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<SEC-DOCUMENT>0000931763-01-000610.txt : 20010330
<SEC-HEADER>0000931763-01-000610.hdr.sgml : 20010330
ACCESSION NUMBER: 0000931763-01-000610
CONFORMED SUBMISSION TYPE: 10-K405
PUBLIC DOCUMENT COUNT: 14
CONFORMED PERIOD OF REPORT: 20001231
FILED AS OF DATE: 20010329
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: EQUIFAX INC
CENTRAL INDEX KEY: 0000033185
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-CONSUMER CREDIT REPORTING, COLLECTION AGENCIES [7320]
IRS NUMBER: 580401110
STATE OF INCORPORATION: GA
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-K405
SEC ACT:
SEC FILE NUMBER: 001-06605
FILM NUMBER: 1584628
BUSINESS ADDRESS:
STREET 1: 1600 PEACHTREE ST NW
CITY: ATLANTA
STATE: GA
ZIP: 30302
BUSINESS PHONE: 4048858000
MAIL ADDRESS:
STREET 1: 1600 PEACHTREE ST NW
CITY: ATLANTA
STATE: GA
ZIP: 30309
FORMER COMPANY:
FORMER CONFORMED NAME: RETAIL CREDIT CO
DATE OF NAME CHANGE: 19760222
</SEC-HEADER>
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<FILENAME>0001.txt
<DESCRIPTION>FORM 10-K405
<TEXT>
<PAGE>
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended 12-31-00 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from
_______________________ to_________________________
Commission file number 1-6605
--------------------------------------------------------
EQUIFAX INC.
- -------------------------------------------------------------------------------
(Exact name of Registrant as specified in its Charter)
GEORGIA 58-0401110
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1550 Peachtree St., N.W., Atlanta, GA 30309
- ------------------------------------------ --------------------------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (404) 885-8000
------------------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock
($1.25 Par Value) New York Stock Exchange
- ------------------------------- -----------------------------------------
Securities registered pursuant to Section 12(g) of the Act:
None
----
(Title of class)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [ ]
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K (SECTION 229.405 OF THIS CHAPTER) IS NOT CONTAINED HEREIN, AND
WILL NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE
PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS
FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K. [X]
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NONAFFILIATES (WHICH FOR
PURPOSES HEREOF ARE ALL HOLDERS OTHER THAN CURRENT EXECUTIVE OFFICERS, DIRECTORS
AND HOLDERS OF 5% OR MORE OF THE OUTSTANDING COMMON STOCK) OF THE REGISTRANT AS
OF FEBRUARY 28, 2001 WAS $4,030,522,322 BASED ON THE CLOSING SALE PRICE OF THE
COMMON STOCK AS REPORTED BY THE NEW YORK STOCK EXCHANGE ON SUCH DATE. SEE ITEM
12.
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S CLASSES OF
COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
Class Outstanding at February 28, 2001
----- --------------------------------
COMMON STOCK, $1.25 PAR VALUE 143,127,560
- ----------------------------------- --------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
THE PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 2,
2001, IS INCORPORATED BY REFERENCE, TO THE EXTENT INDICATED UNDER ITEMS 10, 11,
12, 13 AND 14, INTO PARTS III AND IV OF THIS FORM 10-K.
THE ANNUAL REPORT TO SECURITY HOLDERS FOR THE FISCAL YEAR ENDED DECEMBER 31,
2000 IS INCORPORATED BY REFERENCE, TO THE EXTENT INDICATED UNDER ITEMS 3, 6, 7,
8 AND 14, INTO PARTS I, II AND IV.
<PAGE>
PART I
ITEM 1. BUSINESS
- ------- --------
Equifax is a leader in facilitating and securing commerce by bringing buyers and
sellers together world-wide through information, transaction processing and
Internet businesses. Global operations include consumer and commercial credit
information services, credit card marketing and processing services, check
guarantee and authorization, software, modeling, database management, marketing
solutions, analytics, direct to consumer services, Internet identity
verification and digital certificate services; and, through September 2000, risk
management and collection services.
The Company was founded as a credit reporting agency under the name "Retail
Credit Company" in Atlanta, Georgia, in 1899. Over the next several years, the
Company established itself in the area of investigation of applicants for
insurance. The business grew, and by 1920, the Company had numerous branch
offices throughout the United States and Canada. Since that time, the Company
has continued to expand on a domestic and international basis and diversify by
means of internal development and strategic acquisitions. In late 1975, the
Company changed its name from "Retail Credit Company" to "Equifax Inc." In mid-
1997, the Company divested its insurance services operations which was
accomplished through the spinoff of a subsidiary company to shareholders.
Equifax Inc. is a holding company which conducts its business operations through
subsidiary companies. The Company's business areas are divided into separate
groups and are conducted on a "profit center" basis with self-contained
functional integrity, although Equifax Inc. supplies centralized overall
financial, legal, communications, media relations, tax and similar services. The
specific products and services presently offered by the Company are described
below under the respective Company segment headings.
In January 2000, the Company acquired Procard S.A., the second largest card
processor in Chile.
In May 2000, the Company acquired the Consumer Information Solutions group of
R.L. Polk & Co. for approximately $260 million in cash. These businesses are
reported under the Consumer Information Services segment.
In June 2000, the Company announced that it had entered into a five-year
agreement (projected revenues of $100 million) with National Australia Bank to
process cards in Australia, United Kingdom, New Zealand and Ireland.
In October 2000, Equifax announced its intention to spin-off its Payment
Services division, which conducts credit card processing and check management
operations, by a tax free stock distribution. Equifax believes that separating
Information Services from Payment Services will create two very strong
companies, each with its own management team and board of directors focused on
taking advantage of growth opportunities in each respective market. The spin-off
is expected to be completed during the summer of 2001. The spin-off is subject
to favorable ruling from the Internal Revenue Service (the "IRS"), confirming
the tax-free status of the share distribution, and the filing of a satisfactory
registration statement with the Securities and Exchange Commission ("SEC").
In October 2000, the Company sold its collection services business, Equifax Risk
Management Services, to Risk Management Alternatives Parent, Inc. ("RMA") in the
United States, and in Canada and United Kingdom to IntelliRisk Management
Corporation. The aggregate sales price was approximately $150 million.
<PAGE>
As part of these transactions the Company provided $41 million of acquisition
financing to RMA and guaranteed approximately $60 million of RMA's other
acquisition financing.
In October 2000, the Company acquired for approximately $12 million in cash and
stock Compliance Data Center, Inc., the leader in customer information services
to the brokerage industry.
In November 2000, the Company acquired SEK S.r.l., a leading Italian online
information company.
Since January 1993, the Company has had an open market share repurchase program.
During 2000, the Company repurchased 296,400 shares at a cost of approximately
$6.5 million.
Reference is made to acquisitions and investments in unconsolidated affiliates
reported in Note 3 and industry segment information reported in Note 11 of the
Notes to Consolidated Financial Statements, included as Exhibit 13.3 in Part IV,
Item 14 of this report, which are incorporated by reference.
A description of the Company's products or services by segment follows:
North American Information Services Segment
- -------------------------------------------
The Company's principal classes of service for this segment are consumer credit
information; credit card marketing services; fraud detection and prevention
services; mortgage loan analytics; account acquisition services; notification
services; mortgage information and consumer direct products. In Canada, services
also include commercial credit information. Distribution of information to
customers is made primarily through electronic data interfaces. Expanding
businesses in this segment include database solutions for customer relationship
management, services for direct consumer purchase, brokerage account
facilitation and a variety of e-commerce solutions including online identity
verification services and digital certificate products. Customers include banks,
financial institutions, retailers, credit card issuers, utilities and
telecommunications companies, transportation companies, mortgage lenders,
healthcare administration companies, insurance companies, consumers and
government.
Informational services and commercial credit reporting in the U.S. and Canada
accounted for 34% of the Company's 2000 total revenue, as compared with 35% in
1999 and 37% in 1998. Risk management services in the U.S. and Canada, operated
by the Company until September 2000 when this business was sold, is now included
in the Divested Operations Segment.
In the U.S., the Company's consumer credit services operations, including non-
owned affiliate bureaus, compete with two other automated credit reporting
companies -- Experian Information Solutions, Inc. and Trans Union LLC. Equifax
Canada Inc., is the leading provider of both consumer and commercial credit
information in Canada.
This segment includes Equifax Credit Information Services, Inc.; Compliance Data
Center, Inc.; Credit Northwest Corporation; Acrofax Inc.; Equifax Consumer
Services, Inc.; Equifax Secure, Inc.; Equifax Knowledge Engineering, Inc.; and
Equifax Canada Inc.
2
<PAGE>
Consumer Information Services Segment
- -------------------------------------
This segment is comprised of the Consumer Information Services group that the
Company purchased from R. L. Polk in 2000 and provides consumer, demographic and
lifestyle information and directories of residents and businesses. Direct
marketing products include data capture, database management and registration
card programs for consumer durable goods manufacturers. Its customers include
credit services users, insurers, catalogers, publishers, technology companies,
travel and manufacturing clients.
Equifax Europe Segment
- ----------------------
The businesses in this segment primarily provide consumer and commercial credit
services, as well as other financial services, including credit application
processing, credit scoring, consumer marketing lists and related services,
modeling and analytics. The dominant means of distribution is through electronic
data interfaces. This segment operates in the United Kingdom, Spain, Portugal,
Ireland and due to the acquisition of SEK S.r.l. in fourth quarter 2000, in
Italy.
Customers include banks, financial institutions, retailers, automobile
manufacturers, utilities and telecommunications companies, auto finance and
leasing firms, automobile dealers and rental companies and mortgage lenders. The
Company also sells to small and medium-size businesses operating in a variety of
diverse markets.
This segment includes The Infocheck Group Ltd.; Dicodi, S.A.; Equifax Decision
Systems B.V.; Information Tecnica Del Credito, S.L. (Incresa); Via Ejectiva,
S.A.; Credinformacoes, Informacoes de Credito, LDA; Precision Marketing
Information Ltd. (49% owned); and Equifax Commercial Services Ltd.. Also
included in this segment are The Database Company Ltd., Equifax Iberica, S.A.,
SEK S.r.l. and ASNEF-Equifax Servicios de Informacion Sobre Solvencia y Credito,
S.L. (95% owned).
Equifax Latin America Segment
- -----------------------------
The principal class of service for this segment is consumer and commercial
credit information services, delivered largely through electronic distribution.
SCI is a leading commercial credit information vendor in Brazil, and provides
consumer credit information. DICOM and Veraz are the leading providers of
consumer and commercial credit information in Chile and Argentina respectively.
DICOM also provides import/export data, legal, trademark, stock market and other
consumer information. Equifax Latin America also has operations in Peru and El
Salvador. Customers include retailers, banks, financial institutions, utilities,
telecommunications companies, manufacturers and individual consumers.
This segment includes Equifax de Chile, S.A.; DICOM S.A.; Organizacion Veraz
S.A. (79%); Propago S.A.; Equifax do Brasil, Ltda.; Infocorp S.A. (51%); and
Dicom CentroAmerica (51%).
Divested Operations Segment
- ---------------------------
This segment includes the Company's collection services business, Equifax Risk
Management Services, in the U.S., Canada and the United Kingdom, as well as an
automobile lien business in the U.K. All of these
3
<PAGE>
were divested in fourth quarter 2000. Revenue from this segment as a percentage
of the Company's total operating revenue was 7% in 2000, 10% in 1999 and 12% in
1998.
Other Segment
- -------------
The Company's single class of service for this segment is lottery services. In
1996, the Company subcontracted many of its lottery obligations to GTECH
Corporation, and as a result, these operations are not material to a general
understanding of the Company's business. Other than this subcontract, which
extends until mid 2002, the Company is no longer in the lottery business. This
segment includes High Integrity Systems, Inc.
Card Solutions Segment
- ----------------------
This segment provides "card issuer" services that enable banks, credit unions,
retailers and others to issue Visa and MasterCard credit and debit cards,
private label cards, and other electronic payment cards. It also provides
"merchant processing" services that enable retailers and other businesses to
accept credit, debit and other electronic payment cards from purchasers of their
goods and services.
A broad range of card processing solutions is offered, ranging from full service
card programs, to more limited transaction processing services. The majority of
card issuer customers subscribe to "full service" programs, wherein the Company
provides essentially all of the operations and support necessary to support a
card issuer's credit and debit card issuing program, including cardholder
transaction processing, authorization, and "back office" support functions.
These back office functions include, among others, invoicing the credit
cardholders, receiving and posting cardholder payments, and providing customer
service. Services are menu driven, and offer flexibility for those customers
that require less than our full service program. Such customers include large
card issuing banks that contract with us to provide transaction processing, but
choose to invest the capital and human resources necessary to provide their own
back office program support.
Card Solutions' merchant processing services include "front-end" authorization
and data capture services, and "back-end" accounting and settlement services.
The Company provides these services both directly to retailers and other
merchants who accept electronic payment cards, and through contracts and
financial institutions and others where the Company's solutions enable them to
service the card processing needs of their merchant customers.
In addition to card processing programs, Card Solutions also provides e-banking
solutions that enable banks to provide electronic banking services to their
customers, allowing them to compete for and retain customers more effectively
and to generate non-interest fee income.
In 2000, Card Solutions had operations in the U.S., U.K. and Brazil, and through
September a joint venture in India. In January 2000 it purchased Procard S.A.
in Chile and in June it contracted to process cards in Australia, New Zealand
and Ireland pursuant to a contract with National Australia Bank. This class of
service accounted for 26% of the Company's 2000 total operating revenue, as
compared with 25% in 1999 and 22% in 1998.
This segment includes Equifax Card Services, Inc.; Credit Union Card Services,
Inc.; Financial Insurance Marketing Group, Inc.; First Bankcard Systems, Inc.;
Equifax Card Solutions Australia Pty Ltd.; Equifax
4
<PAGE>
Card Solutions, S.A.; Equifax E-Banking Solutions, Inc.; Equifax Card Solutions
Limited; Unnisa Solucoes en Meios de Pagamento Ltda. (59%); and Procard S.A.;
Check Solutions Segment
- -----------------------
This segment's businesses are a leading provider of check risk management and
related processing services. Check risk management solutions, which utilize
proprietary check authorization systems and risk assessment decision platforms,
enable retailers, hotels, automotive dealers, telecommunications companies,
supermarkets, casinos, mail order houses and other businesses to minimize losses
from dishonored checks, maximize check acceptance, and improve customer service.
A diverse and flexible portfolio of check risk management services allows the
Company to tailor solutions to meet the specific needs of the customer.
Services include check guarantee, where the Company accepts the risk of bad
checks presented to our customers, verification services, where the Company
determines the likelihood that a check will clear and the customer retains the
risk, and certain combinations of guarantee and verification services. Related
service offerings, including risk management consulting and market services,
which enable retailers to cross-sell and increase their customer relations are
also provided.
Check Solutions now includes operations in the U.S., U.K., Canada, Ireland,
France, New Zealand, and Australia. Our companies in this segment are leading
providers of their products and services in the United States. Check Solutions
accounted for 13% of the Company's 2000 total operating revenue, as compared
with 13% in 1999 and 13% in 1998.
This segment includes Equifax Check Services, Inc.; Equifax Payment Recovery
Services, Inc.; Light Signatures, Inc.; Equifax SNC; Financial Institution
Benefit Association, Inc.; Telecredit Canada, Inc.; Transax (Ireland) Ltd.;
Equifax Australia Plc, and Equifax Ltd. (New Zealand).
General
- -------
Business in the Card Solutions and Check Solutions segments are somewhat
seasonal. The volume of check and credit and debit card processing is highest
during the holiday shopping season and during other periods of increased
consumer spending. Other businesses are not significantly impacted by
seasonality.
The principal methods of competition for the Company are product innovation,
value added, price, speed of delivery, ease of use, and quality of the
information and services provided.
None of the Company's segments is dependent on any single customer, and the
Company's largest customer provides less than 10% of the Company's total
revenues.
The Company had approximately 12,200 employees as of December 31, 2000.
5
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------
The Company's executive officers, as of March 17, 2001, are listed below, with
certain information relating to each of them:
<TABLE>
<CAPTION>
Name and Position Officer
With Company Age Since
----------------- --- -------
<S> <C> <C>
Thomas F. Chapman, Chairman and Chief Executive Officer(1)(2) 57 1991
Lee A. Kennedy, President and Chief Operating Officer(1)(2) 50 1997
William V. Catucci, Executive Vice President - The Americas(3) 62 1999
John T. Chandler, Senior Vice President and General Manager - 53 1995
City Directory(2)
C. Richard Crutchfield, Executive Vice President - Europe, 53 1997
Asia Pacific and Internet(2)
Virgil P. Gardaya, Corporate Vice President and Chief Technology 54 2000
Officer(4)
Karen H. Gaston, Corporate Vice President, Human Resources 48 1998
and Community Relations(2)
Kent E. Mast, Corporate Vice President, General Counsel 58 2000
and Secretary(5)
Philip J. Mazzilli, Executive Vice President and Chief Financial Officer(6) 60 2000
William R. Phinney, Senior Vice President and Group Executive - 62 1997
Latin America(2)
Bruce S. Richards, Corporate Vice President(2) 46 1996
Michael G. Schirk, Vice President and Treasurer(2) 51 1999
Larry J. Towe, Executive Vice President - Payment Services(2) 53 1999
Michael T. Vollkommer, Corporate Vice President and Controller(7) 42 1999
- -----------------------------
</TABLE>
(1) Also serves as a Director.
(2) Has been employed with the Company in an executive position for the previous
five years.
(3) Mr. Catucci joined the Company in October 1999 as Group Executive, North
America Information Services and was promoted to his current position in October
2000. Prior to joining the Company, Mr. Catucci served as President and Chief
Executive Officer of Unitel/AT&T Canada Long Distance Services from 1996 to 1999
and as a Vice President of AT&T for more than five years.
(4) Prior to being promoted to his current position in March 2000, Mr. Gardaya
served as Senior Vice President, Global Communications Micro/LAN Services, since
joining the Company in November 1998. Prior to that, Mr. Gardaya served as
6
<PAGE>
Vice President and Chief Information Officer with dual responsibility for GTE
Wireless and GTE Airfone and in various executive positions with GTE for more
than 30 years.
(5) Prior to joining the Company, in November 2000, Mr. Mast served as a Senior
Partner of Kilpatrick Stockton LLP, an international law firm, from 1990.
(6) From 1992 through June 1999, Mr. Mazzilli served as Corporate Vice
President, Treasurer and Controller of the Company. In 1999, he became Executive
Vice President and Chief Financial Officer of Nova Corporation, which provides
transaction processing and related software application products to small
merchants. He rejoined the Company in his current position in February 2000.
(7) Mr. Vollkommer joined the Company in 1999 in his current position. Prior to
joining the Company, he served as Vice President-Finance for Superior TeleCom
Inc., a manufacturer of copper wire and cable products, from 1998 to 1999. Prior
to that, he held executive financial officer positions with Alumax Inc., a
producer of primary aluminum and fabricated aluminum products, from 1994 to
1998.
There are no family relationships among the officers of the Company, nor are
there any arrangements or understandings between any of the officers and any
other persons pursuant to which they were selected as officers. The Board of
Directors may elect one or more officers at any meeting of the Board, however,
election of officers has generally occurred each year at the Board of Directors
meeting held in conjunction with the Annual Meeting of the Shareholders. Each
elected officer serves until their successors have been elected and duly
qualified subject to earlier termination in accordance with the Bylaws.
ITEM 2. PROPERTIES
- ------- ----------
The Company ordinarily leases office space of the general commercial type for
conducting its business and is obligated under approximately 335 leases and
other rental arrangements for its headquarters and field locations. The
Company's operating leases involve principally office space.
The Company owns four office buildings, one of which is located in Wexford,
Ireland; one in Salisbury, England; one in Sao Paolo, Brazil; and one in
Santiago, Chile. The Company owns approximately 23.5 acres in Windward Office
Park located in Alpharetta, Georgia adjacent to office space currently under
lease by the Company.
ITEM 3. LEGAL PROCEEDINGS
- ------- -----------------
Reference is made to Note 8 of the Notes to Consolidated Financial Statements
(Commitments and Contingencies - Litigation), included in Part IV, Item 14 of
this report, which is incorporated by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------- ---------------------------------------------------
No matters were submitted during the fourth quarter 2000 to a vote of security
holders.
CERTAIN FACTORS AFFECTING
--------------------------
FORWARD LOOKING STATEMENTS
--------------------------
Statements in this annual report that relate to Equifax's future plans,
objectives, expectations, performance, events, and the like are "forward-looking
statements" within the meaning of the Private Securities Litigation Reporting
Act of 1995 and the Securities Exchange Act of 1934. These statements are based
on a number of assumptions that are inherently subject to significant
uncertainties. Many of these
7
<PAGE>
uncertainties are beyond Equifax's control. Factors that could cause actual
results to differ from those expressed or implied by forward-looking statements
include, but are not limited to, those set forth below:
We depend on our customers' requirements for consumer credit information. If
- -----------------------------------------------------------------------------
these requirements decrease, our business might be adversely affected.
- ----------------------------------------------------------------------
Our core product is our consumer credit profiles. In general, the usage of
credit profiles (and related services) is driven by consumer demand for credit
(via new credit cards, automobile loans, home mortgages and refinancings and
other consumer loans) and lenders' efforts to develop new, and monitor existing,
credit relationships. Consumer demand for credit tends to increase during
periods of economic expansion. On the other hand, lenders' efforts to monitor
existing credit relationships tend to increase during periods of economic
contraction. Consequently, revenue from consumer credit information products is
influenced by cyclical economic trends related to consumer debt.
We rely on demand for consumer information services. Our business might be
- ---------------------------------------------------------------------------
negatively affected by a decline in demand.
- -------------------------------------------
We provide value-added consumer information services including direct marketing
products and services to our traditional customers, as well as to catalog,
publishing, high tech, travel and manufacturing clients. Direct marketing
products also include data capture, database management, and registration card
programs for consumer durable goods manufacturers. In the event that consumers
begin to buy fewer of the types of products and services that have in the past
been marketed and sold through direct marketing, or if direct marketing loses
effectiveness in comparison to other methods of advertising, use of our direct
marketing products and services could lessen and, consequently, our revenues and
profits could decline.
