distinct from those of any other Person, and is not a division of any other Person. Without limiting the generality of the foregoing and in addition to and consistent with the covenant set forth in Section 9.1.2, Borrower shall take such actions as shall be required in order that: 38 45 (a) Borrower will be a limited purpose corporation whose primary activities are restricted in its certificate of incorporation to owning financial assets and financing the acquisition thereof and conducting such other activities as it deems necessary or appropriate to carry out its primary activities; (b) Not less than one member of Borrower's Board of Directors (each, an "INDEPENDENT DIRECTOR") shall be an individual who is not, and during the past five (5) years has not been, a director, officer, employee or 5% beneficial owner of the outstanding common stock of any Person or entity beneficially owning any outstanding shares of common stock of ChoicePoint or any Affiliate thereof; PROVIDED, HOWEVER, that an individual shall not be deemed to be ineligible to be an Independent Director solely because such individual serves or has served in the capacity of an "independent director" or similar capacity for special purpose entities formed by ChoicePoint or any of its Affiliates. The certificate of incorporation of Borrower shall provide that (i) the Board of Directors shall not approve, or take any other action to cause the filing of, a voluntary bankruptcy petition with respect to Borrower unless the Independent Directors shall approve the taking of such action in writing prior to the taking of such action, and (ii) such provision cannot be amended without the prior written consent of the Independent Directors; (c) Any employee, consultant or agent of Borrower will be compensated from funds of Borrower, as appropriate, for services provided to Borrower; (d) Borrower will allocate and charge fairly and reasonably overhead expenses shared with any other Person. To the extent, if any, that Borrower and any other Person share items of expenses such as legal, auditing and other professional services, such expenses will be allocated to the extent practical on the basis of actual use or the value of services rendered, and otherwise on a basis reasonably related to the actual use or the value of services rendered; Borrower's operating expenses will not be paid by any other Person except as permitted under the terms of this Agreement or otherwise consented to by Administrator and Lender; (e) Borrower's books and records will be maintained separately from those of any other Person; (f) All audited financial statements of any Person that are consolidated to include Borrower will contain detailed notes clearly stating that (A) all of Borrower's assets are owned by Borrower, and (B) Borrower is a separate corporate entity; (g) Borrower's assets will be maintained in a manner that facilitates their identification and segregation from those of any other Person; 39 46 (h) Borrower will strictly observe corporate formalities in its dealings with all other Persons, and funds or other assets of Borrower will not be commingled with those of any other Person; (i) Borrower shall not, directly or indirectly, be named or enter into an agreement to be named, as a direct or contingent beneficiary or loss payee, under any insurance policy with respect to any amounts payable due to occurrences or events related to any other Person; and (j) Any Person that renders or otherwise furnishes services to Borrower will be compensated thereby at market rates for such services it renders or otherwise furnishes thereto. Borrower will not hold itself out to be responsible for the debts of any other Person or the decisions or actions respecting the daily business and affairs of any other Person. 9.1.8 Adverse Claims on Receivables. Each of Borrower and Servicer will, and will require Originator to, defend each Receivable against all claims and demands of all Persons at any time claiming the same or any interest therein adverse to Administrator and the Secured Parties. 9.1.9 Further Assurances. At its expense, each of Borrower and Servicer will perform all acts and execute all documents reasonably requested by Administrator at any time to evidence, perfect, maintain and enforce the title or the security interest of Administrator in the Receivables and the priority thereof. Borrower will, at the reasonable request of Administrator, execute (if required by applicable law) and deliver financing statements relating to or covering the Collateral and, where permitted by law, Borrower hereby authorizes Administrator to file one or more financing statements covering the Collateral without Borrower's signature. Borrower shall, and shall cause Originator to, cause its computer records, master data processing records and other books and records relating to the Receivables to be marked, with a legend stating that the Receivables have been sold to Borrower and that the Collateral has been pledged to Administrator for the benefit of the Secured Parties. 9.1.10 Servicing. Servicer shall use all reasonable measures to prevent or minimize any loss being realized on a Receivable and shall take all reasonable steps to recover the full amount of such loss. Borrower and Servicer shall, at their own expense, take such steps as are necessary to maintain perfection of the security interest created by each Receivable in the related goods and merchandise subject thereto. Servicer shall use its best efforts, consistent with prudent servicing procedures, to repossess or otherwise convert the ownership of the goods or merchandise securing any Receivable which becomes a Defaulted Receivable. Servicer shall follow such practices and procedures for servicing the Receivables as would be customary and usual for a prudent servicer under similar circumstances, including using reasonable efforts to realize upon any recourse to the Obligors and selling the goods securing a Receivable at a public or private sale. 40 47 9.1.11 Inspection. Each of Borrower and Servicer shall permit Lender, Administrator or their duly authorized representatives, attorneys or auditors to inspect the Receivables, the Receivable Files, Documents and the related accounts, records and computer systems, software and programs used or maintained by Borrower or Servicer at such times as Lender or Administrator may reasonably request. Upon instructions from Lender or Administrator, each of Borrower and Servicer shall release any document in its possession related to any Receivables to Lender or Administrator, as the case may be, or to the Servicer, if requested by Lender or Administrator. 9.1.12 Cooperation. Each of Borrower and Servicer shall provide such cooperation, information and assistance, and prepare and supply Administrator with such data regarding the performance by the Obligors of their obligations under the Receivables and the performance by Borrower and Servicer of their respective obligations under the Transaction Documents, as may be reasonably requested by Administrator from time to time. 9.1.13 Facility. Servicer shall maintain its facility from which it services the Receivables in its present condition, ordinary wear and tear excepted, or such other facility of similar quality, security and safety as Servicer may select from time to time. Servicer shall make all property tax payments, lease payments and all other payments with respect to such facility. Servicer shall (i) ensure that Administrator shall have complete and unrestricted access, at Servicer's expense, to such facility and all computers and other systems relating to the servicing of the Receivables and all persons employed at such facility, (ii) use all commercially reasonable efforts to retain the employees based at such facility to provide assistance to Administrator and (iii) continue to store on a daily basis all back-up files relating to the Receivables and the servicing of the Receivables at the facilities of ChoicePoint, or such other storage facility of similar quality, security and safety as Servicer may select from time to time, in the case of each of clauses (i), (ii) and (iii) until the receipt of all Collections in respect of all Receivables or all Receivables have been written off in accordance with the Credit and Collection Policy. 9.1.14 Accounts. Borrower shall not maintain any bank accounts other than the accounts described on Schedule 8.12. Except as set forth in the last sentence of Section 11.2.3(b), neither Borrower nor Servicer shall make, nor will either of them permit Originator to make, any change in its instructions to Obligors regarding payments to be made to a LockBox. Neither Borrower nor Servicer will, nor will either of them permit Originator to (a) add or close any Depository Account or (b) add any LockBox Account Bank or Lock Box Account to those listed on Schedule 8.12 unless Administrator shall have consented thereto and received a copy of any new duly executed LockBox and Blocked Account Agreement. Neither Borrower nor Servicer will, nor will either of them permit Originator to, change any LockBox Account Bank or close any LockBox or LockBox Account unless Administrator shall have received at least thirty (30) days' prior notice of such termination and (i) in the case of a closed LockBox, all 41 48 applicable Obligors have been notified to make payments to another LockBox that clears through a LockBox Account which is subject to a LockBox and Blocked Account Agreement, or (ii) in the case of termination of a LockBox Bank or closing of a LockBox Account, a new LockBox and Blocked Account Agreement is entered into with respect to any new or replacement LockBox Account or LockBox Account Bank. Section 9.2 Negative Covenants. From the date hereof until the first day, following the Commitment Termination Date, on which all Obligations shall have been finally and fully paid and performed, each of Borrower and Servicer hereby covenants and agrees as to itself as follows: 9.2.1 Sales, Liens, Etc. Except pursuant to, or as contemplated by, the Transaction Documents, Borrower shall not sell, assign (by operation of law or otherwise) or otherwise dispose of, or create or suffer to exist voluntarily or involuntarily any Adverse Claims upon or with respect to any of its assets, including, without limitation, the Collateral, any interest therein or any right to receive any amount from or in respect thereof. 9.2.2 Mergers, Acquisitions, Sales, Subsidiaries, etc. Borrower shall not: (a) be a party to any merger or consolidation, or directly or indirectly purchase or otherwise acquire all or substantially all of the assets or any stock of any class of, or any partnership or joint venture interest in, any other Person, except for Permitted Investments, or sell, transfer, assign, convey or lease any of its property and assets (or any interest therein) other than pursuant to, or as contemplated by, this Agreement or the other Transaction Documents; (b) make, incur or suffer to exist an investment in, equity contribution to, loan or advance to, or payment obligation in respect of the deferred purchase price of property from, any other Person, except for Permitted Investments or pursuant to the Transaction Documents; (c) create any direct or indirect Subsidiary or otherwise acquire direct or indirect ownership of any equity interests in any other Person other than pursuant to the Transaction Documents; or (d) enter into any transaction with any Affiliate except for the transactions contemplated by the Transaction Documents and other transactions upon fair and reasonable terms materially no less favorable to Borrower than would be obtained in a comparable arm's length transaction with a Person not an Affiliate. 9.2.3 Change in Business; Change in Credit and Collection Policy. Borrower will not make any change in the character of its business. Neither Borrower nor Servicer will make any change in the Credit and Collection Policy that could adversely affect the collectibility of any Receivable. 42 49 9.2.4 Other Debt. Borrower will not incur any Debt to any Person other than pursuant to this Agreement, the Receivables Sale Agreement or otherwise in connection with a transaction involving Lender, Bank, any Credit Bank, any Liquidity Bank or any other Persons providing liquidity or credit support to Lender. 9.2.5 Certificate of Incorporation and By-Laws. Borrower shall not amend its certificate of incorporation or by-laws. 9.2.6 Chief Executive Office. Borrower shall not move its chief executive office or permit the documents and records evidencing the Receivables to be moved unless (i) Borrower or Servicer, as the case may be, shall have given to Administrator prior written notice thereof, clearly describing the new location, and (ii) Borrower shall have taken such action, satisfactory to Administrator, to maintain the title or ownership of Borrower and any security interest of Administrator in the Collateral at all times fully perfected and in full force and effect. Servicer shall not, in any event, move the location where it conducts the servicing and collection of the Receivables from the address referred to on Schedule 15.3 to this Agreement, without the prior written consent of Administrator, which consent shall not be unreasonably withheld or delayed. 9.2.7 Financing Statements. Borrower shall not execute any effective financing statement (or similar statement or instrument of registration under the laws of any jurisdiction) or statements relating to any Receivables other than the financing statements described in Section 7.1.5. 9.2.8 Business Restrictions. Borrower shall not (i) engage in any business other than the acquisition, financing and collection of Receivables and other Collateral, (ii) engage in any transactions or be a party to any documents, agreements or instruments, other than the Transaction Documents and those incidental to the purposes thereof, or (iii) incur any trade payables (other than for professional fees incurred in the ordinary course of business) or other liabilities not constituting Debt permitted under Section 9.2.4 if such the aggregate outstanding balance of such trade payables and other liabilities would at any time exceed $10,700. 9.2.9 Other Agreements; Performance Undertaking. Borrower will not amend, restate, supplement, cancel, terminate or otherwise modify the First Step Sale Agreement, the Receivables Sale Agreement or the Performance Undertaking, or give any consent, waiver, directive or approval thereunder or waive any default, action, omission or breach under any of the foregoing or otherwise grant any indulgence thereunder, without (in each case) the prior written consent of Administrator. 43 50 ARTICLE X. SIGNIFICANT EVENTS AND THEIR EFFECT Section 10.1 Events of Default. Each of the following shall constitute an "EVENT OF DEFAULT" under this Agreement: 10.1.1 Non-Payment of Loans, Etc. Borrower shall fail to make any payment when due of any principal of or interest on any Loan, or payment of any other Obligation payable by Borrower hereunder or under the other Transaction Documents, including, without limitation, any Fees and Indemnified Amounts, or shall fail to make any deposit required to be made hereunder when due and, in each of the foregoing cases, such failure shall continue for three (3) Business Days. 10.1.2 Non-Compliance with Other Provisions. Borrower shall: (a) fail to perform or observe any covenant contained in Section 9.2 of this Agreement and such failure shall remain unremedied for three (3) days after the earlier to occur of (i) Executive Officer of Borrower's having knowledge thereof and (ii) Borrower's having received written notice thereof from the Lender or Administrator, or (b) fail to perform or observe any other term, covenant or agreement contained in this Agreement or any other Transaction Document on its part to be performed or observed and any such failure shall remain unremedied for thirty (30) days after the earlier to occur of (i) Executive Officer of Borrower's having knowledge thereof and (ii) Borrower's having received written notice thereof from the Lender or Administrator. 10.1.3 Breach of Representations and Warranties. Any representation, warranty, certification or statement made by Borrower in this Agreement, any other Transaction Document to which Borrower is a party or in any other document delivered pursuant hereto or thereto shall prove to have been incorrect in any material respect when made or deemed made; PROVIDED THAT the materiality threshold in the preceding clause shall not be applicable with respect to any representation or warranty which itself contains a materiality threshold. 10.1.4 Bankruptcy. An Event of Bankruptcy shall have occurred and remained continuing with respect to Borrower, Servicer or Performance Guarantor. 10.1.5 Tax Liens. The Internal Revenue Service shall file notice of a lien pursuant to ss. 6323 of the Internal Revenue Code with regard to any of the assets of Borrower, and such lien shall not have been released within fifteen (15) Business Days. 44 51 Section 10.2 Amortization Events. Each of the following shall constitute an "AMORTIZATION EVENT" under this Agreement: 10.2.1 Servicer Event of Default. A Servicer Event of Default shall have occurred and remained continuing. 10.2.2 Borrowing Base Deficit. A Borrowing Base Deficit shall exist and such condition shall continue unremedied for three (3) Business Days. 10.2.3 Default Ratio. The Default Ratio shall equal or exceed 6.0% on a rolling three-month average basis. 10.2.4 Delinquency Ratio. The Delinquency Ratio shall equal or exceed 7.0% on a rolling three-month average basis. 10.2.5 Dilution Ratio. The Dilution Ratio shall equal or exceed 1.0% on a rolling three-month average basis. 10.2.6 Accounts Receivable Turnover Ratio. The Accounts Receivable Turnover Ratio shall be less than 6.5 to 1 for any Calculation Period. 10.2.7 Event of Default. An Event of Default shall have occurred and be continuing. 10.2.8 Validity of Transaction Documents. (a) Any Transaction Document, or any lien or security interest granted thereunder, shall (except in accordance with its terms), in whole or in part, terminate, cease to be effective or cease to be the legally valid, binding and enforceable obligation of Borrower, Servicer or Originator party to such Transaction Document, (b) Borrower, Originator or Servicer shall, directly or indirectly, contest in any manner such effectiveness, validity, binding nature or enforceability or (c) any security interest securing any Secured Obligation shall, in whole or in part, cease to be a perfected first priority security interest. 10.2.9 Termination Date. The Termination Date (under and as defined in the Receivables Sale Agreement) shall occur, or any Material Originator's Termination Date (under and as defined in the First Step Sale Agreement) shall occur. 10.2.10 Performance Undertaking. Performance Guarantor shall fail to perform or observe any term, covenant or agreement required to be performed by it under the Performance Undertaking, or the Performance Undertaking shall cease to be effective or to be the legally valid, binding and enforceable obligation of Performance Guarantor, or Performance Guarantor shall directly or indirectly contest in any manner such effectiveness, validity, binding nature or enforceability. 45 52 Section 10.3 Effect of Significant Event. (a) Optional Termination. Upon the occurrence of a Significant Event (other than an Event of Default described in Section 10.1.4), Administrator may, and at the request of Lender shall, by notice to Borrower (a copy of which shall be promptly forwarded by Administrator to each Rating Agency), declare all or any portion of the outstanding principal amount of the Loans and other Obligations to be due and payable and/or the Lender's Commitment (if not theretofore terminated) to be terminated by declaring the Commitment Termination Date to have occurred, whereupon the full unpaid amount of such Loans and other Obligations which shall be so declared due and payable shall be and become immediately due and payable, without further notice, demand or presentment, and/or, as the case may be, the Lender's Commitment shall terminate. (b) Automatic Termination. Upon the occurrence of an Event of Default described in Section 10.1.4 or Section 10.2.2), the Commitment Termination Date shall be deemed to have occurred automatically, and all outstanding Loans and all other Obligations shall become immediately and automatically due and payable, all without presentment, demand, protest, or notice of any kind. (c) Notice to Rating Agencies. Administrator shall notify each Rating Agency of the occurrence of any continuing Significant Event, promptly following its actual knowledge thereof. ARTICLE XI. THE SERVICER Section 11.1 ChoicePoint as Initial Servicer. The servicing, administering and collection of the Receivables shall be conducted by the Person designated from time to time as Servicer under the Servicing Agreement. Until such time following the occurrence of a Servicer Default or an Amortization Event as Administrator shall notify ChoicePoint and Borrower in writing of the revocation of such power and authority, Borrower, Lender and Administrator hereby appoint ChoicePoint to act as Servicer under the Transaction Documents. Section 11.2 Certain Duties of the Servicer. 11.2.1 Authorization to Act as Borrower's Agent. Borrower hereby appoints Servicer as its agent for the following purposes: (i) selecting the amount of each requested Loan and executing Borrowing Requests on behalf of Borrower, (ii) making transfers among, deposits to and withdrawals from all deposit accounts of Borrower for the purposes described in the Transaction Documents, (iii) arranging payment by Borrower of all Fees, expenses, other Obligations and other amounts payable under the Transaction Documents, (iv) causing the repayment and prepayment of the Loans as required or permitted pursuant to Section 4.1, and (v) executing and preparing the Monthly Reports; PROVIDED, HOWEVER, that Servicer shall act in such capacity only as an agent of Borrower and shall incur thereby no additional obligations with respect to any Loan. Borrower 46 53 irrevocably agrees that (A) it shall be bound by all proper actions taken by Servicer pursuant to the preceding sentence, and (B) Lender, Administrator and the banks holding all deposit accounts of Borrower are entitled to accept submissions, determinations, selections, specifications, transfers, deposits and withdrawal requests, and payments from Servicer on behalf of Borrower. 11.2.2 Servicer to Act as Servicer; Originators as Permitted Sub-Servicers. (a) Servicer shall service and administer the Receivables on behalf of Borrower and Administrator (for the benefit of the Secured Parties) and shall have full power and authority, acting alone and/or through sub-servicers as provided in Section 11.2.2(c), to do any and all things which it may deem reasonably necessary or desirable in connection with such servicing and administration and which are consistent with this Agreement. Consistent with the terms of this Agreement, Servicer may waive, modify or vary any term of any Receivable or consent to the postponement of strict compliance with any such term or in any manner, grant indulgence to any Obligor if, in Servicer's reasonable determination, such waiver, modification, postponement or indulgence is not materially adverse to the interests of Borrower or Administrator (for the benefit of the Secured Parties); PROVIDED, HOWEVER, that Servicer may not permit any modification with respect to any Receivable that would reduce the Unpaid Balance (except for actual payments thereof), or extend the due date thereof, except that Servicer may take such actions with respect to Defaulted Receivables if such actions will, in Servicer's reasonable business judgment, maximize the Collections thereof. Without limiting the generality of the foregoing, Servicer in its own name or in the name of Borrower is hereby authorized and empowered by Borrower when Servicer believes it appropriate in its best judgment to execute and deliver, on behalf of Borrower, any and all instruments of satisfaction or cancellation, or of partial or full release or discharge and all other comparable instruments, with respect to the Receivables. (b) Servicer shall service and administer the Receivables by employing such procedures (including collection procedures) and degree of care, in each case consistent with applicable law, with the Credit and Collection Policy and with prudent industry standards, as are customarily employed by Servicer in servicing and administering receivables owned or serviced by Servicer comparable to the Receivables. Servicer shall not take any action to impair Administrator's (for the benefit of the Secured Parties) security interest in any Receivable, except to the extent allowed pursuant to this Agreement or required by law. (c) Servicer may perform any of its duties pursuant to this Agreement, including those delegated to it pursuant to this Agreement, through the Originators and permitted sub-servicers appointed by Servicer, PROVIDED that such sub-servicing arrangements may be terminated, at Administrator's discretion, upon the replacement of ChoicePoint as Servicer, and PROVIDED, FURTHER, that notwithstanding any such delegation of a duty, Servicer shall remain primarily 47 54 obligated and liable for the performance of such duty as if Servicer were performing such duty. (d) Servicer may take such actions as are necessary to discharge its duties as Servicer in accordance with this Agreement, including the power to execute and deliver on behalf of Borrower such instruments and documents as may be customary, necessary or desirable in connection with the performance of Servicer's duties under this Agreement (including consents, waivers and discharges relating to the Receivables). (e) Servicer shall keep separate records covering the transactions contemplated by this Agreement, including the identity and collection status of each Receivable purchased by Parent SPE from any Originator and by Borrower from Parent SPE and the associated Purchase Price Credits. 11.2.3 Collections. (a) On or prior to the Closing Date, Borrower and Servicer shall have established and shall maintain thereafter the following system of collecting and processing Collections of Receivables. The Obligors shall be instructed to make payments of Receivables only by check, draft or money order mailed to a LockBox listed on Schedule 8.12 (such payments, upon receipt in such a LockBox, being referred to herein as "MAIL PAYMENTS"), or by wire transfer or ACH to a LockBox Account or a Depository Account. (b) On or prior to the Closing Date, Administrator shall have received a LockBox Agreement with respect to each LockBox Account. Servicer's right of access to any LockBox Account shall be revocable at the option of Administrator upon the occurrence and during the continuance of Unmatured Significant Event or Significant Event. In addition, after the occurrence and during the continuance of any Unmatured Significant Event or any Significant Event, Servicer agrees that it shall, upon the written request of Administrator, notify all Obligors under Receivables to make payment thereof to (i) one or more bank accounts and/or post-office boxes designated by Administrator and specified in such notice or (ii) any successor Servicer appointed hereunder. (c) Servicer shall remove all Mail Payments, or cause all Mail Payments to be removed, from each LockBox by the close of business on each Business Day and deposited into a LockBox Account. Servicer shall process all such Mail Payments, and all wire transfers, ACH payments and other payments on the date received by recording the amount of the payment received from the Obligor and the applicable account or invoice number. (d) All Collections received by Originator or Servicer in respect of Receivables will, pending remittance to a Depository Account as provided in Section 11.2.4, be held by Originator or Servicer in trust for the exclusive benefit 48 55 of Administrator, and shall not be commingled with any other funds or property of Originator or Servicer. (e) Borrower and Servicer hereby irrevocably waive any right to set-off or otherwise deduct any amount owing by or to them from any Collections received by them prior to remittance thereof in accordance with this Agreement. (f) In performing its duties and obligations hereunder, Servicer (i) shall not impair the rights of Borrower or Administrator in any Receivable, (ii) shall not amend the terms of any Receivable other than in accordance with the Credit and Collection Policy and this Agreement, (iii) shall not release any goods securing a Receivable from the lien created by such Receivable except as specifically provided for herein, and (iv) shall be entitled to commence or settle any legal action to enforce collection of any Receivable or to foreclose upon or repossess any goods securing such Receivable. In the event that Servicer shall breach any of its covenants set forth in clause (i), (ii) or (iii) of this Section 11.2.3(f), Servicer shall pay the Unpaid Balance of each Receivable affected thereby on the Distribution Date following the Calculation Period in which such event occurs. For the purposes of Section 11.7 hereof, Servicer shall not be deemed to have breached its obligations under this Section 11.2.3(f) unless it shall fail to make such payment with respect to any Receivable affected by Servicer's noncompliance with clause (i), (ii) or (iii) of this Section 11.2.3(f). (g) All payments or other amounts collected or received by Servicer in respect of a Receivable shall be applied to the Unpaid Balance of such Receivable. 11.2.4 Depository Accounts. (a) On any Business Day, Borrower may withdraw, or permit Servicer to withdraw, funds that are on deposit in the Depository Accounts, PROVIDED that (i) no Significant Event or Unmatured Significant Event has occurred and is continuing, (ii) the Commitment Termination Date has not occurred, and (iii) after giving effect to such withdrawal, no Borrowing Base Deficit has occurred or will result therefrom and there are funds in the Depository Accounts at least equal to the interest on the Loans and the Fees accrued through such date. (b) Prior to 3:00 p.m., New York time, on the Business Day preceding each Distribution Date (a "DEPOSIT DATE"): (i) Servicer shall deposit or cause to be deposited in a Depository Account, to the extent not already on deposit therein, an amount equal to, without duplication, the lesser of (A) the sum of (1) the aggregate amount of all Collections received during the immediately preceding Calculation Period, plus (2) the aggregate amounts due from Servicer on such Distribution Date pursuant to Section 11.2.3(f) hereof, plus (3) the aggregate amount of Purchase Price Credits, if any, required to be made in cash on such Distribution Date in accordance with the Receivables Sale Agreement, and (B) the amounts due on such Distribution Date pursuant to clauses FIRST through SEVENTH 49 56 of Section 4.2(b), PROVIDED that if a Significant Event or Unmatured Significant Event shall exist on such Distribution Date or the Commitment Termination Date has occurred, then the Servicer shall deposit all of the amounts described in the foregoing clause (A) in a Depository Account on such Deposit Date. (c) Servicer shall distribute the amounts on deposit in the Depository Accounts in accordance with Section 4.2 hereof. (d) Funds deposited in the Depository Accounts may be invested by Servicer in Permitted Investments that mature not later than the Business Day next preceding the Distribution Date. All income, gain or losses realized from any such investment shall be credited or debited (as applicable) to the balance of the applicable Depository Account. Servicer shall have no obligation to reimburse any Depository Account for any losses realized by reason of such investments. Section 11.3 Servicing Compensation. Servicer, as compensation for its activities hereunder, shall be entitled to receive the Servicing Fee, which shall be payable by Borrower on each Distribution Date from funds on deposit in the Depository Accounts in accordance with Section 4.2. Servicer shall be required to pay all expenses incurred by it in connection with its servicing activities hereunder (including payment of the fees and expenses of any sub-servicer) and shall not be entitled to reimbursement therefor except as specifically provided herein. Section 11.4 Agreement Not to Resign. ChoicePoint acknowledges that Lender and Administrator have relied on ChoicePoint's agreement to act as Servicer hereunder in their respective decisions to execute and deliver the respective Transaction Documents to which they are parties. In recognition of the foregoing, ChoicePoint agrees not to resign as Servicer voluntarily, except as required by law (as evidenced by the delivery of an outside opinion of counsel to Administrator, in form and substance satisfactory to Administrator), without the prior written consent of Administrator. Section 11.5 Designation of Servicer. Borrower agrees not to designate any Person other than ChoicePoint as Servicer without the prior written consent of Administrator. Section 11.6 Termination. The authorization of Servicer to act on behalf of Borrower under this Agreement and the other Transaction Documents shall terminate at the sole discretion of Administrator upon the replacement of Servicer by a successor Servicer selected by Administrator. Section 11.7 Servicer Events of Default. Each of the following shall constitute a "SERVICER EVENT OF DEFAULT" under this Agreement: 11.7.1 Failure to Make Payments and Deposits. Servicer shall fail to make any payment or deposit required to be made by it hereunder on the date when due and, in each of the foregoing cases, such failure shall continue for three (3) Business Days. 50 57 11.7.2 Non-Compliance with Other Provisions. Servicer shall fail to perform or observe any other term, covenant or agreement contained in this Agreement or any other Transaction Document on its part to be performed or observed and any such failure shall remain unremedied for thirty (30) days after the earlier to occur of (i) Executive Officer of Servicer's having knowledge thereof and (ii) Servicer's having received written notice thereof from the Lender or Administrator. 11.7.3 Delegation. Servicer shall not delegate any of its duties hereunder, except as expressly permitted in accordance with the terms hereof. 11.7.4 Breach of Representations and Warranties. Any representation, warranty, certification or statement made by Servicer in this Agreement, any other Transaction Document to which Servicer is a party or in any Borrowing Base Certificate, Monthly Report or other document delivered pursuant hereto or thereto shall prove to have been incorrect in any material respect when made or deemed made; PROVIDED THAT the materiality threshold in the preceding clause shall not be applicable with respect to any representation or warranty which itself contains a materiality threshold. 11.7.5 Consolidated Tangible Net Worth. At any time while ChoicePoint is the Servicer, the Consolidated Tangible Net Worth of ChoicePoint and its Consolidated Subsidiaries is less than or equal to $150,000,000; 11.7.6 Bankruptcy. An Event of Bankruptcy shall have occurred and remained continuing with respect to Servicer. 11.7.7 Judgments. A final judgment or judgments for the payment of money in excess of $10,700 in the aggregate shall have been rendered against Borrower, or in excess of $5,000,000 in the aggregate shall have been rendered against Servicer, and the same shall have remained unsatisfied and in effect, without stay of execution, for a period of thirty (30) consecutive days after the period for appellate review shall have elapsed. 11.7.8 Cross-Default to Material Debt. Failure of Servicer to pay any Debt in excess of $5,000,000 in aggregate principal amount ("MATERIAL DEBT") when due; or the default by Servicer in the performance of any term, provision or condition contained in any agreement under which any Material Debt was created or is governed, the effect of which is to cause, or to permit the holder or holders of such Material Debt to cause, such Indebtedness to become due prior to its stated maturity; or any Material Debt of Servicer shall be declared to be due and payable or required to be prepaid (other than by a regularly scheduled payment) prior to the date of maturity thereof. At any time during the continuance of any Servicer Event of Default, Administrator may, in its sole discretion, notify Servicer in writing of the revocation of its appointment as Servicer hereunder. Upon revocation of Servicer's appointment hereunder, Administrator shall appoint a 51 58 successor Servicer. Servicer agrees that upon receipt of written notification from Administrator of the revocation of Servicer's appointment as Servicer hereunder, Servicer shall upon the written request of Administrator (which request may be contained in the notification of revocation) (i) notify all Obligors under the Receivables to make payment thereof to a bank account(s) or post office box designated by Administrator and specified in such notice, and (ii) pay to Administrator (or its designee) immediately all Collections then held or thereafter received by Servicer or Originator of Receivables, together with all other payment obligations of the Servicer hereunder owing to Lender or Administrator. Servicer shall, at its sole cost and expense, cooperate with and assist the successor Servicer (including, without limitation, providing access to, and transferring, all Receivable Files and all records (including data-processing records) relating thereto (which shall be held in trust for the benefit of the parties hereto in accordance with their respective interests)) and allowing the successor Servicer to use all licenses, hardware or software necessary or desirable to collect the Receivables). ChoicePoint irrevocably agrees to act (if requested to do so) as the data-processing agent for the successor Servicer (in substantially the same manner as ChoicePoint conducted such data-processing functions while it acted as Servicer). ARTICLE XII. ADMINISTRATOR Section 12.1 Authorization and Action. Lender hereby appoints SunTrust Equitable Securities Corporation as its Administrator for purposes of the Transaction Documents and authorizes SunTrust Equitable Securities Corporation in such capacity to take such action on its behalf under each Transaction Document and to exercise such powers hereunder and thereunder as are delegated to SunTrust Equitable Securities Corporation, as Administrator, by the terms hereof and thereof, together with such powers as are reasonably incidental thereto. Section 12.2 Administrator and Affiliates. Bank and any of its Affiliates may generally engage in any kind of business with Borrower, Bank, Servicer, any Obligor, any of their respective Affiliates and any Person who may do business with or own securities of Borrower, Bank, Servicer, any Obligor or any of their respective Affiliates, all as if SunTrust Equitable Securities Corporation were not Administrator and without any duty to account therefor to Lender. ARTICLE XIII. ASSIGNMENTS Section 13.1 Restrictions on Assignments. Neither Borrower nor Servicer may assign its rights hereunder or any interest herein without the prior written consent of Administrator and Lender. Lender may not assign all or any portion of Lender's Commitment to any Person other than the Liquidity Bank(s) without the prior written consent of Borrower and Administrator; PROVIDED, HOWEVER, that each of the parties hereto agrees that Borrower may withhold its consent to any proposed assignment to any Person that (i) is not incorporated under the laws of the United States of America or a state thereof, and (ii) fails to deliver to the Administrator prior to the effectiveness of any such assignment two (2) duly completed copies of United States Internal Revenue Service Form W-8BEN or W-8ECI, as applicable. Nothing 52 59 herein shall be deemed to preclude Lenders from pledging or assigning all or any portion of any Loan or the Lender Note: (a) to Credit Bank, any Liquidity Bank (or any successor of any thereof by merger, consolidation or otherwise), any Affiliate of Credit Bank or any Liquidity Bank in connection with a draw under the Liquidity Agreement or a Credit Advance (which may then assign all or any portion thereof so assigned or any interest therein to such party or parties as it may choose); or (b) to any other Person proposed by Lender and consented to by Administrator. Administrator shall promptly provide notice of any assignment to each Rating Agency. Subject to Section 13.2, all of the aforementioned assignments shall be upon such terms and conditions as Lender and the assignee may mutually agree. Section 13.2 Documentation. Lender shall deliver to each assignee an assignment, in such form as Lender and the related assignee may agree, duly executed by Lender, assigning any such Loan to the assignee, and Lender shall promptly execute and deliver all further instruments and documents, and take all further action, that the assignee may reasonably request, in order to perfect, protect or more fully evidence the assignee's right, title and interest in and to such Loan, and to enable the assignee to exercise or enforce any rights hereunder or under the Lender Note evidencing such Loan. Section 13.3 Rights of Assignee. Upon the foreclosure of any assignment of any Loans made for security purposes, or upon any other assignment of any Loan from Lender pursuant to this Article XIII, the respective assignee receiving such assignment shall have all of the rights of Lender hereunder to the extent of such assignment with respect to such Loans and all references to Lender in Section 6.1 shall be deemed to apply to such assignee to the extent of such assignment. Section 13.4 Notice of Assignment. Lender shall provide notice to Borrower of any assignment hereunder by Lender to any assignee. Lender authorizes Administrator to, and Administrator agrees that it shall, endorse the Lender Note to reflect any assignments made pursuant to this Article XIII or otherwise. ARTICLE XIV. INDEMNIFICATION Section 14.1 General Indemnity of Borrower. Without limiting any other rights which any such Person may have hereunder or under applicable law, Borrower hereby agrees to indemnify Administrator, Lender, Servicer, each Liquidity Bank, each Credit Bank, Bank, each of Bank's Affiliates and each of their respective successors, transferees, participants and assigns and all officers, directors, shareholders, controlling persons, employees and agents of any of the foregoing (each of the foregoing Persons being individually called an "INDEMNIFIED PARTY"), forthwith on demand, on an after-tax basis, from and against any and all damages, losses, claims, liabilities and related costs and expenses, including reasonable attorneys' fees and disbursements (all of the foregoing being collectively called "INDEMNIFIED AMOUNTS") awarded against or 53 60 incurred by any of them arising out of or relating to any Transaction Document or the transactions contemplated thereby, any commingling of funds (whether or not permitted hereunder), or the use of proceeds therefrom by Borrower, including (without limitation) in respect of the funding of any Loan or in respect of any Receivable; EXCLUDING, HOWEVER, (a) Indemnified Amounts to the extent a final judgment of a court of competent jurisdiction holds that such Indemnified Amounts resulted from gross negligence or willful misconduct on the part of the Indemnified Party seeking indemnification, and (b) Excluded Taxes. Section 14.2 Indemnity of Servicer. Without limiting any other rights which any such Person may have hereunder or under applicable law, ChoicePoint as Servicer, hereby agrees to indemnify each Indemnified Party forthwith on demand, on an after-tax basis, from and against any and all Indemnified Amounts awarded against or incurred by any of them arising from, or related to, the negligence or willful misconduct of ChoicePoint, the inaccuracy of any representation or warranty of ChoicePoint, or the failure of ChoicePoint to perform its obligations under any Transaction Document; EXCLUDING, HOWEVER, (a) Indemnified Amounts to the extent determined by a court of competent jurisdiction to have resulted from gross negligence or willful misconduct on the part of such Indemnified Party, (b) Indemnified Amounts to the extent solely due to non-payment by any Obligor of an amount due and payable with respect to a Receivable for credit reasons, and (c) any tax upon or measured by net income on any Indemnified Party. ARTICLE XV. MISCELLANEOUS Section 15.1 No Waiver; Remedies. No failure on the part of Lender, Administrator, any Indemnified Party or any Affected Party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise by any of them of any right, power or remedy hereunder preclude any other or further exercise thereof, or the exercise of any other right, power or remedy. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. Without limiting the foregoing, each of Bank, each Credit Bank and each Liquidity Bank is hereby authorized by Borrower at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by Bank, such Credit Bank or such Liquidity Bank to or for the credit or the account of Borrower, now or hereafter existing under this Agreement, to Administrator, any Affected Party, any Indemnified Party, or Lender or their respective successors and assigns. Section 15.2 Amendments, Etc. No amendment, modification or waiver of, or consent with respect to, any provision of this Agreement and any Schedules hereto, or the Lender Note shall in any event be effective unless the same shall be in writing and signed and delivered by (i) Borrower, Servicer, Administrator and Lender (with respect to an amendment), or (ii) Administrator and Lender (with respect to a waiver or consent by them) or Servicer or Borrower (with respect to a waiver or consent by them), as the case may be, and then any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; PROVIDED, HOWEVER, that no material amendment of this Agreement (other than an 54 61 amendment to extend the Scheduled Commitment Termination Date) shall be effective unless the Lender (or Administrator on its behalf) shall have received written confirmation by the Rating Agencies that such amendment shall not cause the rating on the then outstanding Commercial Paper Notes to be downgraded or withdrawn. Administrator shall provide each Rating Agency with a copy of each amendment to or consent or waiver under this Agreement promptly following the effective date thereof. Section 15.3 Notices, Etc. All notices and other communications provided for hereunder shall, unless otherwise stated herein, be in writing (including facsimile communication) and shall be personally delivered or sent by certified mail, postage prepaid, or by facsimile, to the intended party at the address or facsimile number of such party set forth opposite its name on Schedule 15.3 hereto or at such other address or facsimile number as shall be designated by such party in a written notice to the other parties hereto. All such notices and communications shall be effective, (a) if personally delivered, when received, (b) if sent by certified mail, three Business Days after having been deposited in the mail, postage prepaid, (c) if sent by overnight courier, one Business Day after having been given to such courier, and (d) if transmitted by facsimile, when sent, receipt confirmed by telephone or electronic means, except that notices and communications pursuant to Section 2.2 shall not be effective until received. Section 15.4 Costs, Expenses and Taxes. In addition to its obligations under Section 14.1, Borrower agrees to pay (or to cause to be paid) on demand: (a) all reasonable costs and expenses incurred by Administrator, Lender, each Liquidity Bank, each Credit Bank and Servicer in connection with (i) the preparation, execution, delivery, administration and enforcement of, or any breach of, this Agreement, the Lender Note, the other Transaction Documents, the Liquidity Agreement and, to the extent directly related to this Agreement, the Program Documents (including any amendments or modifications of or supplements to the Program Documents directly related to this Agreement), including, without limitation, the reasonable fees and expenses of counsel to any of such Persons incurred in connection therewith, (ii) the perfection of Administrator's security interest in the Collateral, (iii) the maintenance of the Depository Accounts and the LockBox Accounts, (iv) the audit of the books, records and procedures of Originator, Servicer and Borrower by Administrator's auditors (which may be employees of Administrator), and (v) Rating Agency fees related to the transactions contemplated by this Agreement; and (b) all stamp and other transactional or filing taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of this Agreement, the Lender Note, the other Transaction Documents, or (to the extent directly related to this Agreement) the Program Documents, and agrees to indemnify each Indemnified Party against any liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and fees. Section 15.5 Binding Effect; Survival. This Agreement shall be binding upon and inure to the benefit of Borrower, Bank, Lender, Administrator, and their respective successors and assigns, and the provisions of Article VI and Article XIV shall inure to the 55 62 benefit of the Affected Parties and the Indemnified Parties, respectively, and their respective successors and assigns; PROVIDED, HOWEVER, nothing in the foregoing shall be deemed to authorize any assignment not permitted by Article XIII. This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms, and shall remain in full force and effect until such time, after the Commitment Termination Date, when all Obligations have been finally and fully paid and performed. The rights and remedies with respect to any breach of any representation and warranty made by Borrower or Servicer pursuant to Article VIII and the indemnification and payment provisions of Article XIV and Article VI, Sections 15.4, 15.11 and 15.12 shall be continuing and shall survive any termination of this Agreement and any termination of ChoicePoint's rights to act as Servicer hereunder or under any other Transaction Document. Section 15.6 Captions and Cross References. The various captions (including, without limitation, the table of contents) in this Agreement are provided solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement. Unless otherwise indicated, references in this Agreement to any Section, Appendix, Schedule or Exhibit are to such Section of or Appendix, Schedule or Exhibit to this Agreement, as the case may be, and references in any Section, subsection, or clause to any subsection, clause or subclause are to such subsection, clause or subclause of such Section, subsection or clause. Section 15.7 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Section 15.8 Governing Law. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW) EXCEPT TO THE EXTENT THAT THE LAWS OF ANOTHER JURISDICTION GOVERN THE PERFECTION, OR THE EFFECT OF PERFECTION OR NONPERFECTION, OF THE SECURITY INTERESTS OF THE ADMINISTRATOR, FOR THE BENEFIT OF THE SECURED PARTIES. Section 15.9 Counterparts. This Agreement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original but all of which shall constitute together but one and the same agreement. Section 15.10 Submission to Jurisdiction; Waiver of Trial by Jury. (a) Each of Borrower and Servicer hereby submits to the nonexclusive jurisdiction of any United States District Court for the Southern District of New York and of any New York state court sitting in New York, New York for purposes of all legal proceedings arising out of, or relating to, the Transaction Documents or the transactions contemplated thereby. Each of Borrower and Servicer hereby irrevocably waives, to the fullest extent possible, any objection it may now or hereafter have to the venue of any such proceeding and any claim 56 63 that any such proceeding has been brought in an inconvenient forum. Nothing in this Section 15.10 shall affect the right of Administrator or Lender to bring any action or proceeding against Borrower or Servicer or their respective properties in the courts of other jurisdictions. (b) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF, OR IN CONNECTION WITH, ANY TRANSACTION DOCUMENT OR ANY MATTER ARISING THEREUNDER. Section 15.11 Limitation on Recourse. (a) The obligations of the Lender under this Agreement are solely the corporate obligations of Lender. No recourse shall be had for any obligation, covenant or agreement (including, without limitation, the payment of any amount owing in respect to this Agreement or the payment of any Fee hereunder or for any other obligation or claim) arising out of or based upon this Agreement or any other agreement, instrument or Transaction Document entered into pursuant hereto or in connection herewith against any stockholder, employee, officer, director, manager, administrator, partner or incorporator of Lender, as such, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute or otherwise. (b) Notwithstanding any provisions contained in this Agreement to the contrary, Lender shall not, and shall not be obligated to, pay any amount pursuant to this Agreement unless (i) Lender has received funds which may be used to make such payment and which funds are not required to repay the Commercial Paper when due and (ii) after giving effect to such payment, either (A) Lender could issue Commercial Paper Notes to refinance all outstanding Commercial Paper Notes (assuming such outstanding Commercial Paper Notes matured at such time) in accordance with the program documents governing Lender's securitization program or (B) all Commercial Paper Notes are paid in full; PROVIDED, HOWEVER, that the foregoing limitations on payments by Lender shall not apply to any distributions of funds received by Lender pursuant to Section 4.2. Any amount which Lender does not pay pursuant to the operation of the preceding sentence shall not constitute a claim (as defined in ss.101 of the Bankruptcy Code) against or corporate obligation of Lender for any such insufficiency unless and until Lender satisfies the provisions of clauses (i) and (ii) above. Section 15.12 No Proceedings. Each of the parties hereto hereby agree that it will not institute against Lender, or join any other Person in instituting against Lender, any insolvency proceeding (namely, any proceeding of the type referred to in the definition of Event of Bankruptcy) so long as any Commercial Paper Notes issued by Lender shall be outstanding and there shall not have elapsed one year plus one day since the last day on which any such 57 64 Commercial Paper Notes shall be outstanding. The provisions of this Section 15.12 shall survive the termination hereof. Section 15.13 Confidentiality. (a) Unless otherwise consented to by Administrator or required by any applicable law, rule, regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings, each of Borrower and Servicer hereby agrees that it shall maintain and shall cause each of its employees and officers to maintain the confidentiality of the Fee Letter and the other confidential or proprietary information with respect to Administrator and Lender and their respective businesses obtained by it or them in connection with the structuring, negotiating and execution of the transactions contemplated herein, except that each of Borrower, Servicer and their respective officers and employees may disclose such information to their external accountants, attorneys and other advisors and as required by any applicable law, rule, direction, request or order of any judicial, administrative or regulatory authority or proceeding (whether or not having the force or effect of law). The restrictions in this Section 15.13(a) shall not apply to any information which is or becomes generally available to the public other than as a result of disclosure by Borrower, Servicer or one of their respective Affiliates. (b) Each of Borrower and Servicer hereby consents to the disclosure of any nonpublic information with respect to it (i) to Administrator, the Liquidity Banks or Lender by each other, (ii) as required by or pursuant to any applicable law, rule, regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings (whether or not having the force or effect of law), (iii) to any prospective or actual assignee or participant of any of the Persons described in clause (i), and (iv) to any Rating Agency, Commercial Paper Note dealer, Credit Bank or Support Provider to Lender or any entity organized for the purpose of purchasing, or making loans secured by, financial assets for which Administrator acts as the administrative agent or administrator and to any officers, directors, employees, outside accountants and attorneys of any of the foregoing, PROVIDED each Person described in the foregoing clauses (iii) and (iv) is informed of the confidential nature of such information. Section 15.14 Entire Agreement. This Agreement and the other Transaction Documents executed and delivered herewith represent the final agreement among the parties hereto and thereto and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties. There are no unwritten oral agreements among the parties. [SIGNATURE PAGES BEGIN ON NEXT PAGE] 58 65 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the day and year first above written. CHOICEPOINT FINANCIAL INC., AS BORROWER By: /s/ David E. Trine -------------------------------------------- Name: David E. Trine Title: Treasurer CHOICEPOINT INC., AS INITIAL SERVICER By: /s/ David E. Trine -------------------------------------------- Name: David E. Trine Title: Treasurer 59 66 THREE PILLARS FUNDING CORPORATION, AS LENDER By: /s/ Douglas K. Johnson -------------------------------------------- Name: Douglas K. Johnson Title: President 60 67 SUNTRUST EQUITABLE SECURITIES CORPORATION, AS ADMINISTRATOR By: /s/ James R. Bennison -------------------------------------------- Name: James R. Bennison Title: Managing Director 61 EX-10.2 4 g71227ex10-2.txt RECEIVABLES SALE AND CONTRIBUTION AGREEMENT 1 RECEIVABLES SALE AND CONTRIBUTION AGREEMENT DATED AS OF JULY 2, 2001 AMONG CHOICEPOINT SERVICES INC., PRC CORPORATION, CHOICEPOINT BUSINESS AND GOVERNMENT SERVICES INC., CHOICEPOINT DIRECT INC., STATEWIDE DATA SERVICES, INC., I.R.S.C., INC., CHOICEPOINT PUBLIC RECORDS INC., PATLEX CORPORATION, NATIONAL SAFETY ALLIANCE INCORPORATED, BTI EMPLOYEE SCREENING SERVICES INC. AND EACH OTHER SUBSIDIARY OF CHOICEPOINT INC. THAT HEREAFTER BECOMES A PARTY HERETO, AS ORIGINATORS, AND CHOICEPOINT CAPITAL INC., AS BUYER 2 TABLE OF CONTENTS
PAGE ---- ARTICLE I THE RECEIVABLES CONVEYANCES.............................................................................3 Section 1.1 Initial Parent Sale and Capitalization of Buyer with the Initial First Step Contribution........3 Section 1.2 Purchases of Future Receivables; Purchase Reports...............................................3 Section 1.3 Payment for the Purchases.......................................................................4 Section 1.4 Purchase Price Credit Adjustments...............................................................5 Section 1.5 Payments and Computations, Etc..................................................................6 Section 1.6 License of Software.............................................................................6 Section 1.7 Intention of the Parties; Marking of Records; Further Assurances................................7 Section 1.8 Characterization; Grant of Security Interest....................................................7 ARTICLE II REPRESENTATIONS AND WARRANTIES.........................................................................8 Section 2.1 Representations and Warranties of Originators...................................................8 (a) Existence and Power...................................................................................8 (b) Power and Authority; Due Authorization, Execution and Delivery........................................8 (c) No Conflict...........................................................................................8 (d) Governmental Authorization............................................................................9 (e) Actions, Suits........................................................................................9 (f) Binding Effect........................................................................................9 (g) Accuracy of Information...............................................................................9 (h) Use of Proceeds.......................................................................................9 (i) Good Title............................................................................................9 (j) Perfection...........................................................................................10 (k) Places of Business and Locations of Records..........................................................10 (l) LockBoxes, Etc.......................................................................................10 (m) Originator Material Adverse Effect...................................................................10 (n) Names................................................................................................10 (o) Ownership of Buyer...................................................................................11 (p) Not a Holding Company or an Investment Company.......................................................11 (q) Compliance with Law..................................................................................11 (r) Compliance with Credit and Collection Policy.........................................................11 (s) Payments to Originators..............................................................................11 (t) Enforceability of Contracts..........................................................................11 (u) Eligible Receivables.................................................................................12 (v) Accounting...........................................................................................12 (w) Solvency.............................................................................................12