We depend on our customers' demand for our card and check solutions. If
- ------------------------------------------------------------------------
consumer use of credit cards, debit cards or checks declines, either due to
- ---------------------------------------------------------------------------
decreased consumer spending or for other reasons, our business might be
- -----------------------------------------------------------------------
adversely affected.
- -------------------
Demand for credit card, debit card and check authorization services is driven by
the level of non-cash consumer spending. Consumer demand for credit tends to
increase during periods of economic expansion and declines in times of economic
contraction. Decrease in consumer spending could result in decline in the number
of transactions processed. Also, increase in the use of competitive
technologies, such as e-banking, pay-by-phone, and smartcard transactions, may
decrease the number of checking transactions processed and reduce our revenue
and profits.
We rely on external data sources. Loss of access to credit and other data from
- -------------------------------------------------------------------------- ----
external sources could negatively impact our business.
- ------------------------------------------------------
We rely extensively upon data from external sources to maintain our proprietary
and non-proprietary databases, including data received from customers and
various government and public record services. The continued availability of
such data sources cannot be assured. Although we have no reason to believe that
access to current data sources will become restricted, loss of access to, or the
availability of, data in the future due to government regulation or otherwise
could have a material adverse effect on our business, financial condition and
results of operations.
Changes in government regulation could increase our costs or otherwise affect
- -----------------------------------------------------------------------------
our profits.
- ------------
Our business involves collection of consumer and business data and distribution
of such information to businesses making credit and marketing decisions. Equifax
Payment Services processes information
8
<PAGE>
reflecting consumers' spending and payment activities. Consequently, certain of
our activities and services are subject to regulation under various federal laws
including the Fair Credit Reporting Act, Fair Debt Collection Practices Act,
Gramm-Leach-Bliley Act, Equal Credit Opportunity Act, Truth in Lending Act and
Fair Credit Billing Act, as well as similar state laws. We are also subject to
privacy and consumer credit laws and regulations in foreign countries where we
do business.
We have no reason to believe that additional regulations will be imposed that
will have a material adverse effect on our business. However, further federal,
state and local data use regulations may affect our operations with increased
compliance requirements and potential loss of revenue.
Competition could hurt our business.
- ------------------------------------
Equifax operates in a number of geographic, product and service markets, which
are highly competitive. We primarily compete with two national consumer credit
reporting companies, Experian Information Solutions, Inc. and Trans Union LLC,
which offer credit reporting products that are similar to those we offer. We
also compete with these and other companies that offer marketing information
products and services, including Acxiom Corporation and Info USA, Inc. Primary
competitors of Payment Services are First Data Corporation, Total System
Services, Payment Services Credit Union, Scan and International Check Solutions.
In each of our markets, we compete on the basis of responsiveness to customer
needs as well as the quality and range of products and services offered.
Although we believe that we offer a broader range of products and services in
more geographic markets than our competitors, we face strong competition in
certain geographic, product and service markets which, if successful, may have
adverse effects on our operations.
If not accomplished in a timely and tax-free manner, the proposed spin-off of
- -----------------------------------------------------------------------------
Payment Services may negatively impact our business.
- ---------------------------------------------------
On October 2, 2000 the Company announced its intention to spin-off its Payment
Services division to its shareholders in a tax-free stock dividend. We believe
that separating Information Services from Payment Services will create two very
strong companies, each with its own management team and Board of Directors
focused on taking advantage of growth opportunities in their respective markets.
We expect to complete the spin-off by the summer of 2001. However, prior to that
time, there is a significant amount of work that must be completed to separate
the two companies, much of which will require the time and attention of our
management.
The spin-off is subject to a favorable ruling from the Internal Revenue Service
(the "IRS") confirming the tax-free status of the distribution of dividend
shares. It is possible, however, that IRS may not issue such a ruling and or
that the spin-off could be rendered taxable as a result of subsequent actions or
events, or as a result of a determination that Equifax failed to disclose
properly to the IRS all material facts related to the spin-off. While we expect
that the spin-off will be completed as a tax-free transaction, the inability to
complete the spin-off as a tax-free transaction could have a negative effect on
the trading price of Equifax's Common Stock, our operations and financial
results, and or on our decision to complete the spin-off.
9
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
- ------- -----------------------------------------------------------------
MATTERS
-------
The Company's common stock is listed and traded on the New York Stock Exchange,
which is the principal market on which the stock is traded.
<TABLE>
<CAPTION>
DIVIDENDS PER SHARE
- ---------------------------------------------------
Quarter 1999 2000 2001*
- ---------------------------------------------------
<S> <C> <C> <C>
First $0.090 $0.093 $0.093
Second 0.090 $0.093 N/A
Third 0.090 $0.093 N/A
Fourth 0.093 $0.093 N/A
- ---------------------------------------------------
Annual $0.363 $0.370 $0.093
- ---------------------------------------------------
*Through March 20, 2001.
</TABLE>
<TABLE>
<CAPTION>
STOCK PRICE
- -------------------------------------------------------------------------------
(In Dollars) 1999 2000 2001*
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
High Low High Low High Low
First Quarter 39.875 31.375 25.500 19.875 33.063 27.438
Second Quarter 38.438 33.250 29.688 23.375 N/A N/A
Third Quarter 36.938 26.750 27.250 23.250 N/A N/A
Fourth Quarter 28.313 20.125 36.500 26.000 N/A N/A
- -------------------------------------------------------------------------------
Annual 39.875 20.125 36.500 19.875
- -------------------------------------------------------------------------------
*Through March 20, 2001.
</TABLE>
As of February 28, 2001, there were approximately 10,611 holders of record of
the Company's common stock.
Recent Sales of Unregistered Securities
- ---------------------------------------
In October 2000, the Company acquired Compliance Data Center, Inc. ("CDC") for
approximately $12 million, paid in cash and shares of the Company's common
stock. In connection with the acquisition, 340,545 shares of common stock were
issued to the seller pursuant to an exemption from the registration requirements
of the Securities Act of 1933, as amended, provided by Section 4(2) and the
regulations promulgated thereunder. The Company received no cash proceeds in
connection with the issuance of the shares. The shares were registered for
resale by the former shareholders of CDC (which was liquidated) pursuant to a
registration statement filed by the Company with the Securities and Exchange
Commission on February 1, 2001. The Company will receive no cash proceeds from
the resale of the shares by the former CDC shareholders.
10
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
- ------- -----------------------
Reference is made to Exhibit 13.1, included in Part IV, Item 14 of this report,
which is incorporated by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT
- ------- ----------------------------------------------------------------------
OF OPERATIONS
-------------
Reference is made to Exhibit 13.2, included in Part IV, Item 14 of this report,
which is incorporated by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
- -------- ---------------------------------------------------------
The Company is exposed to market risk, primarily from changes in foreign
currency exchange rates and interest rates.
In the normal course of business, the balance sheets and results of operations
of the Company's foreign subsidiaries can be impacted by changes in foreign
currency exchange rates. The Company's position is to not hedge against this
risk due to the significant cost involved. At December 31, 2000, the Company
had no material intercompany balances with foreign affiliates that were short-
term in nature or material obligations in a foreign currency, other than
intercompany advances to its U.K. operations and intercompany balances
associated with funding an acquisition in Italy and a startup operation in
Australia. From time to time, as such balances or obligations arise, the
Company may consider hedging to minimize its exposure for these transactions.
At December 31, 2000, the exchange risk associated with the Company's
intercompany advances to its U.K. operations, as well as the intercompany
balances associated with funding the Italy acquisition and startup operation in
Australia were partially hedged by having a portion of borrowings under its
revolving credit facility denominated in those respective currencies.
The Company chooses to have a mix of fixed-rate and variable-rate debt in its
portfolio of debt obligations. Accordingly, the Company's earnings can be
affected by the impact that changes in interest rates have on its variable-rate
obligations. At December 31, 2000 approximately $251 million (24%) of the
Company's short-term and long-term debt was in variable-rate facilities. At
this level, if market interest rates increased 1%, interest expense would
increase approximately $2.5 million per year (pre-tax). In July 2000 and in
January 2001, the Company entered into six-month interest rate swap arrangements
to fix the interest rate for $200 million of its variable rate revolver debt.
That portion of the Company's revolver debt has been excluded from the $251
million amount of variable rate debt mentioned above.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ------- -------------------------------------------
Reference is made to Exhibit 13.3, included in Part IV, Item 14 of this report,
which is incorporated by reference.
11
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------- ---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- -------- --------------------------------------------------
The Company's Proxy Statement for the Annual Meeting of Shareholders to be held
on May 2, 2001, contains, on pages 4 through 7 thereof and on page 14 (under the
heading "Stock Ownership Reporting Compliance"), information relating to the
Company's Directors and persons nominated to become Directors, which is
incorporated by reference. Information relating to the Executive Officers of the
Company is included in Item 1 of this Report.
ITEM 11. EXECUTIVE COMPENSATION
- -------- ----------------------
The Company's Proxy Statement for the Annual Meeting of Shareholders to be held
on May 2, 2001, contains, on page 8 thereof (under the heading "Compensation of
Directors"), on pages 17 through 27 thereof (under the heading "Executive
Officer Compensation"), information relating to Executive Officer compensation,
which is incorporated by reference. In no event shall the information contained
in the Proxy Statement under the heading "Report of the Compensation and Human
Resources Committee on Executive Compensation" be deemed incorporated herein by
such reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -------- --------------------------------------------------------------
The Company's Proxy Statement for the Annual Meeting of Shareholders to be held
on May 2, 2001, contains on page 13 thereof, information relating to security
ownership of certain beneficial owners and management, which is incorporated by
reference.
For purposes of determining the aggregate market value of the Company's voting
stock held by nonaffiliates, shares held by all current directors, executive
officers and holders of 5% or more of the outstanding Common Stock of the
Company have been excluded. The exclusion of such shares is not intended to, and
shall not, constitute a determination as to which persons or entities may be
"affiliates" of the Company as defined by the Commission.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------- ----------------------------------------------
The Company's Proxy Statement for the Annual Meeting of Shareholders to be held
on May 2, 2001, contains, on page 10 thereof (under the heading "Certain
Relationships and Related Transactions"), information relating to certain
relationships and related transactions between the Company and certain of its
directors and executive officers, which is incorporated by reference.
12
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
- -------- ---------------------------------------------------------------
(a) DOCUMENTS FILED WITH THIS REPORT
(1) Financial Statements
--------------------
The following financial statements are filed with this Report.
. Consolidated Balance Sheets - December 31, 2000 and 1999
. Consolidated Statements of Income for the Years Ended December 31,
2000, 1999 and 1998
. Consolidated Statements of Cash Flows for the Years Ended
December 31, 2000, 1999 and 1998
. Consolidated Statements of Shareholders' Equity and Comprehensive
Income for the Years Ended December 31, 2000, 1999 and 1998
. Notes to Consolidated Financial Statements
. Report of Independent Public Accountants and Report of Management
(2) Financial Statement Schedules
-----------------------------
All schedules have been omitted because they are not applicable or the required
information is included in the consolidated financial statements or notes to
these statements.
(3) Exhibits
--------
The following is a complete list of exhibits included as part of this Report
including those incorporated by reference. A list of those documents filed with
this Report is set forth on the Exhibit Index appearing elsewhere in this Report
and is incorporated by reference.
Exhibit No. Description
- ----------- -----------
2.1 Distribution Agreement, Plan of Reorganization and Distribution
previously filed as an exhibit to Pre-effective Amendment No. 1 to
Registration Statement on Form S-1, Registration No. 333-30297,
filed July 16, 1997, and incorporated by reference.
3.1 Amended and Restated Articles of Incorporation previously filed as an
exhibit on Schedule 14A, filed, March 26, 1996, and incorporated by
reference.
3.2 Bylaws previously field as an Exhibit on Form 10-K filed March 30,
2000 and incorporated by reference.
4.1 Loan Agreement previously filed as an exhibit on Form 10-K, filed
March 31, 1998, and incorporated by reference.
4.2 Portion of Prospectus and Trust Indenture previously filed as pages 8
through 16 and Exhibit 4.1 on Amendment No. 1 to Form S-3,
Registration Statement No. 33-62820, filed June 17, 1993, and
incorporated by reference.
13
<PAGE>
4.3 Rights Agreement, dated October 25, 1995, between Equifax Inc. and
SunTrust Bank, Atlanta with Form of Right Certificate attached as
Exhibit "A".
4.4 Indenture Relating to Debt Securities previously filed as an exhibit
on Form 10-K, filed March 31, 1999, and incorporated by reference.
10.1 Equifax Inc. 1988 Performance Share Plan for Officers, as amended
previously filed as an exhibit on Form 10-K, filed March 31, 1998,
and incorporated by reference.(1)
10.2 Equifax Inc. Executive Incentive Plan previously filed as an exhibit
on Form 10-K, filed March 31, 1998, and incorporated by reference.(1)
10.3 Deferred Compensation Plan previously filed as an exhibit on
Form 10-K, filed April 1, 1996, as amended on Form 10-K/A, filed
April 4, 1996, and incorporated by reference.(1)
10.4 Form of Change in Control Agreement previously filed as an Exhibit to
Form 10-K, filed March 31, 1998, and incorporated by reference.(1)
10.5 Equifax Inc. Omnibus Stock Incentive Plan, as amended previously
filed as an exhibit on Form 10-K, filed March 31, 1998, and
incorporated by reference.(1)
10.6 Equifax Inc. Non-Employee Director Stock Option Plan and Agreement
previously filed as an exhibit on Form 10-K, filed March 31, 1999,
and incorporated by reference.(1)
10.7 Equifax Inc. Supplemental Executive Retirement Plan and subsequent
Amendments.(1)
10.8 Equifax Inc. Executive Life and Supplemental Retirement Benefit Plan
(U.S.)
10.9 Agreement For Computerized Credit Reporting Services previously field
as an Exhibit on Form 10-K filed March 30, 2000 and incorporated by
reference.
10.10 Amendments to Agreement for Computerized Credit Reporting Services
and related documents previously filed as an exhibit on Form 10-K,
filed March 31, 1997, and incorporated by reference.
10.11 Amendment to Agreement for Computerized Credit Reporting Services
previously filed as pages 8 through 16 and Exhibit 4.1 on Amendment
No. 1 to Form S-3, Registration Statement No. 33-62820, filed June
17, 1993, and incorporated by reference.
10.12 Fifth Amendment to Agreement for Computerized Credit Reporting
Services previously field as an Exhibit on Form 10-K filed March 30,
2000 and incorporated by reference.
10.14 Computer and network operations agreement (redacted version)
previously filed as an exhibit on Form 10-Q, filed November 16, 1998,
and incorporated by reference.(2)
10.15 Lease Agreement previously field as an Exhibit on Form 10-K filed
March 30, 2000 and incorporated by reference.
14
<PAGE>
10.16 Lease Agreement previously filed as an exhibit on Form 10-K, filed
March 31, 1999, and incorporated by reference.
10.17 Transaction Document #1 previously field as an Exhibit on Form 10-K
filed March 30, 2000 and incorporated by reference.(2)
10.18 Master Agreement previously field as an Exhibit on Form 10-K filed
March 30, 2000 and incorporated by reference.(2)
10.19 Human Resources Business Process and Support Services Agreement with
First Amendment and schedule of omitted exhibits previously field as
an Exhibit on Form 10-K filed March 30, 2000 and incorporated by
reference.
10.20 Finance & Accounting Business Process and Support Services Agreement,
with First amendment and schedule of omitted exhibits previously
field as an Exhibit on Form 10-K filed March 30, 2000 and
incorporated by reference.
10.21 Employment Agreement(1)
10.22 Equifax Inc. Key Management Long-Term Incentive Plan(1)
10.23 Equifax Inc. 2000 Stock Incentive Plan(1)
10.24 Bonus Exchange Program(1)
13.1 Summary of Selected Financial Data
13.2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
13.3 Financial Statements and Supplementary Data
21 Subsidiaries of the Registrant
23 Consent of Independent Public Accountants to incorporation by
reference
24 Power of Attorney-Set forth on Signature Page
99.1 Form of Proxy Statement for the Annual Meeting of Shareholders, to be
held May 2, 2001.
____________________________
(1) Management Contract or Compensatory Plan
(2) Document omits information pursuant to a Request for Confidential Treatment
under Rule 406 of the Securities Act of 1933
(b) REPORTS ON FORM 8-K
On October 5, 2000, the Company filed a report on Form 8-K filing the press
release announcing its intention to spin-off its Payment Services Division
to its shareholders as a tax free stock dividend.
15
<PAGE>
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 duly authorized officer.
Date: March 23, 2001 /s/Kent E. Mast
-----------------------------------------
By: Kent E. Mast
Corporate Vice President, General Counsel
and Secretary
POWER OF ATTORNEY
Know all men by these presents, that each person whose signature appears below
constitutes and appoints Thomas F. Chapman, Kent E. Mast and Philip J. Mazzilli
and either of them, as attorneys-in-fact, with power of substitution, for him in
any and all capacities, to sign any amendments to this Report on Form 10-K, and
to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorneys-in-fact may do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Date: March 23, 2001 /s/Thomas F. Chapman
---------------------------------------------
Thomas F. Chapman, Chairman of the Board
and Chief Executive Officer
Date: March 23, 2001 /s/Lee A. Kennedy
---------------------------------------------
Lee A. Kennedy, President and
Chief Operating Officer
Date: March 23, 2001 /s/Philip J. Mazzilli
---------------------------------------------
Philip J. Mazzilli, Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
Date: March 23, 2001 /s/Michael T. Vollkommer
---------------------------------------------
Michael T. Vollkommer, Corporate Vice
President and Controller
(Principal Accounting Officer)
16
<PAGE>
Date: March 23, 2001 /s/Lee A. Ault
---------------------------------------------
Lee A. Ault, III, Director
Date: March 24, 2001 /s/John L. Clendenin
---------------------------------------------
John L. Clendenin, Director
Date: March 26, 2001 /s/A. W. Dahlberg
---------------------------------------------
A. W. Dahlberg, Director
Date: March 29, 2001 /s/Robert P. Forrestal
---------------------------------------------
Robert P. Forrestal, Director
Date: March 26, 2001 /s/L. Phillip Humann
---------------------------------------------
L. Phillip Humann, Director
Date: March 26, 2001 /s/Larry L. Prince
---------------------------------------------
Larry L. Prince, Director
Date: March 26, 2001 /s/Louis W. Sullivan
---------------------------------------------
Dr. Louis W. Sullivan, Director
Date: March 26, 2001 /s/Jacquelyn M. Ward
---------------------------------------------
Jacquelyn M. Ward, Director
17
<PAGE>
INDEX TO EXHIBITS
The following documents are being filed with this Report.
Exhibit No. Description
- ----------- -----------
4.3 Rights Agreement, dated October 25, 1995, between Equifax Inc. and
SunTrust Bank, Atlanta with Form of Right Certificate attached as
Exhibit "A"
10.7 Equifax Inc. Supplement Executive Retirement Plan and
subsequent Amendments(1)
10.8 Equifax Inc. Executive Life and Supplemental Retirement Benefit
Plan (U.S.)
10.21 Employment Agreement(1)
10.22 Equifax Inc. Key Management Long-Term Incentive Plan(1)
10.23 Equifax Inc. 2000 Stock Incentive Plan(1)
10.24 Bonus Exchange Program(1)
13.1 Summary of Selected Financial Data
13.2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
13.3 Financial Statements and Supplementary Data
21 Subsidiaries of the Registrant
23 Consent of Independent Public Accountants to incorporation by
reference
99 Form of Proxy Statement for the Annual Meeting of Shareholders to
be held May 2, 2001
________________________________________________________________
(1) Management Contract or Compensatory Plan
18
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.3
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>RIGHTS AGREEMENT DATED OCT. 25, 1995
<TEXT>
<PAGE>
EXHIBIT 4.3
================================================================================
EQUIFAX INC.
and
SUNTRUST BANK, ATLANTA
RIGHTS AGREEMENT
Dated as of October 25, 1995
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS........................................................................................................ 1
Section 1. Certain Definitions............................................................................... 1
Section 2. Appointment of Rights Agent....................................................................... 7
Section 3. Issue of Right Certificates....................................................................... 7
Section 4. Form of Right Certificates........................................................................ 9
Section 5. Countersignature and Registration................................................................. 9
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates....................................................................................... 10
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights..................................... 11
Section 8. Cancellation and Destruction of Right Certificates................................................ 14
Section 9. Company Covenants Concerning Securities and Rights................................................ 14
Section 10. Record Date....................................................................................... 16
Section 11. Adjustment of Purchase Price, Number and Kind of Securities or Number of Rights................... 17
Section 12. Certificate of Adjusted Purchase Price or Number of Securities.................................... 29
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.............................. 29
Section 14. Fractional Rights and Fractional Securities....................................................... 33
Section 15 Rights of Action.................................................................................. 34
Section 16. Agreement of Rights Holders....................................................................... 35
Section 17. Right Certificate Holder Not Deemed a Shareholder................................................. 36
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 18. Concerning the Rights Agent....................................................................... 37
Section 19. Merger or Consolidation or Change of Name of Rights Agent......................................... 37
Section 20. Duties of Rights Agent............................................................................ 38
Section 21. Change of Rights Agent............................................................................ 41
Section 22. Issuance of New Right Certificates................................................................ 42
Section 23. Redemption........................................................................................ 43
Section 24. Notice of Certain Events.......................................................................... 44
Section 25. Notices........................................................................................... 45
Section 26. Supplements and Amendments........................................................................ 46
Section 27. Exchange.......................................................................................... 47
Section 28. Successors; Certain Covenants..................................................................... 49
Section 29. Benefits of this Agreement........................................................................ 49
Section 30. Severability...................................................................................... 49
Section 31. Governing Law..................................................................................... 49
Section 32. Counterparts...................................................................................... 50
Section 33. Descriptive Headings.............................................................................. 50
Exhibit A Form of Right Certificate......................................................................... A-1
Exhibit B Summary of Rights to Purchase Common Shares....................................................... B-1
</TABLE>
ii
<PAGE>
RIGHTS AGREEMENT
This RIGHTS AGREEMENT, dated as of October 25, 1995 (this "Agreement"), is
made and entered into by and between Equifax Inc., a Georgia corporation (the
"Company"), and SunTrust Bank, Atlanta, a Georgia banking corporation (the
"Rights Agent").