i 3 ARTICLE III CONDITIONS OF PURCHASE...............................................................................12 Section 3.1 Conditions Precedent to Purchase...............................................................12 Section 3.2 Conditions Precedent to Subsequent Payments....................................................12 ARTICLE IV COVENANTS.............................................................................................13 Section 4.1 Affirmative Covenants of Originators...........................................................13 (a) Financial Reporting..................................................................................13 (i) Annual Reporting..................................................................................13 (ii) Quarterly Reporting...............................................................................13 (iii) Compliance Certificate............................................................................13 (iv) S.E.C. Filings....................................................................................14 (v) Change in Credit and Collection Policy............................................................14 (vi) Other Information.................................................................................14 (b) Notices..............................................................................................14 (i) Termination Events or Unmatured Termination Events................................................14 (ii) Judgment and Proceedings..........................................................................14 (iii) Originator Material Adverse Effect................................................................14 (c) Compliance with Laws and Preservation of Existence...................................................15 (d) Audits...............................................................................................15 (e) Keeping and Marking of Records and Books.............................................................15 (f) Compliance with Contracts and Credit and Collection Policy...........................................16 (g) Ownership............................................................................................16 (h) Borrower's, Administrator's and Lender's Reliance....................................................16 (i) Collections..........................................................................................17 (j) Taxes................................................................................................17 Section 4.2 Negative Covenants of Originators..............................................................17 (a) Name Change, Offices and Records.....................................................................17 (b) Change in Payment Instructions to Obligors...........................................................17 (c) Modifications to Contracts and Credit and Collection Policy..........................................18 (d) Sales, Adverse Claims................................................................................18 (e) Accounting for Purchases.............................................................................18 ARTICLE V TERMINATION EVENTS.....................................................................................18 Section 5.1 Termination Events.............................................................................18 Section 5.2 Remedies.......................................................................................20 ARTICLE VI INDEMNIFICATION.......................................................................................20 Section 6.1 Indemnities by Originators.....................................................................20 Section 6.2 Other Costs and Expenses.......................................................................22
ii 4 Section 6.3 Taxes..........................................................................................22 ARTICLE VII JOINDER OF ADDITIONAL ORIGINATORS....................................................................23 Section 7.1 Addition of New Originators....................................................................23 Section 7.2 Documentation..................................................................................23 ARTICLE VIII MISCELLANEOUS.......................................................................................23 Section 8.1 Waivers and Amendments.........................................................................23 Section 8.2 Notices........................................................................................24 Section 8.3 Protection of Ownership Interests of Buyer.....................................................24 Section 8.4 Confidentiality................................................................................25 Section 8.5 Bankruptcy Petition............................................................................25 Section 8.6 CHOICE OF LAW..................................................................................26 Section 8.7 CONSENT TO JURISDICTION........................................................................26 Section 8.8 WAIVER OF JURY TRIAL...........................................................................26 Section 8.9 Integration; Binding Effect; Survival of Terms.................................................27 Section 8.10 Counterparts; Severability; Section References.................................................28
iii 5 EXHIBITS AND SCHEDULES Exhibit I - Definitions Exhibit II - Chief Executive Offices; Principal Places of Business; Locations of Records; Federal Employer Identification Numbers; Other Names Exhibit III - LockBoxes and LockBox Accounts Exhibit IV - Form of Compliance Certificate Exhibit V - Form of First Step Note Exhibit VI - Form of Purchase Report Exhibit VII - Form of Joinder Agreement Exhibit IX - Credit and Collection Policies Schedule A List of Documents to Be Delivered to Buyer Prior to the Closing Date (or, as applicable, the Effective Date of a Joinder Agreement) Schedule B Notice Addresses iv 6 RECEIVABLES SALE AND CONTRIBUTION AGREEMENT THIS RECEIVABLES SALE AND CONTRIBUTION AGREEMENT, dated as of July 2, 2001, is by and among: (a) ChoicePoint Services Inc., a Georgia corporation (together with its successors, the "PARENT ORIGINATOR" and, together with the Subsidiary Originators defined below, the "ORIGINATORS"), (b) PRC Corporation, a Georgia corporation, ChoicePoint Business and Government Services Inc., a Georgia corporation, ChoicePoint Direct Inc., an Illinois corporation, Statewide Data Services, Inc., a Florida corporation, I.R.S.C., Inc., a California corporation, ChoicePoint Public Records Inc., a Georgia corporation, Patlex Corporation, a Pennsylvania corporation, National Safety Alliance Incorporated, a Tennessee corporation, and BTi Employee Screening Services Inc., a Texas corporation (each of the foregoing, together with any other Subsidiary of ChoicePoint Inc. that hereafter becomes a party hereto, and their respective successors, a "SUBSIDIARY ORIGINATOR" and collectively, the "SUBSIDIARY ORIGINATORS"), and (c) ChoicePoint Capital Inc., a Delaware corporation (together with its successors, "BUYER"). UNLESS DEFINED ELSEWHERE HEREIN, CAPITALIZED TERMS USED IN THIS AGREEMENT SHALL HAVE THE MEANINGS ASSIGNED TO SUCH TERMS IN EXHIBIT I HERETO. PRELIMINARY STATEMENTS Each of the Subsidiary Originators that is a party to this Agreement on the Closing Date owns Existing Receivables. On the Closing Date, each of such Subsidiary Originators wishes to sell and assign to Parent Originator all of such Subsidiary Originator's Existing Receivables (such Existing Receivables, the "SUBSIDIARY EXISTING RECEIVABLES"), together with all Related Security and Collections associated therewith (such sale, the "INITIAL PARENT SALE"). Parent Originator now owns Existing Receivables originated by it and, pursuant to the Initial Parent Sale, will acquire the Subsidiary Existing Receivables. On the Closing Date, Parent Originator wishes to contribute to Buyer's capital, and Buyer wishes to accept from Parent Originator as a contribution to Buyer's capital, all of Parent Originator's right, title and interest in and to all Existing Receivables originated by Parent and all Subsidiary Existing Receivables, together (in each case) with the Related Security and Collections with respect thereto, whether such Receivables were originated by Parent 1 7 Originator or acquired by Parent Originator from the Subsidiary Originators via the Initial Parent Sale (such capital contribution, the "INITIAL FIRST STEP CONTRIBUTION"). Some time after the Closing Date (under and as defined in the Loan Agreement), Buyer wishes to make a loan to Parent Originator in a principal amount not to exceed $100,000,000 (the "BUYER LOAN"). From time to time hereafter, each of the Originators will own Future Receivables. Each of the Originators wishes to sell and assign to Buyer, and Buyer wishes to purchase and accept from each of the Originators, all of the Originators' respective right, title and interest in and to all Future Receivables, together with the Related Security and Collections with respect thereto. Each of the parties hereto intends the transactions contemplated hereby (other than the Buyer Loan) to be true sales or other outright conveyances of Receivables to the applicable Transferee, providing such Transferee with the full benefits of ownership of the Receivables transferred to it, and none of the parties hereto intends any of such transactions (other than the Buyer Loan) to be, or for any purpose to be characterized as, loans from any Transferee of Receivables to any other party. Buyer plans to sell and contribute the Receivables, Related Security and Collections acquired by it hereunder to ChoicePoint Financial Inc., a Delaware corporation (the "BORROWER"), pursuant to the terms of a Receivables Sale Agreement dated as of July 2, 2001, by and between Buyer, as seller thereunder, and Borrower, as purchaser thereunder (as the same may from time to time hereafter be amended, supplemented, restated or otherwise modified, the "RECEIVABLES SALE AGREEMENT"), and Borrower intends to finance its purchases of Receivables under the Receivables Sale Agreement by borrowing under that certain Loan Agreement dated as of July 2, 2001 (as the same may from time to time hereafter be amended, supplemented, restated or otherwise modified, the "LOAN AGREEMENT") among Borrower, ChoicePoint Inc., as initial servicer, Three Pillars Funding Corporation (together with its successors and permitted assigns, "LENDER"), and SunTrust Equitable Securities Corporation, as agent and administrator for Lender (in such capacity, together with its successor and assigns in such capacity, the "ADMINISTRATOR"). NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 2 8 ARTICLE I THE RECEIVABLES CONVEYANCES Section 1.1 Initial Parent Sale and Capitalization of Buyer with the Initial First Step Contribution. (a) Effective on the Closing Date, each Subsidiary Originator does hereby sell, assign, transfer, set-over and otherwise convey to Parent Originator, upon the terms and subject to the conditions set forth herein, in consideration for the Purchase Price paid to such Subsidiary Originator, without recourse (except to the extent expressly provided herein), and Parent Originator does hereby purchase from such Subsidiary Originator, all of such Subsidiary Originator's right, title and interest in and to its Existing Receivables, together with all Related Security and Collections associated therewith. (b) Effective on the Closing Date immediately after the Initial Parent Sale, (i) Parent Originator hereby makes the Initial First Step Contribution, and (ii) Buyer hereby accepts from Parent Originator as a contribution to Buyer's capital, the Initial First Step Contribution. Section 1.2 Purchases of Receivables; Purchase Reports. (a) Effective on each Business Day after the Closing Date or, in the case of a Subsidiary Originator that is not a party hereto on the Closing Date, the Business Day on which such Subsidiary Originator becomes a party hereto) through and including such Originator's Termination Date (the Closing Date and each such other Business Day, a "PURCHASE DATE"), in consideration for the Purchase Price paid to such Originator, without recourse (except to the extent expressly provided herein), and Buyer does hereby purchase from such Originator, all of such Originator's right, title and interest in and to all Future Receivables existing as of the close of business on the Business Day immediately preceding such Purchase Date, together with all Related Security and Collections associated therewith. Buyer shall be obligated to pay the Purchase Price for the Receivables purchased hereunder from each Originator in accordance with Section 1.3. (b) On each Reporting Date, each Originator shall (or shall require Servicer to) deliver to Buyer (with a copy to Administrator at any time while the Loan Agreement remains in effect) a report in substantially the form of Exhibit VI hereto (each such report being herein called a "PURCHASE REPORT") with respect to the Receivables sold by such Originator during the Calculation Period then most recently ended. In addition to, and not in limitation of, the foregoing, in connection with the payment of the Purchase Price for any Receivables purchased hereunder, Buyer may request that the applicable Originator deliver, and such Originator shall deliver, such information or documents as Buyer may reasonably request. 3 9 Section 1.3 Payment for the Purchases. (a) The Purchase Price for each Subsidiary Existing Receivable shall be payable by the Parent Originator to the applicable Subsidiary Originator in connection with the Initial Parent Sale on the Closing Date by the issuance of a promissory note in the form of Exhibit VIII hereto (each, a "PARENT NOTE") in the amount of such Purchase Price. The Purchase Price for each Purchase by Buyer from an Originator of its Receivables shall be payable in full by Buyer on the applicable Purchase Date in the following manner: (i) by delivery of immediately available funds to Parent Originator for the account of the applicable Originator; (ii) if the applicable Originator is Parent Originator, by delivery to the Parent Originator or its designee of the proceeds of a revolving loan from Parent Originator to Buyer (each, a "PURCHASE PRICE LOAN") in an amount not to exceed the least of (A) the remaining unpaid portion of such Purchase Price, (B) the maximum Purchase Price Loan that could be borrowed without rendering Buyer's Net Worth less than the Required Capital Amount, and (C) fifteen percent (15%) of such Purchase Price. Parent Originator is hereby authorized by Buyer to endorse on the schedule attached to the First Step Note an appropriate notation evidencing the date and amount of each advance thereunder, as well as the date of each payment with respect thereto, PROVIDED THAT the failure to make such notation shall not affect any obligation of Buyer thereunder, and/or (iii) if the applicable Originator is Parent Originator, at Parent Originator's election unless its Termination Date has occurred, by accepting a contribution to its capital in an amount equal to the remaining unpaid balance of such Purchase Price. Parent Originator irrevocably agrees to advance each Purchase Price Loan requested by Buyer from it on or prior to Parent Originator's Termination Date. The Purchase Price Loans owing to Parent Originator shall be evidenced by, and shall be payable in accordance with the terms and provisions of the First Step Note and shall be payable solely from funds which Buyer is not required under the Receivables Sale Agreement to set aside for the benefit of, or otherwise pay over to, Borrower. (b) No Originator shall be obligated to (but may, at its option) sell Receivables to Buyer from and after its Termination Date, and Parent Originator shall not be obligated to contribute Future Receivables to Buyer pursuant to Section 1.3(a)(iii) above from and after its Termination Date. (c) Although the Purchase Price for each Future Receivable shall be due and payable in full by Buyer to the applicable Originator on the Purchase Date immediately 4 10 following the Business Day on which such Future Receivable came into existence, settlement of the Purchase Price between Buyer and each Originator shall be effected on a monthly basis on Settlement Dates with respect to all Future Receivables originated during the same Calculation Period and based on the information contained in the Purchase Report delivered by or on behalf of such Originator for the Calculation Period then most recently ended. Although settlement shall be effected on Settlement Dates, increases or decreases in the amount owing to Parent Originator under the First Step Note and any contribution of capital by Parent Originator to Buyer made pursuant to Section 1.3(a)(iii) shall be deemed to have occurred and shall be effective as of the last Business Day of the Calculation Period to which such settlement relates. (d) Parent Originator hereby agrees to act as the agent of each of the Subsidiary Originators for the purposes of receiving payments of Purchase Price owing to such Subsidiary Originator. Each payment received by Parent Originator for the account of any other Originator shall be credited to an account maintained by Parent Originator on its books in the name of such Subsidiary Originator and, upon demand, shall be forthwith paid over to such Subsidiary Originator or its designee. Section 1.4 Purchase Price Credit Adjustments. If on any day: (a) the Outstanding Balance of any Receivable purchased from an Originator is: (i) reduced as a result of any defective, rejected or returned goods or services, any discount or adjustment or otherwise by such Originator (OTHER THAN a reduction in such Outstanding Balance resulting from (A) cash Collections received by Buyer or Servicer, on Buyer's behalf, on account of such Receivable's Outstanding Balance, or (B) any reserve established against or write-off of such Receivable that is made due to its becoming a Defaulted Receivable), (ii) reduced (in whole or in part) as a result of a setoff in respect of any claim by any Person (whether such claim arises out of the same or a related transaction or an unrelated transaction), or (b) any of the representations and warranties set forth in Sections 2.1(h), (i), (j), (r), (s), (t), (u), the second sentence of Section 2.1(q) hereof and the last clause (relating to bulk sales laws) of Section 2.1(c) are not true when made or deemed made with respect to any Receivable, then, in such event, Buyer shall be entitled to a credit (each, a "PURCHASE PRICE CREDIT") against the Purchase Price otherwise owing to such Originator hereunder equal to (x) in the case of a reduction under the preceding clause (a)(i) or (ii), the amount of such whole or partial reduction, and (y) in the case of a misrepresentation described in the preceding clause (b), the full amount of the Purchase Price of such Receivable. If such Purchase Price Credit exceeds the aggregate 5 11 Purchase Price owing to such Originator on any day, such Originator shall pay the remaining amount of such Purchase Price Credit in cash (i) if such Originator's Termination Date has not occurred, not later than the next Settlement Date, and (ii) if such Originator's Termination Date has occurred, immediately; PROVIDED THAT, in the case of Parent Originator, if Parent Originator's Termination Date has not occurred, Parent Originator shall be allowed to deduct the remaining amount of any Purchase Price Credit owing by it from any indebtedness owed to it under the First Step Note. Section 1.5 Payments and Computations, Etc. All amounts to be paid or deposited by Buyer hereunder shall be paid or deposited in accordance with the terms hereof on the day when due in immediately available funds to the account of the applicable Originator designated from time to time by such Originator or as otherwise directed by such Originator. In the event that any payment owed by any Person hereunder becomes due on a day that is not a Business Day, then such payment shall be made on the next succeeding Business Day. If any Person fails to pay any amount hereunder when due, such Person agrees to pay, on demand, the Default Fee in respect thereof until paid in full; PROVIDED, HOWEVER, that such Default Fee shall not at any time exceed the maximum rate permitted by applicable law. All computations of interest payable hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first but excluding the last day) elapsed. Section 1.6 License of Software. (a) To the extent that any software used by an Originator to account for the Receivables originated by it is non-transferable, each Originator hereby grants to Buyer, Servicer and their respective assigns, an irrevocable, non-exclusive license to use, without royalty or payment of any kind, all such software used by such Originator to account for such Receivables, to the extent necessary to administer such Receivables, whether such software is owned by such Originator or is owned by others and used by such Originator under license agreements with respect thereto, PROVIDED THAT should the consent of any licensor of such software be required for the grant of the license described herein, to be effective, such Originator hereby agrees that upon the request of Buyer (or its assigns), such Originator will use its reasonable efforts to obtain the consent of such third-party licensor. The license granted hereby shall be irrevocable until the later to occur of (i) indefeasible payment in full of the Obligations (as defined in the Loan Agreement), and (ii) the date on which each of this Agreement and the Loan Agreement terminates in accordance with its terms. (b) Each Originator (i) shall take such action requested by Buyer and/or at any time while the Loan Agreement remains in effect, Administrator, from time to time hereafter, that may be necessary or appropriate to ensure that Buyer and its assigns have an enforceable ownership interest in the records included in the Receivable Files relating to the Receivables purchased from such Originator hereunder, and (ii) shall use its reasonable efforts to ensure that Buyer, Servicer and their respective assigns each has an enforceable right (whether by 6 12 license or sublicense or otherwise) to use all of the computer software used to account for such Receivables and/or to recreate such records. Section 1.7 Intention of the Parties; Marking of Records; Further Assurances. It is the intention of the parties hereto that the Initial Parent Sale, the Initial First Step Capital Contribution and each subsequent contribution or Purchase of Receivables under this Agreement shall constitute a sale or other absolute transfer and assignment, which sale or other transfer is absolute and irrevocable and provides Buyer with the full benefits of ownership of the Receivables. Except for the Purchase Price Credits owed to the applicable Originator pursuant to Section 1.4, each sale of Future Receivables hereunder by such Originator is made without recourse to such Originator; PROVIDED, HOWEVER, that (i) such Originator shall be liable to Buyer and each of its assigns for all representations, warranties, covenants and indemnities made by such Originator pursuant to the terms of the Transaction Documents to which such Originator is a party, and (ii) such sale does not constitute, and is not intended to result in, an assumption by Buyer or any assignee thereof of any obligation of such Originator or any other Person arising in connection with the Receivables, the related Contracts and/or other Related Security or any other obligations of such Originator. In view of the intention of the parties hereto that each Purchase of Receivables made hereunder shall constitute a purchase and sale of such Receivables rather than a loan secured thereby, each Originator agrees that it will, on or prior to the date on which such Originator becomes a party to this Agreement and in accordance with Section 4.1(e)(ii), mark its master data processing records relating to the Receivables originated by it with a legend stating that Buyer has purchased such Receivables and to note in its financial statements that its Receivables have been sold to Buyer and ultimately, to Borrower. Upon the request of Buyer or any of its assigns, each Originator will execute and file such financing or continuation statements, or amendments thereto or assignments thereof, and such other instruments or notices, as may be necessary or appropriate to perfect and maintain the perfection of Buyer's ownership interest in the Receivables and the Related Security (other than Excluded Items) that is subject to Article 9 of the UCC and Collections with respect thereto, or as Buyer or any of its assigns may reasonably request. Section 1.8 Characterization; Grant of Security Interest. If, notwithstanding the intention of the parties expressed in Section 1.7, any sale, dividend or contribution by any Originator of Receivables hereunder shall be characterized as a secured loan and not a sale or such sale, dividend or contribution shall for any reason be ineffective or unenforceable, then this Agreement shall be deemed to constitute a security agreement under the UCC and other applicable law. For this purpose and without being in derogation of the parties' intention that each sale, dividend or contribution of Receivables by each Originator hereunder shall constitute a true sale or other outright conveyance thereof: Each Originator hereby grants to Buyer a valid and continuing security interest in all of such Originator's right, title and interest in, to and under all Receivables which are now existing or hereafter created by such Originator, all Collections and Related Security with respect thereto, all other rights and payments relating to such Receivables and all proceeds of the foregoing to secure the prompt and complete payment of a 7 13 loan deemed to have been made in an amount equal to the Purchase Price of the Receivables purchased from such Originator together with all other obligations of such Originator hereunder, which security interest shall be prior to all other Adverse Claims thereto. Buyer and its assigns shall have, in addition to the rights and remedies which they may have under this Agreement, all other rights and remedies provided to a secured creditor under the UCC and other applicable law, which rights and remedies shall be cumulative. ARTICLE II REPRESENTATIONS AND WARRANTIES Section 2.1 Representations and Warranties of Originators. On the date on which it becomes a party to this Agreement and on each Purchase Date thereafter, each Originator hereby represents and warrants to Buyer, as to such Originator and the Receivables originated by it, as follows: (a) Existence and Power. Such Originator is a corporation duly incorporated under the laws of the state indicated after its name in the preamble to this Agreement (such Originator's "APPLICABLE STATE"). Such Originator is validly existing and in good standing under the laws of its Applicable State and is duly qualified to do business and is in good standing as a foreign corporation, and has and holds all corporate power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted except where the failure to so qualify or so hold could not reasonably be expected to have an Originator Material Adverse Effect. (b) Power and Authority; Due Authorization, Execution and Delivery. The execution and delivery by such Originator of this Agreement (or a Joinder Agreement) and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder, and such Originator's use of the proceeds of the Purchases made from it hereunder, are within its corporate powers and authority and have been duly authorized by all necessary corporate action on its part. This Agreement (or a Joinder Agreement) and each other Transaction Document to which such Originator is a party has been duly executed and delivered by such Originator. (c) No Conflict. The execution and delivery by such Originator of this Agreement (or a Joinder Agreement) and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder do not contravene or violate (i) its Organizational Documents, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on assets of such Originator or its Subsidiaries (except as created hereunder) except, in any case described in clauses (i)-(iv) inclusive, where such contravention or violation 8 14 could not reasonably be expected to have an Originator Material Adverse Effect; and no transaction contemplated hereby requires compliance with any bulk sales act or similar law. (d) Governmental Authorization. Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or regulatory body is required for the due execution and delivery by such Originator of this Agreement (or a Joinder Agreement) and each other Transaction Document to which it is a party and the performance of its obligations hereunder and thereunder. (e) Actions, Suits. Except as disclosed in the SEC Filings, there is no litigation, arbitration, governmental investigation, proceeding or inquiry pending or, to the knowledge of any of their officers, threatened against or affecting such Originator or any of its Subsidiaries which could reasonably be expected to have an Originator Material Adverse Effect or which seeks to prevent, enjoin or delay the making or repayment of any Purchase Price Loans. Other than any liability incident to any litigation, arbitration or proceeding which could not reasonably be expected to have an Originator Material Adverse Effect, such Originator and its Subsidiaries have no material contingent obligations not provided for or disclosed in the SEC Filings. (f) Binding Effect. This Agreement (or the applicable Joinder Agreement) and each other Transaction Document to which such Originator is a party constitute the legal, valid and binding obligations of such Originator enforceable against such Originator in accordance with their respective terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). (g) Accuracy of Information. All written information heretofore furnished by such Originator or any of its Affiliates to Buyer (or its assigns) for purposes of or in connection with this Agreement, any of the other Transaction Documents or any transaction contemplated hereby or thereby is, and all such information hereafter furnished by such Originator or any of its Affiliates to Buyer (or its assigns) will be, true and accurate in every material respect on the date such written information is stated or certified and does not and will not contain any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein, taken as a whole, not misleading. (h) Use of Proceeds. No portion of any Purchase Price payment to such Originator hereunder will be used for a purpose that violates, or would be inconsistent with, any law, rule or regulation applicable to such Originator. (i) Good Title. Immediately prior to each Purchase from such Originator hereunder and upon the creation of each Future Receivable, such Originator (i) is the legal and beneficial owner of the Future Receivables originated by it and (ii) is the legal and 9 15 beneficial owner of the Related Security with respect thereto or possesses a valid and perfected security interest therein, in each case, free and clear of any Adverse Claim, except as created by the Transaction Documents. There have been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect such Originator's ownership interest in each such Receivable, its Collections and the Related Security except for Excluded Items. (j) Perfection. This Agreement, together with the filing of the financing statements contemplated hereby, is effective to transfer to Buyer (and Buyer shall acquire from such Originator) (i) legal and equitable title to, with the right to sell and encumber each Receivable originated by such Originator, whether now existing and hereafter arising, together with the Collections with respect thereto, and (ii) all of such Originator's right, title and interest in the Related Security associated with each such Receivable (except for Excluded Items), in each case, free and clear of any Adverse Claim, except as created by the Transactions Documents. There have been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Buyer's ownership interest in such Receivables, the Related Security (except for Excluded Items) and the Collections. (k) Places of Business and Locations of Records. Such Originator's chief executive office, principal place(s) of business, and locations where it keeps all of its Receivable Files are located at the address(es) listed on Exhibit II or such other locations of which Buyer has been notified in accordance with Section 4.2(a) in jurisdictions where all action required by Section 4.2(a) has been taken and completed. Such Originator's Federal Employer Identification Number is correctly set forth on Exhibit II. (l) LockBoxes, Etc. The addresses of all existing LockBoxes and the related banks, account names and account numbers for all existing LockBox Accounts and Depositary Accounts are correctly listed on Exhibit III. All such LockBoxes, LockBox Accounts and Depositary are included in the Related Security sold to Buyer hereunder. Such Originator has not granted any Person, other than Buyer (and Borrower and Administrator, as Buyer's assigns or pledgees) dominion and control of any LockBox, LockBox Account or Depositary Account, or the right to take dominion and control of any such LockBox, LockBox Account or Depositary Account a future time or upon the occurrence of a future event. (m) Originator Material Adverse Effect. Since December 31, 2000, no event has occurred that would have an Originator Material Adverse Effect. (n) Names. In the past five (5) years, such Originator has not used any corporate names, trade names or assumed names other than (i) the name in which it has executed this Agreement (or, as applicable, its Joinder Agreement) and (ii) as listed on Exhibit II. 10 16 (o) Ownership of Buyer. Parent Originator owns, directly or indirectly, 100% of the issued and outstanding equity interests of Buyer, free and clear of any Adverse Claims. Such equity interests are validly issued, fully paid and nonassessable, and there are no options, warrants or other rights to acquire securities of Buyer. (p) Not a Holding Company or an Investment Company. Such Originator is not a "holding company" or a "subsidiary holding company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended, or any successor statute. Such Originator is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or any successor statute. (q) Compliance with Law. Such Originator has complied with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have an Originator Material Adverse Effect. Each Receivable originated by such Originator, together with the Contract related thereto, does not contravene any laws, rules or regulations applicable thereto (including, without limitation, laws, rules and regulations relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy), and no part of such Contract is in violation of any such law, rule or regulation, except where such contravention or violation could not reasonably be expected to have an Originator Material Adverse Effect. (r) Compliance with Credit and Collection Policy. Such Originator has complied in all material respects with the Credit and Collection Policy with regard to each Receivable originated by it and the related Contract, and has not made any change to such Credit and Collection Policy, except such material change as to which Buyer (or its assigns) has been notified in accordance with Section 4.1(a)(vii). (s) Payments to Originators. With respect to each Receivable sold to Buyer by such Originator hereunder, the Purchase Price received by such Originator constitutes reasonably equivalent value in consideration therefor. No transfer hereunder by such Originator of any Receivable is or may be voidable under any section of the Bankruptcy Reform Act of 1978 (11 U.S.C.ss.ss.101 et seq.), as amended. (t) Enforceability of Contracts. Each Contract with respect to each Receivable sold by such Originator hereunder is effective to create, and has created, a legally valid and binding obligation of the related Obligor to pay the Outstanding Balance of the Receivable created thereunder and any accrued interest thereon, enforceable against the Obligor in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). 11 17 (u) Eligible Receivables. Each Receivable originated by such Originator which is reflected in any Purchase Report as an Eligible Receivable was an Eligible Receivable on the date of its acquisition by Buyer hereunder. (v) Accounting. The manner in which such Originator accounts for the transactions contemplated by this Agreement in its financial statements does not jeopardize the characterization of the transactions contemplated herein as being true sales. (w) Solvency. Such Originator is Solvent. ARTICLE III CONDITIONS OF PURCHASE Section 3.1 Conditions Precedent to Purchase. The initial Purchase from each Originator under this Agreement is subject to the conditions precedent that (a) Buyer shall have issued 100% of its capital stock to Parent Originator and shall have thereafter been capitalized with the Initial First Step Contribution, and (b) Buyer shall have received on or before the date of such Purchase those documents listed on Schedule A. Section 3.2 Conditions Precedent to Subsequent Payments. Buyer's obligation to pay any Originator for any Future Receivable originated by it shall be subject to the further conditions precedent that: (a) as of the applicable Purchase Date, Buyer (or its assigns) shall have received such other documents as it may reasonably request and (b) as of the applicable Purchase Date, the following statements shall be true (and acceptance of the proceeds of any payment for such Future Receivable shall be deemed a representation and warranty by the applicable Originator that such statements are then true): (i) the representations and warranties of such Originator set forth in Article II are true and correct in all material respects on and as of the date such Future Receivable came into existence as though made on and as of such date; PROVIDED THAT the materiality threshold in the preceding clause shall not be applicable with respect to any representation or warranty which itself contains a materiality threshold; and (ii) no event has occurred and is continuing that will constitute a Termination Event or an Unmatured Termination Event. Notwithstanding the foregoing conditions precedent, upon the applicable Purchase Date for any Future Receivable, title to such Receivable and the Related Security and Collections with respect thereto shall vest in Buyer, whether or not the conditions precedent to Buyer's obligation to pay for such Receivable were in fact satisfied and whether or not the Purchase Price has actually been paid as of such date; PROVIDED, HOWEVER, that failure of the applicable Originator to satisfy any of the foregoing conditions precedent shall give rise to a right of Buyer to rescind the related 12 18 Purchase and direct such Originator to pay to Buyer an amount equal to the Purchase Price payment, if any, made with respect to the Future Receivables included in such Purchase. ARTICLE IV COVENANTS Section 4.1 Affirmative Covenants of Originators. Until the date on which this Agreement terminates in accordance with its terms, each Originator hereby covenants as set forth below: (a) Financial Reporting. Such Originator will maintain, for itself and each Consolidated Subsidiary, a system of accounting established and administered in accordance with generally accepted accounting principles, and furnish to Buyer (and its assigns): (i) Annual Reporting. Within 95 days after the close of each of its fiscal years, an unqualified audit report (with all amounts stated in Dollars) certified by independent certified public accountants of recognized national standing, prepared in accordance with GAAP on a consolidated basis for ChoicePoint Inc. and its Consolidated Subsidiaries, including a consolidated balance sheet and the related consolidated statements of income, cash flows and statements of changes in common shareholders' equity, setting forth in each case in comparative form the figures for such fiscal year and the previous fiscal year (it being understood that the requirement to deliver such information may be satisfied by the delivery of ChoicePoint Inc.'s annual report on Form 10-K for such fiscal year so long as such annual report continues to include such information). (ii) Quarterly Reporting. Within 50 days after the close of the first three quarterly periods of each of its fiscal years, for ChoicePoint Inc. and its Consolidated Subsidiaries, an unaudited consolidated balance sheet as at the close of each such period and a consolidated income statement and a statement of cash flows for the period from the beginning of such fiscal year to the end of such quarter, setting forth in the case of such statements of income and cash flows in comparative form the figures for the corresponding quarter and the corresponding portion of ChoicePoint Inc.'s previous fiscal year (it being understood that the requirement to deliver such information may be satisfied by the delivery of ChoicePoint Inc.'s quarterly report on Form 10-Q for such fiscal quarter so long as such quarterly report continues to include such information), all certified (subject to normal year-end adjustments) as to fairness of presentation, preparation in accordance with GAAP and consistency by a Financial Officer of ChoicePoint Inc. (iii) Compliance Certificate. Together with the financial statements required hereunder, a compliance certificate in substantially the form of Exhibit IV signed by a Financial Officer of ChoicePoint Inc. and dated the date of such annual financial statement or such quarterly financial statement, as the case may be. 13 19 (iv) S.E.C. Filings. Promptly upon the filing thereof, copies of all tender offer documents and reports on Form 8-K (or any successor form thereto) which ChoicePoint Inc. or any of its Subsidiaries files with the Securities and Exchange Commission. (v) Change in Credit and Collection Policy. At least thirty (30) days prior to the effectiveness of any material change in or material amendment to the Credit and Collection Policy, a copy of the Credit and Collection Policy then in effect and a notice (A) indicating such proposed material change or material amendment, and (B) if such proposed change or amendment would be reasonably likely to adversely affect the collectibility of the Receivables or decrease the credit quality of any newly created Receivables in any material respect, requesting Buyer's, Borrower's (and, if the Loan Agreement remains in effect, Administrator's) consent thereto. (vi) Other Information. Promptly, from time to time, such other information, documents, records or reports relating to the Receivables or the condition or operations, financial or otherwise, of such Originator as Buyer (or its assigns) may from time to time reasonably request in order to protect the interests of Buyer (and its assigns) under or as contemplated by this Agreement. (b) Notices. As soon as practicable and in any event within one (1) Business Day after learning of any of the following, such Originator will notify Buyer (or its assigns) in writing of any of the following, describing the same and, if applicable, the steps being taken with respect thereto: (i) Termination Events or Unmatured Termination Events. The occurrence of each Termination Event and each Unmatured Termination Event, by a statement of a Financial Officer of such Originator. (ii) Judgment and Proceedings. (1) The entry of any judgment or decree against ChoicePoint Inc. or any of its Subsidiaries if the aggregate amount of all judgments and decrees then outstanding against ChoicePoint Inc. and its Subsidiaries exceeds $5,000,000 after deducting (a) the amount with respect to which ChoicePoint Inc. or such Subsidiary is insured and with respect to which the insurer has assumed responsibility in writing or undertaken the defense with a reservation of rights, and (b) the amount for which ChoicePoint Inc. or such Subsidiary is otherwise indemnified if the terms of such indemnification are satisfactory to Buyer (or its assigns), and (2) the institution of any litigation, arbitration proceeding or governmental proceeding against such Originator which, individually or in the aggregate, could reasonably be expected to have an Originator Material Adverse Effect. (iii) Originator Material Adverse Effect. The occurrence of any event or condition that has had, or could reasonably be expected to have, an Originator Material Adverse Effect. 14 20 (c) Compliance with Laws and Preservation of Existence. Such Originator will comply in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have an Originator Material Adverse Effect. Such Originator will preserve and maintain its legal existence, rights, franchises and privileges in the jurisdiction of its organization, and qualify and remain qualified in good standing as a foreign entity in each jurisdiction where its business is conducted, except where the failure to so qualify or remain in good standing could not reasonably be expected to have an Originator Material Adverse Effect. (d) Audits. Such Originator will furnish to Buyer and, at any time while the Loan Agreement remains in effect, Administrator from time to time such information with respect to such Originator and the Receivables sold or contributed by it as Buyer (or, at any time while the Loan Agreement remains in effect, Administrator) may reasonably request. Such Originator will, from time to time during regular business hours as requested by Buyer (or, at any time while the Loan Agreement remains in effect, Administrator), upon reasonable notice and at the sole cost of such Originator, permit an accounting firm designated by Buyer (or, at any time while the Loan Agreement remains in effect, by Administrator), on at least a semi-annual basis: (i) to examine and make copies of and abstracts from all Receivable Files in the possession or under the control of such Originator and other records relating to the Receivables originated by such Originator, the Collections and the Related Security, including, without limitation, the related Contracts, and (ii) to visit the offices and properties of such Originator for the purpose of examining such materials described in clause (i) above, and to discuss matters relating to such Originator's financial condition or the Receivables and the Related Security or such Originator's performance under any of the Transaction Documents or such Originator's performance under the Contracts and, in each case, with any of the officers or employees of such Originator having knowledge of such matters; PROVIDED, HOWEVER, that unless and until a Termination Event shall have occurred and be continuing, the Originators in the aggregate shall not be responsible to pay for more than two (2) such examinations in any period beginning on July 2 of one year and ending on July 1 of the following year. (e) Keeping and Marking of Records and Books. (i) Such Originator will maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing Receivables originated by it in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records and other information reasonably necessary or advisable for the collection of all Receivables (including, without limitation, records adequate to permit the immediate identification of each Future Receivable originated by it and all Collections of and adjustments to each Existing Receivable originated by it). Such Originator will give Buyer (or its assigns) 15 21 notice of any material change in the administrative and operating procedures referred to in the previous sentence. (ii) Such Originator will (A) on or prior to the date on which such Originator becomes a party hereto, mark its master data processing records and other books and records relating to the Receivables originated by it with a legend, acceptable to Buyer (or its assigns), describing Buyer's ownership interests in such Receivables and (B) upon the request of Buyer (or its assigns) from and after the occurrence of a Termination Event: (x) mark each invoice evidencing any Receivable originated by it with a legend describing Buyer's ownership thereof and (y) at any time after ChoicePoint Inc. (or one of its Affiliates) is no longer acting as Servicer, deliver to Buyer (or its assigns) all Contracts relating to such Receivables. (f) Compliance with Contracts and Credit and Collection Policy. Such Originator will timely and fully (i) perform and comply in all material respects with all provisions, covenants and other promises required to be observed by it under the Contracts related to the Receivables originated by it, and (ii) comply in all respects with the Credit and Collection Policy in regard to each such Receivable and the related Contract. (g) Ownership. Such Originator will take all necessary action to establish and maintain, irrevocably in Buyer: (A) legal and equitable title to the Receivables originated by such Originator and the Collections and (B) all of such Originator's right, title and interest in the Related Security associated with the Receivables originated by it described in the preceding clause (A) (except for Excluded Items), in each case, free and clear of any Adverse Claims other than Adverse Claims in favor of Buyer (and its assigns) (INCLUDING, WITHOUT LIMITATION, the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Buyer's interest in such Receivables, Related Security (except for Excluded Items) and Collections and such other action to perfect, protect or more fully evidence the interest of Buyer as Buyer (or its assigns) may reasonably request). (h) Borrower's, Administrator's and Lender's Reliance. Such Originator acknowledges that Borrower is entering into the transactions contemplated by the Receivables Sale Agreement, and Administrator and Lender are entering into the transactions contemplated by the Loan Agreement, in reliance upon Buyer's identity as a legal entity that is separate from such Originator and any Affiliates thereof. Therefore, from and after the date on which such Originator becomes a party hereto, such Originator will take all reasonable steps within such Originator's control to maintain Buyer's identity as a separate legal entity and to make it manifest to third parties that Buyer is an entity with assets and liabilities distinct from those of such Originator and any Affiliates thereof and not just a division of such Originator or any such Affiliate. Without limiting the generality of the foregoing and in addition to the other covenants set forth herein, such Originator (i) will not hold itself out to third parties as liable for the debts of Buyer nor purport to own any of the Receivables and other assets acquired by Buyer, (ii) will 16 22 not take any action that would cause Buyer to violate the "separateness covenants" set forth in Section 7.1(i) of the Loan Agreement and (iii) will cause all tax liabilities arising in connection with the transactions contemplated herein or otherwise to be allocated between such Originator and Buyer on an arm's-length basis and in a manner consistent with the procedures set forth in U.S. Treasury Regulations ss.ss.1.1502-33(d) and 1.1552-1. (i) Collections. In the event any payments relating to Receivables are remitted directly to such Originator or any Affiliate of such Originator, such Originator will remit (or will cause all such payments to be remitted) directly to a LockBox Account or a Depositary Account within one (1) Business Day following receipt thereof and, at all times prior to such remittance, such Originator will itself hold or, if applicable, will cause such payments to be held in trust for the exclusive benefit of Buyer and its assigns. Such Originator will transfer exclusive ownership, dominion and control of each LockBox, LockBox Account and Depositary Account to Buyer and, will not grant the right to take dominion and control of any LockBox, any LockBox Account or any Depositary Account at a future time or upon the occurrence of a future event to any Person, except to Buyer, as contemplated by this Agreement, to Borrower, as contemplated by the Receivables Sale Agreement, and, at any time while the Loan Agreement remains in effect, to Administrator, as contemplated by the Loan Agreement. (j) Taxes. Such Originator will file all tax returns and reports required by law to be filed by it and promptly pay all Covered Taxes at any time owing, except any such Covered Taxes which are not yet delinquent or are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books. Section 4.2 Negative Covenants of Originators. Until the date on which this Agreement terminates in accordance with its terms, each Originator hereby covenants that: (a) Name Change, Offices and Records. Such Originator will not change its (i) state of organization, (ii) name, (iii) identity or structure (within the meaning of Article 9 of any applicable enactment of the UCC) or relocate its chief executive office at any time while the location of its chief executive office is relevant to perfection of Buyer's interest in the Receivables or the associated Related Security (except for Excluded Items) and Collections or any office where Receivable Files are kept unless, in each of the foregoing cases, it shall have: (A) given Buyer (and, at any time while the Loan Agreement remains in effect, Administrator) written notice thereof within 30 days thereafter and (B) delivered to Buyer or, at any time while the Loan Agreement remains in effect, Administrator all financing statements, instruments and other documents reasonably requested by Buyer or, at any time while the Loan Agreement remains in effect, Administrator, in connection with such change or relocation. (b) Change in Payment Instructions to Obligors. Such Originator will not add or terminate any LockBox, LockBox Account or Depositary Account, or make any change in the instructions to Obligors regarding payments to be made to any LockBox, any LockBox 17 23 Account or any Depositary Account, unless Buyer and, if the Loan Agreement remains in effect, Administrator shall have received, at least ten (10) days before the proposed effective date therefor, (i) written notice of such addition, termination or change and (ii) with respect to the addition of a LockBox, LockBox Account or Depositary Account, an executed LockBox and Collection Account Agreement; PROVIDED, HOWEVER, that such Originator may make changes in instructions to Obligors regarding payments if such new instructions require such Obligor to make payments to another existing LockBox, LockBox Account or Depositary Account. (c) Modifications to Contracts and Credit and Collection Policy. Such Originator will not make any change to the Credit and Collection Policy that could reasonably be expected to adversely affect the collectibility of the Receivables or decrease the credit quality of any of its newly created Receivables. Except as otherwise permitted in its capacity as a sub-Servicer, such Originator will not extend, amend or otherwise modify the terms of any Receivable or any Contract related thereto other than in accordance with the Credit and Collection Policy. (d) Sales, Adverse Claims. Such Originator will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, or create or suffer to exist any Adverse Claim upon (including, without limitation, the filing of any financing statement) or with respect to, any Receivable, Related Security or Collections, or upon or with respect to any Contract under which any Receivable arises, or any LockBox, LockBox Account or Depositary Account, or assign any right to receive income with respect thereto (other than, in each case, the creation of the interests therein in favor of Buyer provided for herein), and such Originator will defend the right, title and interest of Buyer in, to and under any of the foregoing property, against all claims of third parties claiming through or under such Originator. (e) Accounting for Purchases. Such Originator will not, and will not permit any Affiliate to, account for the transactions contemplated hereby in any financial statements in any manner other than the sale (or other outright conveyance) by such Originator to Buyer of the Receivables and the associated Collections and Related Security except to the extent that such transactions are not recognized on account of consolidated financial reporting in accordance with generally accepted accounting principles. ARTICLE V TERMINATION EVENTS Section 5.1 Termination Events. The occurrence of any one or more of the following events shall constitute a Termination Event with respect to an Originator: (a) Such Originator shall fail to make any payment or deposit required hereunder when due and such failure shall continue for three (3) consecutive Business Days. 18 24 (b) Any representation, warranty, certification or statement made by such Originator in this Agreement, any other Transaction Document or in any other document delivered pursuant hereto or thereto shall prove to have been incorrect in any material respect when made or deemed made; PROVIDED THAT the materiality threshold in the preceding clause shall not be applicable with respect to any representation or warranty which itself contains a materiality threshold and PROVIDED FURTHER, that any misrepresentation or certification for which Buyer has actually received a Purchase Price Credit from such Originator shall not constitute a Termination Event hereunder. (c) Such Originator shall breach any covenant contained in Section 4.1(b)(i) which is not cured within three (3) Business Days, or such Originator shall breach any covenant contained in Section 4.2(c) or 4.2(e), which is not cured within thirty (30) days, or such Originator shall breach any covenant contained in Section 4.2(a), (b) or (d). (d) Such Originator shall breach, fail to perform or observe any covenant contained in any Section of this Agreement (which is not covered by another subsection, paragraph or clause of this Section 5.1) or of any other Transaction Document to which it is a party which is not remedied within thirty (30) days after written notice from Buyer (or, at any time while the Loan Agreement remains in effect, Administrator). (e) Failure of such Originator or any of its Subsidiaries to pay any of its Material Debts when due; or the default by such Originator or any of its Subsidiaries in the performance of any term, provision or condition contained in any agreement under which such Material Debt was created or is governed, or any other event shall occur or condition exist, the effect of which is to cause, or to permit the holder or holders of such Material Debt to cause such Material Debt to become due prior to its stated maturity; or any Material Debt of such Originator or any of its Subsidiaries shall be declared to be due and payable or required to be prepaid (other than by a regularly scheduled payment or as a result of the sale of an asset securing such Material Debt) prior to the stated maturity thereof. (f) (i) Such Originator shall generally not pay its debts as such debts become due or shall admit in writing its inability to pay its debts generally or shall make a general assignment for the benefit of creditors; or (ii) any proceeding shall be instituted by or against such Originator seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or any substantial part of its property or (iii) such Originator shall take any corporate action to authorize any of the actions set forth in the foregoing clauses (i) or (ii) of this subsection (f). (g) A Change of Control shall occur. 19 25 (h) Such Originator or any of its Subsidiaries shall fail within 30 days to pay, bond or otherwise discharge any judgment or order for the payment of money in excess of $5,000,000, which is not stayed on appeal or otherwise being appropriately contested in good faith. (i) The First Step Note shall be assigned, pledged or otherwise transferred to any Person in violation of the last section thereof. Section 5.2 Remedies. Upon the occurrence and during the continuation of a Termination Event, Buyer may take any of the following actions: (i) declare the applicable Originator's Termination Date to have occurred, whereupon such Originator's Termination Date shall forthwith occur, without demand, protest or further notice of any kind, all of which are hereby expressly waived by such Originator; PROVIDED, HOWEVER, that upon the occurrence of a Termination Event described in Section 5.1(f), or of an actual or deemed entry of an order for relief with respect to any Originator under the United States Bankruptcy Code, such Originator's Termination Date shall automatically occur, without demand, protest or any notice of any kind, all of which are hereby expressly waived by each of the Originators and (ii) to the fullest extent permitted by applicable law, declare that the Default Fee shall accrue with respect to any amounts then due and owing by such Originator to Buyer. The aforementioned rights and remedies shall be without limitation and shall be in addition to all other rights and remedies of Buyer and its assigns otherwise available under any other provision of this Agreement, by operation of law, at equity or otherwise, all of which are hereby expressly preserved, including, without limitation, all rights and remedies provided under the UCC, all of which rights shall be cumulative. ARTICLE VI INDEMNIFICATION Section 6.1 Indemnities by Originators. Without limiting any other rights that Buyer may have hereunder or under applicable law, each Originator hereby agrees to indemnify (and pay upon demand to) Buyer and its assigns, officers, directors, agents and employees (each an "ORIGINATOR INDEMNIFIED PARTY") from and against any and all damages, losses, claims, Covered Taxes, liabilities, costs, expenses and for all other amounts payable, including reasonable attorneys' fees (which attorneys may be employees of Buyer or any such assign) and disbursements (all of the foregoing being collectively referred to as "ORIGINATOR INDEMNIFIED AMOUNTS") awarded against or incurred by any of them arising out of any of the following: (i) any representation or warranty made by such Originator (or any officers of such Originator) under or in connection with any Purchase Report, this Agreement, any other Transaction Document to which such Originator is a party or any other information or report delivered by such Originator pursuant hereto or thereto for which Buyer has not received a Purchase Price Credit that shall have been false or incorrect when made or deemed made; 20 26 (ii) the failure by such Originator, to comply with any applicable law, rule or regulation with respect to any Receivable or Contract related thereto, or the nonconformity of any Receivable or Contract included therein with any such applicable law, rule or regulation or any failure of such Originator to keep or perform any of its obligations, express or implied, with respect to any Contract; (iii) any failure of such Originator to perform its duties, covenants or other obligations in accordance with the provisions of this Agreement or any other Transaction Document to which such Originator is a party; (iv) any products liability, personal injury or damage, suit or other similar claim arising out of or in connection with merchandise, insurance or services that are the subject of any Contract to which such Originator is a party or any Receivable originated by such Originator; (v) any dispute, claim, offset or defense (other than discharge in bankruptcy of the Obligor or failure to pay due to financial inability) of the Obligor to the payment of any Receivable originated by such Originator (including, without limitation, a defense based on such Receivable or the related Contract not being a legal, valid and binding obligation of such Obligor enforceable against it in accordance with its terms), or any other claim resulting from the sale of the merchandise or service related to such Receivable or the furnishing or failure to furnish such merchandise or services; (vi) the commingling of Collections of Receivables originated by such Originator at any time with other funds; (vii) any investigation, litigation or proceeding related to or arising from this Agreement or any other Transaction Document to which such Originator is a party, the transactions contemplated hereby, such Originator's use of the proceeds of any Purchase from it hereunder, the ownership of the Receivables originated by such Originator or any other investigation, litigation or proceeding relating to such Originator in which any Originator Indemnified Party becomes involved as a result of any of the transactions contemplated hereby; (viii) any inability to litigate any claim against any Obligor in respect of any Receivable originated by such Originator as a result of such Obligor being immune from civil and commercial law and suit on the grounds of sovereignty or otherwise from any legal action, suit or proceeding; (ix) any failure to vest and maintain vested in Buyer, or to transfer to Buyer, legal and equitable title to, and ownership of, the Receivables originated by such Originator and the associated Collections, and all of such Originator's right, title and 21 27 interest in