RECITALS
WHEREAS, on October 25, 1995, the Board of Directors of the Company
authorized and declared a dividend distribution of one right ("Right") for each
share of Common Stock, par value $2.50 per share, of the Company (a "Common
Share") outstanding as of the Close of Business (as hereinafter defined) on
November 6, 1995, (the "Record Date"), each Right initially representing the
right to purchase one Common Share, upon the terms and subject to the
conditions herein set forth, and further authorized and directed the issuance
of one Right with respect to each Common Share issued or delivered by the
Company (whether originally issued or delivered from the Company's treasury)
after the Record Date but prior to the earlier of the Distribution Date (as
hereinafter defined) and the Expiration Date (as hereinafter defined).
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (other than the Company or
any Subsidiary of the Company or any employee benefit or stock ownership plan of
the Company or of any Subsidiary of the Company or any entity holding Common
Shares for or pursuant to the terms of any such plan) who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 15% or more of the Common Shares then outstanding; provided, however, that a
Person shall not be deemed to have become an Acquiring Person solely as a result
of a reduction in the number of Common Shares outstanding unless and until (i)
such time as such Person or any Affiliate or Associate of such Person shall
thereafter become the Beneficial Owner of any additional Common Shares, other
than as a result of a stock dividend, stock split or similar transaction
effected by the Company in which all holders of Common Shares are treated
equally, or (ii) any other Person who is the Beneficial Owner of any Common
Shares shall thereafter become an Affiliate or Associate of such Person.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act, as in effect on the date of this Agreement.
1
<PAGE>
(c) A Person shall be deemed the "Beneficial Owner" of, and to
"beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (whether or not in
writing), or upon the exercise of conversion rights, exchange rights,
rights, warrants or options, or otherwise (in each case, other than upon
exercise or exchange of the Rights); provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by or on behalf of
such Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange; or
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of,
including pursuant to any agreement, arrangement or understanding (whether
or not in writing); or
(iii) of which any other Person is the Beneficial Owner, if such
Person or any of such Person's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) with such other
Person (or any of such other Person's Affiliates or Associates) with
respect to acquiring, holding, voting or disposing of any securities of the
Company;
provided, however, that a Person shall not be deemed the Beneficial Owner of,
or to beneficially own, any security (A) if such Person has the right to vote
such security pursuant to an agreement, arrangement or understanding (whether
or not in writing) which (1) arises solely from a revocable proxy given to such
Person in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations of the Exchange
Act and (2) is not also then reportable on Schedule 13D under the Exchange Act
(or any comparable or successor report), or (B) if such beneficial ownership
arises solely as a result of such Person's status as a "clearing agency", as
defined in Section 3(a)(23) of the Exchange Act; and provided, further, that
nothing in this paragraph (c) shall cause a Person engaged in business as an
underwriter of securities to be the Beneficial Owner of, or to beneficially
own, any securities acquired through such Person's participation in good faith
in an underwriting syndicate until the expiration of 40 calendar days after the
date of such acquisition, or such later date as the Board of Directors of the
Company may determine in any specific case.
2
<PAGE>
(d) "Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in the State of Georgia (or such other state
in which the principal office of the Rights Agent is located) are authorized or
obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00 P.M., Eastern
time, on such date; provided, however, that if such date is not a Business Day
it shall mean 5:00 P.M., Eastern time, on the next succeeding Business Day.
(f) "Common Shares" when used with reference to the Company shall mean the
Common Stock, par value $2.50 per share (and following the amendment to the
Articles of Incorporation contemplated to become effective November 24, 1995,
$1.25 per share, or as such par value may be amended in the future), of the
Company; provided, however, that, if the Company is the continuing or surviving
corporation in a transaction described in Section 11(a)(ii) or Section 13(a)(ii)
hereof, "Common Shares" when used with reference to the Company shall mean the
capital stock or equity security with the greatest aggregate voting power of the
Company. "Common Shares" when used with reference to any corporation or other
legal entity, other than the Company, including an Issuer, shall mean the
capital stock or equity security with the greatest aggregate voting power of
such corporation or other legal entity.
(g) "Company" shall mean Equifax Inc., a Georgia corporation.
(h) "Distribution Date" shall mean the earliest of: (i) the Close of
Business on the tenth calendar day (or, unless the Distribution Date shall have
previously occurred, such later date as may be specified by the Board of
Directors of the Company) after the Share Acquisition Date, (ii) the Close of
Business on the tenth Business Day (or, unless the Distribution Date shall have
previously occurred, such later date as may be specified by the Board of
Directors of the Company) after the date of the commencement of a tender or
exchange offer by any Person (other than the Company or any Subsidiary of the
Company or any employee benefit or stock ownership plan of the Company or of any
Subsidiary of the Company or any entity holding Common Shares for or pursuant to
the terms of any such plan), if upon the consummation thereof such Person would
be the Beneficial Owner of 15% or more of the outstanding Common Shares, and
(iii) the Close of Business on the tenth calendar day after the first date of
public announcement by the Company or an Acquiring Person (by press release,
filing made with the Securities and Exchange Commission or otherwise) of the
first occurrence of a Triggering Event; provided, however, that if the earliest
of such dates would otherwise occur prior to the Record Date, the Distribution
Date shall mean the Close of Business on the Record Date.
3
<PAGE>
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(j) "Expiration Date" shall mean the earliest of (i) the Close of Business
on the Final Expiration Date, (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof, and (iii) the time at which all exercisable
Rights are exchanged as provided in Section 27 hereof.
(k) "Final Expiration Date" shall mean the tenth anniversary of the Record
Date.
(l) "Flip-in Event" shall mean any event described in clauses (A), (B) or
(C) of Section 11(a)(ii) hereof.
(m) "Flip-over Event" shall mean any event described in subsections (i),
(ii) or (iii) of Section 13(a) hereof.
(n) "Issuer" shall have the meaning set forth in Section 13(b) hereof.
(o) "NASDAQ" shall mean the National Association of Securities Dealers,
Inc. Automated Quotation System.
(p) "Person" shall mean any individual, firm, corporation, partnership or
other legal entity, and shall include any successor (by merger or otherwise) of
such entity.
(q) "Purchase Price" shall mean initially $185.00 per Common Share and
shall be automatically adjusted to $92.50 per Common Share upon the two-for-one
stock split of the Common Shares contemplated to become effective as of November
24, 1995, and shall be subject to further adjustment from time to time as
provided in this Agreement.
(r) "Redemption Price" shall mean $0.01 per Right, subject to adjustment
by resolution of the Board of Directors of the Company to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof.
(s) "Right" shall have the meaning set forth in the Recitals to this
Agreement.
(t) "Right Certificates" shall mean certificates evidencing the Rights, in
substantially the form of Exhibit A attached hereto.
(u) "Rights Agent" shall mean SunTrust Bank, Atlanta, unless and until a
successor Rights Agent shall have become such pursuant to the terms of
4
<PAGE>
this Agreement, and thereafter, "Rights Agent" shall mean such successor Rights
Agent.
(v) "Securities Act" shall mean the Securities Act of 1933, as amended.
(w) "Share Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person (by press release, filing
made with the Securities and Exchange Commission or otherwise) that an Acquiring
Person has become such.
(x) "Subsidiary" when used with reference to any Person shall mean any
corporation or other legal entity of which a majority of the voting power of the
voting equity securities or equity interests is owned, directly or indirectly,
by such Person; provided, however, that for purposes of Section 13(b) hereof,
"Subsidiary" when used with reference to any Person shall mean any corporation
or other legal entity of which at least 20% of the voting power of the voting
equity securities or equity interests is owned, directly or indirectly, by such
Person.
(y) "Summary of Rights to Purchase Common Shares" shall mean the Summary
of Rights to Purchase Common Shares, in substantially the form of Exhibit B
attached hereto.
(z) "Trading Day" shall mean any day on which the principal national
securities exchange on which the Common Shares are listed or admitted to trading
is open for the transaction of business or, if the Common Shares are not listed
or admitted to trading on any national securities exchange, a Business Day.
(aa) "Triggering Event" shall mean any Flip-in Event or Flip-over Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall also be, prior to the Distribution
Date, the holders of the Common Shares) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment and
hereby certifies that it complies with the requirements of the New York Stock
Exchange governing transfer agents and registrars. The Company may from time to
time act as Co-Rights Agent or appoint such Co-Rights Agents as it may deem
necessary or desirable. Any actions which may be taken by the Rights Agent
pursuant to the terms of this Agreement may be taken by any such Co-Rights
Agent. To the extent that any Co-Rights Agent takes any action pursuant to this
Agreement, such Co-Rights Agent shall be entitled to all of the rights and
protections of, and subject to all of the applicable duties and obligations
imposed upon, the Rights Agent pursuant to the terms of this
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Agreement.
Section 3. Issue of Right Certificates.
(a) Until the Distribution Date, (i) the Rights shall be evidenced by the
certificates representing Common Shares registered in the names of the record
holders thereof (which certificates representing Common Shares shall also be
deemed to be Right Certificates), together with a copy of the Summary of Rights,
(ii) the Rights shall be transferable only in connection with the transfer of
the underlying Common Shares, and (iii) the surrender for transfer of any
certificates evidencing Common Shares in respect of which Rights have been
issued, with or without a copy of the Summary of Rights, shall also constitute
the transfer of the Rights associated with the Common Shares evidenced by such
certificates.
(b) As promptly as practicable after the Record Date, the Company shall
send a copy of the Summary of Rights by first-class, postage prepaid mail, to
each record holder of Common Shares as of the close of business on the Record
Date, at the address of such holder shown on the records of the Company as of
such date.
(c) Rights shall be issued by the Company in respect of all Common Shares
(other than Common Shares issued upon the exercise or exchange of any Right)
issued or delivered by the Company (whether originally issued or delivered from
the Company's treasury) after the Record Date but prior to the earlier of the
Distribution Date and the Expiration Date. Certificates evidencing such Common
Shares shall have stamped on, impressed on, printed on, written on or otherwise
affixed to them the following legend or such similar legend as the Company may
deem appropriate and as is not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or with any
rule or regulation made pursuant thereto or with any rule or regulation of any
stock exchange or transaction reporting system on which the Common Shares may
from time to time be listed or quoted, or to conform to usage:
This Certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Equifax Inc.
and SunTrust Bank, Atlanta, dated as of October 25, 1995 (the "Rights
Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive
offices of Equifax Inc.. Under certain circumstances, as set forth in
the Rights Agreement, such Rights may be redeemed, may expire, may be
amended or may be evidenced by separate certificates and no longer be
evidenced by this Certificate. Equifax Inc. will mail to the holder
of this Certificate a copy of the Rights Agreement without charge
promptly after receipt of a written request therefor. Under certain
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circumstances as set forth in the Rights Agreement, Rights beneficially
owned by an Acquiring Person or any Affiliate or Associate of an Acquiring
Person (as such terms are defined in the Rights Agreement) may become null
and void.
(d) As promptly as practicable after the Distribution Date, the Company
shall prepare and execute, the Rights Agent will countersign and the Company
shall send or cause to be sent (and the Rights Agent shall, if requested, send),
by first-class, insured, postage prepaid mail, to each record holder of Common
Shares as of the Close of Business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Right Certificate, evidencing
one Right for each Common Share so held, subject to adjustment. As of and after
the Distribution Date, the Rights shall be evidenced solely by such Right
Certificates.
Section 4. Form of Right Certificates. The Right Certificates (and the
form of election to purchase and form of assignment to be printed on the reverse
thereof) shall be substantially in the form set forth as Exhibit A hereto with
such changes, marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or transaction
reporting system on which the Rights may from time to time be listed or quoted,
or to conform to usage. Subject to the provisions of Section 22 hereof, the
Right Certificates, whenever issued, on their face shall entitle the holders
thereof to purchase such number of Common Shares as shall be set forth therein
at the Purchase Price set forth therein, but the Purchase Price, the number and
kind of securities issuable upon exercise of each Right and the number of Rights
outstanding shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board, President or any Vice President, either manually or
by facsimile signature, and shall have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights Agent and shall not
be valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless, may
be countersigned by the Rights Agent, and issued and delivered by the Company
with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be
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signed on behalf of the Company by any person who, at the actual date of the
execution of such Right Certificate, shall be a proper officer of the Company
to sign such Right Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent shall keep or cause
to be kept, at the principal office of the Rights Agent designated for such
purpose and at such other offices as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange or any transaction reporting system on
which the Rights may from time to time be listed or quoted, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Sections 7(d) and 14 hereof, at any time
after the Close of Business on the Distribution Date and prior to the Expiration
Date, any Right Certificate or Right Certificates representing exercisable
Rights may be transferred, split up, combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered holder to purchase a
like number of Common Shares (or other securities, as the case may be) as the
Right Certificate or Right Certificates surrendered then entitled such holder
(or former holder in the case of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any such Right Certificate
shall make such request in writing delivered to the Rights Agent, and shall
surrender the Right Certificate or Right Certificates to be transferred, split
up, combined or exchanged at the principal office of the Rights Agent designated
for such purpose. Thereupon or as promptly as practicable thereafter, subject to
the provisions of Sections 7(d) and 14 hereof, the Company shall prepare,
execute and deliver to the Rights Agent, and the Rights Agent shall countersign
and deliver a Right Certificate or Right Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and reimbursement to the Company and
the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company shall prepare, execute and deliver a new Right
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Certificate of like tenor to the Rights Agent and the Rights Agent shall
countersign and deliver such new Right Certificate to the registered holder in
lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) The registered holder of any Right Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein) in whole or in part at
any time after the Distribution Date and prior to the Expiration Date, upon
surrender of the Right Certificate, with the form of election to purchase on the
reverse side thereof duly executed, to the Rights Agent at the office or offices
of the Rights Agent designated for such purpose, together with payment in cash,
in lawful money of the United States of America by certified check or bank draft
payable to the order of the Company equal to the sum of (i) the exercise price
for the total number of securities as to which such surrendered Rights are
exercised and (ii) an amount equal to any applicable transfer tax required to be
paid by the holder of such Right Certificate in accordance with the provisions
of Section 9 hereof. In lieu of the cash payment referred to in the immediately
preceding sentence, following the occurrence of a Triggering Event the
registered holder of a Right Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein) in whole or in part upon surrender
of the Right Certificate as described above together with an election to
exercise such Rights without payment of cash on the reverse side thereof duly
completed. With respect to any Rights as to which such an election is made, the
holder shall receive a number of Common Shares or other securities having a
value equal to the difference between (i) the value of the Common Shares or
other securities that would have been issuable upon payment of the cash amount
as described above, and (ii) the amount of such cash payment. For purposes of
this Section 7(a), the value of any Common Share or other security shall be the
current per share market price of a Common Share (determined pursuant to Section
11(d) hereof) on the Trading Day immediately preceding the date of the first
occurrence of a Triggering Event.
(b) Upon receipt of a Right Certificate representing exercisable Rights
with the form of election to purchase duly executed, accompanied by either
payment as described above or a duly completed election to exercise without
payment of cash, the Rights Agent shall promptly (i) requisition from any
transfer agent of the Common Shares (or make available, if the Rights Agent is
the transfer agent) certificates representing the number of Common Shares to be
purchased (and the Company hereby irrevocably authorizes and directs its
transfer agent to comply with all such requests), (ii) after receipt of such
certificates, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder, (iii) when appropriate, requisition from the
Company or any transfer agent therefor (or make available, if the Rights Agent
is the
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transfer agent) certificates representing the number of equivalent common shares
to be issued in lieu of the issuance of Common Shares in accordance with the
provisions of Section 11(a)(iii) hereof, (iv) when appropriate, after receipt of
such certificates, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder, (v) when appropriate, requisition from the
Company the amount of cash to be paid in lieu of the issuance of fractional
shares in accordance with the provisions of Section 14 hereof or in lieu of the
issuance of Common Shares in accordance with the provisions of Section
11(a)(iii) hereof, (vi) when appropriate, after receipt, deliver such cash to or
upon the order of the registered holder of such Right Certificate, and (vii)
when appropriate, deliver any due bill or other instrument provided to the
Rights Agent by the Company for delivery to the registered holder of such Right
Certificate as provided by Section 11(l) hereof.
(c) In case the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, the Company shall prepare, execute
and deliver a new Right Certificate evidencing Rights equivalent to the Rights
remaining unexercised and the Rights Agent shall countersign and deliver such
new Right Certificate to the registered holder of such Right Certificate or to
his duly authorized assigns, subject to the provisions of Section 14 hereof.
(d) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to any purported transfer, split up, combination or exchange of any
Right Certificate pursuant to Section 6 hereof or exercise of a Right
Certificate as set forth in this Section 7 unless the registered holder of such
Right Certificate shall have (i) completed and signed the certificate following
the form of assignment or form of election to purchase, as applicable, set forth
on the reverse side of the Right Certificate surrendered for such transfer,
split up, combination, exchange or exercise, and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall have reasonably requested.
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
stock transfer agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Right Certificates shall be issued in lieu thereof except as
expressly permitted by this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
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cancelled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Company Covenants Concerning Securities and Rights. The Company
covenants and agrees that:
(a) So long as the Common Shares issuable upon the exercise of the Rights
may be listed on a national securities exchange, it shall endeavor to cause,
from and after such time as the Rights become exercisable, all securities
reserved for issuance upon the exercise of Rights to be listed on such exchange
upon official notice of issuance.
(b) It shall take all such action as may be necessary to ensure that all
Common Shares and/or other securities delivered upon exercise of Rights, at the
time of delivery of the certificates for such securities shall be (subject to
payment of the Purchase Price) duly and validly authorized and issued, fully
paid and nonassessable securities.
(c) It shall pay when due and payable any and all federal and state
transfer taxes and charges that may be payable in respect of the issuance or
delivery of the Right Certificates and of any certificates representing
securities issued upon the exercise of Rights; provided, however, that the
Company shall not be required to pay any transfer tax or charge which may be
payable in respect of any transfer or delivery of Right Certificates to a person
other than, or the issuance or delivery of certificates representing securities
issued upon the exercise of Rights in a name other than that of, the registered
holder of the Right Certificate evidencing Rights surrendered for exercise, or
to issue or deliver any certificates representing securities issued upon the
exercise of any Rights until any such tax or charge shall have been paid (any
such tax or charge being payable by the holder of such Right Certificate at the
time of surrender) or until it has been established to the Company's reasonable
satisfaction that no such tax is due.
(d) It shall use its best efforts (i) to file on an appropriate form, as
soon as practicable following the later of the first occurrence of a Triggering
Event or the Distribution Date, a registration statement under the Securities
Act with respect to the securities issuable upon exercise of the Rights, (ii) to
cause such registration statement to become effective as soon as practicable
after such filing, and (iii) to cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the Act)
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities and (B) the Expiration Date. The Company shall
also take such action as may be appropriate under, or to ensure compliance with,
the securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights. The Company may
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temporarily suspend, for a period of time after the date set forth in clause (i)
of the first sentence of this Section 9(d), the exercisability of the Rights in
order to prepare and file such registration statement and to permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. In addition, if the Company shall determine that a
registration statement should be filed under the Securities Act or any state
securities laws following the Distribution Date, the Company may temporarily
suspend the exercisability of the Rights in each relevant jurisdiction until
such time as a registration statement has been declared effective and, upon any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding anything in this Agreement to the contrary, the Rights shall not
be exercisable in any jurisdiction if the requisite registration or
qualification in such jurisdiction shall not have been effected or the exercise
of the Rights shall not be permitted under applicable law.
(e) Notwithstanding anything in this Agreement to the contrary, after the
Distribution Date it shall not, except as permitted by Section 23 or Section 26
hereof, take (or permit any Subsidiary to take) any action if at the time such
action is taken it is reasonably foreseeable that such action will eliminate or
otherwise diminish the benefits intended to be afforded by the Rights.
(f) In the event that the Company is obligated to issue other securities
of the Company and/or pay cash pursuant to Sections 11, 13 or 14 hereof, it
shall make all arrangements necessary so that such other securities and/or cash
are available for distribution by the Rights Agent, if and when appropriate.
Section 10. Record Date. Each Person in whose name any certificate
representing Common Shares is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the Common Shares
represented thereby on, and such certificate shall be dated, the date upon which
the Right Certificate evidencing such Rights was duly surrendered and payment of
the Purchase Price (and all applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon which the
Common Shares transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such securities on, and such
certificate shall be dated, the next succeeding Business Day on which the Common
Shares transfer books of the Company are open. Prior to the exercise of the
Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a shareholder of the Company with respect to
securities for which the Rights shall be exercisable, including,
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without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Securities or
Number of Rights. The Purchase Price, the number and kind of securities issuable
upon exercise of each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) In the event that the Company shall at any time after the date of
this Agreement (A) effect a dividend on the Common Shares payable in Common
Shares, (B) subdivide the outstanding Common Shares, (C) combine the outstanding
Common Shares into a smaller number of shares or (D) issue any shares of its
capital stock in a reclassification of the Common Shares (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), the Purchase Price in
effect at the time of the record date for such dividend or of the effective date
of such subdivision, combination or reclassification, and/or the number and/or
kind of shares of capital stock issuable on such date upon exercise of a Right,
shall be proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive upon payment of the Purchase Price
then in effect the aggregate number and kind of shares of capital stock which,
if such Right had been exercised immediately prior to such date and at a time
when the Common Shares transfer books of the Company were open, the holder of
such Right would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification. If an
event occurs which would require an adjustment under both this Section 11(a)(i)
and Section 11(a)(ii) hereof or Section 13 hereof, the adjustment provided for
in this Section 11(a)(i) shall be in addition to, and shall be made prior to,
any adjustment required pursuant to Section 11(a)(ii) or Section 13 hereof.