the Related Security associated with such Receivables (other than Excluded Items), in each case, free and clear of any Adverse Claim; (x) the failure to have filed, or any delay in filing, financing statements or other similar instruments or documents under the UCC of any applicable jurisdiction or other applicable laws with respect to any Receivable originated by such Originator or the Related Security (other than Excluded Items) and Collections with respect thereto, and the proceeds of any thereof, whether at the time of the applicable Purchase from such Originator hereunder or at any subsequent time; (xi) any attempt by any Person to void any Purchase from such Originator hereunder under statutory provisions or common law or equitable action; and (xii) the failure of any Receivable originated by such Originator that is reflected as an Eligible Receivable on any Purchase Report prepared by such Originator (or by Servicer on its behalf) to be an Eligible Receivable at the time acquired by Buyer; EXCLUDING, HOWEVER, (a) Originator Indemnified Amounts to the extent a final judgment of a court of competent jurisdiction holds that such Originator Indemnified Amounts resulted from gross negligence or willful misconduct on the part of the Originator Indemnified Party seeking indemnification; (b) Originator Indemnified Amounts to the extent the same includes losses in respect of Receivables originated by that are uncollectible on account of the insolvency, bankruptcy or lack of creditworthiness of the related Obligor; and (c) Excluded Taxes. Nothing in this Section 6.1 shall limit the liability of any Originator or limit the recourse of Buyer to such Originator for amounts otherwise specifically provided to be paid by such Originator under the terms of this Agreement. Section 6.2 Other Costs and Expenses. The Originators, jointly and severally, agree to pay to Buyer, on demand, all reasonable out-of-pocket costs and expenses in connection with (a) the preparation, execution and delivery of this Agreement and the other documents to be delivered hereunder, (b) the preparation, execution and delivery of any amendment hereto or waiver hereof requested by any Originator, and (c) any and all reasonable costs and expenses of Buyer, if any, including reasonable counsel fees and expenses, in connection with the enforcement of this Agreement and the other documents delivered hereunder. Section 6.3 Taxes. All payments by each Originator to or for the account of Buyer (or any of its assigns) hereunder or under any other Transaction Document to which such Originator is a party shall be made free and clear of and without deduction for any and all Covered Taxes. If any Originator shall be required by law to deduct any Covered Taxes from or in respect of any sum payable hereunder to Buyer (or any of its assigns), (a) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 6.3), Buyer (or such assign, as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, 22 28 (b) such Originator shall make such deductions, (c) such Originator shall pay the full amount deducted to the relevant authority in accordance with applicable law, and (d) such Originator shall furnish to Buyer (or, at any time while the Loan Agreement remains in effect, to Administrator) the original copy of a receipt evidencing payment thereof within 30 days after such payment is made. ARTICLE VII JOINDER OF ADDITIONAL ORIGINATORS Section 7.1 Addition of New Originators. From time to time upon not less than 60 days' prior written notice to Buyer and its assigns (or such shorter period of time as Buyer and its assigns may agree upon), Buyer may agree that one or more of ChoicePoint Inc.'s existing or hereafter acquired wholly-owned Subsidiaries become an Originator hereunder. No such addition shall become effective (a) without the written consent of Buyer and Borrower and, if the proposed New Originator is a Material Originator and the Loan Agreement remains in effect, without the written consent of Administrator, but may become effective prior to such 60th day if such written consent is given more promptly and (b) unless all conditions precedent to such addition required by Section 7.2 below are satisfied prior to such date. Section 7.2 Documentation. Prior to the effectiveness of any New Originator's becoming an Originator hereunder, such New Originator shall execute a Joinder Agreement in the form of Exhibit VII hereto (a "JOINDER AGREEMENT") and shall deliver each of the documents listed on Schedule A hereto which is required to be delivered by each Originator, together with such updated Exhibits hereto as may be necessary to ensure that after giving effect to the addition of such New Originator, each of the representations and warranties of such New Originator under Article II hereof will be true and correct. ARTICLE VIII MISCELLANEOUS Section 8.1 Waivers and Amendments. (a) No failure or delay on the part of Buyer (or its assigns) in exercising any power, right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy preclude any other further exercise thereof or the exercise of any other power, right or remedy. The rights and remedies herein provided shall be cumulative and nonexclusive of any rights or remedies provided by law. Any waiver of this Agreement shall be effective only in the specific instance and for the specific purpose for which given. (b) No provision of this Agreement may be amended, supplemented, modified or waived except in writing signed by each of the Originators and Buyer 23 29 and, for so long as the Loan Agreement remains in effect to the extent required thereunder, by Administrator. At any time while the Loan Agreement remains in effect, any material amendment, supplement, modification or waiver will require Administrator's receipt of written notice from S&P and Moody's that such change will not cause the rating on the then outstanding commercial paper of Lender to be downgraded or withdrawn. Section 8.2 Notices. All communications and notices provided for hereunder shall be in writing (including bank wire, telecopy or electronic facsimile transmission or similar writing) and shall be given to the other parties hereto at their respective addresses or telecopy numbers set forth on Schedule B hereto or at such other address or telecopy number as such Person may hereafter specify for the purpose of notice to each of the other parties hereto. Each such notice or other communication shall be effective (a) if given by telecopy, upon the receipt thereof, (b) if given by mail, five (5) Business Days after the time such communication is deposited in the mail with first class postage prepaid or (c) if given by any other means, when received at the address specified in this Section 8.2. Section 8.3 Protection of Ownership Interests of Buyer. (a) Each of the Originators agrees that from time to time, at its expense, it will promptly execute and deliver all instruments and documents, and take all actions, that may be necessary or desirable, or that Buyer (or its assigns) may reasonably request, to perfect, protect or more fully evidence the interest of Buyer and its assigns therein, or to enable Buyer (or its assigns) to exercise and enforce their rights and remedies hereunder. At any time following the earlier to occur of a Termination Event or an Amortization Event: Buyer (or its assigns) may, at each Originator's sole cost and expense, direct such Originator to notify the Obligors of Receivables originated by such Originator of the ownership interests of Buyer under this Agreement and may also direct that payments of all amounts due or that become due under any or all such Receivables be made directly to Buyer or its designee. (b) If any Originator fails to perform any of its obligations hereunder: (i) with not less than ten (10) days' prior written notice (or, if such 10-days would have the effect of extending the cure period, if any, applicable to any Originator's nonperformance, such shorter period of prior written notice as would not cause such an extension), Buyer (or its assigns) may (but shall not be required to) perform, or cause performance of, such obligations, and Buyer's (or such assigns') costs and expenses incurred in connection therewith shall be payable by such Originator as provided in Section 6.2; (ii) such Originator irrevocably authorizes Buyer (and its assigns) at any time and from time to time in the sole discretion of Buyer (or its assigns), and appoints Buyer (and its assigns) as its attorney(ies)-in-fact, to act on behalf of such Originator (A) to execute on behalf of such Originator as debtor (if the debtor's signature is required) and to 24 30 file financing statements (with or without such Originator's signature, as debtor, as permitted by applicable law) which are necessary or desirable in Buyer's (or its assigns') sole discretion to perfect and to maintain the perfection and priority of the interest of Buyer in the Receivables and the associated Related Security (except for Excluded Items) and Collections and (B) to file a carbon, photographic or other reproduction of this Agreement or any financing statement with respect to the Receivables as a financing statement in such offices as Buyer (or its assigns) in their sole discretion deem necessary or desirable to perfect and to maintain the perfection and priority of Buyer's interests in such Receivables. The appointment under the foregoing clause (ii) is coupled with an interest and is irrevocable. Section 8.4 Confidentiality. (a) Each Originator shall maintain and shall cause each of its employees and officers to maintain the confidentiality of the Fee Letter and the other confidential or proprietary information with respect to Administrator and Lender and their respective businesses obtained by it or them in connection with the structuring, negotiating and execution of the transactions contemplated herein, except that each Originator and its officers and employees may disclose such information to such Originator's external accountants, attorneys and other advisors and as required by any applicable law, rule, direction, request or order of any judicial, administrative or regulatory authority or proceeding (whether or not having the force or effect of law). The restrictions in this Section 8.4(a) shall not apply to any information which is or becomes generally available to the public other than as a result of disclosure by such Originator or one of its Affiliates. (b) Each Originator hereby consents to the disclosure of any nonpublic information with respect to it (i) to Buyer, Borrower, Administrator, the Liquidity Banks or Lender by each other, (ii) to any prospective or actual assignee or participant of any of the Persons described in clause (i), (iii) to any of Lender's rating agencies, commercial paper dealers or Support Providers or to any entity organized for the purpose of purchasing, or making loans secured by, financial assets for which Administrator acts as the administrative agent or administrator and to any officers, directors, employees, outside accountants and attorneys of any of the foregoing, PROVIDED each Person described in the foregoing clauses (ii) and (iii) is informed of the confidential nature of such information, and (iv) as required pursuant to any law, rule, regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings (whether or not having the force or effect of law). Section 8.5 Bankruptcy Petition. Each Originator hereby covenants and agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of Lender, it will not institute against, or join any other Person in instituting against, Lender any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States. Each Originator hereby covenants and agrees that, prior to the date that is one 25 31 year and one day after the payment in full of all outstanding senior indebtedness of Buyer, it will not institute against, or join any other Person in instituting against, Buyer any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States Section 8.6 CHOICE OF LAW. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW) EXCEPT TO THE EXTENT THAT THE LAWS OF ANOTHER JURISDICTION GOVERN THE PERFECTION, OR THE EFFECT OF PERFECTION OR NONPERFECTION, OF THE OWNERSHIP OR SECURITY INTERESTS OF BUYER. Section 8.7 CONSENT TO JURISDICTION. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY ANY ORIGINATOR PURSUANT TO THIS AGREEMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF BUYER (OR ITS ASSIGNS) TO BRING PROCEEDINGS AGAINST ANY ORIGINATOR IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY ORIGINATOR AGAINST BUYER (OR ITS ASSIGNS) OR ANY AFFILIATE THEREOF INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY ANY ORIGINATOR PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK, NEW YORK. Section 8.8 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ANY ORIGINATOR 26 32 PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER. Section 8.9 Integration; Binding Effect; Survival of Terms. (a) This Agreement and each other Transaction Document contain the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof superseding all prior oral or written understandings. (b) This Agreement shall be binding upon and inure to the benefit of each of the Originators, Buyer and their respective successors and permitted assigns (including any trustee in bankruptcy). No Originator may assign any of its rights and obligations hereunder or any interest herein without the prior written consent of Buyer (and, while the Loan Agreement remains in effect, Administrator). Buyer may assign at any time its rights and obligations hereunder and interests herein to any other Person without the consent of any Originator. Without limiting the foregoing, each Originator acknowledges that Buyer, pursuant to the Receivables Sale Agreement, may assign to Borrower all of Buyer's rights, remedies, powers and privileges hereunder and that Borrower, pursuant to the Loan Agreement, may pledge to Administrator, for the benefit of Lender and its assigns, its rights, remedies, powers and privileges hereunder. Originator agrees that, at any time while the Loan Agreement remains in effect, Administrator, as the pledgee of Borrower (as Buyer's assignee), shall, subject to the terms of the Loan Agreement, have the right to enforce this Agreement and to exercise directly all of Buyer's rights and remedies under this Agreement (including, without limitation, the right to give or withhold any consents or approvals of Buyer to be given or withheld hereunder). This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms and shall remain in full force and effect until terminated in accordance with its terms; PROVIDED, HOWEVER, that the rights and remedies with respect to (i) any breach of any representation and warranty made by any Originator pursuant to Article II; (ii) the indemnification and payment provisions of Article VI; and (iii) Section 8.5 shall be continuing and shall survive any termination of this Agreement. 27 33 Section 8.10 Counterparts; Severability; Section References. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same Agreement. Any provisions of this Agreement which are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Unless otherwise expressly indicated, all references herein to "Article," "Section," "Schedule" or "Exhibit" shall mean articles and sections of, and schedules and exhibits to, this Agreement. [signature pages follow] 28 34 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers as of the date hereof. CHOICEPOINT SERVICES INC., PRC CORPORATION, CHOICEPOINT BUSINESS AND GOVERNMENT SERVICES INC., CHOICEPOINT DIRECT INC., STATEWIDE DATA SERVICES, INC., I.R.S.C., INC., CHOICEPOINT PUBLIC RECORDS INC., PATLEX CORPORATION, NATIONAL SAFETY ALLIANCE INCORPORATED AND BTI EMPLOYEE SCREENING SERVICES INC. By: /s/ David E. Trine ------------------------------------- Name: David E. Trine Title: Treasurer CHOICEPOINT CAPITAL INC. By: /s/ David E. Trine ------------------------------------- Name: David E. Trine Title: Treasurer 29 35 EXHIBIT I Definitions This is Exhibit I to the Agreement (as hereinafter defined). As used in the Agreement and the Exhibits and Schedules thereto, capitalized terms have the meanings set forth in this Exhibit I (such meanings to be equally applicable to the singular and plural forms thereof). IF A CAPITALIZED TERM IS USED IN THE AGREEMENT AND IS NOT OTHERWISE DEFINED THEREIN OR IN THIS EXHIBIT I, SUCH TERM SHALL HAVE THE MEANING ASSIGNED THERETO IN THE LOAN AGREEMENT (HEREINAFTER DEFINED). "ADMINISTRATOR" has the meaning set forth in the Preliminary Statements to the Agreement. "ADVERSE CLAIM" means any lien (statutory or other), mortgage, pledge, hypothecation, assignment, encumbrance or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, capitalized lease or other title retention agreement). "AFFILIATE" of any Person means any other Person that (i) directly or indirectly controls, is controlled by or is under common control with such Person or (ii) is an officer or director of such Person. A Person shall be deemed to be "controlled by" another Person if such other Person possesses, directly or indirectly, power (a) to vote 5% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managing partners of such other Person, or (b) to direct or cause the direction of the management and policies of such other Person whether by contract or otherwise. The word "AFFILIATED" has a correlative meaning. "AGREEMENT" means the Receivables Sale and Contribution Agreement, dated as of July 2, 2001, among Originators and Buyer, as the same may be amended, restated or otherwise modified. "APPLICABLE STATE" has the meaning set forth in Section 2.1(a) of the Agreement "BORROWER" has the meaning set forth in the Preliminary Statements to the Agreement. "BUSINESS DAY" means any day on which (a) SunTrust Bank is not authorized or required to be closed for business in Atlanta, Georgia, and The Depository Trust Company of New York is open for business, and (b) commercial banks in New York City are not authorized or required to be closed. 30 36 "BUYER" has the meaning set forth in the preamble to the Agreement. "BUYER LOAN" has the meaning set forth in the Preliminary Statements to the Agreement. "BUYER'S NET WORTH" means as of the last Business Day of each Calculation Period preceding any date of determination, the excess, if any, of (a) the aggregate net book value of Buyer's assets determined in accordance with GAAP, OVER (b) the sum of (i) the aggregate outstanding principal balance of all actual liabilities of Buyer at such time determined in accordance with GAAP (including, without limitation, all then outstanding Purchase Price Loans and any Purchase Price Loan proposed to be made on the date of determination), PLUS (ii) the aggregate principal amount of all known contingent liabilities of Buyer at such time. "CALCULATION PERIOD" means each calendar month or portion thereof which elapses during the term of the Agreement. The first Calculation Period shall commence on the Closing Date and the final Calculation Period shall terminate on the latest Termination Date. "CHANGE OF CONTROL" means (a) the acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 20% or more of the outstanding shares of voting stock of ChoicePoint Inc., (b) ChoicePoint Inc. ceases to own, directly or indirectly, 100% of the outstanding voting securities of each of the Originators, or (c) Parent Originator ceases to own , directly or indirectly, 100% of the outstanding voting securities of Buyer. "CLOSING DATE" has the meaning provided in the Loan Agreement. "COLLECTIONS" means, with respect to any Receivable, all cash collections and other cash proceeds in respect of such Receivable, including, without limitation, all yield, Finance Charges or other related amounts accruing in respect thereof and all cash proceeds of Related Security with respect to such Receivable. "CONSOLIDATED SUBSIDIARY" means, at any date as of which the same is to be determined, any Subsidiary or other entity the accounts of which would be consolidated with those of ChoicePoint Inc. in its consolidated financial statements if such statements were prepared as of such date in accordance with GAAP. "CONTRACT" means either (i) a written agreement between an Originator and an Obligor, or (ii) an invoice issued by an Originator to an Obligor, in either of the foregoing cases, pursuant to which such Obligor is obligated to pay for goods, merchandise and/or services. "COVERED TAXES" means all Taxes other than Excluded Taxes. 31 37 "CREDIT AND COLLECTION POLICY" means each Originator's credit and collection policies and practices relating to Contracts and Receivables existing on the date on which such Originator becomes a party hereto and delivered to Buyer and Administrator prior to such date, as modified from time to time with the consent of Buyer (and, if the Loan Agreement remains in effect, Administrator). A summary of the Credit and Collection Policy of each Originator party to this Agreement as of July 2, 2001 is contained in Exhibit IX to this Agreement. "DEBT" means, with respect to any Person at any date, without duplication: (i) all indebtedness of such Person for borrowed money, (ii) all indebtedness of such Person for the deferred purchase price of property or services (other than property and services purchased, and expense accruals and deferred compensation items arising, in the ordinary course of business), (iii) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments (other than performance, surety and appeal bonds arising in the ordinary course of business), (iv) all indebtedness of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (v) all obligations of such Person under leases which have been or should be, in accordance with GAAP, recorded as capital leases, to the extent required to be so recorded, (vi) all reimbursement, payment or similar obligations of such Person, contingent or otherwise, under acceptance, letter of credit or similar facilities (other than letters of credit in support of trade obligations or in connection with workers' compensation, unemployment insurance, old-age pensions and other social security benefits in the ordinary course of business), (vii) all net obligations of such Person in respect of interest rate swap, cap, collar, swaption, option or similar agreements, (viii) all obligations arising in connection with a sale or other transfer of any of such Person's financial assets which are, or are intended to be, classified as loans for federal tax purposes, (ix) all Debt referred to in clauses (i) through (viii) above guaranteed directly or indirectly by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (A) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (B) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss in respect of such Debt, (C) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (D) otherwise to assure a creditor against loss in respect of such Debt, and (x) all Debt referred to in clauses (i) through (viii) above secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Adverse Claim, security interest or other charge or encumbrance upon or in property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Debt. 32 38 "DEFAULT FEE" means a per annum rate of interest equal to the sum of (i) the Prime Rate (as defined in the First Step Note), PLUS (ii) 2.00% per annum. "DEFAULTED RECEIVABLE" means, as of any date of determination, any Receivable (i) which the Servicer has or should have charged-off or deemed uncollectible in accordance with the Credit and Collection Policy after taking a reasonable time to apply Collections received to applicable invoices and reconcile the amount of such Receivable, (ii) as to which, as of such date of determination, any payment, or part thereof, remains unpaid for 91 days or more past the due date for such payment, determined by reference to the original contractual payment terms of such Receivable or (iii) as to which the Obligor thereon has suffered an Event of Bankruptcy. "DELINQUENT RECEIVABLE" means a Receivable (other than a Defaulted Receivable) as to which all or any part of a scheduled payment remains unpaid for 61 days or more from the original due date for such payment. "DEPOSITORY ACCOUNT" means a deposit account (other than a LockBox Account) into which Collections are deposited. "DISCOUNT FACTOR" means a percentage calculated to provide the applicable Transferee with a reasonable profit from its investment in the Receivables after taking account of (i) the time value of money based upon the anticipated dates of collection of such Receivables and the cost to such Transferee of financing its investment in such Receivables during such period, (ii) the risk of nonpayment by the Obligors, and (iii) in the case of Buyer, the cost to Buyer of paying the Servicer to service and collect the Receivables and Related Security on Buyer's behalf. Each Originator and Buyer may agree from time to time to change the Discount Factor applicable to Future Receivables originated by such Originator based on changes in one or more of the items affecting the calculation thereof, PROVIDED THAT any change to the Discount Factor shall take effect as of the commencement of a Calculation Period, shall apply only prospectively and shall not affect the Purchase Price payment made prior to the Calculation Period during which such Originator and Buyer agree to make such change. As of the Closing Date, the Discount Factor in respect of the Receivables originated by each of the Originators is 1.8%. "DOLLARS," "DOLLARS" and "$" shall mean lawful money of the United States of America. "ELIGIBLE RECEIVABLE" means each Receivable that meets the following criteria: (a) that was created by an Originator in compliance, in all material respects, with its Credit and Collection Policy, in the regular and ordinary course of the business of such Originator; 33 39 (b) that was documented in all material respects in compliance with the applicable Originator's standard administration and documentation policies and procedures; (c) is not a Delinquent Receivable or a Defaulted Receivable; (d) as to which, at the time of the sale or contribution of such Receivable to Parent SPE, the applicable Originator was the sole owner thereof and had good and marketable title thereto, free and clear of all Adverse Claims, and which was sold or contributed to Parent SPE pursuant to the Agreement, free and clear of all Adverse Claims other than in favor of Borrower and Administrator; (e) the sale or assignment of which by an Originator to Parent SPE or by Parent SPE to Borrower does not contravene or conflict with any law, rule or regulation or any contractual or other restriction, limitation or encumbrance, and the sale or assignment of which does not require the consent of the Obligor thereof; (f) which is denominated and payable in Dollars and is only payable in the United States of America, (g) the Obligor of which is a resident of the United States; (h) the Obligor of which is not an officer, director or Affiliate of any Originator, Parent SPE or Purchaser; (i) the Obligor of which is not a Governmental Authority; (j) that is in full force and effect and constitutes the legally valid and binding payment obligation of the Obligor with respect thereto, enforceable against such Obligor in accordance with its terms and is not subject to any right of rescission, setoff, counterclaim or defense (including the defense of usury) or to any repurchase obligation or return right; (k) that does not contravene any applicable requirements of law (including without limitation all laws, rules and regulations relating to truth in lending, fair credit billing, fair credit reporting, fair debt collection practices and privacy) and which complies with all applicable requirements of law and with respect to which all consents, licenses, approvals or authorizations of, or registrations or declarations with, any Governmental Authority required to be obtained, effected or given by the related Originator in connection with the 34 40 creation or the execution, delivery and performance of such Receivable, have been duly obtained, effected or given and are in full force and effect; (l) that complies with all applicable requirements of the applicable Credit and Collection Policy; (m) as to which each of Parent SPE's and Purchaser's ownership interest has been perfected under the applicable Uniform Commercial Code and other applicable laws; (n) as to which the Servicer is in possession of the related Receivable File; (o) which provides for repayment in full of the unpaid balance thereof upon receipt of invoice or in any event within thirty (30) days of the date of the creation thereof; (p) the terms of which have not been modified or waived except as permitted under the applicable Credit and Collection Policy and the Agreement; (q) which constitutes an "account" under and as defined in Article 9 of the Uniform Commercial Code of all applicable jurisdictions, (r) which is not subject to any dispute, right of rescission, set-off, counterclaim or any other defense (including defenses arising out of violations of usury laws) of the applicable Obligor against the applicable Originator or any other Adverse Claim, and the Obligor thereon holds no right as against the applicable Originator to cause the applicable Originator to repurchase the goods the sale of which shall have given rise to such Receivable (except with respect to sale discounts effected pursuant to the Contract, or goods returned in accordance with the terms of the Contract), and (s) the applicable Originator has satisfied and fully performed all obligations on its part with respect to such Receivable required to be fulfilled by it, and no further action is required to be performed by any Person with respect thereto other than payment thereon by the applicable Obligor. "EVENT OF BANKRUPTCY" shall be deemed to have occurred with respect to a Person if either: (a) a case or other proceeding shall be commenced, without the application or consent of such Person, in any court, seeking the liquidation, reorganization, debt arrangement, dissolution, winding up, or composition or readjustment of debts of such Person, the appointment of a trustee, receiver, custodian, liquidator, 35 41 assignee, sequestrator or the like for such Person or all or substantially all of its assets, or any similar action with respect to such Person under any law relating to bankruptcy, insolvency, reorganization, winding up or composition or adjustment of debts; or an order for relief in respect of such Person shall be entered in an involuntary case under the federal bankruptcy laws or other similar laws now or hereafter in effect; or (b) such Person shall commence a voluntary case or other proceeding under any applicable bankruptcy, insolvency, reorganization, debt arrangement, dissolution or other similar law now or hereafter in effect, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) for such Person or for any substantial part of its property, or shall make any general assignment for the benefit of creditors, or shall fail to, or admit in writing its inability to, pay its debts generally as they become due, or, if a corporation or similar entity, its board of directors shall vote to implement any of the foregoing. "EXCLUDED ITEMS" means the interest of an Originator (or Buyer, as its assignee) in Related Security which, by operation of law or enforceable contractual restrictions, either (i) cannot be transferred by an Originator to Buyer or (ii) cannot be subjected to an Adverse Claim which can be perfected by filing a UCC financing statement in the state where such Originator maintains its chief executive office or is organized. "EXCLUDED TAXES" means, in the case of Buyer (or any other Originator Indemnified Party), taxes imposed on its overall net income, and franchise taxes and branch profit taxes based on net income imposed on it, by (i) the jurisdiction under the laws of which Buyer (or such other Originator Indemnified Party) is incorporated or organized or (ii) the jurisdiction in which Buyer's (or such other Originator Indemnified Party's) principal executive office is located. "EXISTING RECEIVABLES" means Receivables in existence as of the Initial Cutoff Date. "FINANCE CHARGES" means, with respect to a Contract, any finance, interest, late payment, returned check charges or similar charges owing by an Obligor pursuant to such Contract. "FINANCIAL OFFICER" means, with respect to any Person, such Person's Chief Financial Officer, Treasurer, Corporate Controller or Assistant Treasurer. 