(ii) Subject to the provisions of Section 27 hereof, in the event
that:
(A) any Acquiring Person or any Affiliate or Associate of any
Acquiring Person, at any time after the date of this Agreement, directly or
indirectly, shall (1) merge into the Company or otherwise combine with the
Company and the Company shall be the continuing or surviving corporation of
such merger or combination (other than in a transaction subject to Section
13 hereof), (2) merge or otherwise combine with any Subsidiary of the
Company, (3) in one or more transactions (other than in connection with the
exercise or exchange of Rights or the exercise or conversion of securities
exercisable for or convertible into shares of any class of capital
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stock of the Company or any of its Subsidiaries) transfer any assets to the
Company or any of its Subsidiaries in exchange (in whole or in part) for
shares of any class of capital stock of the Company or any of its
Subsidiaries or for securities exercisable for or convertible into shares
of any class of capital stock of the Company or any of its Subsidiaries, or
otherwise obtain from the Company or any of its Subsidiaries, with or
without consideration, any additional shares of any class of capital stock
of the Company or any of its Subsidiaries or securities exercisable for or
convertible into shares of any class of capital stock of the Company or any
of its Subsidiaries (other than as part of a pro rata distribution to all
holders of such shares of any class of capital stock of the Company, or any
of its Subsidiaries), (4) sell, purchase, lease, exchange, mortgage,
pledge, transfer or otherwise dispose (in one or more transactions), to,
from, with or of, as the case may be, the Company or any of its
Subsidiaries (other than in a transaction subject to Section 13 hereof ),
assets, including securities, on terms and conditions less favorable to the
Company than the Company would be able to obtain in arm's-length
negotiation with an unaffiliated third party, (5) receive any compensation
from the Company or any of its Subsidiaries other than compensation as a
director or for full-time employment as a regular employee, in either case,
at rates in accordance with the Company's (or its Subsidiaries') past
practices, or (6) receive the benefit, directly or indirectly (except
proportionately as a shareholder), of any loans, advances, guarantees,
pledges or other financial assistance or any tax credits or other tax
advantage provided by the Company or any of its Subsidiaries; or
(B) during such time as there is an Acquiring Person, there
shall be any reclassification of securities (including any reverse stock
split), or recapitalization of the Company, or any merger or consolidation
of the Company with any of its Subsidiaries or any other transaction or
series of transactions involving the Company or any of its Subsidiaries
(whether or not with or into or otherwise involving an Acquiring Person),
other than a transaction subject to Section 13 hereof, which has the
effect, directly or indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any class of equity
securities or of securities exercisable for or convertible into equity
securities of the Company or any of its Subsidiaries of which an Acquiring
Person or any Affiliate or Associate of any Acquiring Person, is the
Beneficial Owner; or
(C) any Person (other than the Company or any Subsidiary of the
Company or any employee benefit or stock ownership plan of the Company or
of any Subsidiary of the Company or any entity holding Common Shares for or
pursuant to the terms of any such plan) who or which, together with all
Affiliates and Associates of such Person, shall at any time after
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date of this Agreement, become the Beneficial Owner of 20% or more of the
Common Shares then outstanding (other than pursuant to any transaction set
forth in Section 13(a) hereof ); provided, however, that a Person shall not
be deemed to have become the Beneficial Owner of 20% or more of the Common
Shares then outstanding for the purposes of this Section 11(a)(ii)(C)
solely as a result of a reduction in the number of Common Shares
outstanding unless and until such time as (1) such Person or any Affiliate
or Associate of such Person shall thereafter become the Beneficial Owner of
any additional Common Shares other than as a result of a stock dividend,
stock split or similar transaction effected by the Company in which all
holders of Common Shares are treated equally, or (2) any other Person who
is the Beneficial Owner of any Common Shares shall thereafter become an
Affiliate or Associate of such Person, then, and in each such case, proper
provision shall be made so that each holder of a Right, except as provided
below, shall thereafter have a right to receive, upon exercise thereof in
accordance with the terms of this Agreement at an exercise price per Right equal
to the product of the then-current Purchase Price multiplied by the number of
Common Shares for which a Right was exercisable immediately prior to the first
occurrence of a Triggering Event, such number of Common Shares as shall equal
the result obtained by (x) multiplying the then-current Purchase Price by the
number of Common Shares For which a Right was exercisable immediately prior to
the first occurrence of a Triggering Event, and dividing that product by (y) 50%
of the current per share market price of the Common Shares (determined pursuant
to Section 11(d) hereof) on the date of the first occurrence of a Triggering
Event. Notwithstanding anything in this Agreement to the contrary, from and
after the later of the Distribution Date and the first occurrence of a Flip-in
Event, (1) any Rights that are or were acquired or beneficially owned by any
Acquiring Person (or any Affiliate or Associate of such Acquiring Person) shall
be void and any holder of such Rights shall thereafter have no right to exercise
such Rights under any provision of this Agreement, (2) no Right Certificate
shall be issued pursuant to this Agreement that represents Rights beneficially
owned by an Acquiring Person or any Affiliate or Associate thereof, (3) no Right
Certificate shall be issued at any time upon the transfer of any Rights to an
Acquiring Person or any Affiliate or Associate thereof or to any nominee of such
Acquiring Person or Affiliate or Associate thereof, and (4) any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring Person or
any Affiliate or Associate thereof shall be cancelled.
(iii) Upon the occurrence of the Distribution Date or a Flip-in Event,
if there shall not be sufficient Common Shares authorized but unissued or issued
but not outstanding to permit the issuance of all the Common Shares issuable in
accordance with the provisions hereof upon the exercise of a Right, the Board of
Directors of the Company shall use its best efforts promptly to authorize and,
subject to the provisions of Section 9(d) hereof, make available for issuance
additional Common Shares or other equity securities of the Company having
equivalent voting rights and an equivalent value (as determined in good faith by
the Board of Directors of the Company) to the Common Shares (for purposes of
this Section 11(a)(iii), "equivalent common
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shares"). In the event that equivalent common shares are so authorized, upon the
exercise of a Right in accordance with the provisions of Section 7 hereof, the
registered holder shall be entitled to receive (A) Common Shares, to the extent
any are available and (B) a number of equivalent common shares, which the Board
of Directors of the Company shall have determined in good faith to have a value
equivalent to the excess of (x) the aggregate current per share market value of
all the Common Shares issuable in accordance with subsection (ii) hereof upon
the exercise of a Right (the "Exercise Value") over (y) the aggregate current
per share market value of any Common Shares available for issuance upon the
exercise of such Right; provided, however, that if at any time after 90 calendar
days after the first occurrence of a Flip-in Event, there shall not be
sufficient Common Shares and/or equivalent common shares available for issuance
upon the exercise of a Right, then the Company shall be obligated to deliver,
upon the surrender of such Right and without requiring payment of the Purchase
Price, Common Shares (to the extent available), equivalent common shares (to the
extent available) and then cash (to the extent permitted by applicable law and
any agreements or instruments to which the Company is a party in effect
immediately prior to the first occurrence of any Flip-in Event), which
securities and cash shall have an aggregate value equal to the excess of (1) the
Exercise Value over (2) the product of the then-current Purchase Price
multiplied by the number of Common Shares for which a Right was exercisable
immediately prior to the first occurrence of a Triggering Event. To the extent
that any legal or contractual restrictions prevent the Company from paying the
full amount of cash payable in accordance with the foregoing sentence, the
Company shall pay to holders of the Rights as to which such payments are being
made all amounts which are not then restricted on a pro rata basis and shall
continue to make payments on a pro rata basis as funds become available until
the full amount due to each such Rights holder has been paid.
(b) In the event that the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Common Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Common Shares (or securities having equivalent rights,
privileges and preferences as the Common Shares (for purposes of this Section
11(b), "equivalent common shares")) or securities convertible into Common Shares
or equivalent common shares at a price per Common Share or equivalent common
share (or having a conversion price per share, if a security convertible into
Common Shares or equivalent common shares) less than the current per share
market price of the Common Shares (determined pursuant to Section 11(d) hereof)
on such record date, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of Common Shares outstanding on such record date plus the number of
Common Shares which the aggregate offering price of the total number of Common
Shares and/or equivalent common shares so to be offered (and/or the aggregate
initial conversion price of the convertible securities so
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to be offered) would purchase at such current per share market price and the
denominator of which shall be the number of Common Shares outstanding on such
record date plus the number of additional Common Shares and/or equivalent
common shares to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). In case
such subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent.
Common Shares owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed; and in the
event that such rights, options or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
(c) In the event that the Company shall fix a record date for the making
of a distribution to all holders of Common Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular periodic cash dividend), assets, stock
(other than a dividend payable in Common Shares) or subscription rights, options
or warrants (excluding those referred to in Section 11(b) hereof), the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the current per share market price of
the Common Shares (as determined pursuant to Section 11(d) hereof) on such
record date or, if earlier, the date on which Common Shares begin to trade on an
ex-dividend or when-issued basis for such distribution, less the fair market
value (as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent) of the portion of the evidences of indebtedness, cash, assets or stock so
to be distributed or of such subscription rights, options or warrants applicable
to one Common Share, and the denominator of which shall be such current per
share market price of the Common Shares. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(d) For the purpose of any computation hereunder, the "current per share
market price" of Common Shares on any date shall be deemed to be the average of
the daily closing prices per share of such Common Shares for the 30 consecutive
Trading Days immediately prior to such date; provided, however, that in the
event that the current per share market price of the Common Shares is determined
during a period following the announcement by the issuer of such Common Shares
of (i) a dividend or distribution on such Common Shares payable
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in such Common Shares or securities convertible into such Common Shares (other
than the Rights) or (ii) any subdivision, combination or reclassification of
such Common Shares, and prior to the expiration of 30 Trading Days after the ex-
dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such case, the
current per share market price shall be appropriately adjusted to take into
account ex-dividend trading or to reflect the current per share market price per
Common Share equivalent. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Common Shares are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Common Shares are listed or admitted to trading or, if the Common
Shares are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by NASDAQ
or such other system then in use, or, if on any such date the Common Shares are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Common
Shares selected by the Board of Directors of the Company. If the Common Shares
are not publicly held or not so listed or traded, or not the subject of
available bid and asked quotes, "current per share market price" shall mean the
fair value per share as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed with
the Rights Agent.
(e) Except as set forth below, no adjustment in the Purchase Price shall
be required unless such adjustment would require an increase or decrease of at
least 1% in such price; provided, however, that any adjustments which by reason
of this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one ten-
thousandth of a Common Share or other security, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which requires such adjustment and (ii)
the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a) hereof,
the holder of any Right thereafter exercised shall become entitled to receive
any securities of the Company other than Common Shares, thereafter the number of
such other securities so receivable upon exercise of any Right shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Shares
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contained in this Section 11, and the provisions of Sections 7, 9, 10 and 13
hereof with respect to the Common Shares shall apply on like terms to any such
other securities.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Common Shares issuable
from time to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i) hereof, upon each adjustment of the Purchase Price as a result of
the calculations made in Section 11(b) and Section 11(c) hereof made with
respect to a distribution of subscription rights, options or warrants applicable
to Common Shares, each Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of Common Shares (calculated to the nearest one-
thousandth a Common Share) obtained by (i) multiplying (x) the number of Common
Shares issuable upon exercise of a Right immediately prior to this adjustment by
(y) the Purchase Price in effect immediately prior to such adjustment of the
Purchase Price, and (ii) dividing the product so obtained by the Purchase Price
in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect, on or after the date of any adjustment of the
Purchase Price, to adjust the number of Rights in substitution for any
adjustment in the number of Common Shares issuable upon the exercise of a Right.
Each of the Rights outstanding after such adjustment of the number of Rights
shall be exercisable for the number of Common Shares for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one- thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but,
if the Right Certificates have been issued, shall be at least 10 calendar days
later than the date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right Certificates
evidencing, subject to the provisions of Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company,
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shall cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein (and may bear, at
the option of the Company, the adjusted Purchase Price) and shall be registered
in the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number or kind of securities issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the
Purchase Price and the number and kind of securities which were expressed in the
initial Right Certificate issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the Common Shares or other
securities issuable upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and nonassessable
Common Shares or such other securities at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such record date the number
of Common Shares or other securities of the Company, if any, issuable upon such
exercise over and above the number of Common Shares or other securities of the
Company, if any, issuable upon such exercise on the basis of the Purchase Price
in effect prior to such adjustment; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate instrument evidencing
such holder's right to receive such additional Common Shares or other securities
upon the occurrence of the event requiring such adjustment.
(m) Notwithstanding anything in this Agreement to the contrary, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in its good faith judgment the Board of Directors of the Company
shall determine to be advisable in order that any (i) consolidation or
subdivision of the Common Shares, (ii) issuance wholly for cash of Common Shares
at less than the current per share market price therefor, (iii) issuance wholly
for cash of Common Shares or securities which by their terms are convertible
into or exchangeable for Common Shares, (iv) stock dividends, or
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(v) issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Company to holders of its Common Shares shall not be
taxable to such shareholders.
Section 12. Certificate of Adjusted Purchase Price or Number of
Securities. Whenever an adjustment is made as provided in Section 11 or Section
13 hereof, the Company shall promptly (a) prepare a certificate setting forth
such adjustment and a brief statement of the facts accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for the
Common Shares, a copy of such certificate, and (c) if such adjustment is made
after the Distribution Date, mail a brief summary of such adjustment to each
holder of a Right Certificate in accordance with Section 25 hereof.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, following the Share Acquisition Date, directly or
indirectly:
(i) the Company shall consolidate with, or merge with or into, any
other Person and the Company shall not be the continuing or surviving
corporation of such consolidation or merger; or
(ii) any Person shall consolidate with the Company, or merge with or
into the Company and the Company shall be the continuing or surviving
corporation of such merger or consolidation and, in connection with such
merger or consolidation, all or part of the Common Shares shall be changed
into or exchanged for stock or other securities of any other Person or cash
or any other property; or
(iii) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power (including, without limitation,
securities creating any obligation on the part of the Company and/or any of
its Subsidiaries) representing in the aggregate more than 50% of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to
any Person or Persons, then, and in each such case, proper provision shall
be made so that (A) each holder of a Right (except as otherwise provided
herein) shall thereafter have the right to receive, upon the exercise
thereof in accordance with the terms of this Agreement at an exercise price
per Right equal to the product of the then-current Purchase Price
multiplied by the number of Common Shares for which a Right was exercisable
immediately prior to the first occurrence of a Triggering Event, such
number of validly authorized and issued, fully paid, nonassessable and
freely tradeable Common Shares of the Issuer, free and clear of any liens,
encumbrances and other adverse claims and not subject to any rights of call
or first refusal, as shall be equal to the result obtained by (x)
multiplying the then-current Purchase Price by the number of Common Shares
for
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which a Right is exercisable immediately prior to the first occurrence of a
Triggering Event and dividing that product by (y) 50% of the current per
share market price of the Common Shares of the Issuer (determined pursuant
to Section 11(d) hereof), on the date of consummation of such Flip-over
Event; (B) the Issuer shall thereafter be liable for, and shall assume, by
virtue of the consummation of such Flip-over Event, all the obligations and
duties of the Company pursuant to this Agreement; (C) the term "Company"
shall thereafter be deemed to refer to the Issuer; and (D) the Issuer shall
take such steps (including, without limitation, the reservation of a
sufficient number of its Common Shares to permit the exercise of all
outstanding Rights) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be possible, in relation to its
Common Shares thereafter deliverable upon the exercise of the Rights.
(b) For purposes of this Section 13, "Issuer" shall mean (i) in the case
of any Flip-over Event described in Sections 13(a) (i) or (ii) above, the Person
that is the continuing, surviving, resulting or acquiring Person (including the
Company as the continuing or surviving corporation of a transaction described in
Section 13(a)(ii) above), and (ii) in the case of any Flip-over Event described
in Section 13(a)(iii) above, the Person that is the party receiving the greatest
portion of the assets or earning power (including, without limitation,
securities creating any obligation on the part of the Company and/or any of its
Subsidiaries) transferred pursuant to such transaction or transactions;
provided, however, that, in any such case, (A) if (1) no class of equity
security of such Person is, at the time of such merger, consolidation or
transaction and has been continuously over the preceding 12-month period,
registered pursuant to Section 12 of the Exchange Act, and (2) such Person is a
Subsidiary, directly or indirectly, of another Person, a class of equity
security of which is and has been so registered, the term "Issuer" shall mean
such other Person; and (B) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, a class of equity security of two or more
of which are and have been so registered, the term "Issuer" shall mean whichever
of such Persons is the issuer of the equity security having the greatest
aggregate market value. Notwithstanding the foregoing, if the Issuer in any of
the Flip-over Events listed above is not a corporation or other legal entity
having outstanding equity securities, then, and in each such case, (x) if the
Issuer is directly or indirectly wholly owned by a corporation or other legal
entity having outstanding equity securities, then all references to Common
Shares of the Issuer shall be deemed to be references to the Common Shares of
the corporation or other legal entity having outstanding equity securities which
ultimately controls the Issuer, and (y) if there is no such corporation or other
legal entity having outstanding equity securities, (I) proper provision shall be
made so that the Issuer shall create or otherwise make available for purposes of
the exercise of the Rights in accordance with the terms of this Agreement, a
kind or kinds of security or securities having a fair market value at least
equal to the economic value of the Common
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Shares which each holder of a Right would have been entitled to receive if the
Issuer had been a corporation or other legal entity having outstanding equity
securities; and (II) all other provisions of this Agreement shall apply to the
issuer of such securities as if such securities were Common Shares.
(c) The Company shall not consummate any Flip-over Event, unless the
Issuer shall have a sufficient number of authorized Common Shares (or other
securities as contemplated in Section 13(b) above) which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in accordance
with this Section 13 and unless prior to such consummation the Company and the
Issuer shall have executed and delivered to the Rights Agent a supplemental
agreement providing for the terms set forth in subsections (a) and (b) of this
Section 13 and further providing that as promptly as practicable after the
consummation of any Flip-over Event, the Issuer shall:
(i) prepare and file a registration statement under the Securities
Act, with respect to the Rights and the securities issuable upon exercise
of the Rights on an appropriate form, and shall use its best efforts to
cause such registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a prospectus
at all times meeting the requirements of the Securities Act) until the
Expiration Date;
(ii) take all such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights; and
(iii) deliver to holders of the Rights historical financial statements
for the Issuer and each of its Affiliates which comply in all respects with
the requirements for registration on Form 10 under the Exchange Act.
(d) The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that a Flip-
over Event occurs at any time after the occurrence of a Flip-in Event, the
Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a) hereof.
Section 14. Fractional Rights and Fractional Securities.
(a) The Company shall not be required to issue fractions of Rights or to
distribute Right Certificates which evidence fractional Rights. In lieu of such
fractional Rights, the Company shall pay as promptly as practicable to the
registered holders of the Right Certificates with regard to which such
fractional Rights otherwise would be issuable, an amount in cash equal to the
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same fraction of the current market value of a whole Right. For the purposes of
this Section 14(a), the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the date on
which such fractional Rights otherwise would have been issuable. The closing
price for any day shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by NASDAQ or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Rights selected by the Board of Directors of the Company. If on any such
date no such market maker is making a market in the Rights the fair value of the
Rights on such date as determined in good faith by the Board of Directors of the
Company shall be used.
(b) The Company shall not be required to issue fractions of Common Shares
or other securities issuable upon exercise or exchange of the Rights or to
distribute certificates which evidence any such fractional securities. In lieu
of issuing any such fractional securities, the Company may pay to any Person to
whom or which such fractional securities would otherwise be issuable an amount
in cash equal to the same fraction of the current market value of one such
security. For purposes of this Section 14(b), the current market value of a
Common Share or other security issuable upon the exercise or exchange of Rights
shall be the closing price thereof (as determined in the same manner as set
forth for Common Shares in the second sentence of Section 11(d) hereof) for the
Trading Day immediately prior to the date of such exercise or exchange;
provided, however, that if neither the Common Shares nor any such other
securities are publicly held or listed or admitted to trading on any national
securities exchange, or the subject of available bid and asked quotes, the
current market value of one Common Share or such other security shall be
determined in good faith by the Board of Directors of the Company.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of
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the Rights Agent or of the holder of any other Right Certificate (or, prior to
the Distribution Date, of the holder of any Common Shares), may in his own
behalf and for his own benefit enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise act in respect
of, his right to exercise the Rights evidenced by such Right Certificate or
Common Share certificate in the manner provided in such Right Certificate and in
this Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
shall be entitled to specific performance of the obligations under this
Agreement, and injunctive relief against actual or threatened violations of the
obligations of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) Prior to the Distribution Date, the Rights shall be transferable only
in connection with the transfer of the Common Shares;
(b) After the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the principal
office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer;
(c) The Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Share certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Right Certificate or the associated Common Share certificate
made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be affected by
any notice to the contrary;
(d) Such holder expressly waives any right to receive any fractional
Rights and any fractional securities upon exercise or exchange of a Right,
except as otherwise provided in Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
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performance of such obligation; provided, however, that the Company shall use
its best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Shareholder.
No holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Common Shares or any
other securities of the Company which may at any time be issuable upon the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions of this Agreement or exchanged pursuant to the provisions of Section
27 hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, suit, action, proceeding or expense, incurred
without gross negligence, bad faith or willful misconduct on the part of the
Rights Agent, for anything done or omitted by the Rights Agent in connection
with the acceptance and administration of this Agreement, including the costs
and expenses of defending against any claim of liability arising therefrom,
directly or indirectly.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Right
Certificate or certificate evidencing Common Shares or other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent.
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(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall not
have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board,
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the President or any Vice President of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution and delivery hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Right Certificate; nor shall it be responsible for any adjustment required
under the provisions of Section 11 or Section 13 hereof (including any
adjustment which results in Rights becoming void) or responsible for the
manner, method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Right Certificates after actual notice
of any such adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of stock or other securities to be issued pursuant to this Agreement or any
Right Certificate or as to whether any shares of stock or other securities will,
when issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the President or any Vice President of the
Company, and to apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with instructions of any such
officer.
28
<PAGE>
(h) The Rights Agent and any shareholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the
selectionand continued employment thereof. The Rights Agent shall not be under
any duty or responsibility to insure compliance with any applicable federal or
state securities laws in connection with the issuance, transfer or exchange of
Right Certificates.