36 42 "FIRST STEP NOTE" means a promissory note in substantially the form of Exhibit V hereto as more fully described in Section 1.3 of the Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time. "FUTURE RECEIVABLES" means Receivables coming into existence after the Initial Cutoff Date. "GAAP" means accounting principles generally accepted in the United States of America as recommended by the Financial Accounting Standards Board as in effect as of the Closing Date applied consistently with the audited financial statements of ChoicePoint Inc. and its Consolidated Subsidiaries for the fiscal year ended December 31, 2000. "GOVERNMENTAL AUTHORITY" means any nation or government, any federal, state, local or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative authority or functions of or pertaining to government including any authority or other quasi-governmental entity established to perform any of such functions. "INITIAL CONTRIBUTED RECEIVABLES" has the meaning set forth in Section 1.1. "INITIAL CUTOFF DATE" means the Business Day immediately prior to the Closing Date. "INITIAL FIRST STEP CONTRIBUTION" has the meaning set forth in the Preliminary Statements to the Agreement. "INITIAL PARENT SALE" has the meaning set forth in the Preliminary Statements to the Agreement. "IRS" means the Internal Revenue Service and any Person succeeding to the functions thereof. "JOINDER AGREEMENT" has the meaning set forth in Section 7.1 of the Agreement. "LENDER" has the meaning set forth in the Preliminary Statements to the Agreement. "LOAN AGREEMENT" has the meaning set forth in the Preliminary Statements to the Agreement. "LOCKBOX" has the meaning provided in the Loan Agreement. "LOCKBOX ACCOUNT" has the meaning provided in the Loan Agreement. 37 43 "MATERIAL DEBT" means (a) Debt of any Originator and/or one or more of its Subsidiaries (other than Buyer and any of Buyer's Subsidiaries), arising in one or more related or unrelated transactions, in an aggregate principal or face amount exceeding $5,000,000, or (b) Debt of Buyer and any of Buyer's Subsidiaries, arising in one or more related or unrelated transactions, in an aggregate principal or face amount exceeding $10,700. "MATERIAL ORIGINATOR" means any proposed New Originator whose Receivables represent more than 10% of the aggregate Unpaid Balance of all Receivables immediately prior to the effectiveness of such Person's addition hereto as an Originator. "NEW ORIGINATOR" means any direct or indirect wholly-owned Subsidiary of ChoicePoint that hereafter becomes an Originator under this Agreement by executing a Joinder Agreement and complying with the provisions of Article VII hereof. "MOODY'S" means Moody's Investors Service, Inc. "ORGANIZATIONAL DOCUMENTS" means, for any Person, the documents for its formation and organization, which, for example, (a) for a corporation are its corporate charter and bylaws, (b) for a partnership are its certificate of partnership (if applicable) and partnership agreement, (c) for a limited liability company are its certificate of formation or organization and its operating agreement, regulations or the like and (d) for a trust is the trust agreement, declaration of trust, indenture or bylaws under which it is created. "ORIGINAL BALANCE" means, with respect to any Receivable coming into existence after the Initial Cutoff Date, the Outstanding Balance of such Receivable on the date it was created. "ORIGINATOR INDEMNIFIED AMOUNTS" has the meaning set forth in Section 6.1. "ORIGINATOR INDEMNIFIED PARTY" has the meaning set forth in Section 6.1. "ORIGINATOR MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) on the business, property, condition (financial or otherwise) or results of operations of the Originators and their Subsidiaries taken as a whole, (ii) the ability of any Originator to perform its obligations under the Agreement or any other Transaction Document to which it is a party, (iii) the legality, validity or enforceability of the Agreement or any other Transaction Document, (iv) any Originator's, Buyer's, Borrower's, Administrator's or Lender's interest in the Receivables generally or in any significant portion of the Receivables, the Related Security or Collections with respect thereto, or (v) the collectibility of the Receivables generally or of any material portion of the Receivables. "ORIGINATORS" has the meaning set forth in the preamble to the Agreement. 38 44 "OUTSTANDING BALANCE" of any Receivable at any time means the then outstanding principal balance thereof. "PARENT ORIGINATOR" has the meaning set forth in the preamble to the Agreement. "PERSON" means an individual, partnership, limited liability company, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, government or any agency or political subdivision thereof or any other entity. "PURCHASE" means (a) the Initial Parent Sale, or (b) each purchase by Buyer from an Originator pursuant to Section 1.2 of the Agreement of Receivables and the Related Security and Collections related thereto, together with all related rights in connection therewith. "PURCHASE DATE" has the meaning set forth in Section 1.2(a) of the Agreement. "PURCHASE PRICE" means: (a) with respect to the Initial Parent Sale, (i) the product of (x) the Outstanding Balance of the Existing Subsidiary Receivables on the Initial Cutoff Date, MULTIPLIED BY (y) one minus the Discount Factor in effect on such date; and (b) with respect to each Purchase by Buyer from an Originator, the aggregate price to be paid by Buyer to such Originator for such Purchase in accordance with Section 1.3 of the Agreement for the Future Receivables originated by such Originator and the associated Collections and Related Security being sold to Buyer, which price shall equal on any date (i) the product of (x) the Outstanding Balance of such Future Receivables on such date, MULTIPLIED BY (y) one minus the Discount Factor in effect on such date, minus (ii) any Purchase Price Credits to be credited in accordance with Section 1.4 of the Agreement against the Purchase Price otherwise payable. "PURCHASE PRICE CREDIT" has the meaning set forth in Section 1.4 of the Agreement. "PURCHASE PRICE LOAN" has the meaning set forth in Section 1.3(a) of the Agreement. "PURCHASE REPORT" has the meaning set forth in Section 1.2(b) of the Agreement. "RECEIVABLE" means all indebtedness and other obligations owed to an Originator at the times it arises, and before giving effect to any transfer or conveyance under the Agreement or the Receivables Sale Agreement (including, without limitation, any indebtedness, obligation or interest constituting an account, chattel paper, instrument or general intangible) arising in connection with the sale of goods or the rendering of services by an Originator and further includes, without limitation, the applicable Obligor's obligation to pay any Finance Charges or 39 45 freight charges and any other obligations of such Obligor with respect thereto. Indebtedness and other rights and obligations arising from any one transaction, including, without limitation, indebtedness and other rights and obligations represented by an individual invoice, shall constitute a Receivable separate from a Receivable consisting of the indebtedness and other rights and obligations arising from any other transaction; PROVIDED, FURTHER, that any indebtedness, rights or obligations referred to in the immediately preceding sentence shall be a Receivable regardless or whether the account debtor or such Originator or any of its Affiliates treats such indebtedness, rights or obligations as a separate payment obligation. "RECEIVABLES SALE AGREEMENT" has the meaning set forth in the Preliminary Statements to the Agreement. "RELATED SECURITY" means, with respect to any Receivable: (a) all right, title and interest, but none of the obligations, of the applicable Originator, in the goods (including returned goods), if any, relating to the sale which gave rise to such Receivable, (b) all right, title and interest, but none of the obligations, of such Originator, in, to and under other Adverse Claims and property subject to Adverse Claims from time to time purporting to secure payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, (c) all UCC financing statements or similar instruments covering any collateral securing payment of such Receivable, (d) all guaranties, indemnities, insurance and other agreements (including the related Receivable File) or arrangement and other collateral of whatever character from time to time supporting or securing payment of such Receivable, whether pursuant to the Contract relating to such Receivable or otherwise relating to such Receivable, (e) all right, title and interest, if any, of such Originator in any LockBox, any LockBox Account or any Depositary Account, and (f) all other instruments and all rights under the documents in the Receivables File relating to such Receivables and all rights (but not obligations) relating to such Receivables. "REPORTING DATE" means the second Business Day after the 15th of each month hereafter. "REQUIRED CAPITAL AMOUNT" means (a) as of any date of determination while the Loan Agreement remains in effect, an amount equal to the greater of (i) the product of (A) 1.5 times the product of the Default Ratio (as defined in the Loan Agreement) times the Loss Horizon Ratio (as defined in the Loan Agreement) times (B) the Outstanding Balance of all Receivables as of such date, each as determined from the most recent Monthly Report delivered to Administrator, and (ii) the amount necessary to ensure that Buyer remains Solvent, and (b) at all other times, the amount determined pursuant to the preceding clause (a)(ii). "S&P" means Standard and Poor's Ratings Services, a division of The McGraw Hill Companies, Inc. "SEC FILINGS" means ChoicePoint Inc.'s annual and quarterly reports on Forms 10-K and 10-Q as filed with the U.S. Securities and Exchange Commission for the fiscal year 40 46 ended December 31, 1999 and the fiscal quarters ended March 31, 2000, June 30, 2000 and September 30, 2000, respectively. "SERVICER" means ChoicePoint Inc., a Georgia corporation, or any other Person who from time to time is designated by Buyer or any of its assigns to service the Receivables. At any time while the Loan Agreement remains in effect, such designation shall be made by Administrator. "SETTLEMENT DATE" means the 20th day of each month hereafter (or, if any such date is not a Business Day, the next succeeding Business Day). "SOLVENT" means with respect to any Person that as of the date of determination both (A)(i) the then fair saleable value of the property of such Person is (y) greater than the total amount of liabilities (including contingent liabilities) of such Person and (z) not less than the amount that will be required to pay the probable liabilities on such Person's then existing debts as they become absolute and matured considering all financing alternatives and potential asset sales reasonably available to such Person; (ii) such Person's capital is not unreasonably small in relation to its business or any contemplated or undertaken transaction; and (iii) such Person does not intend to incur, or believe (nor should it reasonably believe) that it will incur, debts beyond its ability to pay such debts as they become due; and (B) such Person is "solvent" within the meaning given that term and similar terms under applicable laws relating to fraudulent transfers and conveyances. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. "SUBSIDIARY" means, with respect to any Person, a corporation of which such Person and/or its other Subsidiaries own, directly or indirectly, such number of outstanding shares as have more than 50% of the ordinary voting power for the election of directors. "SUBSIDIARY EXISTING RECEIVABLES" has the meaning set forth in the Preliminary Statements to the Agreement. "SUBSIDIARY ORIGINATOR(S)" has the meaning set forth in the preamble to the Agreement. "TAXES" means any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, and any and all liabilities (including but not limited to interest and penalties) with respect to the foregoing, imposed by any Governmental Authority. "TERMINATION DATE" means, as to each Originator, the earliest to occur of (i) the Termination Date (as defined in the Receivables Sale Agreement), (ii) at any time while the Loan Agreement remains in effect, the Commitment Termination Date (as defined in the Loan 41 47 Agreement), (iii) the Business Day immediately prior to the occurrence of a Termination Event set forth in Section 5.1(f) with respect to such Originator, (iv) the Business Day specified in a written notice from Buyer to such Originator following the occurrence of any other Termination Event with respect to such Originator, and (v) the date which is ten (10) Business Days after Buyer's receipt of written notice from such Originator that it wishes to terminate the facility evidenced by this Agreement. "TERMINATION EVENT" has the meaning set forth in Section 5.1 of this Agreement. "TRANSACTION DOCUMENTS" means, collectively, this Agreement, the First Step Note, each Joinder Agreement (if any), and all other instruments, documents and agreements executed and delivered by any Originator or Buyer in connection herewith. "TRANSFEREE" means (a) with respect to the Subsidiary Existing Receivables, Parent Originator, (b) with respect to all Existing Receivables (including the Subsidiary Existing Receivables) sold or contributed by Parent Originator, Buyer, and (c) with respect to all Future Receivables, Buyer. "UNMATURED TERMINATION EVENT" means an event which, with the passage of time or the giving of notice, or both, would constitute a Termination Event. ALL ACCOUNTING TERMS NOT SPECIFICALLY DEFINED HEREIN SHALL BE CONSTRUED IN ACCORDANCE WITH GAAP. ALL TERMS USED IN ARTICLE 9 OF THE UCC IN THE STATE OF NEW YORK, AND NOT SPECIFICALLY DEFINED HEREIN, ARE USED HEREIN AS DEFINED IN SUCH ARTICLE 9. 42 EX-10.3 5 g71227ex10-3.txt RECEIVABLES SALE AGREEMENT 1 EXHIBIT 10.3 RECEIVABLES SALE AGREEMENT DATED AS OF JULY 2, 2001 AMONG CHOICEPOINT CAPITAL INC., AS SELLER, AND CHOICEPOINT FINANCIAL INC., AS PURCHASER 2 TABLE OF CONTENTS
PAGE ---- ARTICLE I CONTRIBUTION AND SALE OF RECEIVABLES............................................ 2 Section 1.1 Capitalization of Purchaser............................................. 2 Section 1.2 Purchases; Purchase Reports............................................. 2 Section 1.3 Payment for the Purchases............................................... 3 Section 1.4 Purchase Price Credit Adjustments....................................... 4 Section 1.5 Payments and Computations, Etc.......................................... 4 Section 1.6 License of Software..................................................... 5 Section 1.7 Intention of the Parties; Marking of Records; Further Assurances........ 5 Section 1.8 Characterization; Grant of Security Interest............................ 6 ARTICLE II REPRESENTATIONS AND WARRANTIES................................................. 6 Section 2.1 Representations and Warranties of Seller................................ 6 (a) Existence and Power........................................................... 6 (b) Power and Authority; Due Authorization, Execution and Delivery................ 7 (c) No Conflict................................................................... 7 (d) Governmental Authorization.................................................... 7 (e) Actions, Suits................................................................ 7 (f) Binding Effect................................................................ 7 (g) Accuracy of Information....................................................... 8 (h) Use of Proceeds............................................................... 8 (i) Good Title.................................................................... 8 (j) Perfection.................................................................... 8 (k) Places of Business and Locations of Records................................... 8 (l) LockBoxes, Etc................................................................ 8 (m) Seller Material Adverse Effect................................................ 9 (n) Names......................................................................... 9 (o) Ownership of Purchaser........................................................ 9 (p) Not a Holding Company or an Investment Company................................ 9 (q) Compliance with Law........................................................... 9 (r) Compliance with Credit and Collection Policy.................................. 9 (s) Payments to Seller............................................................ 9 (t) Enforceability of Contracts................................................... 10 (u) Eligible Receivables.......................................................... 10 (v) Accounting.................................................................... 10 (w) Solvency...................................................................... 10
i 3 ARTICLE III CONDITIONS OF PURCHASE........................................................ 10 Section 3.1 Conditions Precedent to Purchase........................................ 10 Section 3.2 Conditions Precedent to Subsequent Payments............................. 10 ARTICLE IV COVENANTS...................................................................... 11 Section 4.1 Affirmative Covenants of Seller......................................... 11 (a) Financial Reporting........................................................... 11 (i) Annual Reporting........................................................... 11 (ii) Quarterly Reporting........................................................ 11 (iii) Financial Officer's Certificate............................................ 11 (iv) S.E.C. Filings............................................................. 11 (v) Change in Credit and Collection Policy..................................... 11 (vi) Other Information.......................................................... 12 (b) Notices....................................................................... 12 (i) Termination Events or Unmatured Termination Events......................... 12 (ii) Judgment and Proceedings................................................... 12 (iii) Seller Material Adverse Effect............................................. 12 (c) Compliance with Laws and Preservation of Existence............................ 12 (d) Audits........................................................................ 13 (e) Keeping and Marking of Records and Books...................................... 13 (f) Compliance with Contracts and Credit and Collection Policy.................... 14 (g) Ownership..................................................................... 14 (h) Administrator's and Lender's Reliance......................................... 14 (i) Collections................................................................... 14 (j) Taxes......................................................................... 15 Section 4.2 Negative Covenants of Seller............................................ 15 (a) Name Change, Offices and Records.............................................. 15 (b) Change in Payment Instructions to Obligors.................................... 15 (c) Modifications to Contracts and Credit and Collection Policy................... 15 (d) Sales, Adverse Claims......................................................... 15 (e) Accounting for Purchases...................................................... 16 ARTICLE V TERMINATION EVENTS.............................................................. 16 Section 5.1 Termination Events...................................................... 16 Section 5.2 Remedies................................................................ 17 ARTICLE VI INDEMNIFICATION................................................................ 18 Section 6.1 Indemnities by Seller................................................... 18 Section 6.2 Other Costs and Expenses................................................ 20
ii 4 Section 6.3 Taxes................................................................... 20 ARTICLE VII MISCELLANEOUS................................................................. 20 Section 7.1 Waivers and Amendments.................................................. 20 Section 7.2 Notices................................................................. 21 Section 7.3 Protection of Ownership Interests of Purchaser.......................... 21 Section 7.4 Confidentiality......................................................... 22 Section 7.5 Bankruptcy Petition..................................................... 22 Section 7.6 CHOICE OF LAW........................................................... 23 Section 7.7 CONSENT TO JURISDICTION................................................. 23 Section 7.8 WAIVER OF JURY TRIAL.................................................... 23 Section 7.9 Integration; Binding Effect; Survival of Terms.......................... 24 Section 7.10 Counterparts; Severability; Section References.......................... 24
EXHIBITS AND SCHEDULES Exhibit I - Definitions Exhibit II - Chief Executive Office; Principal Place(s) of Business; Location(s) of Records; Federal Employer Identification Number; Other Names Exhibit III - LockBoxes, LockBox Accounts, Depositary Accounts Exhibit IV - Form of Financial Officer's Certificate Exhibit V - Form of Subordinated Note Exhibit VI Form of Purchase Report Schedule A List of Documents to Be Delivered to Purchaser Prior to the Closing Date iii 5 RECEIVABLES SALE AGREEMENT THIS RECEIVABLES SALE AGREEMENT, dated as of July 2, 2001, is by and between: (a) ChoicePoint Capital Inc., a Delaware corporation (together with its successors, "SELLER"), and (b) ChoicePoint Financial Inc., a Delaware corporation (together with its successors, "PURCHASER"). UNLESS DEFINED ELSEWHERE HEREIN, CAPITALIZED TERMS USED IN THIS AGREEMENT SHALL HAVE THE MEANINGS ASSIGNED TO SUCH TERMS IN EXHIBIT I HERETO OR, IF NOT DEFINED THEREIN, IN THE FIRST STEP SALE AGREEMENT (HEREINAFTER DEFINED). PRELIMINARY STATEMENTS Purchaser may from time to time acquire various Receivables and the Related Security and Collections associated therewith pursuant to that certain Receivables Sale and Contribution Agreement dated as of July 2, 2001 by and among ChoicePoint Services Inc. ("PARENT ORIGINATOR"), PRC Corporation, a Georgia corporation, ChoicePoint Business and Government Services Inc., a Georgia corporation, ChoicePoint Direct Inc., an Illinois corporation, Statewide Data Services, Inc., a Florida corporation, I.R.S.C., Inc., a California corporation, ChoicePoint Public Records Inc., a Georgia corporation, Patlex Corporation, a Pennsylvania corporation, National Safety Alliance Incorporated, a Tennessee corporation, and BTi Employee Screening Services Inc., a Texas corporation (all of the foregoing including Parent Originator, collectively, the "ORIGINATORS"), as sellers, and Seller, as purchaser (as amended, restated or otherwise modified from time to time, the "FIRST STEP SALE AGREEMENT"). Seller wishes to contribute all of Seller's right, title and interest in certain of the Receivables and to sell all other Receivables, in each case, together with the associated Collections and Related Security, to Purchaser, and Purchaser wishes to acquire the foregoing from Seller. Each of the parties hereto intends the transactions contemplated hereby to be true sales or other outright conveyances of Receivables to Purchaser, providing Purchaser with the full benefits of ownership of the Receivables transferred to it, and neither of the parties hereto intends any of such transactions to be, or for any purpose to be characterized as, loans from Purchaser to Seller. 1 6 Purchaser intends to finance certain of its purchases of Receivables hereunder in part by borrowing under that certain Loan Agreement dated as of July 2, 2001 (as the same may from time to time hereafter be amended, supplemented, restated or otherwise modified, the "LOAN AGREEMENT") among Purchaser, as borrower, Parent Originator, as initial servicer, Three Pillars Funding Corporation (together with its successors and permitted assigns, "LENDER"), and SunTrust Equitable Securities Corporation, as agent and administrator for Lender (in such capacity, together with its successor and assigns in such capacity, the "ADMINISTRATOR"). NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I CONTRIBUTION AND SALE OF RECEIVABLES Section 1.1 Capitalization of Purchaser. Effective on the Closing Date: (a) Seller hereby contributes to Purchaser all Existing Receivables (the "ORIGINAL CONTRIBUTED RECEIVABLES"), together with the associated Collections and Related Security, in exchange for 100% of Purchaser's authorized capital stock, and (b) Purchaser hereby accepts from Seller as a contribution to Purchaser's capital, the Original Contributed Receivables, together with the associated Collections and Related Security. Section 1.2 Purchases; Purchase Reports. (a) Upon the terms and subject to the conditions set forth herein, effective on the Closing Date and on each Business Day after the Closing Date through and including the Termination Date (each such Business Day, a "PURCHASE DATE"), Seller does hereby sell, assign, transfer, set-over and otherwise convey to Purchaser, in consideration for the Purchase Price, without recourse (except to the extent expressly provided herein), and Purchaser does hereby purchase from Seller, all of Seller's right, title and interest in and to all Receivables (other than Original Contributed Receivables) existing as of the close of business on the Business Day immediately preceding such Purchase Date, together with all Related Security and Collections associated therewith. Purchaser shall be obligated to pay the Purchase Price for the Receivables purchased hereunder in accordance with Section 1.3. (b) On each Reporting Date, Seller shall (or shall require Servicer to) deliver to Purchaser (with a copy to Administrator) a report in substantially the form of Exhibit VI hereto (each such report being herein called a "PURCHASE REPORT") with respect to the Receivables sold during the Calculation Period then most recently ended. In addition to, and not in limitation of, the foregoing, in connection with the payment of the Purchase Price for any 2 7 Receivables purchased hereunder, Purchaser may request that Seller deliver, and Seller shall deliver, such information or documents as Purchaser may reasonably request. Section 1.3 Payment for the Purchases. (a) The Purchase Price for each Purchase shall be payable in full by Purchaser to Seller on the applicable Purchase Date in the following manner: (i) by delivery to Seller or its designee of immediately available funds; (ii) by delivery to Seller or its designee of the proceeds of a subordinated revolving loan from Seller to Purchaser (each, a "SUBORDINATED LOAN") in an amount not to exceed the least of (A) the remaining unpaid portion of such Purchase Price, (B) the maximum Subordinated Loan that could be borrowed without rendering Purchaser's Net Worth less than the Required Capital Amount, and (C) fifteen percent (15%) of such Purchase Price. Seller is hereby authorized by Purchaser to endorse on the schedule attached to the Subordinated Note an appropriate notation evidencing the date and amount of each advance thereunder, as well as the date of each payment with respect thereto, PROVIDED THAT the failure to make such notation shall not affect any obligation of Purchaser thereunder, and (iii) at Seller's election unless the Termination Date has occurred, by accepting a contribution to its capital in an amount equal to the remaining unpaid balance of such Purchase Price. Seller irrevocably agrees to advance each Subordinated Loan requested by Purchaser on or prior to the Termination Date. The Subordinated Loans owing to Seller shall be evidenced by, and shall be payable in accordance with the terms and provisions of the Subordinated Note and shall be payable solely from funds which Purchaser is not required under the Receivables Sale Agreement to set aside for the benefit of, or otherwise pay over to, Purchaser. (b) From and after the Termination Date, Seller shall not be obligated to (but may, at its option) sell or contribute Receivables to Purchaser. (c) Although the Purchase Price for each Receivable shall be due and payable in full by Purchaser to Seller on the Purchase Date immediately following the Business Day on which such Receivable came into existence, settlement of the Purchase Price between Purchaser and Seller shall be effected on a monthly basis on Settlement Dates with respect to all Receivables originated during the same Calculation Period and based on the information contained in the Purchase Report delivered by or on behalf of Seller for the Calculation Period then most recently ended. Although settlement shall be effected on Settlement Dates, increases or decreases in the amount owing under the Subordinated Note made pursuant to Section 1.3 and any contribution of capital by Seller to Purchaser made pursuant to Section 1.3(a)(iii) shall be 3 8 deemed to have occurred and shall be effective as of the last Business Day of the Calculation Period to which such settlement relates. Section 1.4 Purchase Price Credit Adjustments. If on any day: (a) the Outstanding Balance of any Receivable purchased from Seller is: (i) reduced as a result of any defective, rejected or returned goods or services, any discount or adjustment or otherwise by Seller (OTHER THAN A REDUCTION IN SUCH OUTSTANDING BALANCE RESULTING FROM (A) cash Collections received by Purchaser or Servicer, on Purchaser's behalf, on account of such Receivable's Outstanding Balance, or (B) any reserve established against or write-off of such Receivable that is made due to its becoming a Defaulted Receivable), (ii) reduced (in whole or in part) as a result of a setoff in respect of any claim by any Person (whether such claim arises out of the same or a related transaction or an unrelated transaction), or (b) any of the representations and warranties set forth in Sections 2.1(h), (i), (j), (r), (s), (t), (u), the second sentence of Section 2.1(q) hereof and the last clause (relating to bulk sales laws) of Section 2.1(c) are not true when made or deemed made with respect to any Receivable, then, in such event, Purchaser shall be entitled to a credit (each, a "PURCHASE PRICE CREDIT") against the Purchase Price otherwise payable to Seller hereunder equal to (x) in the case of a reduction under the preceding clause (a)(i) or (ii), the amount of such whole or partial reduction, and (y) in the case of a misrepresentation described in the preceding clause (b), the full Outstanding Balance of such Receivable. If such Purchase Price Credit exceeds the aggregate Original Balance of the Receivables on any day, Seller shall pay the remaining amount of such Purchase Price Credit in cash (i) if the Termination Date has not occurred, not later than the next Settlement Date, and (ii) if the Termination Date has occurred, immediately, PROVIDED THAT if the Termination Date has not occurred, Seller shall be allowed to deduct the remaining amount of any Purchase Price Credit owing by it from any indebtedness owed to it under the Subordinated Note. Section 1.5 Payments and Computations, Etc. All amounts to be paid or deposited by Purchaser hereunder shall be paid or deposited in accordance with