(j) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise, transfer, split up, combination or exchange, the certificate
attached to the form of assignment or form of election to purchase, as the case
may be, has either not been completed or indicates an affirmative response to
clause 1 or 2 thereof, the Rights Agent shall not take any further action with
respect to such requested exercise, transfer, split up, combination or exchange,
without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 calendar days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. The Company may remove
the Rights Agent or any successor Rights Agent upon 30 calendar days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Shares by registered or certified
mail, and to the holders of the Right Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of 30 calendar days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Right Certificate (who shall, with such notice, submit his
Right Certificate for inspection by the Company), then the registered holder of
any Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights
29
<PAGE>
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of the States of Georgia or New York (or of any other state of the United States
so long as such corporation is authorized to do business as a banking
institution in the States of Georgia or New York), in good standing, having a
principal office in the States of Georgia or New York, which is authorized under
such laws to exercise corporate trust powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Shares,
and mail a notice thereof in writing to the registered holders of the Right
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price per share and the number or kind of securities issuable
upon exercise of the Rights made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale by the Company
of Common Shares following the Distribution Date and prior to the Expiration
Date, the Company (a) shall, with respect to Common Shares so issued or sold
pursuant to the exercise or conversion of securities issued prior to the
Distribution Date which are exercisable for, or convertible into, Common Shares,
and (b) may, in any other case, if deemed necessary, appropriate or desirable by
the Board of Directors of the Company, issue Right Certificates representing an
equivalent number of Rights as would have been issued in respect of such Common
Shares if they had been issued or sold prior to the Distribution Date, as
appropriately adjusted as provided herein as if they had been so issued or sold;
provided, however, that (i) no such Right Certificate shall be issued if, and to
the extent that, in its good faith judgment the Board of Directors of the
Company shall have determined that the issuance of such Right Certificate could
have a material adverse tax consequence to the Company or to the Person to whom
or which such Right Certificate otherwise would be issued, and (ii) no such
Right Certificate shall be issued if, and to the extent that, appropriate
adjustment otherwise shall have been made in lieu of the issuance thereof.
30
<PAGE>
Section 23. Redemption.
(a) Prior to the Expiration Date, the Board of Directors of the Company
may, at its option, redeem all but not less than all of the then-outstanding
Rights at the Redemption Price at any time prior to the Close of Business on the
later of (i) the Distribution Date and (ii) the Share Acquisition Date.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, and without any further action
and without any notice, the right to exercise the Rights shall terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price. Promptly after the action of its Board of Directors ordering
the redemption of the Rights, the Company shall publicly announce such action,
and within 10 calendar days thereafter, the Company shall give notice of such
redemption to the holders of the then- outstanding Rights by mailing such notice
to all such holders at their last addresses as they appear upon the registry
books of the Company; provided, however, that the failure to give, or any defect
in, any such notice shall not affect the validity of the redemption of the
Rights. Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. The notice of redemption
mailed to the holders of Rights shall state the method by which the payment of
the Redemption Price will be made. The Company may, at its option, pay the
Redemption Price in cash, Common Shares (based upon the current per share market
price of the Common Shares (determined pursuant to Section 11(d) hereof) at the
time of redemption) or any other form of consideration deemed appropriate by the
Board of Directors of the Company (based upon the fair market value of such
other consideration, determined by the Board of Directors of the Company in good
faith) or any combination thereof.
(c) At any time following the Share Acquisition Date, the Board of
Directors of the Company may relinquish the right to redeem the Rights under
this Section 23 by duly adopting a resolution to that effect. Immediately upon
adoption of such resolution, the rights of the Board of Directors of the Company
to redeem the Rights shall terminate without further action and without any
notice. Promptly after adoption of such a resolution, the Company shall publicly
announce such action; provided, however, that the failure to give, or any defect
in, any such notice shall not affect the validity of the action of the Board of
Directors of the Company.
Section 24. Notice of Certain Events.
(a) In case, after the Distribution Date, the Company shall propose (i)
to pay any dividend payable in stock of any class to the holders of Common
Shares or to make any other distribution to the holders of Common Shares
31
<PAGE>
(other than a regular periodic cash dividend), (ii) to offer to the holders of
Common Shares rights, options or warrants to subscribe for or to purchase any
additional Common Shares or shares of stock of any class or any other
securities, rights or options, (iii) to effect any reclassification of its
Common Shares (other than a reclassification involving only the subdivision of
outstanding Common Shares), (iv) to effect any consolidation or merger into or
with, or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more transactions,
of assets or earning power (including, without limitation, securities creating
any obligation on the part of the Company and/or any of its Subsidiaries)
representing more than 50% of the assets and earning power of the Company and
its Subsidiaries, taken as a whole, to any other Person or Persons, or (v) to
effect the liquidation, dissolution or winding up of the Company, then, in each
such case, the Company shall give to each holder of a Right Certificate, in
accordance with Section 25 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, distribution or
offering of rights, options or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares, if any such date is to be fixed,
and such notice shall be so given, in the case of any action covered by clause
(i) or (ii) above, at least 10 calendar days prior to the record date for
determining holders of the Common Shares for purposes of such action, and, in
the case of any such other action, at least 10 calendar days prior to the date
of the taking of such proposed action or the date of participation therein by
the holders of the Common Shares, whichever shall be the earlier.
(b) In case any Triggering Event shall occur, then, in any such case,
the Company shall as soon as practicable thereafter give to the Rights Agent and
each holder of a Right Certificate, in accordance with Section 25 hereof, a
notice of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights.
Section 25. Notices.
(a) Notices or demands authorized by this Agreement to be given or made
by the Rights Agent or by the holder of any Right Certificate to or on the
Company shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
Equifax Inc.
1600 Peachtree Street, N.W.
Atlanta, Georgia 30309
Attention: Corporate Secretary
(b) Subject to the provisions of Section 21 hereof, any notice or
32
<PAGE>
demand authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Company) as follows:
SunTrust Bank, Atlanta
Corporate Trust Department
P.O. Box 4625
Atlanta, Georgia 30302
Attention: Department Manager
(c) Notices or demands authorized by this Agreement to be given or made
by the Company or the Rights Agent to the holder of any Right Certificate (or,
if prior to the Distribution Date, to the holder of any certificate evidencing
Common Shares) shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.
Section 26. Supplements and Amendments. Prior to the Distribution Date
and subject to the last sentence of this Section 26, if the Company so directs,
the Company and the Rights Agent shall supplement or amend any provision of this
Agreement without the approval of any holders of certificates representing
Common Shares. From and after the Distribution Date and subject to the last
sentence of this Section 26, if the Company so directs, the Company and the
Rights Agent shall supplement or amend this Agreement without the approval of
any holders of Right Certificates in order (i) to cure any ambiguity, (ii) to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten or lengthen any
time period hereunder, or (iv) to supplement or amend the provisions hereunder
in any manner which the Company may deem desirable, including, without
limitation, the addition of other events requiring adjustment to the Rights
under Sections 11 or 13 hereof or procedures relating to the redemption of the
Rights, which supplement or amendment shall not, in the good faith determination
of the Board of Directors of the Company, adversely affect the interests of the
holders of Right Certificates (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person). Upon the delivery of a certificate from an
officer of the Company which states that the proposed supplement or amendment is
in compliance with the terms of this Section 26, the Rights Agent shall execute
such supplement or amendment; provided, however, that the failure or refusal of
the Rights Agent to execute such supplement or amendment shall not affect the
validity of any supplement or amendment adopted by the Company, any of which
shall be effective in accordance with the terms thereof. Notwithstanding
anything in this Agreement to the contrary, no supplement or amendment shall be
made at such time as the Rights are not then redeemable which decreases the
stated Redemption Price or the
33
<PAGE>
period of time remaining until the Final Expiration Date or which modifies a
time period relating to when the Rights may be redeemed.
Section 27. Exchange.
(a) The Board of Directors of the Company may, at its option, at any
time after the later of the Distribution Date and the first occurrence of a
Triggering Event, exchange all or part of the then-outstanding and exercisable
Rights (which shall not include Rights that have become void pursuant to the
provisions of Section 11(a)(ii) hereof) for Common Shares at an exchange ratio
of one Common Share per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such exchange ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Common Shares for or pursuant to the terms of
any such plan), who or which, together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of 50% or more of the Common Shares
then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to Section 27(a) hereof,
and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right with respect to such Rights
thereafter of the holder of such Rights shall be to receive that number of
Common Shares equal to the number of such Rights held by such holder multiplied
by the Exchange Ratio. Promptly after the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to Section 27(a)
hereof, the Company shall publicly announce such action, and within 10 calendar
days thereafter shall give notice of any such exchange to all of the holders of
such Rights at their last addresses as they appear upon the registry books of
the Rights Agent; provided, however, that the failure to give, or any defect in,
such notice shall not affect the validity of such exchange. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of exchange shall state the method
by which the exchange of the Common Shares for Rights will be effected and, in
the event of any partial exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become void pursuant to the provisions of Section
11(a)(ii) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 27, the Company, at its
option, may substitute for any Common Share exchangeable for a Right, (i)
equivalent common shares (as such term is used in Section 11(a)(iii) hereof),
(ii) cash, (iii) debt securities of the Company, (iv) other assets, or (v) any
combination of the foregoing, in any event having an aggregate value which the
Board of Directors
34
<PAGE>
of the Company shall have determined in good faith to be equal to the current
market value of one Common Share (determined pursuant to Section 11(d) hereof)
on the Trading Day immediately preceding the date of exchange pursuant to this
Section 27.
Section 28. Successors; Certain Covenants. All the covenants and
provisions of this Agreement by or for the benefit of the Company or the Rights
Agent shall bind and inure to the benefit of their respective successors and
assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (or prior to the Distribution Date, the Common Shares).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 31. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the internal
substantive laws of the State of Georgia and for all purposes shall be governed
by and construed in accordance with the internal substantive laws of such State
applicable to contracts to be made and performed entirely within such State.
Section 32. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
[SEAL]
35
<PAGE>
Attest: EQUIFAX INC.
By /s/ Thomas H. Magis By /s/ C.B. Rogers, Jr.
- ---------------------- ------------------------------------
Thomas H. Magis C.B. Rogers, Jr.
Secretary Chairman and Chief Executive Officer
[SEAL]
Attest: SUNTRUST BANK, ATLANTA
By /s/ Roy C. Forward, Jr. By /s/ Thomas Donaldson
- -------------------------- ------------------------------------
Roy C. Forward, Jr. Thomas Donaldson
Vice President Group Vice President
36
<PAGE>
EXHIBIT A
Form of Right Certificate
Certificate No. R- _________Rights
NOT EXERCISABLE AFTER NOVEMBER 6, 2005 OR EARLIER IF REDEEMED. THE RIGHTS
ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.01 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES SPECIFIED IN THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY
OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) MAY
BECOME NULL AND VOID.
Right Certificate
EQUIFAX INC.
This certifies that ________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of October 25, 1995 (the "Rights Agreement"), between
Equifax Inc., a Georgia corporation (the "Company"), and SunTrust Bank, Atlanta,
a Georgia banking corporation (the "Rights Agent"), to purchase from the Company
at any time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M. (Eastern time) on November 6, 2005 at the
principal office or offices of the Rights Agent designated for such purpose, one
fully paid nonassessable share of common stock, par value $2.50 per share (the
"Common Shares"), of the Company, at a purchase price of $185.00 per Common
Share (the "Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase and related Certificate duly
executed. If this Right Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised. The number of Rights
evidenced by this Right Certificate (and the number of Common Shares which may
be purchased upon exercise thereof) set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of November 6, 1995, based on
the Common Shares as constituted at such date.
A-1
<PAGE>
As provided in the Rights Agreement, the Purchase Price and the number and
kind of securities issuable upon the exercise of the Rights evidenced by this
Right Certificate are subject to adjustment upon the happening of certain
events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights Agent,
the Company and the holders of the Right Certificates, which limitations of
rights include the temporary suspension of the exercisability of the Rights
under the circumstances specified in the Rights Agreement. Copies of the Rights
Agreement are on file at the above-mentioned office of the Rights Agent.
Pursuant to the Rights Agreement, from and after the later of the
Distribution Date and the first occurrence of a Flip-in Event (as such term is
defined in the Rights Agreement), (i) any Rights that are or were acquired or
beneficially owned by any Acquiring Person (or any Affiliate or Associate of
such Acquiring Person) shall be void and any holder of such Rights shall
thereafter have no right to exercise such Rights under any provision of the
Rights Agreement, (ii) no Right Certificate shall be issued pursuant to the
Rights Agreement that represents Rights beneficially owned by an Acquiring
Person or any Affiliate or Associate thereof, (iii) no Right Certificate shall
be issued at any time upon the transfer of any Rights to an Acquiring Person or
any Affiliate or Associate thereof or to any nominee of such Acquiring Person or
Affiliate or Associate thereof, and (iv) any Right Certificate delivered to the
Rights Agent for transfer to an Acquiring Person or any Affiliate or Associate
thereof shall be cancelled.
This Right Certificate, with or without other Right Certificates, may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the holder to purchase a like number of Common
Shares (or other securities, as the case may be) as the Right Certificate or
Right Certificates surrendered shall have entitled such holder (or former holder
in the case of a transfer) to purchase, upon presentation and surrender hereof
at the principal office of the Rights Agent designated for such purpose, with
the Form of Assignment (if appropriate) and the related Certificate duly
executed.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company at its option at a redemption
price of $0.01 per Right. The Rights Agreement may be supplemented and amended
by the Company, as provided therein.
A-2
<PAGE>
The Company is not required to issue fractional Common Shares or other
securities issuable upon the exercise of any Right or Rights evidenced hereby.
In lieu of issuing such fractional Common Shares or other securities, the
Company may make a cash payment, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Common Shares
or of any other securities of the Company which may at any time be issuable upon
the exercise of the Right or Rights represented hereby, nor shall anything
contained herein or in the Rights Agreement be construed to confer upon the
holder hereof, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised in accordance with
the provisions of the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of _________, 19__.
ATTEST: EQUIFAX INC.
____________________________ By __________________________
Secretary Title:
[SEAL]
Countersigned:
SunTrust Bank, Atlanta
By _________________________
Authorized Signature
A-3
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate)
FOR VALUE RECEIVED, ____________________________________________________
__________________________________________ hereby sells, assigns and transfers
unto__________________________________________________________________________
_____________________________________________________________________________
(Please print name and address of transferee)
______________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: _____________, 19__
_________________________________
Signature
Signature Guaranteed:
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being sold, assigned, transferred, split up, combined or exchanged by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Person (as such terms are defined in the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [
] did [ ] did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: _____________, 19
_________________________________
Signature
A-4
<PAGE>
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Right Certificate)
To Equifax Inc.:
The undersigned hereby irrevocably elects to exercise _________________
Rights represented by this Right Certificate to purchase the Common Shares or
other securities issuable upon the exercise of such Rights and requests that
certificates for such securities be issued in the name of:
Please insert social security
or other identifying number: _________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number: ________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
Optional Election to Exercise without Payment of Cash:
With respect to the exercise of ___________ of the Rights specified above,
the undersigned hereby elects to exercise such Rights without payment of cash
and to receive a number of Common Shares or other securities having a value (as
determined pursuant to the Rights Agreement) equal to the difference between (i)
the value of the Common Shares or other securities that would have been issuable
upon the exercise thereof upon payment of the cash amount as provided in the
Rights Agreement, and (ii) the amount of such cash payment.
Dated: _____________, 19__
_________________________________
Signature
Signature Guaranteed:
A-5
<PAGE>
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Person (as such terms are defined pursuant
to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [
] did [ ] did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: _____________, 19
_________________________________
Signature
NOTICE
------
Signatures on the foregoing Form of Assignment and Form of Election to
Purchase and in the related Certificates must correspond to the name as written
upon the face of this Right Certificate in every particular, without alteration
or enlargement or any change whatsoever.
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
A-6
<PAGE>
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE
COMMON SHARES
The Board of Directors of Equifax Inc. (the "Company") has declared a
dividend distribution of one right (a "Right") for each outstanding share of
common stock, par value $2.50 per share (the "Common Shares"), of the Company.
The distribution is payable on November 6, 1995 (the "Record Date") to the
shareholders of record as of the close of business on the Record Date. Each
Right entitles the registered holder to purchase from the Company one Common
Share at a price of $185.00 (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement, dated
as of October 25, 1995 (the "Rights Agreement"), between the Company and
SunTrust Bank, Atlanta, as Rights Agent (the "Rights Agent"). On October 25,
1995, the Board of Directors of the Company also adopted an amendment to the
Articles of Incorporation of the Company to effect a two-for-one stock split of
the issued and unissued Common Shares as permitted by Georgia law. The two-for-
one stock split will become effective as of 5:00 p.m. Eastern Time on November
24, 1995, with certificates representing the additional shares to be mailed on
or about December 15, 1995. Unless otherwise indicated, all information herein
is set forth on a pre-split basis. At the effective time of the stock split, the
Purchase Price will be adjusted to $92.50 per Right to reflect the two-for-one
stock split.
Until the earliest to occur of (i) the close of business on the tenth
calendar day (or such later date as may be specified by the Board of Directors)
following a public announcement that a person or group of affiliated or
associated persons has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding Common Shares (an "Acquiring
Person"), (ii) the close of business on the tenth calendar day following the
commencement of a tender offer or exchange offer by a person or group of
affiliated or associated persons, the consummation of which would result in
beneficial ownership by such person or group of 15% or more of the outstanding
Common Shares, or (iii) the close of business on the tenth calendar day
following the first date of public announcement of the first occurrence of a
Flip-in Event or a Flip-over Event (as such terms are hereinafter defined) (the
earliest of such dates being hereinafter called the "Distribution Date"), the
Rights will be evidenced, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share certificates.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date upon transfer or new
B-1
<PAGE>
issuance of Common Shares will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares in respect of which Rights have been issued will also constitute
the transfer of the Rights associated with the Common Shares represented by such
certificates. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights (the "Right Certificates") will be mailed to
holders of record of the Common Shares of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights.
No Right is exercisable at any time prior to the Distribution Date. The
Rights will expire on November 6, 2005 (the "Final Expiration Date") unless
earlier redeemed or exchanged by the Company as described below. Until a Right
is exercised, the holder thereof, as such, will have no rights as a shareholder
of the Company, including without limitation the right to vote or to receive
dividends.
The Purchase Price payable, and the number of Common Shares or other
securities issuable, upon exercise of the Rights are subject to adjustment from
time to time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Common Shares, (ii) upon
the grant to holders of the Common Shares of certain rights or warrants to
subscribe for or purchase Common Shares at a price, or securities convertible
into Common Shares with a conversion price, less than the then current market
price of the Common Shares or (iii) upon the distribution to holders of the
Common Shares of evidences of indebtedness or cash (excluding regular periodic
cash dividends), assets, stock (excluding dividends payable in Common Shares) or
of subscription rights or warrants (other than those referred to above).
In the event (a "Flip-in Event") that (i) any person or group of affiliated
or associated persons becomes the beneficial owner of 20% or more of the
outstanding Common Shares, (ii) any Acquiring Person merges into or combines
with the Company and the Company is the surviving corporation or any Acquiring
Person effects certain other transactions with the Company, as described in the
Rights Agreement, or (iii) during such time as there is an Acquiring Person,
there shall be any reclassification of securities or recapitalization or
reorganization of the Company which has the effect of increasing by more than 1%
the proportionate share of the outstanding shares of any class of equity
securities of the Company or any of its subsidiaries beneficially owned by the
Acquiring Person, proper provision shall be made so that each holder of a Right,
other than Rights that are or were owned beneficially by the Acquiring Person
(which, from and after the later of the Distribution Date and the date of the
earliest of any such events, will be void), will thereafter have the right to
receive, upon exercise thereof at the then current exercise price of the Right,
that number of Common Shares (or,
B-2
<PAGE>
under certain circumstances, an economically equivalent security or securities
of the Company) having a market value of two times the exercise price of the
Right.
To illustrate the operation of such an adjustment, at a Purchase Price of
$185.00, assuming the current market price (as determined pursuant to the
provisions of the Rights Agreement) per Common Share were $46.25, each Right not
owned beneficially by an Acquiring Person at or after the time of such an
occurrence would entitle its holder to purchase (after the Distribution Date)
from the Company eight (8) Common Shares (having a market value of $370.00) for
$185.00.
In the event (a "Flip-over Event") that, following the first date of public
announcement that a person has become an Acquiring Person, (i) the Company
merges with or into any person and the Company is not the surviving corporation,
(ii) any person merges with or into the Company and the Company is the surviving
corporation, but its Common Shares are changed or exchanged, or (iii) 50% or
more of the Company's assets or earning power, including without limitation
securities creating obligations of the Company, are sold, proper provision shall
be made so that each holder of a Right will thereafter have the right to
receive, upon the exercise thereof at the then current exercise price of the
Right, that number of shares of common stock (or, under certain circumstances,
an economically equivalent security or securities) of such other person which at
the time of such transaction would have a market value of two times the exercise
price of the Right.
At any time after the later of the Distribution Date and the first
occurrence of a Flip-in Event or Flip-over Event and prior to the acquisition by
any person or group of affiliated or associated persons of 50% or more of the
outstanding Common Shares, the Board of Directors of the Company may exchange
the Rights (other than any Rights which have become void), in whole or in part,
at an exchange ratio of one Common Share per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment in the Purchase
Price of at least 1%. The Company is not required to issue fractional Common
Shares or other securities issuable upon the exercise of Rights. In lieu of
issuing such securities, the Company may make a cash payment, as provided in the
Rights Agreement.
The Company may redeem the Rights in whole, but not in part, at a price of
$0.01 per Right (the "Redemption Price"), at any time prior to the close of
business on the later of (i) the Distribution Date and (ii) the first date of
public announcement that a person has become an Acquiring Person. Immediately
upon any redemption of the Rights, the right to exercise the Rights will
B-3
<PAGE>
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
The Rights Agreement may be amended by the Company without the approval of
any holders of Right Certificates, including amendments which add other events
requiring adjustment to the purchase price payable and the number of Common
Shares or other securities issuable upon the exercise of the Rights or which
modify procedures relating to the redemption of the Rights, provided that no
amendment may be made at such time as the Rights are not then redeemable which
decreases the stated Redemption Price or the period of time remaining until the
Final Expiration Date or which modifies a time period relating to when the
Rights may be redeemed.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company. This
summary description of the Rights is as of November 6, 1995, does not purport to
be complete and is qualified in its entirety by reference to the Rights
Agreement, which is incorporated herein by this reference.
B-4
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>EQUIFAX SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
<TEXT>
<PAGE>
EXHIBIT 10.7
EQUIFAX INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Amended and Restated
October 1, 1989
<PAGE>
EQUIFAX INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 - DEFINITIONS
1.1 Accrued Benefit 1
1.2 Actuarial Equivalent 1
1.3 Beneficiary 1
1.4 Code 2
1.5 Company 2
1.6 Credited Service 2
1.7 Eligible Employees 2
1.8 Executive Committee 2
1.9 Exempt Grade 2
1.10 Final Average Earnings 2
1.11 Plan 3
1.12 Plan Earnings 3
1.13 Retirement Income Plan 3
1.14 Retirement Income Plan Benefit 3
ARTICLE 2 - ELIGIBILITY
2.1 Eligibility Requirements 4
2.2 Frozen Participation as of October 1, 1989 5
2.3 Schedule of Eligible Employees 5
ARTICLE 3 - BENEFITS
3.1 Amount of Benefit 6
3.2 Disability Benefit 9
3.3 Benefit Accrual 10
3.4 Vesting 10
3.5 Normal Form of Payment 11
3.6 Preretirement Death Benefit 11
3.7 Postretirement Death Benefit 11
3.8 Lump Sum Payment 12
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
ARTICLE 4 - NONFUNDED PLAN
4.1 Payment From General Treasury 13
4.2 Assets Subject to General Creditors 13
4.3 No Participant Contributions 14
ARTICLE 5 - RIGHTS OF EMPLOYEES AND OTHERS
5.1 Limitation on Rights Under Plan 15
5.2 No Employment Rights 15
5.3 Nonalienation 15
ARTICLE 6 - AMENDMENT AND TERMINATION OF THE PLAN
6.1 Amendment of the Plan 16
6.2 Termination of the Plan 16
ARTICLE 7 - MISCELLANEOUS
7.1 Headings 17
7.2 Construction 17
7.3 Administration 17
7.4 Withholding for Taxes 17
</TABLE>
ii
<PAGE>
EQUIFAX INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Amended and Restated Effective October 1, 1989
WHEREAS, the Company currently maintains the Equifax Inc. U.S. Retirement
Income Plan, which is a qualified defined benefit pension plan (the Retirement
Income Plan) for the benefit of its eligible employees; and
WHEREAS, Section 415 of the Internal Revenue Code of 1986 (the Code)
imposes a maximum benefit limitation on annual payments from the Retirement
Income Plan, and Code Section 401(a)(17) limits the amount of each participant's
annual compensation which can be taken into account under the Retirement Income
Plan to $200,000, as indexed to the CPI beginning in 1990; and WHEREAS, the
Company also maintains the Equifax Inc. Deferred Bonus Compensation Plan (the
Bonus Plan), pursuant to which certain executive employees of the Company may
defer receipt of bonuses otherwise currently payable by the Company; and
WHEREAS, bonuses paid by the Company are included in compensation in a
limited manner for purposes of calculating benefits accrued under the Retirement
Income Plan; and
WHEREAS, certain participants in the Retirement Income Plan would be
entitled to a greater benefit if it were calculated by ignoring the limitations
under Code Sections 415 and 401(a)(17) and by including annual bonuses, whether
paid currently or deferred under the Bonus Plan, to the extent the bonus does
not exceed 50 percent of the participant's annual base salary including any tax-
deferred amounts contributed under Code Sections 401(k) and/or 125; and
WHEREAS, the Company previously adopted the Equifax Inc. Supplemental
Executive Retirement Plan (the Plan) to provide to such participants in the
Retirement Income Plan supplemental payments from its general assets to bring
their total retirement benefits to the amount they would be entitled to receive
under the Retirement Income Plan if their benefit under the Retirement Income
Plan were calculated as described in the preceding paragraph; and
WHEREAS, the Company desires to amend and restate the Plan, effective as of
October 1, 1989, to provide additional supplemental retirement benefits, payable
from its general assets or from a trust or other fund as designated by the Board
of Directors of Equifax Inc., to executive employees in Exempt Grades No. 37 and
higher to ensure the payment of a competitive level of retirement income in
order to recruit, retain and motivate selected executive employees; and
WHEREAS, the Company desires to provide for the immediate payment of the
<PAGE>
supplemental retirement benefits payable under this Plan to any vested Plan
participant who becomes disabled, regardless of his age and service; and
NOW, THEREFORE, in consideration of the foregoing and of the valuable
services rendered and to be rendered to the Company by its executive employees
who are covered by this Plan, the Company hereby adopts the amendment and
restatement of the Plan as set forth below. United States subsidiaries of
Equifax Inc. may adopt this Plan subject to consent of the Board of Directors of
Equifax Inc. The amended and restated Plan will include the provisions set forth
below:
<PAGE>
ARTICLE I
Definitions
-----------
As used in the Plan, the following words and phrases and any derivatives
thereof will have the meanings set forth below unless the context clearly
indicates otherwise. Definitions of other words and phrases are set forth
throughout the Plan. Section references indicate sections of the Plan unless
otherwise stated. The masculine pronoun includes the feminine, and the singular
number includes the plural and the plural the singular, whenever applicable.
1.1 Accrued Benefit. The Eligible Employee's accrued benefit as defined under
---------------
the Retirement Income Plan.
1.2 Actuarial Equivalent. A benefit of equal value, determined in the same
--------------------
manner as under the Retirement Income Plan except that the interest assumption
will be the Pension Benefit Guaranty Corporation immediate annuity rate in
effect on the first day of the first calendar year for which the benefit is
payable.
1.3 Beneficiary. The person whom the Eligible Employee has designated as his
-----------
joint annuitant or other beneficiary under the Retirement Income Plan.
1.4 Code. The Internal Revenue Code of 1986 as amended from time to time, and
----
rules and regulations issued under the Code.
1.5 Company. Equifax Inc. and any United States subsidiary of Equifax Inc.
-------
that adopts this Plan with the consent of the Board of Directors of Equifax Inc.
1.6 Credited Service. The Eligible Employee's credited service as defined
----------------
under the Retirement Income Plan.
1.7 Eligible Employees. Employees and former employees of the Company who have
------------------
satisfied the eligibility requirements set forth in Section 2.1.
1.8 Executive Committee. The Executive Committee of the Board of Directors of
-------------------
Equifax Inc.
1.9 Exempt Grade. The salary grading system which the Companies use to
------------
classify managerial employees. For any Company which does not use a salary
grading system, the Executive Committee will designate an equivalent system to
grade Eligible Employees.
1.10 Final Average Earnings. The annual average of the Eligible Employee's
----------------------
Plan Earnings during the 36-consecutive-month period of his employment with the
Company which produces the highest average.
1
<PAGE>
1.11 Plan. The Equifax Inc. Supplemental Executive Retirement Plan as amended
----
from time to time.
1.12 Plan Earnings. The Eligible Employee's annual base salary including any
-------------
tax-deferred amounts contributed under Code Sections 401(k) and/or 125 and
excluding payments under the Performance Share Plan, plus, for purposes of the
benefit provided under Subsection 3.1(a), 100 percent of his annual paid or
deferred bonus.
1.13 Retirement Income Plan. The Equifax Inc. U.S. Retirement Income Plan, as
----------------------
amended from time to time, and any successor plan.
1.14 Retirement Income Plan Benefit. The benefit actually paid or payable
------------------------------
under the Retirement Income Plan to the Eligible Employee or to his Beneficiary,
as adjusted under all applicable provisions of the Retirement Income Plan,
including but not limited to adjustments for the form of payment and/or early
payment.
ARTICLE 2
Eligibility
-----------
2.1 Eligibility Requirements. The employees and former employees of a Company
------------------------
who will be eligible to participate in the Plan include those who meet all of
the following conditions:
(a) are or were officers or assistant officers of a Company;
(b) are designated by the Executive Committee as being eligible for
benefits under this Plan;
(c) are or were participants in the Retirement Income Plan;
(d) have sufficient Plan Earnings and Credited Service to be eligible for
a benefit under Section 3.1; and
(e) either (1) are in Exempt Grade 37 or above or an equivalent grade, or
(2) were first designated as Eligible Employees before October 1, 1989 and
are listed on Schedule B attached to this Plan.
2.2 Frozen Participation as of October 1, 1989. Eligible Employees below
------------------------------------------
Exempt Grade No. 37 who were designated as such before the effective date of
this amendment and restatement on October 1, 1989, will continue to participate
in this Plan and will be eligible to receive the benefit described in Subsection
2
<PAGE>
3.1(b). In the event such Eligible Employee subsequently achieves Exempt Grade
No. 37 or above and the Executive Committee designates him as an Eligible
Employee with Exempt Grade status, he will then be eligible to receive any
benefit for which he is eligible under Subsection 3.1(a).
2.3 Schedule of Eligible Employees. The Pension and Profit Sharing Committee
------------------------------
will be responsible for maintaining a list of Eligible Employees.
ARTICLE 3
Benefits
--------
3.1 Amount of Benefits. To the extent vested under Section 3.4 and at the time
------------------
described in this Section, each Eligible Employee will be eligible to receive
the benefit described in either Subsection (a) or (b), as applicable, which
benefit will be paid in the same form and adjusted for the form of payment in
the same manner as his Retirement Income Plan Benefit.
(a) Exempt Grade Nos. 37 and Above who Retire After Reaching Age 55. A
benefit will be payable from this Plan to the two respective groups of
Eligible Employees identified below, in the respective amounts identified
below. The benefit payable under this Plan to the Eligible Employee in
Exempt Grade No. 37 or higher, who retires after reaching age 55 and before
reaching age 65, will not be reduced for early payment. For purposes of
this Subsection (a), the Eligible employee who terminates employment for
any reason with at least 5 years of Credited Service will be treated as
having retired.
(1) Exempt Grade Nos. 46 and Above. Each Eligible Employee in Exempt
Grade Nos. 46 and above who retires after reaching age 55 will be
eligible to receive a benefit in an annual amount equal to 3 percent
of his Final Average Earnings, multiplied by the number of his years
of Credited Service up to 20 years, minus the annual amount of his
Retirement Income Plan Benefit. Each such Eligible Employee who
retires after reaching age 65 will be eligible to will be eligible to
receive a benefit in an annual amount equal to 60 percent of his Final
Average Earnings, regardless of the number of his years of Credited
Service, minus the annual amount of his Retirement Income Plan
Benefit, and if he has fewer than 20 years of Credited Service, minus
the actuarial equivalent of the aggregated annual or annualized amount
of his qualified and nonqualified defined benefit plan retirement
benefits received or receivable from all previous employers.
(2) Exempt Grade Nos. 37 through 45. Each Eligible Employee in Exempt
Grade Nos. 37 through 45 who retires after reaching age 55 will be
eligible to receive a benefit in an annual amount equal to 1.5 percent
3
<PAGE>
of his Final Average Earnings multiplied by the number of his years of
Credited Service up to 40 years, minus the annual amount of his
Retirement Income Plan Benefit; provided that he will be given credit
for a number of additional years of Credited Service equal to the
least of (A) years to age 65, (B) years to a total of 40, or (C) 5
years.
(b) Participants as of September 30, 1989 Who Terminate Before Age 55 or
Who are in Exempt Grades Below No. 37. Each Eligible Employee who was a
participant as of September 30, 1989, and who either (1) is in Exempt Grade
No. 37 or above and terminates employment before reaching age 55, or (2) is
in an Exempt Grade below No. 37 regardless of his age at termination or
retirement, will be eligible to receive a benefit in the amount he would
receive under the Retirement Income Plan if it were calculated by ignoring
the limitations under Code Sections 415 and 401(a)(17) and any other
limitations on benefits payable from qualified retirement plans in effect
at the time when benefits are payable under this Plan; and by defining his
Plan Earnings to include the amount of his annual paid or deferred bonus
which does not exceed 50 percent of his annual base salary including any
tax-deferred amounts contributed under Code Sections 401(k) and/or 125. His
benefit under this Plan will be payable in the same form and beginning at
the same time as his Retirement Income Plan Benefit, (which amount will be
reduced for early payment in the manner described in the Retirement Income
Plan if applicable), minus his Retirement Income Plan Benefit.
3.2 Disability Benefit. In the event a vested Eligible Employee described in
------------------
subsection 3.1(a) incurs a disability within the meaning of the Company's long-
term disability plan (whether or not he is covered under that plan), he will be
entitled to receive the benefit described in that Subsection as calculated on
the basis of his Final Average Earnings and years of Credited Service determined
on his disability commencement date as defined in the long-term disability plan,
and without any reduction for early payment. The benefit will begin as of his
disability commencement date. The benefit will be paid even though his age
and/or years of Credited Service would not otherwise entitle him to a benefit
under this Plan.
If the disabled Eligible Employee also receives a benefit under the
Retirement Income Plan as of his disability commencement date, he will receive
his benefit under this Plan in the same form and adjusted for the form of
payment in the same manner as his Retirement Income Plan Benefit. If he does not
receive his Retirement Income Plan Benefit and he is married as of his
disability commencement date, his benefit under this Plan will be paid in the
form of the 50 percent joint and survivor annuity, adjusted for the form of
payment in the same manner as his Retirement Income Plan Benefit; if he is
unmarried, his benefit under this Plan will be paid in the form of the single
life annuity. The Eligible Employee's disability benefit payments will cease
immediately in the event he becomes employed full-time with any employer. In the
4
<PAGE>
event he resumes employment with a Company and is again designated as an
Eligible Employee, his Credited Service earned before his disability
commencement date will be included in the calculation of any benefit he
subsequently receives under this Plan.
3.3 Benefit Accrual. As of the date of determination, each Eligible Employee
---------------
will be considered to have accrued the benefit that would be payable under
Section 3.1 or 3.2, as applicable, if he terminated employment on that date,
taking into account his vested Retirement Income Plan Benefit accrued as of that
date.
3.4 Vesting. Each Eligible Employee's right to benefits under this Plan will
-------
become vested at the same time and in the same manner as his Retirement Income
Plan Benefit becomes vested, except that an Eligible Employee who terminates
employment before he reaches age 55 and is not eligible for a disability benefit
under Section 3.2, will not receive any benefit under Subsection 3.1(a).
3.5 Normal Form of Payment. Except as provided in Sections 3.2 and 3.8, the
----------------------
benefit payable from this Plan will be paid in the same form and at the same
time as the Eligible Employee's Retirement Income Plan Benefit.
3.6 Preretirement Death Benefit. In the event an Eligible Employee dies at a
---------------------------
time when a preretirement death benefit is payable to his surviving spouse or
other beneficiary under the Retirement Income Plan, any gross benefit payable to
his Beneficiary under this Plan will be calculated in the same manner and will
be paid at the same time as the benefit payable under the Retirement Income
Plan, and will be offset by any benefit payable under the Retirement Income
Plan.
3.7 Postretirement Death Benefit. After the death of an Eligible Employee who
----------------------------
is receiving benefits under this Plan in a form other than a joint annuity,
benefits will continue to be paid to his Beneficiary in the same form, beginning
as of the first day of the month following the month in which the Eligible
Employee dies, and ending on the date when benefits cease to be paid to the
Beneficiary under the Retirement Income Plan. In the event an Eligible Employee
dies while receiving benefits from this Plan in the form of a joint annuity, the
benefit will continue to be paid to his surviving Beneficiary, adjusted in the
same manner and payable at the same time as the death benefit under the
Retirement Income Plan.
3.8 Lump Sum Payment. In the event benefits under this Plan would be paid in a
----------------
monthly amount less than $100, the Pension and Profit Sharing Committee may in
its sole discretion make a lump sum payment to the Eligible Employee or
Beneficiary, in an amount equal to the present value of the benefit as
calculated using the Pension Benefit Guaranty Corporation interest rate for
immediate annuities as in effect on the first day of the calendar year in which
monthly payments otherwise would
5
<PAGE>
have begun. The lump sum payment will be made at the time the first monthly
payment would have been made.
ARTICLE 4
Nonfunded Plan
--------------
4.1 Payment From General Treasury. Benefits under this Plan will be paid from
-----------------------------
the general treasury of the Eligible Employee's employer as they become due, and
will not be a liability or obligation of any other member of the controlled
group or other related employer. The Company reserves the right to establish and
to change from time to time the method for paying benefits under this Plan.
The Board of Directors of Equifax Inc. may, in its sole discretion, direct
that a trust fund be established under this Plan. Except in the event of such
direction, no trust fund or legal reserve will be created to fund any benefit
payable under this Plan. No Eligible Employee or Beneficiary will have any prior
right to assets of the Company or any related employer arising from this Plan,
except to the extent that he has a benefit funded under any trust fund
established by the Board of Directors of Equifax Inc.
4.2 Assets Subject to General Creditors. All assets of this Plan, and of any
-----------------------------------
trust fund established under this Plan, will be subject to the Company's general
creditors, and each Eligible Employee or Beneficiary will have the status of a
general unsecured creditor of the Company.
4.3 No Participant Contributions. Participants will neither be required nor
----------------------------
permitted to make contributions to this Plan.
ARTICLE 5
Rights of Employees and Others
------------------------------
5.1 Limitation on Rights Under Plan. Participation in this Plan creates an
-------------------------------
unfunded, unsecured promise to make payments to the Eligible Employee or to his
Beneficiary in the future. No employee or other person will have any rights
under this Plan except as specifically provided in the Plan.
5.2 No Employment Rights. This Plan is not a contract of employment and will
--------------------
not affect the Company's right to terminate the employment of any employee.
5.3 Nonalienation. No benefits accrued under the Plan will be subject to the
-------------
6
<PAGE>
claim or legal process of any creditor of any Eligible Employee or Beneficiary,
and no Eligible Employee or Beneficiary can alienate, transfer, anticipate or
assign any interest in any benefit accrued under the Plan, except that
distributions will be made as required by law.
ARTICLE 6
Amendment and Termination of the Plan
-------------------------------------
6.1 Amendment of the Plan. The Board of Directors of Equifax Inc. will have
---------------------
the right to amend the Plan from time to time; provided that no amendment will
have the effect of eliminating any benefit accrued and vested before the
effective date of the amendment.
6.2 Termination of the Plan. Each Company expects this Plan to be continued
-----------------------
indefinitely but necessarily reserves the right to terminate its participation
in the Plan at any time by action of its own Board of Directors. The entire Plan
may be terminated at any time by action of the Board of Directors of Equifax
Inc. In the event of Plan termination, each Eligible Employee and Beneficiary
will preserve his right to the full amount of his vested benefit accrued under
this Plan as of the termination date.
ARTICLE 7
Miscellaneous
-------------
7.1 Headings. The headings and subheadings in this Plan have been inserted for
--------
convenient reference and in the event any heading or subheading conflicts with
the text of the provision, the text will govern.
7.2 Construction. The Plan will be construed in accordance with the laws of
------------
the State of Georgia, except to the extent such laws are preempted by the code
or by ERISA.
7.3 Administration. The Plan will be administered by the Pension and Profit
--------------
Sharing Committee.
7.4 Withholding for Taxes. Any distribution under this Plan will be subject
---------------------
to withholding for taxes as required by law.
7
<PAGE>
AMENDMENT TO THE
EQUIFAX INC. SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN
THIS AMENDMENT to the Equifax Inc. Supplemental Executive Retirement Plan
(the "Plan"), made this ____ day of _____________, 1992, by Equifax Inc., a
corporation organized and existing under the laws of the State of Georgia
(hereinafter referred to as the "Company"), to be effective as indicated below.
W I T N E S S E T H:
WHEREAS, the Company desires to amend the Plan for purposes of establishing
enhanced early retirement benefits for certain described employees who elect to
receive said benefits; NOW, THEREFORE, the Company does hereby amend the Plan as
follows:
I.
A new subsection (c) is hereby added to Section 3.1 as follows:
(c) Certain Eligible Employees Electing Early Retirement Between February
-------------------------------------------------------------------------
28 and December 31. 1991.
------------------------
Pursuant to the provisions of the Retirement Income Plan, certain Eligible
Employees who terminate employment between February 28 and December 31,
1991, are eligible to elect early retirement under said Retirement Income
Plan, notwithstanding the fact that they had not yet attained age 55 or
completed five years of service as of said date. Any Eligible Employee
listed on Schedule A who is entitled to elect an Early Retirement Date and
who terminates employment during said period and pursuant to said
provisions, shall be entitled to the benefits described in Section
3.1(8)(1) or (2), as appropriate, and not section 3.1(b) of this Plan,
notwithstanding the fact that said eligible employee has not attained age
55 as of the date of termination of employment. Any such Eligible Employee
who is listed on Schedule B shall continue to be entitled to the benefits
provided pursuant to Section 3.1(b) of this Plan.
<PAGE>
II.
All other parts of the Plan not inconsistent herewith are hereby confirmed
and ratified.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its
duly authorized officers, and the corporate seal affixed, this ____ day of
___________, 1992.
COMPANY:
EQUIFAX INC.
By: /s/ D. E. McGuffey
------------------------------
Title: Vice President - CIBF
---------------------------
ATTEST:
By: /s/ Joan A. Martin
-------------------------
Title: Assistant Secretary
-----------------------
-2-
<PAGE>
AMENDMENT TO THE
EQUIFAX INC. SUPPLIMENTAL
EXECUTIVE RETIREMENT PLAN
THIS AMENDMENT to the Equifax Inc. Supplemental Executive Retirement Plan
(the "Plan''), made this 21/st/ day of March, 1994, by Equifax Inc., a
------ -----
corporation organized and existing under the laws of the State of Georgia
(hereinafter referred to as the "Company"), to be effective as indicated below.
W I T N E S S E T H:
WHEREAS, the Company desires to amend the Plan to clarify that annual
bonuses paid in the form of restricted stock or other property will be taken
into account for certain purposes under the Plan;
NOW, THEREFORE, the Company does hereby amend the Plan as
follows:
I.
Section 1.12 is hereby amended effective January 1, 1994, by adding the
following sentence to the end thereof:
In determining the: amount of a Participant's bonus, the amount of any
bonus paid pursuant to the Company's Incentive Compensation Plan in the
form of shares of restricted stock or other property pursuant to the
Company's Incentive Compensation Plan shall be included as part of the
Participant's bonus compensation for the year in which such property is
transferred to the Participant, without regard to any vesting or forfeiture
provisions that could defer the time at which the value of such property is
included in the Participant's taxable income; provided, however, that the
amount of such bonus taken into account under the Plan shall not include
any premium representing the excess of the fair market value of such
property over the amount of such bonus if paid in cash.
<PAGE>
All other parts of the Plan not inconsistent herewith are hereby confirmed
and ratified.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
by its duly authorized officers, and the corporate seal affixed as of the day
and year first above written.
COMPANY:
EQUIFAX INC.
By: /s/ Donald E. McGuffey
-----------------------------
Title: Vice President - CIBF
---------------------------
ATTEST:
By: /s/ Kathy N. Kelpen
--------------------------
Title: Admin. Asst.
-----------------------
-2-
<PAGE>
AMENDMENT TO THE
EQUIFAX INC. SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN
THIS AMENDMENT to the Equifax Inc. Supplemental Executive Retirement Plan
(the "Plan"), made this 21/st/ day of March, 1994, by Equifax Inc., a
------ -----
corporation organized and existing under the laws of the State of Georgia
(hereinafter referred to as the "Company"), to be effective as of April 1, 1993.