the terms hereof on the day when due in immediately available funds to the account of Seller designated from time to time by Seller or as otherwise directed by Seller. In the event that any payment owed by any Person hereunder becomes due on a day that is not a Business Day, then such payment shall be made on the next succeeding Business Day. If any Person fails to pay any amount hereunder when due, such Person agrees to pay, on demand, the Default Fee in respect thereof until paid in full; PROVIDED, HOWEVER, that such Default Fee shall not at any time exceed the maximum rate 4 9 permitted by applicable law. All computations of interest payable hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first but excluding the last day) elapsed. Section 1.6 License of Software. (a) To the extent that any software used by Seller to account for the Receivables is non-transferable, Seller hereby grants to Purchaser, Servicer and their respective assigns, an irrevocable, non-exclusive license to use, without royalty or payment of any kind, all such software used by Seller to account for such Receivables, to the extent necessary to administer such Receivables, whether such software is owned by Seller or is owned by others and used by Seller under license agreements with respect thereto, PROVIDED THAT should the consent of any licensor of such software be required for the grant of the license described herein, to be effective, Seller hereby agrees that upon the request of Purchaser (or its assigns), Seller will use its reasonable efforts to obtain the consent of such third-party licensor. The license granted hereby shall be irrevocable until the later to occur of (i) indefeasible payment in full of the Obligations (as defined in the Loan Agreement), and (ii) the date on which each of this Agreement and the Loan Agreement terminates in accordance with its terms. (b) Seller (i) shall take such action requested by Purchaser and/or Administrator (as the ultimate assignee), from time to time hereafter, that may be necessary or appropriate to ensure that Purchaser and its assigns have an enforceable ownership interest in the records included in the Receivable Files relating to the Receivables purchased from Seller hereunder, and (ii) shall use its reasonable efforts to ensure that Purchaser, Servicer and their respective assigns each has an enforceable right (whether by license or sublicense or otherwise) to use all of the computer software used to account for such Receivables and/or to recreate such records. Section 1.7 Intention of the Parties; Marking of Records; Further Assurances. It is the intention of the parties hereto that each sale or contribution of Receivables under this Agreement shall constitute a sale or other absolute transfer and assignment, which sale or other transfer is absolute and irrevocable and provides Purchaser with the full benefits of ownership of the Receivables. Except for the Purchase Price Credits owed to Seller pursuant to Section 1.4, each sale of Receivables hereunder by Seller is made without recourse to Seller; PROVIDED, HOWEVER, that (i) Seller shall be liable to Purchaser and each of its assigns for all representations, warranties, covenants and indemnities made by Seller pursuant to the terms of the Transaction Documents to which Seller is a party, and (ii) such sale does not constitute, and is not intended to result in, an assumption by Purchaser or any assignee thereof of any obligation of Seller or any other Person arising in connection with the Receivables, the related Contracts and/or other Related Security or any other obligations of Seller. In view of the intention of the parties hereto that each Purchase of Receivables made hereunder shall constitute a purchase and sale of such Receivables rather than a loan secured thereby, Seller agrees that it will, on or prior to the Closing Date and in accordance with Section 4.1(e)(ii), mark its master data processing records 5 10 relating to the Receivables with a legend stating that Purchaser has purchased such Receivables and to note in its financial statements that its Receivables have been sold to Purchaser. Upon the request of Purchaser or any of its assigns, Seller will execute and file such financing or continuation statements, or amendments thereto or assignments thereof, and such other instruments or notices, as may be necessary or appropriate to perfect and maintain the perfection of Purchaser's ownership interest in the Receivables and the Related Security (other than Excluded Items) that is subject to Article 9 of the UCC and Collections with respect thereto, or as Purchaser or any of its assigns may reasonably request. Section 1.8 Characterization; Grant of Security Interest. If, notwithstanding the intention of the parties expressed in Section 1.7, any sale or contribution by Seller of Receivables hereunder shall be characterized as a secured loan and not a sale or such sale or contribution shall for any reason be ineffective or unenforceable, then this Agreement shall be deemed to constitute a security agreement under the UCC and other applicable law. For this purpose and without being in derogation of the parties' intention that each sale or contribution of Receivables by Seller hereunder shall constitute a true sale or other outright conveyance thereof: Seller hereby grants to Purchaser a valid and continuing security interest in all of Seller's right, title and interest in, to and under all Receivables which are now existing or hereafter created by Seller, all Collections and Related Security with respect thereto, all other rights and payments relating to such Receivables and all proceeds of the foregoing to secure the prompt and complete payment of a loan deemed to have been made in an amount equal to the Purchase Price of the Receivables purchased from Seller together with all other obligations of Seller hereunder, which security interest shall be prior to all other Adverse Claims thereto. Purchaser and its assigns shall have, in addition to the rights and remedies which they may have under this Agreement, all other rights and remedies provided to a secured creditor under the UCC and other applicable law, which rights and remedies shall be cumulative. ARTICLE II REPRESENTATIONS AND WARRANTIES Section 2.1 Representations and Warranties of Seller. On the Closing Date and on each Purchase Date, Seller hereby represents and warrants to Purchaser, as to Seller and the Receivables originated by it, as follows: (a) Existence and Power. Seller is a corporation duly incorporated under the laws of the state indicated after its name in the preamble to this Agreement (Seller's "APPLICABLE STATE"). Seller is validly existing and in good standing under the laws of its Applicable State and is duly qualified to do business and is in good standing as a foreign corporation, and has and holds all corporate power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted except where the failure to so qualify or so hold could not reasonably be expected to have a Seller Material Adverse Effect. 6 11 (b) Power and Authority; Due Authorization, Execution and Delivery. The execution and delivery by Seller of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder, and Seller's use of the proceeds of the Purchases made from it hereunder, are within its corporate powers and authority and have been duly authorized by all necessary corporate action on its part. This Agreement and each other Transaction Document to which Seller is a party has been duly executed and delivered by Seller. (c) No Conflict. The execution and delivery by Seller of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder do not contravene or violate (i) its Organizational Documents, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on assets of Seller or its Subsidiaries (except as created hereunder) except, in any case described in clauses (i)-(iv) inclusive, where such contravention or violation could not reasonably be expected to have a Seller Material Adverse Effect; and no transaction contemplated hereby requires compliance with any bulk sales act or similar law. (d) Governmental Authorization. Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution and delivery by Seller of this Agreement and each other Transaction Document to which it is a party and the performance of its obligations hereunder and thereunder. (e) Actions, Suits. Except as disclosed in the SEC Filings, there is no litigation, arbitration, governmental investigation, proceeding or inquiry pending or, to the knowledge of any of their officers, threatened against or affecting Seller or any of its Subsidiaries which could reasonably be expected to have a Seller Material Adverse Effect or which seeks to prevent, enjoin or delay the making or repayment of any Subordinated Loans. Other than any liability incident to any litigation, arbitration or proceeding which could not reasonably be expected to have a Seller Material Adverse Effect, Seller and its Subsidiaries have no material contingent obligations not provided for or disclosed in the SEC Filings. (f) Binding Effect. This Agreement and each other Transaction Document to which Seller is a party constitute the legal, valid and binding obligations of Seller enforceable against Seller in accordance with their respective terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). 7 12 (g) Accuracy of Information. All written information heretofore furnished by Seller or any of its Affiliates to Purchaser (or its assigns) for purposes of or in connection with this Agreement, any of the other Transaction Documents or any transaction contemplated hereby or thereby is, and all such written information hereafter furnished by Seller or any of its Affiliates to Purchaser (or its assigns) will be, true and accurate in every material respect on the date such information is stated or certified and does not and will not contain any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein, taken as a whole, not misleading. (h) Use of Proceeds. No portion of any Purchase Price payment to Seller hereunder will be used for a purpose that violates, or would be inconsistent with, any law, rule or regulation applicable to Seller. (i) Good Title. Immediately prior to each Purchase from Seller hereunder and upon the creation of each Receivable, Seller (i) is the legal and beneficial owner of the Receivables and (ii) is the legal and beneficial owner of the Related Security with respect thereto or possesses a valid and perfected security interest therein, in each case, free and clear of any Adverse Claim, except as created by the Transaction Documents. There have been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Seller's ownership interest in each such Receivable, its Collections and the Related Security (except for Excluded Items). (j) Perfection. This Agreement, together with the filing of the financing statements contemplated hereby, is effective to transfer to Purchaser (and Purchaser shall acquire from Seller) (i) legal and equitable title to, with the right to sell and encumber each Receivable originated by Seller, whether now existing and hereafter arising, together with the Collections with respect thereto, and (ii) all of Seller's right, title and interest in the Related Security associated with each such Receivable (except for Excluded Items), in each case, free and clear of any Adverse Claim, except as created by the Transactions Documents. There have been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Purchaser's ownership interest in such Receivables, the Related Security (except for Excluded Items) and the Collections. (k) Places of Business and Locations of Records. Seller's chief executive office, principal place(s) of business, and locations where it keeps all of its Receivable Files are located at the address(es) listed on Exhibit II or such other locations of which Purchaser has been notified in accordance with Section 4.2(a) in jurisdictions where all action required by Section 4.2(a) has been taken and completed. Seller's Federal Employer Identification Number is correctly set forth on Exhibit II. (l) LockBoxes, Etc. The addresses of all existing LockBoxes and the banks, account names and account numbers for all existing LockBox Accounts and Depositary Accounts are correctly listed on Exhibit III. Seller has not granted any Person, other than 8 13 Purchaser (and Administrator, as its pledgee) dominion and control of any LockBox, any LockBox Account or any Depositary Account, or the right to take dominion and control of any such LockBox, LockBox Account or Depositary Account at a future time or upon the occurrence of a future event. (m) Seller Material Adverse Effect. Since the date on which Seller was incorporated, no event has occurred that would have a Seller Material Adverse Effect. (n) Names. The name in which Seller has executed this Agreement is identical to the name of Seller as indicated on the public records of its Applicable State. In the past five (5) years, Seller has not used any corporate names, trade names or assumed names other than the name in which it has executed this Agreement and as listed on Exhibit II. (o) Ownership of Purchaser. Seller owns, directly or indirectly, 100% of the issued and outstanding equity interests of Purchaser, free and clear of any Adverse Claims. Such equity interests are validly issued, fully paid and nonassessable, and there are no options, warrants or other rights to acquire securities of Purchaser. (p) Not a Holding Company or an Investment Company. Seller is not a "holding company" or a "subsidiary holding company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended, or any successor statute. Seller is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or any successor statute. (q) Compliance with Law. Seller has complied with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have a Seller Material Adverse Effect. Each Receivable originated by Seller, together with the Contract related thereto, does not contravene any laws, rules or regulations applicable thereto (including, without limitation, laws, rules and regulations relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy), and no part of such Contract is in violation of any such law, rule or regulation, except where such contravention or violation could not reasonably be expected to have a Seller Material Adverse Effect. (r) Compliance with Credit and Collection Policy. Seller has complied in all material respects with the Credit and Collection Policy with regard to each Receivable and the related Contract, and has not made any change to such Credit and Collection Policy, except such material change as to which Purchaser (or its assigns) has been notified in accordance with Section 4.1(a)(vii). (s) Payments to Seller. With respect to each Receivable sold to Purchaser by Seller hereunder, the Purchase Price received by Seller constitutes reasonably equivalent value in 9 14 consideration therefor. No transfer hereunder by Seller of any Receivable is or may be voidable under any section of the Bankruptcy Reform Act of 1978 (11 U.S.C.ss.ss.101 et seq.), as amended. (t) Enforceability of Contracts. Each Contract with respect to each Receivable sold by Seller hereunder is effective to create, and has created, a legally valid and binding obligation of the related Obligor to pay the Outstanding Balance of the Receivable created thereunder and any accrued interest thereon, enforceable against the Obligor in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). (u) Eligible Receivables. Each Receivable which is reflected in any Purchase Report as an Eligible Receivable was an Eligible Receivable on the date of its acquisition by Purchaser hereunder. (v) Accounting. The manner in which Seller accounts for the transactions contemplated by this Agreement in its financial statements does not jeopardize the characterization of the transactions contemplated herein as being true sales. (w) Solvency. Seller is Solvent. ARTICLE III CONDITIONS OF PURCHASE Section 3.1 Conditions Precedent to Purchase. The initial Purchase from Seller under this Agreement is subject to the conditions precedent that (a) Purchaser shall have been capitalized with the Initial First Step Contribution, and (b) Purchaser shall have received on or before the date of such Purchase those documents listed on Schedule A. Section 3.2 Conditions Precedent to Subsequent Payments. Purchaser's obligation to pay Seller for any Receivable shall be subject to the further conditions precedent that: (a) as of the applicable Purchase Date, Purchaser (or its assigns) shall have received such other documents as it may reasonably request and (b) as of the applicable Purchase Date, the following statements shall be true (and acceptance of the proceeds of any payment for such Receivable shall be deemed a representation and warranty by Seller that such statements are then true): (i) the representations and warranties of Seller set forth in Article II are true and correct in all material respects on and as of the date such Receivable came into existence as though made on and as of such date; PROVIDED THAT the materiality 10 15 threshold in the preceding clause shall not be applicable with respect to any representation or warranty which itself contains a materiality threshold; and (ii) no event has occurred and is continuing that will constitute a Termination Event or an Unmatured Termination Event. Notwithstanding the foregoing conditions precedent, upon the applicable Purchase Date for any Receivable, title to such Receivable and the Related Security and Collections with respect thereto shall vest in Purchaser, whether or not the conditions precedent to Purchaser's obligation to pay for such Receivable were in fact satisfied and whether or not the Purchase Price has actually been paid as of such date; PROVIDED, HOWEVER, that failure of Seller to satisfy any of the foregoing conditions precedent shall give rise to a right of Purchaser to rescind the related Purchase and direct Seller to pay to Purchaser an amount equal to the Purchase Price payment, if any, made with respect to the Receivables included in such Purchase. ARTICLE IV COVENANTS Section 4.1 Affirmative Covenants of Seller. Until the date on which this Agreement terminates in accordance with its terms, Seller hereby covenants as set forth below: (a) Financial Reporting. Seller will maintain, for itself and each Consolidated Subsidiary, a system of accounting established and administered in accordance with generally accepted accounting principles, and furnish to Purchaser (and its assigns): (i) Annual Reporting. Within 95 days after the close of each of its fiscal years, the financial statements required to be delivered to Seller under Section 4.1(a)(i) of the First Step Sale Agreement. (ii) Quarterly Reporting. Within 50 days after the close of the first three quarterly periods of each of its fiscal years, the financial statements and certificates required to be delivered to Seller under Section 4.1(a)(ii) of the First Step Sale Agreement (iii) Financial Officer's Certificate. Together with the financial statements required hereunder, a certificate in substantially the form of Exhibit IV signed by a Financial Officer of Seller and dated the date of such annual financial statement or such quarterly financial statement, as the case may be. (iv) S.E.C. Filings. Promptly upon the filing thereof, copies of all tender offer documents and reports on Form 8-K (or any successor form thereto) which ChoicePoint Inc. or any of its Subsidiaries files with the Securities and Exchange Commission. (v) Change in Credit and Collection Policy. At least thirty (30) days prior to the effectiveness of any material change in or material amendment to the Credit and 11 16 Collection Policy, a copy of the Credit and Collection Policy then in effect and a notice (A) indicating such proposed material change or material amendment, and (B) if such proposed change or amendment would be reasonably likely to adversely affect the collectibility of the Receivables or decrease the credit quality of any newly created Receivables in any material respect, requesting Purchaser's (and, if the Loan Agreement remains in effect, Administrator's) consent thereto. (vi) Other Information. Promptly, from time to time, such other information, documents, records or reports relating to the Receivables or the condition or operations, financial or otherwise, of Seller as Purchaser (or its assigns) may from time to time reasonably request in order to protect the interests of Purchaser (and its assigns) under or as contemplated by this Agreement. (b) Notices. As soon as practicable and in any event within one (1) Business Day after learning of any of the following, Seller will notify Purchaser (and, while the Loan Agreement remains in effect, Administrator) in writing of any of the following, describing the same and, if applicable, the steps being taken with respect thereto: (i) Termination Events or Unmatured Termination Events. The occurrence of each Termination Event and each Unmatured Termination Event, by a statement of a Financial Officer of Seller. (ii) Judgment and Proceedings. (1) The entry of any judgment or decree against ChoicePoint Inc. or any of its Subsidiaries if the aggregate amount of all judgments and decrees then outstanding against ChoicePoint Inc. and its Subsidiaries exceeds $5,000,000 after deducting (a) the amount with respect to which ChoicePoint Inc. or such Subsidiary is insured and with respect to which the insurer has assumed responsibility in writing or undertaken the defense with a reservation of rights, and (b) the amount for which ChoicePoint Inc. or such Subsidiary is otherwise indemnified if the terms of such indemnification are satisfactory to Purchaser (or its assigns), and (2) the institution of any litigation, arbitration proceeding or governmental proceeding against Seller which, individually or in the aggregate, could reasonably be expected to have a Seller Material Adverse Effect. (iii) Seller Material Adverse Effect. The occurrence of any event or condition that has had, or could reasonably be expected to have, a Seller Material Adverse Effect. (c) Compliance with Laws and Preservation of Existence. Seller will comply in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have a Seller Material Adverse Effect. Seller will preserve and maintain its legal existence, rights, franchises and privileges in the jurisdiction of its organization, and qualify and remain qualified in good standing as a foreign entity in each 12 17 jurisdiction where its business is conducted, except where the failure to so qualify or remain in good standing could not reasonably be expected to have a Seller Material Adverse Effect. (d) Audits. Seller will furnish to Purchaser and Administrator (as Purchaser's pledgee) from time to time such information with respect to Seller and the Receivables sold or contributed by it as Purchaser (or Administrator) may reasonably request. Seller will, from time to time during regular business hours as requested by Purchaser (or Administrator), upon reasonable notice and at the sole cost of Seller, permit an accounting firm designated by Purchaser (or by Administrator), on at least a semi-annual basis: (i) to examine and make copies of and abstracts from all Receivable Files in the possession or under the control of Seller and other records relating to the Receivables originated by Seller, the Collections and the Related Security, including, without limitation, the related Contracts, and (ii) to visit the offices and properties of Seller for the purpose of examining such materials described in clause (i) above, and to discuss matters relating to Seller's financial condition or the Receivables and the Related Security or Seller's performance under any of the Transaction Documents or Seller's performance under the Contracts and, in each case, with any of the officers or employees of Seller having knowledge of such matters; PROVIDED, HOWEVER, that unless and until a Termination Event shall have occurred and be continuing, Seller and the Originators in the aggregate shall not be responsible to pay for more than two (2) such examinations in any period beginning on July 2 of one year and ending on July 1 of the following year. (e) Keeping and Marking of Records and Books. (i) Seller will maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing Receivables in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records and other information reasonably necessary or advisable for the collection of all Receivables (including, without limitation, records adequate to permit the immediate identification of each Receivable and all Collections of and adjustments to each Receivable sold or contributed by it). Seller will give Purchaser (or its assigns) notice of any material change in the administrative and operating procedures referred to in the previous sentence. (ii) Seller will (A) on or prior to the Closing Date, mark its master data processing records and other books and records relating to the Receivables with a legend, acceptable to Purchaser (or its assigns), describing Purchaser's ownership interests in such Receivables and (B) upon the request of Purchaser (or its assigns) from and after the occurrence of a Termination Event: (x) mark each invoice evidencing any Receivable with a legend describing Purchaser's ownership thereof and (y) at any time after Seller (or one of its Affiliates) is no longer acting as Servicer, deliver to Purchaser (or its assigns) all Contracts relating to such Receivables. 13 18 (f) Compliance with Contracts and Credit and Collection Policy. Seller will timely and fully (i) perform and comply in all material respects with all provisions, covenants and other promises required to be observed by it under the Contracts related to the Receivables, and (ii) comply in all respects with the Credit and Collection Policy in regard to each such Receivable and the related Contract. (g) Ownership. Seller will take all necessary action to establish and maintain, irrevocably in Purchaser: (A) legal and equitable title to the Receivables and the Collections and (B) all of Seller's right, title and interest in the Related Security associated with the Receivables (except for Excluded Items), in each case, free and clear of any Adverse Claims other than Adverse Claims in favor of Purchaser (and its assigns) (INCLUDING, WITHOUT LIMITATION, the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Purchaser's interest in such Receivables, Related Security (except for Excluded Items) and Collections and such other action to perfect, protect or more fully evidence the interest of Purchaser as Purchaser (or its assigns) may reasonably request). (h) Administrator's and Lender's Reliance. Seller acknowledges that Purchaser is entering into the transactions contemplated by the Receivables Sale Agreement, and Administrator and Lender are entering into the transactions contemplated by the Loan Agreement, in reliance upon Purchaser's identity as a legal entity that is separate from Seller and any Affiliates thereof. Therefore, from and after the Closing Date, Seller will take all reasonable steps within Seller's control to maintain Purchaser's identity as a separate legal entity and to make it manifest to third parties that Purchaser is an entity with assets and liabilities distinct from those of Seller and any Affiliates thereof and not just a division of Seller or any such Affiliate. Without limiting the generality of the foregoing and in addition to the other covenants set forth herein, Seller (i) will not hold itself out to third parties as liable for the debts of Purchaser nor purport to own any of the Receivables and other assets acquired by Purchaser, (ii) will not take any action that would cause Purchaser to violate the "separateness covenants" set forth in Section 7.1(i) of the Loan Agreement and (iii) will cause all tax liabilities arising in connection with the transactions contemplated herein or otherwise to be allocated between Seller and Purchaser on an arm's-length basis and in a manner consistent with the procedures set forth in U.S. Treasury Regulations ss.ss.1.1502-33(d) and 1.1552-1. (i) Collections. In the event any payments relating to Receivables are remitted directly to Seller or any Affiliate of Seller, Seller will remit (or will cause all such payments to be remitted) directly to a LockBox Account or a Depositary Account within one (1) Business Day following receipt thereof and, at all times prior to such remittance, Seller will itself hold or, if applicable, will cause such payments to be held in trust for the exclusive benefit of Purchaser and its assigns. Seller will transfer exclusive ownership, dominion and control of each LockBox, LockBox Account and Depositary Account to Purchaser and, will not grant the right to take dominion and control of any LockBox, any LockBox Account or any Depositary Account at 14 19 a future time or upon the occurrence of a future event to any Person, except to Purchaser, as contemplated by this Agreement, and to Administrator, as contemplated by the Loan Agreement. (j) Taxes. Seller will file all tax returns and reports required by law to be filed by it and promptly pay all Covered Taxes at any time owing, except any such Covered Taxes which are not yet delinquent or are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books. Section 4.2 Negative Covenants of Seller. Until the date on which this Agreement terminates in accordance with its terms, Seller hereby covenants that: (a) Name Change, Offices and Records. Seller will not change its (i) state of organization, (ii) name, (iii) identity or structure (within the meaning of Article 9 of any applicable enactment of the UCC) or relocate its chief executive office at any time while the location of its chief executive office is relevant to perfection of Purchaser's interest in the Receivables or the associated Related Security (except for Excluded Items) and Collections or any office where Receivable Files are kept unless, in each of the foregoing cases, it shall have: (A) given Purchaser (and Administrator as Purchaser's pledgee) written notice thereof within 30 days thereafter and (B) delivered to Administrator (as Purchaser's pledgee) all financing statements, instruments and other documents reasonably requested by Purchaser (or Administrator, as Purchaser's pledgee) in connection with such change or relocation. (b) Change in Payment Instructions to Obligors. Seller will not add or terminate any LockBox, LockBox Account or Depositary Account, or make any change in the instructions to Obligors regarding payments to be made to any LockBox, any LockBox Account or any Depositary Account, unless Purchaser and, if the Loan Agreement remains in effect, Administrator shall have received, at least ten (10) days before the proposed effective date therefor, (i) written notice of such addition, termination or change and (ii) with respect to the addition of a LockBox, LockBox Account or Depositary Account, an executed LockBox and Collection Account Agreement; PROVIDED, HOWEVER, that Seller may make changes in instructions to Obligors regarding payments if such new instructions require such Obligor to make payments to another existing LockBox, LockBox Account, Depositary Account. (c) Modifications to Contracts and Credit and Collection Policy. Seller will not make any change to the Credit and Collection Policy that could reasonably be expected to adversely affect the collectibility of the Receivables or decrease the credit quality of any of its newly created Receivables. Except as otherwise permitted in its capacity as a sub-Servicer, Seller will not extend, amend or otherwise modify the terms of any Receivable or any Contract related thereto other than in accordance with the Credit and Collection Policy. (d) Sales, Adverse Claims. Seller will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, or create or suffer to 15 20 exist any Adverse Claim upon (including, without limitation, the filing of any financing statement) or with respect to, any Receivable, Related Security or Collections, or upon or with respect to any Contract under which any Receivable arises, or any LockBox, LockBox Account or Depositary Account, or assign any right to receive income with respect thereto (other than, in each case, the creation of the interests therein in favor of Purchaser provided for herein), and Seller will defend the right, title and interest of Purchaser in, to and under any of the foregoing property, against all claims of third parties claiming through or under Seller. (e) Accounting for Purchases. Seller will not, and will not permit any Affiliate to, account for the transactions contemplated hereby in any financial statements in any manner other than the sale (or other outright conveyance) by Seller to Purchaser of the Receivables and the associated Collections and Related Security except to the extent that such transactions are not recognized on account of consolidated financial reporting in accordance with generally accepted accounting principles. ARTICLE V TERMINATION EVENTS Section 5.1 Termination Events. The occurrence of any one or more of the following events shall constitute a Termination Event: (a) Seller shall fail to make any payment or deposit required hereunder when due and such failure shall continue for three (3) consecutive Business Days. (b) Any representation, warranty, certification or statement made by Seller in this Agreement, any other Transaction Document or in any other document delivered pursuant hereto or thereto shall prove to have been incorrect in any material respect when made or deemed made; PROVIDED THAT the materiality threshold in the preceding clause shall not be applicable with respect to any representation or warranty which itself contains a materiality threshold and PROVIDED FURTHER, that any misrepresentation or certification for which Purchaser has actually received a Purchase Price Credit from Seller shall not constitute a Termination Event hereunder. (c) Seller shall breach any covenant contained in Section 4.1(b)(i) which is not cured within three (3) Business Days, or Seller shall breach any covenant contained in Section 4.2(c) or 4.2(e), which is not cured within thirty (30) days, or Seller shall breach any covenant contained in Section 4.2(a), (b) or (d). (d) Seller shall breach, fail to perform or observe any covenant contained in any Section of this Agreement (which is not covered by another subsection, paragraph or clause of this Section 5.1) or of any other Transaction Document to which it is a party which is not remedied within thirty (30) days after written notice from Purchaser (or, at any time while the Loan Agreement remains in effect, Administrator). 