W I T N E S S T H:
WHEREAS, the Company desires to amend the Plan for purposes of establishing
enhanced early retirement benefits for certain participants in the Plan who
leave the employ of the Company at management's decision and for certain other
purposes;
NOW, THEREFORE, the Company does hereby amend the Plan as follows:
I.
In accordance with a change in the salary administration program of the
Company, references in the Plan to "Exempt Grade No. 37" and "Exempt Grade No.
46" shall mean Exempt Grade No. 79 and Exempt Grade No. 84, respectively.
II.
The first sentence of -Section 3.1 is hereby amended by deleting the words
"in either Subsection (a) or (b)" and inserting the words "in Subsection (a.)
through (d)."
III.
A new subsection (d) is hereby added to Section 3.1 as follows:
(d) Participants in Exempt Grades Nos, 79 and Above Who Terminate After
-------------------------------------------------------------------
Age 50 and Before Age 55. Effective on and after April 1, 1993, each
------------------------
Eligible Employee listed on Schedule A hereto who is in Exempt Grade Nn. 79
or above at the time of termination of employment and who terminates
employment with the Company upon the request of management and whose age at
the time of termination is at least 50 but
<PAGE>
less than 55 will be eligible to receive a benefit in the amount he
would receive under the Retirement Income Plan calculated based upon his
Plan Earnings (which include the amount of his annual paid or deferred
bonus), minus the annual amount of his Retirement Income Plan Benefit;
provided that if such Eligible Employee is in Exempt Grade No. 8-4 or above
at the time of termination of employment, he will be given credit for the
number of additional years of Credited Service he would have had if he
terminated employment at age 55. Such benefit will not be reduced for early
payment. In the event an Eligible Employee qualifies for benefits under
this subsection and subsection (b) of this Section 3.1, such Eligible
Employee shall be entitled to the greater of such benefits.
IV.
A new Section 3.9 is hereby added to Article III as follows:
3.9 Termination for Cause. Notwithstanding anything in this Plan to the
---------------------
contrary, an Eligible Employee shall not, be entitled to any benefit
hereunder if his termination of employment with the Company is a
consequence of embezzlement, theft or infraction of any criminal law
involving the Company or a related entity or engaging in activities
directly competitive with the Company during his employment with the
Company. Any denial of benefits under this Section shall be made by the
Pension, Thrift and Group Benefit Plans Committee in its sole discretion,
acting in good faith.
VI.
All other parts of the Plan not inconsistent herewith are
hereby confirmed and ratified.
-2-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
by its duly authorized officers, and the corporate seal affixed, as of the: day
and year first above written.
COMPANY;
EQUIFAX INC.
By: /s/ Donald E. McGuffey
--------------------------------
Title: Vice President - CIBF
-----------------------------
ATTEST:
By: Kathy N. Kelpen
---------------------------------
Title: Administrative Assistant
------------------------------
-3-
<PAGE>
FOURTH AMENDMENT TO THE
EQUIFAX INC. SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN
THIS AMENDMENT to the Equifax Inc. Supplemental Executive Retirement
Plan (the "Plan"), made this 2nd day of December, 1996, by Equifax Inc., a
corporation organized and existing under the laws of the State of Georgia
(hereinafter referred to as the "Company"), to be effective as indicated below.
W I T N E S S E T H:
WHEREAS, the Company has heretofore adopted the Plan in order to
provide supplemental retirement benefits to certain employees of the Company;
WHEREAS, pursuant to Section 6.1 of the Plan, the Board of Directors has
the right to amend the Plan from time to time;
WHEREAS, the Plan was amended and restated in its entirety effective
as of October 1, 1989, and has subsequently been amended on three separate
occasions;
WHEREAS, the Company desires further to amend the Plan at this time in
order to take into account the Company's new salary classification system,
effective May 1, 1996; and
WHEREAS, the Board of Directors has authorized the following amendment to
the Plan;
NOW, THEREFORE, the Company does hereby amend the Plan as follows:
I.
In accordance with a change in the salary administration program of
the Company, references in the Plan to "Exempt Grade No. 79" and "Exempt Grade
<PAGE>
No. 84" shall mean Exempt Grade No. 3 and Exempt Grade No. 5, respectively,
effective as of May 1, 1996. References in the Plan to Exempt Grade No. 45 shall
mean Exempt Grade No. 83 for the period April 1, 1993 through April 30, 1996,
and shall mean Exempt Grade No. 4 on and after May 1, 1996.
II.
All other parts of the Plan not inconsistent herewith are hereby confirmed
and ratified.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
by its duly authorized officers, and the corporate seal affixed, as of
the day and year first above written.
COMPANY:
EQUIFAX INC.
By: /s/ D. E. McGuffey
-------------------------------
Title: Vice President - CIBF
----------------------------
ATTEST:
By: /s/ Kathy Kelpen
----------------------------
Title: Staff Assistant Senior
-------------------------
-2-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.8
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>EQUIFAX EXE. LIFE AND SUPP. RETIREMENT PLAN
<TEXT>
<PAGE>
Exhibit 10.8
EQUIFAX INC.
Executive Life and Supplemental
Retirement Benefit Plan (U.S.)
This document constitutes the Executive Life and Supplemental Retirement
Benefit Plan (U.S.) (the "Plan") adopted by Equifax Inc. (the "Company") to be
effective January 1, 2000. The Plan incorporates by reference those certain
Questions and Answers dated December 1999 and subsequent updates thereto, each
Split Dollar Life Insurance Agreement entered into with a Plan Participant and
each Collateral Assignment executed by a Plan Participant.
1. Purpose
The purpose of the Plan is to reward certain specified executives of the
Company (the "Participants") for their service to the Company and to provide an
incentive to the Participants, including newly hired executives, for future
service and loyalty to the Company. The benefits of participation consist of
contributions made by the Company to purchase life insurance policies on the
lives of Participants, which policies shall be owned by Participants subject to
the provisions of this Plan and the documents incorporated herein.
2. Plan Operation
Participants shall be designated by the Company's Chief Executive Officer and
shall be informed in writing of the Commencement Date of their participation in
the Plan. In order to participate, the Participants must complete certain
enrollment documents and must execute (i) an Agreement which specifies, among
other matters, the respective interests of the Participant and the Company in
the life insurance policies in question, and (ii) a Collateral Assignment of
certain rights in those policies in favor of the Company.
3. Defined Terms
The following terms shall have the meanings ascribed to them below for
purposes of the Plan and the documents incorporated herein:
3.1 Cause. Termination by the Company of the Participant's employment for
-----
"Cause" means termination by the Company of the Participant's employment upon
(a) the Participant's willful and continued failure to substantially perform the
Participant's duties with the Company (other than any failure resulting from the
Participant's incapacity due to physical or mental illness), after a written
demand for substantial performance is delivered to Participant by the Chief
Executive Officer of the Company (or if Participant is the Chief Executive
Officer, the Chairman of the Compensation and Human Resources Committee of the
Board of Directors) that specifically identifies the manner in which the Chief
Executive Officer believes that Participant has not substantially performed the
Participant's duties, or (b) the Participant's willfully engaging in misconduct
that is materially injurious to the Company, monetarily or otherwise. For
purposes of this paragraph 3.1, no act, or failure to act, on the Participant's
part will be considered "willful" unless done, or omitted to be done, by
Participant not in good faith and without reasonable belief that the
Participant's action or omission was in the best interest of the
<PAGE>
Company. Notwithstanding the above, Participant will not be deemed to have been
terminated for Cause unless and until Participant has been given a copy of a
Notice of Termination from the Chief Executive Officer of the Company (of if
Participant is the Chief Executive Officer, the Chairman of the Compensation and
Human Resources Committee of the Board of Directors), after reasonable notice to
Participant and an opportunity for Participant, together with the Participant's
counsel, to be heard before (i) the Chief Executive Officer, or (ii) if
Participant is an elected officer of the Company, the Board of Directors of the
Company, finding that in the good faith opinion of the Chief Executive Officer,
or, in the case of an elected officer, finding that in the good faith opinion of
two-thirds of the Board of Directors, Participant committed the conduct set
forth above in clauses (a) or (b) of this paragraph 3.1, and specifying the
particulars of that finding in detail.
3.2 Change in Control. A "Change in Control" of the Company means the
-----------------
occurrence of any of the following events during the period in which the Plan
remains in effect:
(a) Voting Stock Accumulations. The accumulation by any Person of
--------------------------
Beneficial Ownership of twenty percent (20%) or more of the combined voting
power of the Company's Voting Stock; provided that for purposes of this
subparagraph 3.2(a), a Change in Control will not be deemed to have
occurred if the accumulation of twenty percent (20%) or more of the voting
power of the Company's Voting Stock results from any acquisition of Voting
Stock (a) directly from the Company that is approved by the Incumbent
Board, (b) by the Company, (c) by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any Subsidiary, or (d) by
any Person pursuant to a Business Combination that complies with clauses
(i), (ii) and (iii) of subparagraph 3.2(b), or
(b) Business Combinations. Consummation of a Business Combination,
---------------------
unless, immediately following that Business Combination, (i) all or
substantially all of the Persons who were the beneficial owners of Voting
Stock of the Company immediately prior to that Business Combination
beneficially own, directly or indirectly, more than sixty-six and two-
thirds percent (66 2/3%) of the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of Directors of the entity
resulting from that Business Combination (including, without limitation, an
entity that as a result of that transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or
more subsidiaries) in substantially the same proportions relative to each
other as their ownership, immediately prior to that Business Combination,
of the Voting Stock of the Company, (ii) no Person (other than the Company,
that entity resulting from that Business Combination, or any employee
benefit plan (or related trust) sponsored or maintained by the Company, any
Eighty Percent (80%) Subsidiary or that entity resulting from that Business
Combination) beneficially owns, directly or indirectly, twenty percent
(20%) or more of the then outstanding shares of common stock of the entity
resulting from that Business Combination or the combined voting power of
the then outstanding voting securities entitled to vote generally in the
election of directors of that entity, and (iii) at least a majority of the
members of the Board of Directors of the entity resulting from that
Business Combination were members of the Incumbent Board at the time of the
action of the Board providing for that Business Combination; or
2
<PAGE>
(c) Sale of Assets. A sale or other disposition of all or
--------------
substantially all of the assets of the Company; or
(d) Liquidations or Dissolutions. Approval by the shareholders of the
----------------------------
Company of a complete liquidation or dissolution of the Company, except
pursuant to a Business Combination that complies with clauses (i), (ii) and
(iii) of subparagraph 3.2(b).
For purposes of this paragraph 3.2, the following definitions will apply:
"Beneficial Ownership" means beneficial ownership as that term is used in
Rule 13d-3 promulgated under the Exchange Act.
"Business Combination" means a reorganization, merger or consolidation of
the Company.
"Eighty Percent (80%) Subsidiary" means an entity in which the Company
directly or indirectly beneficially owns eighty percent (80%) or more of
the outstanding Voting Stock.
"Exchange Act" means the Securities Exchange Act of 1934, including
amendments, or successor statutes of similar intent.
"Incumbent Board" means a Board of Directors at least a majority of whom
consist of individuals who either are (a) members of the Company's Board of
Directors as of January 1, 2000, or (b) members who become members of the
Company's Board of Directors subsequent to said date whose election, or
nomination for election by the Company's shareholders, was approved by a
vote of at least two-thirds (2/3) of the directors then comprising the
Incumbent Board (either by a specific vote or by approval of the proxy
statement of the Company in which that person is named as a nominee for
director, without objection to that nomination), but excluding, for that
purpose, any individual whose initial assumption of office occurs as a
result of an actual or threatened election contest (within the meaning of
Rule 14a-11 of the Exchange Act) with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board of Directors.
"Person" means any individual, entity or group (within the meaning of
Section 13(d)(3) or 14 (d)(2) of the Exchange Act).
"Subsidiary" means an entity more than fifty percent (50%) of whose equity
interests are owned directly or indirectly by the Company.
"Voting Stock" means the then outstanding securities of an entity entitled
to vote generally in the election of members of that entity's Board of
Directors.
3.3 Competitive Activity. A Participant or former Participant will be deemed to
--------------------
engage in "Competitive Activity" if he/she:
(a) directly or indirectly owns, operates, controls, participates in,
performs services for, or otherwise carries on, a business substantially
similar to or competitive with the business conducted by the Company or any
Subsidiary (without limit to any
3
<PAGE>
particular region, because Participant acknowledges that such business may
be engaged in effectively from any location in the United States or
Canada); provided that nothing set forth in this section will prohibit
Participant from owning not in excess of 5% of any class of capital stock
of any corporation if such stock is publicly traded and listed on any
national or regional stock exchange or on the NASDAQ Stock Market; or
(b) directly or indirectly attempts to persuade any employee or
customer of the Company or any Subsidiary to terminate such employment or
business relationship in order to enter into any such relationship on
behalf of Participant or any third party in competition with the business
conducted by the Company or any Subsidiary; or
(c) directly or indirectly engages in any activity that is harmful to
the interests of the Company or any Subsidiary, as determined by the
Compensation and Human Resources Committee in its sole discretion,
including the disclosure or misuse of any confidential information or trade
secrets of the Company or a Subsidiary.
3.4 Good Reason. Termination by the Participant of the Participant's employment
-----------
for "Good Reason" means termination by Participant of the Participant's
employment based on:
(a) The assignment to Participant of duties inconsistent with the
Participant's position and status with the Company as they existed
immediately prior to a Change in Control, or a substantial change in the
Participant's title, offices or authority, or in the nature of the
Participant's responsibilities, as they existed immediately prior to a
Change in Control, except in connection with the termination of the
Participant's employment for Cause or Disability or as a result of the
Participant's death or by Participant other than for Good Reason;
(b) A reduction by the Company in the Participant's base salary as in
effect on the date of this Letter or as the Participant's salary may be
increased from time to time;
(c) A failure by the Company to continue the Company's incentive
compensation plan(s), as it may be modified from time to time,
substantially in the form in effect immediately prior to a Change in
Control (the "Plan"), or a failure by the Company to continue Participant
as a participant in the Plan on at least the basis of the Participant's
participation immediately prior to a Change in Control or to pay
Participant the amounts that Participant would be entitled to receive in
accordance with the Plan;
(d) The Company's requiring Participant to be based more than thirty-
five (35) miles from the location where Participant is based immediately
prior to a Change in Control, except for required travel on the Company's
business to an extent substantially consistent with the Participant's
business travel obligations prior to the Change in Control, or if
Participant consents to that relocation, the failure by the Company to pay
(or reimburse Participant for) all reasonable moving expenses incurred by
Participant or to indemnify Participant against any loss realized in the
sale of the Participant's principal residence in connection with that
relocation;
(e) The failure by the Company to continue in effect any retirement
or compensation plan, performance share plan, stock option plan, life
insurance plan, health and accident plan, disability plan or another
benefit plan in which Participant is
4
<PAGE>
participating immediately prior to a Change in Control of the Company (or
provide plans providing Participant with substantially similar benefits),
the taking of any action by the Company that would adversely affect the
Participant's participation or materially reduce the Participant's benefits
under any of those plans or deprive Participant of any material fringe
benefit enjoyed by Participant immediately prior to a Change in Control, or
the failure by the Company to provide Participant with the number of paid
vacation days to which Participant is then entitled in accordance with the
Company's normal vacation practices in effect immediately prior to a Change
in Control;
(f) Any purported termination of the Participant's employment that is
not effected pursuant to a Notice of Termination satisfying the following
requirements:
A "Notice of Termination" means a notice that indicates the specific
provision in the definition of Cause relied upon and setting forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Participant's employment under the
provision so indicated. Any purported termination not effected
pursuant to a Notice of Termination meeting the requirements set forth
in this subparagraph will not be effective.
4. ERISA Provisions
4.1 The following provisions are part of this Plan and are intended to meet the
requirements Part 4 of Title I of the ERISA:
(a) The named fiduciary: Equifax Inc.
(b) The funding policy under this Plan is that all premiums on the
Policy be remitted to the Insurer when due.
(c) Direct payment by the Insurer is the basis of payment of benefits
under the Plan, with those benefits in turn being based on the payment of
premiums as provided in the Plan.
4.2 The following provisions are part of this Plan and are intended to meet the
requirements of Part 5 of Title I of ERISA:
(a) For claims procedure purposes, the "Claims Manager" shall be the
Senior Vice President, Compensation and Benefits of the Company.
(b) If for any reason a claim for benefits under the Plan is denied
by the Company, the Claims Manager shall deliver to the claimant a written
explanation setting forth the specific reasons for the denial, pertinent
references to the Plan or Agreement section on which the denial is based,
such other data as may be pertinent and information on the procedures to be
followed by the claimant in obtaining a review of his claim, all written in
a manner calculated to be understood by the claimant. For this purpose:
(1) The claimant's claim shall be deemed filed when presented
orally or in writing to the Claims Manager.
5
<PAGE>
(2) The Claims Manager's explanation shall be in writing
delivered to the claimant within 90 days of the date
the claim is filed.
(c) The claimant shall have 60 days following his receipt of the
denial of the claim to file with the Claims Manager a written request for
review of the denial. For such review, the claimant or his representative
may submit pertinent documents and written issues and comments.
(d) The Claims Manager shall decide the issue on review and
furnish the claimant with a copy within 60 days following his receipt of
the claimant's request for review of his claim. The decision on review
shall be in writing and shall include specific reasons for the decision
written in a manner calculated to be understood by the claimant, as well as
specific references to the pertinent Plan provisions on which the decision
is based. If a copy of the decision is not so furnished to the claimant
within such 60 days, the claim shall be deemed denied on review.
5. Effect of Change in Control
In the event of a Change in Control of the Company, the trustee of any
trust which has been established for purposes of making payments of
contributions to insurance policies required by the Agreement shall, as provided
in such trust, deliver to the appropriate insurance company said contributions
as required.
6. Amendment of Plan
The Plan may be amended by the Company at any time in its sole discretion,
except that the definition of Change in Control and the provisions of Section 5
above may not be amended without the written consent of all Participants in the
event that a Change in Control has occurred.
IN WITNESS WHEREOF, the Company has executed this Plan to be effective
January 1, 2000.
EQUIFAX INC.
By: /s/ Richard Gapen
----------------------------
Title: Senior Vice President
-------------------------
6
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.21
<SEQUENCE>5
<FILENAME>0005.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT
<TEXT>
<PAGE>
EXHIBIT 10.21
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement (the "Agreement") is entered into on the date
written below between Equifax Inc., a Georgia Corporation ("Equifax"), with its
principal place of business located in Atlanta, Georgia, and William V. Catucci
("Executive"), an individual residing at 3483 Fenimore Drive, Mohegan Lake, New
York.
In consideration of the promises and the terms set forth in this Agreement, the
parties agree as follows:
1. Employment as Executive Vice President of Equifax. Equifax employs
Executive, and Executive accepts employment, as Executive Vice President & Group
Executive of North American Information Services (the "Business") upon the terms
and conditions stated in this document. Executive will report to the President
and Chief Operating Officer ("COO") of Equifax. Executive will be the senior
executive of the Business and will be responsible for the general management and
operation of the Business and have the authority and duties commensurate with
such position. Executive will perform such additional duties and have such
additional responsibilities and powers commensurate with his position as
delegated to him from time to time by the COO. Executive will be based in
Atlanta, Georgia (at Equifax's executive offices).
2. Term. The term of employment under this Agreement (the "Employment
Term") will begin on the date written below and terminate on May 1, 2002, unless
terminated sooner pursuant to the provisions of Section 6, provided that the
Employment Term will be extended for additional successive one (1) year periods
<PAGE>
unless either party gives the other written notice of nonextension at least
ninety (90) days prior to the end of the then Employment Term.
3. Extent of Services. Executive agrees that during the Employment Term
he will devote substantially all of his time and efforts during regular business
hours to the performance of Executive's duties, provided that Executive may
manage his personal investments, be involved in charitable activities and, with
the consent of the COO, serve on for profit boards, provided that such
activities do not materially interfere with Executive's performance of his
duties hereunder.
4. Consideration. As consideration for all of the services performed by
Executive pursuant to this Agreement, Equifax will compensate Executive as
follows:
4.1 Base Salary. Executive will be entitled to a minimum annual base
salary of $350,000 for the first year of employment and of $400,000 thereafter,
payable by direct deposit in equal biweekly installments. The base salary as in
effect from time to time will be referred to as "Base Salary".
4.2 Benefits. Executive will be entitled to participate in all employee
benefit plans and perquisites of Equifax now or hereafter existing (including
health, life, disability, dental and retirement plans and financial planning and
tax counseling services) in which employees at his level are entitled to
participate.
4.3 Annual Incentive. Executive will be eligible for an annual incentive
payment in accordance with Equifax's Executive Incentive Plan for each Plan year
during the Employment Term, beginning with 2000. Per Plan guidelines, the amount
of
<PAGE>
the incentive payment is determined by Equifax's overall financial performance,
North American Information Service's financial performance and Executive's
individual performance. Executive's target bonus will be 50% of Base Salary paid
in the year, with the opportunity to earn up to 150% of Base Salary paid. In no
event will the incentive payment for the 2000 Plan year be less than 50% of Base
Salary paid for the year. Executive's incentive payment for any partial Plan
Year shall be prorated based on the length of Executive's employment for that
Plan year.
4.4 Bonus. Executive will be entitled to a bonus of $150,00, payable in
two (2) equal installments. The first payment will be made within 30 days of
the commencement of Executive's employment. The second installment will be Paid
on the first anniversary of Executive's employment unless Executive retires,
resigns other than for Good Reason or is discharged for Cause prior to such
date. In the event Executive retires, resigns other than for Good Reason, or is
discharged for Cause within the first six (6) months of commencement of
employment, Executive will repay a pro rata portion of the first $75,000
installment payment based on the length of employment during the first six (6)
month period.
4.5 Stock Options. Equifax will grant Executive an option to purchase
30,000 shares of Equifax Inc., common stock (the "Option") at the market value
on the day of the grant, effective as of the date of employment or the earliest
practical date thereafter. The Option will have a ten (10) year term. The Option
will be subject to Equifax's Standard Option Agreement, provided that the
vesting schedule will be: (i) one-third of the shares will vest as of the grant
date, (ii) another one-third of the shares will vest on the first anniversary of
the grant date and (iii) the remaining one-third of the
<PAGE>
shares will vest on the second anniversary of the grant date. The Option will be
an incentive stock option to the full extent permitted under applicable laws or
regulations.