16 21 (e) Failure of Seller or any of its Subsidiaries to pay any of its Material Debts when due; or the default by Seller or any of its Subsidiaries in the performance of any term, provision or condition contained in any agreement under which such Material Debt was created or is governed, or any other event shall occur or condition exist, the effect of which is to cause, or to permit the holder or holders of such Material Debt to cause such Material Debt to become due prior to its stated maturity; or any Material Debt of Seller or any of its Subsidiaries shall be declared to be due and payable or required to be prepaid (other than by a regularly scheduled payment or as a result of the sale of an asset securing such Material Debt) prior to the stated maturity thereof. (f) (i) Seller shall generally not pay its debts as such debts become due or shall admit in writing its inability to pay its debts generally or shall make a general assignment for the benefit of creditors; or (ii) any proceeding shall be instituted by or against Seller seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or any substantial part of its property or (iii) Seller shall take any corporate action to authorize any of the actions set forth in the foregoing clauses (i) or (ii) of this subsection (f). (g) A Change of Control shall occur. (h) Seller or any of its Subsidiaries shall fail within 30 days to pay, bond or otherwise discharge any judgment or order for the payment of money in excess of $5,000,000, which is not stayed on appeal or otherwise being appropriately contested in good faith. (i) The Subordinated Note shall be assigned, pledged or otherwise transferred to any Person in violation of the last section thereof. Section 5.2 Remedies. Upon the occurrence and during the continuation of a Termination Event, Purchaser may take any of the following actions: (i) declare the Termination Date to have occurred, whereupon the Termination Date shall forthwith occur, without demand, protest or further notice of any kind, all of which are hereby expressly waived by Seller; PROVIDED, HOWEVER, that upon the occurrence of a Termination Event described in Section 5.1(f), or of an actual or deemed entry of an order for relief with respect to Seller under the United States Bankruptcy Code, the Termination Date shall automatically occur, without demand, protest or any notice of any kind, all of which are hereby expressly waived by Seller and (ii) to the fullest extent permitted by applicable law, declare that the Default Fee shall accrue with respect to any amounts then due and owing by Seller to Purchaser. The aforementioned rights and remedies shall be without limitation and shall be in addition to all other rights and remedies of Purchaser and its assigns otherwise available under any other provision of this Agreement, by operation of law, at equity or otherwise, all of which are hereby expressly preserved, including, 17 22 without limitation, all rights and remedies provided under the UCC, all of which rights shall be cumulative. ARTICLE VI INDEMNIFICATION Section 6.1 Indemnities by Seller. Without limiting any other rights that Purchaser may have hereunder or under applicable law, Seller hereby agrees to indemnify (and pay upon demand to) Purchaser and its assigns, officers, directors, agents and employees (each a "SELLER INDEMNIFIED PARTY") from and against any and all damages, losses, claims, Covered Taxes, liabilities, costs, expenses and for all other amounts payable, including reasonable attorneys' fees (which attorneys may be employees of Purchaser or any such assign) and disbursements (all of the foregoing being collectively referred to as "SELLER INDEMNIFIED AMOUNTS") awarded against or incurred by any of them arising out of any of the following: (i) any representation or warranty made by Seller (or any officers of Seller) under or in connection with any Purchase Report, this Agreement, any other Transaction Document to which Seller is a party or any other information or report delivered by Seller pursuant hereto or thereto for which Purchaser has not received a Purchase Price Credit that shall have been false or incorrect when made or deemed made; (ii) the failure by Seller, to comply with any applicable law, rule or regulation with respect to any Receivable or Contract related thereto, or the nonconformity of any Receivable or Contract included therein with any such applicable law, rule or regulation or any failure of Seller to keep or perform any of its obligations, express or implied, with respect to any Contract; (iii) any failure of Seller to perform its duties, covenants or other obligations in accordance with the provisions of this Agreement or any other Transaction Document to which Seller is a party; (iv) any products liability, personal injury or damage, suit or other similar claim arising out of or in connection with merchandise, insurance or services that are the subject of any Contract to which Seller is a party or any Receivable; (v) any dispute, claim, offset or defense (other than discharge in bankruptcy of the Obligor or failure to pay due to financial inability) of the Obligor to the payment of any Receivable (including, without limitation, a defense based on such Receivable or the related Contract not being a legal, valid and binding obligation of such Obligor enforceable against it in accordance with its terms), or any other claim resulting from the sale of the merchandise or service related to such Receivable or the furnishing or failure to furnish such merchandise or services; 18 23 (vi) the commingling of Collections of Receivables at any time with other funds; (vii) any investigation, litigation or proceeding related to or arising from this Agreement or any other Transaction Document to which Seller is a party, the transactions contemplated hereby, Seller's use of the proceeds of the Purchase from it hereunder, the ownership of the Receivables or any other investigation, litigation or proceeding relating to Seller in which any Seller Indemnified Party becomes involved as a result of any of the transactions contemplated hereby; (viii) any inability to litigate any claim against any Obligor in respect of any Receivable as a result of such Obligor being immune from civil and commercial law and suit on the grounds of sovereignty or otherwise from any legal action, suit or proceeding; (ix) any failure to vest and maintain vested in Purchaser, or to transfer to Purchaser, legal and equitable title to, and ownership of, the Receivables and the associated Collections, and all of Seller's right, title and interest in the Related Security associated with such Receivables (other than Excluded Items), in each case, free and clear of any Adverse Claim; (x) the failure to have filed, or any delay in filing, financing statements or other similar instruments or documents under the UCC of any applicable jurisdiction or other applicable laws with respect to any Receivable or the Related Security (other than Excluded Items) and Collections with respect thereto, and the proceeds of any thereof, whether at the time of the applicable Purchase from Seller hereunder or at any subsequent time; (xi) any attempt by any Person to void any Purchase from Seller hereunder under statutory provisions or common law or equitable action; and (xii) the failure of any Receivable that is reflected as an Eligible Receivable on any Purchase Report prepared by Seller (or by Servicer on its behalf) to be an Eligible Receivable at the time acquired by Purchaser; EXCLUDING, HOWEVER, (a) Seller Indemnified Amounts to the extent a final judgment of a court of competent jurisdiction holds that Seller Indemnified Amounts resulted from gross negligence or willful misconduct on the part of the Seller Indemnified Party seeking indemnification; (b) Seller Indemnified Amounts to the extent the same includes losses in respect of Receivables originated by that are uncollectible on account of the insolvency, bankruptcy or lack of creditworthiness of the related Obligor; and (c) Excluded Taxes. Nothing in this Section 6.1 shall limit the liability 19 24 of Seller or limit the recourse of Purchaser to Seller for amounts otherwise specifically provided to be paid by Seller under the terms of this Agreement. Section 6.2 Other Costs and Expenses. Seller agrees to pay to Purchaser, on demand, (a) all reasonable out-of-pocket costs and expenses in connection with (i) the preparation, execution and delivery of this Agreement and the other documents to be delivered hereunder, and (ii) the preparation, execution and delivery of any amendment hereto or waiver hereof requested by Seller, and (b) any and all reasonable costs and expenses of Purchaser, if any, including reasonable counsel fees and expenses, in connection with the enforcement of this Agreement and the other documents delivered hereunder. Section 6.3 Taxes. All payments by Seller to or for the account of Purchaser (or any of its assigns) hereunder or under any other Transaction Document to which Seller is a party shall be made free and clear of and without deduction for any and all Covered Taxes. If Seller shall be required by law to deduct any Covered Taxes from or in respect of any sum payable hereunder to Purchaser (or any of its assigns), (a) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 6.3), Purchaser (or such assign, as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (b) Seller shall make such deductions, (c) Seller shall pay the full amount deducted to the relevant authority in accordance with applicable law and (d) Seller shall furnish to Purchaser (and to Administrator, as the ultimate assignee) the original copy of a receipt evidencing payment thereof within 30 days after such payment is made. ARTICLE VII MISCELLANEOUS Section 7.1 Waivers and Amendments. (a) No failure or delay on the part of Purchaser (or its assigns) in exercising any power, right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy preclude any other further exercise thereof or the exercise of any other power, right or remedy. The rights and remedies herein provided shall be cumulative and nonexclusive of any rights or remedies provided by law. Any waiver of this Agreement shall be effective only in the specific instance and for the specific purpose for which given. (b) No provision of this Agreement may be amended, supplemented, modified or waived except in writing signed by Seller and Purchaser and, for so long as the Loan Agreement remains in effect to the extent required thereunder, by Administrator. At any time while the Loan Agreement remains in effect, any material amendment, supplement, modification or waiver will require 20 25 Administrator's receipt of written notice from S&P and Moody's that such change will not cause the rating on the then outstanding commercial paper of Lender to be downgraded or withdrawn. Section 7.2 Notices. All communications and notices provided for hereunder shall be in writing (including bank wire, telecopy or electronic facsimile transmission or similar writing) and shall be given to the other parties hereto at their respective addresses or telecopy numbers set forth on Schedule B hereto or at such other address or telecopy number as such Person may hereafter specify for the purpose of notice to each of the other parties hereto. Each such notice or other communication shall be effective (a) if given by telecopy, upon the receipt thereof, (b) if given by mail, five (5) Business Days after the time such communication is deposited in the mail with first class postage prepaid or (c) if given by any other means, when received at the address specified in this Section 7.2. Section 7.3 Protection of Ownership Interests of Purchaser. (a) Seller agrees that from time to time, at its expense, it will promptly execute and deliver all instruments and documents, and take all actions, that may be necessary or desirable, or that Purchaser (or its assigns) may reasonably request, to perfect, protect or more fully evidence the interest of Purchaser and its assigns therein, or to enable Purchaser (or its assigns) to exercise and enforce their rights and remedies hereunder. At any time following the earlier to occur of a Termination Event or an Amortization Event: Purchaser (or its assigns) may, at Seller's sole cost and expense, direct Seller to notify the Obligors of Receivables of the ownership interests of Purchaser under this Agreement and may also direct that payments of all amounts due or that become due under any or all such Receivables be made directly to Purchaser or its designee. (b) If Seller fails to perform any of its obligations hereunder: (i) with not less than ten (10) days' prior written notice (or, if such 10-days would have the effect of extending the cure period, if any, applicable to Seller's nonperformance, such shorter period of prior written notice as would not cause such an extension), Purchaser (or its assigns) may (but shall not be required to) perform, or cause performance of, such obligations, and Purchaser's (or such assigns') costs and expenses incurred in connection therewith shall be payable by Seller as provided in Section 6.2; (ii) Seller irrevocably authorizes Purchaser (and its assigns) at any time and from time to time in the sole discretion of Purchaser (or its assigns), and appoints Purchaser (and its assigns) as its attorney(ies)-in-fact, to act on behalf of Seller (A) to execute on behalf of Seller as debtor (if the debtor's signature is required) and to file financing statements (with or without Seller's signature, as debtor, as permitted by applicable law) necessary or desirable in Purchaser's (or its assigns') sole discretion to perfect and to maintain the perfection and priority of the interest of Purchaser in the 21 26 Receivables and the associated Related Security (except for Excluded Items) and Collections and (B) to file a carbon, photographic or other reproduction of this Agreement or any financing statement with respect to the Receivables as a financing statement in such offices as Purchaser (or its assigns) in their sole discretion deem necessary or desirable to perfect and to maintain the perfection and priority of Purchaser's interests in such Receivables. The appointment under the foregoing clause (ii) is coupled with an interest and is irrevocable. Section 7.4 Confidentiality. (a) Seller shall maintain and shall cause each of its employees and officers to maintain the confidentiality of the Fee Letter and the other confidential or proprietary information with respect to Administrator and Lender and their respective businesses obtained by it or them in connection with the structuring, negotiating and execution of the transactions contemplated herein, except that Seller and its officers and employees may disclose such information to Seller's external accountants, attorneys and other advisors and as required by any applicable law, rule, direction, request or order of any judicial, administrative or regulatory authority or proceeding (whether or not having the force or effect of law). The restrictions in this Section 7.4(a) shall not apply to any information which is or becomes generally available to the public other than as a result of disclosure by Seller or one of its Affiliates. (b) Seller hereby consents to the disclosure of any nonpublic information with respect to it (i) to Purchaser, Administrator, the Liquidity Banks or Lender by each other, (ii) to any prospective or actual assignee or participant of any of the Persons described in clause (i), (iii) to any of Lender's rating agencies, commercial paper dealers or Support Providers or to any entity organized for the purpose of purchasing, or making loans secured by, financial assets for which Administrator acts as the administrative agent or administrator and to any officers, directors, employees, outside accountants and attorneys of any of the foregoing, PROVIDED each Person described in the foregoing clauses (ii) and (iii) is informed of the confidential nature of such information, and (iv) as required pursuant to any law, rule, regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings (whether or not having the force or effect of law). Section 7.5 Bankruptcy Petition. Seller hereby covenants and agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of Lender, it will not institute against, or join any other Person in instituting against, Lender any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States. Seller hereby covenants and agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of Purchaser, it will not institute against, or join any other Person in instituting against, Purchaser any bankruptcy, reorganization, arrangement, insolvency 22 27 or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States Section 7.6 CHOICE OF LAW. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW) EXCEPT TO THE EXTENT THAT THE LAWS OF ANOTHER JURISDICTION GOVERN THE PERFECTION, OR THE EFFECT OF PERFECTION OR NONPERFECTION, OF THE OWNERSHIP OR SECURITY INTERESTS OF PURCHASER. Section 7.7 CONSENT TO JURISDICTION. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SELLER PURSUANT TO THIS AGREEMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF PURCHASER (OR ITS ASSIGNS) TO BRING PROCEEDINGS AGAINST SELLER IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY SELLER AGAINST PURCHASER (OR ITS ASSIGNS) OR ANY AFFILIATE THEREOF INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SELLER PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK, NEW YORK. Section 7.8 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ORIGINATOR PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER. 23 28 Section 7.9 Integration; Binding Effect; Survival of Terms. (a) This Agreement and each other Transaction Document contain the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof superseding all prior oral or written understandings. (b) This Agreement shall be binding upon and inure to the benefit of Seller, Purchaser and their respective successors and permitted assigns (including any trustee in bankruptcy). Seller may not assign any of its rights and obligations hereunder or any interest herein without the prior written consent of Purchaser (and, while the Loan Agreement remains in effect, Administrator). Purchaser may assign at any time its rights and obligations hereunder and interests herein to any other Person without the consent of Seller. Without limiting the foregoing, Seller acknowledges that Purchaser, pursuant to the Loan Agreement, may pledge to Administrator, for the benefit of Lender and its assigns, its rights, remedies, powers and privileges hereunder. Seller agrees that Administrator, as the pledgee of Purchaser, shall, subject to the terms of the Loan Agreement, have the right to enforce this Agreement and to exercise directly all of Purchaser's rights and remedies under this Agreement (including, without limitation, the right to give or withhold any consents or approvals of Purchaser to be given or withheld hereunder). This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms and shall remain in full force and effect until terminated in accordance with its terms; PROVIDED, HOWEVER, that the rights and remedies with respect to (i) any breach of any representation and warranty made by Seller pursuant to Article II; (ii) the indemnification and payment provisions of Article VI; and (iii) Section 7.5 shall be continuing and shall survive any termination of this Agreement. Section 7.10 Counterparts; Severability; Section References. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same Agreement. Any provisions of this Agreement which are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Unless otherwise expressly indicated, all references herein to "Article," "Section," "Schedule" or "Exhibit" shall mean articles and sections of, and schedules and exhibits to, this Agreement. [signature pages follow] 24 29 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers as of the date hereof. CHOICEPOINT CAPITAL INC. By: /s/ David E. Trine ----------------------------------- Name: David E. Trine Title: Treasurer CHOICEPOINT FINANCIAL INC. By: /s/ David E. Trine ----------------------------------- Name: David E. Trine Title: Treasurer 25 30 EXHIBIT I Definitions This is Exhibit I to the Agreement (as hereinafter defined). As used in the Agreement and the Exhibits and Schedules thereto, capitalized terms have the meanings set forth in this Exhibit I (such meanings to be equally applicable to the singular and plural forms thereof). IF A CAPITALIZED TERM IS USED IN THE AGREEMENT AND IS NOT OTHERWISE DEFINED THEREIN OR IN THIS EXHIBIT I, SUCH TERM SHALL HAVE THE MEANING ASCRIBED THERETO IN THE FIRST STEP SALE AGREEMENT (HEREINAFTER DEFINED). "ADMINISTRATOR" has the meaning set forth in the Preliminary Statements to the Agreement. "AGREEMENT" means the Receivables Sale Agreement, dated as of July 2, 2001, between Seller and Purchaser, as the same may be amended, restated or otherwise modified. "APPLICABLE STATE" has the meaning set forth in Section 2.1(a) of the Agreement "CALCULATION PERIOD" means each calendar month or portion thereof which elapses during the term of the Agreement. The first Calculation Period shall commence on the date of the initial Purchase hereunder and the final Calculation Period shall terminate on the Termination Date. "CHANGE OF CONTROL" means (a) a "Change of Control" under and as defined in the First Step Agreement, or (b) Seller ceases to own , directly or indirectly, 100% of the outstanding voting securities of Purchaser. "COVERED TAXES" means all Taxes other than Excluded Taxes. "DISCOUNT FACTOR" means a percentage calculated to provide Purchaser with a reasonable profit from its investment in the Receivables after taking account of (i) the time value of money based upon the anticipated dates of collection of such Receivables and the cost to Purchaser of financing its investment in such Receivables during such period, (ii) the risk of nonpayment by the Obligors, and (iii) the cost to Purchaser of paying the Servicer to service and collect the Receivables and Related Security on Purchaser's behalf. Seller and Purchaser may agree from time to time to change the Discount Factor applicable to Receivables based on changes in one or more of the items affecting the calculation thereof, PROVIDED THAT any change to the Discount Factor shall take effect as of the commencement of a Calculation Period, shall apply only prospectively and shall not affect the Purchase Price payment made prior to the Calculation Period during which Seller and Purchaser agree to make such change. As of the Closing Date, the Discount Factor in respect of the Receivables purchased by Purchaser from Seller is 0%. 26 31 "EXCLUDED ITEMS" means the interest of Seller (or Purchaser, as its assignee) in Related Security which, by operation of law or enforceable contractual restrictions, either (i) cannot be transferred by Seller to Purchaser or (ii) cannot be subjected to an Adverse Claim which can be perfected by filing a UCC financing statement in the state where Seller maintains its chief executive office or is organized. "EXCLUDED TAXES" means, in the case of Purchaser (or any other Seller Indemnified Party), taxes imposed on its overall net income, and franchise taxes and branch profit taxes based on net income imposed on it, by (i) the jurisdiction under the laws of which Purchaser (or other Seller Indemnified Party) is incorporated or organized or (ii) the jurisdiction in which Purchaser's (or Seller Indemnified Party's) principal executive office is located. "EXISTING RECEIVABLE" means an "EXISTING RECEIVABLE" under and as defined in the First Step Sale Agreement in which Seller now has or hereafter acquires any rights. "LENDER" has the meaning set forth in the Preliminary Statements to the Agreement. "LOAN AGREEMENT" has the meaning set forth in the Preliminary Statements to the Agreement. "MATERIAL DEBT" means Debt of Seller and/or one or more of its Subsidiaries, arising in one or more related or unrelated transactions, in an aggregate principal or face amount exceeding $10,700. "MATERIAL ORIGINATOR" means, on any date of determination, any Originator who originated more than 10% of the total Receivables originated during the Calculation Period then most recently ended. "NET WORTH" means as of the last Business Day of each Calculation Period preceding any date of determination, the excess, if any, of (a) the aggregate Outstanding Balance of the Receivables at such time, OVER (b) the sum of (i) the aggregate outstanding principal balance of the Loans under the Loan Agreement at such time, PLUS (ii) the aggregate outstanding principal balance of the Subordinated Loans (including any Subordinated Loan proposed to be made on the date of determination). "ORIGINAL CONTRIBUTED RECEIVABLES" has the meaning set forth in Section 1.1 of the Agreement. "ORIGINATORS" has the meaning set forth in the preamble to the Agreement. "PARENT ORIGINATOR" has the meaning set forth in the preamble to the Agreement. 27 32 "PURCHASE" means each purchase by Purchaser from Seller pursuant to Section 1.2 of the Agreement of Receivables and the Related Security and Collections related thereto, together with all related rights in connection therewith. "PURCHASE DATE" has the meaning set forth in Section 1.2(a)of the Agreement. "PURCHASE PRICE" means, with respect to each Purchase by Purchaser from Seller, the aggregate price to be paid by Purchaser to Seller for such Purchase in accordance with Section 1.3 of the Agreement for the Receivables and the associated Collections and Related Security being sold to Purchaser, which price shall equal on any date (i) the product of (x) the Outstanding Balance of such Receivables on such date, MULTIPLIED BY (y) one minus the Discount Factor in effect on such date, minus (ii) any Purchase Price Credits to be credited in accordance with Section 1.4 of the Agreement against the Purchase Price otherwise payable. "PURCHASE PRICE CREDIT" has the meaning set forth in Section 1.4 of the Agreement. "PURCHASE REPORT" has the meaning set forth in Section 1.2(b) of the Agreement. "PURCHASER" has the meaning set forth in the preamble to the Agreement. "RECEIVABLE" means a "RECEIVABLE" under and as defined in the First Step Sale Agreement in which Seller now has or hereafter acquires any rights. "RECEIVABLES SALE AGREEMENT" has the meaning set forth in the Preliminary Statements to the Agreement. "RELATED SECURITY" means, with respect to any Receivable, (a) all "Related Security" under and as defined in the First Step Sale Agreement in which Seller now has or hereafter acquires any rights, and (b) all right, title and interest of Seller in and to, but not its obligations under, the First Step Sale Agreement. "SELLER INDEMNIFIED AMOUNTS" has the meaning set forth in Section 6.1. "SELLER INDEMNIFIED PARTY" has the meaning set forth in Section 6.1. "SELLER MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) on the business, property, condition (financial or otherwise) or results of operations of the Originators and their Subsidiaries (including Seller) taken as a whole, (ii) the ability of Seller to perform its obligations under the Agreement or any other Transaction Document to which it is a party, (iii) the legality, validity or enforceability of the Agreement or any other Transaction Document, (iv) any Originator's, Seller's, Purchaser's, Administrator's or Lender's interest in the Receivables generally or in any significant portion of the Receivables, the Related Security or Collections 28 33 with respect thereto, or (v) the collectibility of the Receivables generally or of any material portion of the Receivables. "SUBORDINATED LOAN" has the meaning set forth in Section 1.3(a) of the Agreement. "SUBORDINATED NOTE" means the promissory note in substantially the form of Exhibit V hereto as more fully described in Section 1.3 of the Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time. "TERMINATION DATE" means the earliest to occur of (i) the Commitment Termination Date (as defined in the Loan Agreement), (ii) the Business Day immediately prior to the occurrence of a Termination Event set forth in Section 5.1(f), (iii) the Business Day specified in a written notice from Purchaser to Seller following the occurrence of any other Termination Event, (iv) the occurrence of any Material Originator's Termination Date under the First Step Sale Agreement, and (v) the date which is ten (10) Business Days after Purchaser's receipt of written notice from Seller that it wishes to terminate the facility evidenced by this Agreement. "TERMINATION EVENT" has the meaning set forth in Section 5.1 of the Agreement. "TRANSACTION DOCUMENTS" means, collectively, the First Step Sale Agreement, the First Step Notes, the Agreement, the Subordinated Note, and all other instruments, documents and agreements executed and delivered by Seller or Purchaser in connection with the foregoing. "UNMATURED TERMINATION EVENT" means an event which, with the passage of time or the giving of notice, or both, would constitute a Termination Event under the Agreement. ALL ACCOUNTING TERMS NOT SPECIFICALLY DEFINED HEREIN SHALL BE CONSTRUED IN ACCORDANCE WITH GAAP. ALL TERMS USED IN ARTICLE 9 OF THE UCC IN THE STATE OF NEW YORK, AND NOT SPECIFICALLY DEFINED HEREIN, ARE USED HEREIN AS DEFINED IN SUCH ARTICLE 9. 29 -----END PRIVACY-ENHANCED MESSAGE-----