4.6 Executive will be provided up to three (3) months temporary living and
reasonable moving expense benefits under Equifax's relocation program.
4.7 Expenses. Equifax will reimburse the Executive's reasonable business
expenses in accordance with its policies in effect from time to time.
5. Restrictive Covenants.
5.1 Definition. As used in this Section 5, the term "Equifax" means
Equifax Inc., and any of its subsidiary, affiliated or successor companies.
5.2 Noncompetition Agreement. Executive agrees that he will not, during
employment with Equifax and for a period of two (2) years following the
termination of employment, directly or indirectly, conduct activity materially
involving consumer credit reporting, credit marketing; services, third-party
collections and accounts receivable outsourcing, or commercial credit reporting
that are competitive with the activities Executive conducted for Equifax
("Competitive Business"). The scope of competitive activities prohibited by this
Agreement will be limited to those activities of the type conducted, offered,
administered or provided by Executive for Equifax during his employment. This
noncompetition covenant applies to the entire geographic area for which
Executive is to be responsible for Equifax's existing business operations as
they may be expanded from time to time.
<PAGE>
5.3 Nonsolicitation of Customers Agreement. Executive agrees that for a
period of two (2) years following the termination of Executives employment,
Executive will not directly, or indirectly by assisting others, solicit or
attempt to solicit any business from any of Equifax's customers with which
Executive had material contact (i.e., dealt with, supervised dealings with, or
obtained confidential information concerning) during employment with Equifax,
for purposes of providing products or services that are competitive with the
Competitive Business.
5.4 Remedies Upon Breach. In the event of any active or threatened breach
of this Section 5 by Executive, Executive agrees that Equifax will be entitled,
in addition to any other remedies and damages available, to an injunction
restraining such violation or threatened violation of this Section 5.
6. Termination.
6.1 Termination for Cause. Equifax may terminate Executive with or without
Cause, provided that any termination for "Cause" may only occur within sixty
(60) days after the COO acquires knowledge of the event justifying the Cause
termination. If Executive is terminated for Cause, no future severance, salary
continuation, bonus, incentive pay, or other benefits are due under this
Agreement. "Cause" will mean any of the following reasons:
(a) willful misconduct with regard to Equifax having a material adverse
impact on the Company or the Business;
<PAGE>
(b) material unauthorized disclosure of the trade or business secrets of
Equifax or any of its subsidiaries, affiliates or successors, other
than good faith disclosure in connection with performance of
Executive's duties;
(c) willful failure to attempt to perform stated duties;
(d) conviction of; or pleading nolo contendere to a felony; or
---- ----------
(e) willful or habitual materiel failure to follow any material written
policy of Equifax.
6.2 Termination Upon Death or Disability. Executive's employment will
terminate upon his death. Equifax may terminate Executive's employment in the
event of Executive's Disability. In either case, no future severance, salary
continuation, bonus, or incentive pay will be due under this Agreement, other
than the bonus pursuant to Section 4.4 and pro rata annual incentive
compensation for the year of such Termination. As used in this Agreement, the
term "Disability" will mean the determination by a duly qualified physician
mutually acceptable to Equifax and Executive (or his personal representative)
that, by reason of a physical, mental, or other illness, existing for more than
one hundred eighty (180) consecutive days, Executive has become physically or
mentally unable to perform the essential functions of his job and is still
unable to perform such functions. Equifax and Executive will in good faith
cooperate in timely selection of the physician.
<PAGE>
6.3 Termination by Executive. The Executive may terminate his employment
with or without Good Reason, provided that any termination for Good Reason will
occur within sixty (60) days after occurrence of the Good Reason event. Good
Reason will mean:
(a) a diminution in Executive's title or a material diminution in
Executive's authority, duties or responsibilities;
(b) failure to timely make any payment due hereunder to Executive;
(c) any decrease in Executive's Base Salary; or
(d) any material breach of a provision of this Agreement by Equifax that
remains uncured for ten (10) days after written notice thereof is
given to Equifax.
7. Severance Upon Termination.
7.1 Termination. If Equifax terminates Executive's employment without
Cause (and not as a result of Executive's Disability) or the Executive resigns
for Good Reason, Executive will be entitled under this Agreement to Base Salary
for the remainder of the then Employment Term, but in no event less than one (1)
year's Base Salary (at the highest rate in effect within one-hundred eighty
(180) days prior to the date of termination), plus a pro rata annual incentive
payment for the year of termination based on actual achievement (and assuming
individual criteria is met at a level equal to the average of that for Equifax
and the Business) and any unpaid bonus under Section 4.4). The forgoing
provisions will not apply in the event of a termination pursuant to a notice of
nonextension under Section 2.
<PAGE>
7.2 Resignation. Should Executive retire or resign before the end of the
then Employment Term without Good Reason, no future salary, unpaid bonuses,
incentive pay or other benefits will be due under this Agreement.
7.3 Benefits Generally. In the event of any termination, Executive will be
entitled to any accrued but unpaid Base Salary or incentive payment amounts or
benefits, if any, in accordance with the terms of Equifax's plans, programs and
policies and such rights under equity grants as provided by the grants.
8. Change in Control. The parties will enter into a Change in Control
Agreement in the standard form appropriate to Executive's level in the Company.
The parties intend that the payments and benefits if paid and provided under
that agreement will be in lieu of any severance or similar payments Executive
would receive otherwise in accordance with this Agreement.
9. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement will be in writing and will be
deemed to have been duly given when delivered or three (3) days after being
mailed by certified or registered mail, return receipt requested, postage
prepaid, addressed to the following addresses:
To Equifax: Lee A. Kennedy
President and COO
Equifax Inc.
1600 Peachtree Street, N.W.
Atlanta, Georgia 30309
<PAGE>
To Executive: William V. Catucci
3483 Fenimore Drive
Mohegan Lake, New York 10547
10. Assignability. This Agreement is binding on Equifax and any
successors of Equifax. Equifax may assign this Agreement and its rights under
this Agreement in whole or in part to any corporation or other entity with or
into which Equifax may merge or consolidate or to which Equifax may transfer all
or substantially all of its assets. It may not be otherwise assigned by Equifax.
11. Amendment, Waiver. No provisions of this Agreement may be modified,
waived or discharged unless the waiver, modification or discharge is agreed to
in writing signed by Executive and the COO or chief executive officer or such
other officer or officers as may be specifically designated by the Board of
Directors of Equifax to sign on their behalf. No waiver by any party at any time
of any breach by any other party of, or compliance with, any condition or
provision of this Agreement will be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
12. Indemnity. Equifax: will indemnify and hold Executive harmless as
provided in the Bylaws, which obligation will be a contractual obligation with
regard to any action or inaction prior to any change to the Bylaws. Equifax will
cover Executive both during and after the Employment Term with regard to any
action or inaction during the Employment Term under directors and officers
liability insurance at the highest level
<PAGE>
maintained for any then current officer or director. This Section 12 shall
survive any termination of the Employment Term or Executive's employment.
13. Arbitration.
13.1 All disputes arising in connection with this Agreement and all
disputes arising from Executive's employment with Equifax, except claims
for injunctive relief under Section 5, will be finally settled under the
rules of the American Arbitration Association by an arbitrator appointed in
accordance with those rules. The proceedings will be conducted in Atlanta,
Georgia.
13.2 The Federal and State courts located in the United States of America
are given jurisdiction to render judgment upon, and to enforce, each
arbitration award, and the parties expressly consent and submit to the
jurisdiction of those courts.
13.3 Each party agrees that the arbitration procedure provided in this
Agreement will be the sole and exclusive method of resolving any claims
arising from Executive's employment with Equifax or claims arising under
this Agreement, except for claims for injunctive relief under Section 5,
which may be submitted to a court of competent jurisdiction.
13.4 In the event of any dispute hereunder, the arbitrator may, in his
discretion, award the prevailing party his or its reasonable legal fees.
<PAGE>
14. No Conflicting Oblligations. Executive represents and warrants that he
is not subject to any duties or restrictions under any prior agreement with any
previous employer or other person that prevents him from performing his duties
hereunder to Equifax, other than that Executive is subject to confidentiality
agreements and limitations on his ability to solicit or hire employees of his
former employer. Executive agrees to notify Equifax immediately if any conflicts
occur in the future.
15. Governing Law. The validity, interpretation, construction and
performance of this Agreement will be governed by the laws of the United States
where applicable and otherwise the substantive laws of the State of Georgia.
16. Headings. The section headings contained in this Agreement are for
reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
17. Construction of Agreement. It is the intent of the parties that this
Agreement will be considered severable in part and in whole, and that if any
covenant will be determined to be unenforceable in any part, that portion of the
Agreement will be severed or modified by the Court or Arbitrator so as to permit
enforcement of the Agreement to the extent reasonable. It is agreed by the
parties that the obligations set forth herein will be considered to be
independent of any other obligations between the parties, and the existence of
any other claim or defense will not affect the enforceability of this Agreement.
<PAGE>
18. Certification of Understanding. Executive certifies that Executive
received a copy of this Agreement for review and study before being asked to
sign it; read this Agreement carefully; had sufficient opportunity before the
Agreement was signed to ask questions about the provisions of the Agreement and
received satisfactory answers; and understands the Executive's rights and
obligations under the Agreement. This Agreement constitutes the complete
understanding and agreement of the parties. Except as provided herein, there are
no other agreements, written or oral, express or implied, between the parties,
concerning the subject matter of this Agreement.
19. Execution of Agreement. This Agreement will be executed in two
originals. Equifax will retain one executed original, and Executive will retain
the other. This agreement may be executed in counterparts.
20. Employment Requirements. Executive will execute the "Employee
Confidentiality, Non-Solicitation and Assignment Agreement," which is attached
as Exhibit "A" hereto and incorporated by reference.
IN WITNESS WHEREOF, this Agreement has been executed this 26/th/ day of
------
October, 1999.
Attest: EQUIFAX INC.
/s/ Karen H. Gaston By: /s/ Lee A. Kennedy
- ------------------------- ------------------------
Lee A.Kennedy
<PAGE>
President and Chief Operating Officer
Attest. EXECUTIVE
/s/ John T. Chandler By: /s/ William V. Catucci
- ------------------------- -----------------------------
William V. Catucci
Exhibit A
<PAGE>
EMPLOYEE CONFIDENTIALITY,
NON-SOLICITATION AND
ASSIGNMENT AGREEMENT
This Employee Confidentiality, Non-solicitation and Assignment Agreement
(the "Agreement") is entered into on ____________, 199_, by and between
Equifax Inc. on behalf of itself, its subsidiary and/or affiliate companies
(collectively "Equifax") and the undersigned Equifax employee ("Employee").
Statement of Facts
------------------
The purpose of this Agreement is to obtain Employee's commitment to protect and
preserve Equifax's business relationships, Trade Secrets and Confidential
Information as defined below.
Statement of Terms
------------------
1. Agreement Not to Solicit Employees. During the term of Employee's
----------------------------------
employment by Equifax and for a period of six (6) months following the
termination of Employee's employment for any reason, Employee will not, either
directly or indirectly, on his or her behalf or on behalf of others (other than
Equifax), solicit for employment or hire, or attempt to solicit for employment
or hire, any Equifax employee with whom Employee had regular contact in the
course of his or her employment or any Equifax employee at any facility where
Employee performed services for Equifax.
<PAGE>
2. Trade Secrets and Confidential Information.
-------------------------------------------
(a) All Trade Secrets (defined below) and Confidential Information (defined
below), and all materials containing them, received or developed by
Employee during the term of his or her employment are confidential to
Equifax, and will remain Equifax's property exclusively. Except as
necessary to perform Employee's duties for Equifax, Employee will hold all
Trade Secrets and Confidential Information in strict confidence, and will
not use, reproduce, disclose or otherwise distribute the Trade Secrets or
Confidential Information, or any materials containing them, except as
deemed desireable by Executive in good faith in connection with performance
of his duties or in compliance with legal process. Employee's obligations
regarding, Trade Secrets will continue indefinitely, while Employee's
obligations regarding Confidential Information will cease two (2) years
from the date of termination of Employee's employment with Equifax.
(b) "Trade Secret" means information, including, but not limited to, technical
or non-technical data, a. formula, a pattern, a compilation, a program, a
device, a method, a technique, a drawing, a process, financial data,
financial plans, product plans, or a list of actual or potential Equifax
customers or suppliers which (A) derives independent economic value, actual
or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other person, who can obtain economic
value from its disclosure or use, and (B)
<PAGE>
is the subject of Equifax's efforts that are reasonable under the
circumstances to maintain secrecy; or as otherwise defined by applicable
state law. "Confidential Information" means any and all knowledge,
information, data, method, or plans (other than Trade Secrets) which are
now or at any time in the future developed, used or employed by Equifax
which are treated as confidential by Equifax and not generally disclosed by
Equifax to the public or known in the industry, and which relate to the
business or financial affairs of Equifax, including, but not limited to,
financial statements and information, marketing strategies, business
development plans and product or process enhancement plans.
(c) Employee acknowledges that Equifax is obligated under federal and
state credit reporting and similar laws and regulations to hold in
confidence and not disclose certain information regarding individuals,
firms or corporations which is obtained or held by Equifax and that Equifax
is required to adopt reasonable procedures for protecting the
confidentiality, accuracy, relevancy and proper utilization of consumer
credit information. In that regard, except as necessary or desirable to
perform Employee's duties for Equifax, Employee will hold in strict
confidence, and will not use, reproduce, disclose or otherwise distribute
any information which Equifax is required to hold confidential under
applicable federal and state laws and regulations, including the federal
Fair Credit Reporting Act (15 U.S.C. 8 1681 et seq.) and any state credit
-------
reporting statutes.
(d) Except as set forth in a separate written agreement executed by an officer
of Equifax, ownership of all programs, systems, inventions, discoveries,
developments, modifications, procedures, ideas, innovations, know-how or
<PAGE>
designs developed by Employee relating to his or her employment with
Equifax will be Equifax's property. Employee will cooperate in applying for
patents or copyrights on those developments as Equifax requests and at
Equifax's expense, and assign those patents or copyrights to Equifax. The
confidentiality requirements of the preceding paragraphs will apply to all
of the above.
(e) At Equifax's request or on termination of Employee's employment with
Equifax, Employee will deliver promptly to Equifax all Equifax property in
his or her possession or control, including all Trade Secrets and
Confidential Information and all materials containing them.
3. Remedies. Employee agrees that his or her promises in this Agreement are
---------
reasonable and necessary to protect and preserve the interests and assets
of Equifax, and that Equifax will suffer irreparable harm if Employee
breaches any of his or her promises. Therefore, in addition to all the
remedies provided at law or in equity, Equifax will be entitled to a
temporary restraining order and permanent injunctions to prevent a breach
or contemplated breach of any of Employee's promises. While Employee will
retain the absolute right to pursue any claim, demand, action or cause of
action that he or she may have against Equifax, if not otherwise
compromised or released, the existence of any claim, demand, action or
cause of action by Employee against Equifax, if any, will not constitute a
defense to the enforcement by Equifax of any of Employee's promises in this
Agreement.
<PAGE>
4. Severability. Each provision of this Agreement is separate and severable
------------
from the remaining provisions, and the invalidity or unenforceability of
any provision will not affect the validity or enforceability of any other
provisions. Further, if any provision is ruled invalid or unenforceable by
a court of competent jurisdiction because of a conflict between that
provision and any applicable law or regulation, that provision will be
curtailed only to the extent necessary to make it consistent with that law
or regulation.
5. Assignment. Equifax may assign its rights and obligations under this
----------
Agreement. Employee may not assign his or her rights and obligations under
this Agreement.
6. Waiver. Equifax's waiver of any breach of this Agreement will not be
------
effective unless in writing, and will not be a waiver of the same or
another breach on a subsequent occasion.
7. Governing Law. This Agreement will be governed and construed in accordance
-------------
with the laws of the State of Georgia without reference to its conflicts of
laws provision.
8. Entire Agreement. This Agreement contains Employee's entire agreement with
----------------
Equifax regarding the subject matter covered by this Agreement. No
amendment or modification of this Agreement will be valid or binding on
Equifax or Employee
<PAGE>
unless in writing signed by both parties. All prior understandings and
agreements regarding the subject matter of this Agreement are terminated.
THIS AGREEMENT, AS A CONDITION OF EMPLOYEE'S EMPLOYMENT OR CONTINUED EMPLOYMENT
WITH EQUIFAX, IMPOSES UPON EMPLOYEE CERTAIN CONFIDENTIALITY RESTRICTIONS WITH
RESPECT TO TRADE SECRETS AND CONFIDENTIAL INFORMATION BELONGING TO EQUIFAX. BY
SIGNING BELOW, EMPLOYEE ACKNOWLEDGES THAT HE OR SHE HAS READ AND UNDERSTANDS
THIS AGREEMENT.
EMPLOYEE: EQUIFAX
__________________________________ By:_________________________
Print Name:_________________ Title:______________________
Company:____________________
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.22
<SEQUENCE>6
<FILENAME>0006.txt
<DESCRIPTION>KEY MANAGEMENT LONG TERM INCENTIVE PLAN
<TEXT>
<PAGE>
EXHIBIT 10.22
EQUIFAX INC.
KEY MANAGEMENT LONG-TERM INCENTIVE PLAN
Effective January 1, 2000
ARTICLE I
Purpose
The purpose of the plan is to provide long-term incentive compensation to
Eligible Executives of Equifax Inc. and/or its subsidiaries who make substantial
contributions to the success of their employers, to provide a means for such
Eligible Executives to participate in such success, and to assist in attracting
and retaining the highest quality individuals in key executive positions. This
plan, which is effective January 1, 2000, supersedes and replaces all long-term
cash incentive plans previously adopted by the Company for such persons, except
with respect to any awards made but not earned prior to January 1, 2000.
ARTICLE II
Definitions
The following words and phrases shall have the respective meanings set forth
below (unless the context indicates otherwise).
(A) "Approval of Shareholders" shall mean the affirmative vote of the holders
of at least a majority of the shares of common stock of the Company then
outstanding.
(B) "Award" shall mean the stated cash amount(s) to which Participants will be
entitled upon achievement of goals based on Management Objectives established at
the time the Award is granted.
(C) "Committee" shall mean the Compensation and Human Resources Committee of
the Company's Board of Directors, as the same from time to time may be
constituted.
(D) "Common Stock" means the Common Stock, $1.25 par value per share, of the
Company.
(E) "Company" shall mean Equifax Inc.
(F) "Eligible Executive" shall mean Equifax Inc. elected officers and any other
key management personnel of Equifax Inc. or a subsidiary or division of Equifax
Inc. as determined by the Committee, from time to time, including any officer
who is a Director. An Eligible Executive shall not include an officer who is not
a full-time employee, even though said officer is a Director, except that a
person who was an Eligible Executive and a Director immediately prior to
1
<PAGE>
his retirement as an employee of the Company shall continue to be an Eligible
Executive so long as he retains his position as an officer and Director.
(G) "Employer" shall mean Equifax Inc. or the subsidiary or affiliate by whom
the Participant is employed at the time in question.
(H) "Management Objective" shall mean specified levels of, or growth in, one or
more of the following criteria:
(1) earnings per share;
(2) economic value added;
(3) revenue;
(4) operating profit;
(5) net income;
(6) total return to shareholders;
(7) cash flow/net assets ratio;
(8) debt/capital ratio;
(9) return on total capital;
(10) return on equity; and
(11) common stock price.
If the Committee makes an Award subject to a particular Management Objective,
the Committee shall adopt or confirm a written definition of that Management
Objective at the time of the Award. Management Objectives may be described in
terms of Company-wide objectives or objectives that are related to a specific
division, subsidiary, Employer, department, region, or function in which the
Participant is employed. Management Objectives may be made relative to the
performance of other corporations.
(I) "Measurement Period:" Management Objectives may be calculated on the basis
of a single year, cumulatively for a stated number of years, as an average over
a stated number of years, or otherwise, as determined by the Committee at the
time the Management Objective is established, which shall be the "Measurement
Period."
(J) "Participant" means any Eligible Executive to whom an Award has been
granted but not yet paid pursuant to this Plan.
(K) "Plan" means this Equifax Inc. Key Management Long-Term Incentive Plan.
2
<PAGE>
ARTICLE III
Eligibility
All Eligible Executives, as determined by the Committee, from time to time,
shall be eligible for participation in this Plan.
ARTICLE IV
Selection of Participants,
Grant of Awards and
Administration of Plan
The Committee shall determine, from time to time, those officers who are to be
granted Awards pursuant to Article V below. This Plan shall be administered by
the Committee, and the Committee shall (1) construe and interpret the Plan, and
(2) make such reasonable rules and regulations for the administration of the
Plan as it deems advisable. Any determination by the Committee in administering,
interpreting or construing the Plan in accordance with this Article shall be
final, binding and conclusive for all purposes and upon all interested persons.
ARTICLE V
Grants of Awards
Effective Date and Termination
Subject to the provisions below, the maximum Award granted to any Participant in
any fiscal year of the Company shall not exceed $5,000,000. Subject to the
approval of the shareholders of the Company, this Plan shall become effective
for the year commencing January 1, 2000. No Awards may be granted under this
Plan after the tenth (10th) anniversary of the approval of this Plan by the
shareholders of the Company.
ARTICLE VI
Right to Receive Cash Award
Conversion to Equity Interest
(A) Subject to the provisions of Article V, the Participant shall be entitled to
receive the cash to which his Award entitles him as soon as practical after the
end of the Measurement Period with respect to that Award; provided, however,
that:
(1) Each Award granted under the Plan shall be forfeited and canceled in
all respects, and no cash shall be delivered or paid to the Participant
thereof, in the event that:
(a) The employment of the Participant by the Employer is terminated,
either voluntarily or involuntarily, by the Employer or the
Participant, for any reason whatsoever (subject to the provisions of
Article VII hereof) prior to the end of the Measurement Period for
that Award;
3
<PAGE>
(b) The employment status of the Participant has changed prior to the
end of the Measurement Period for that Award so that the Participant
is no longer an Eligible Executive; or
(c) The Management Objective for the Measurement Period for such
Award is less than the minimum stated in the Award.
(2) A portion, or all, of each Award shall be forfeited and canceled in
all respects, and no cash shall be delivered or paid with respect to the
portion of such Award so forfeited and canceled, in the event that the
aggregate Management Objective for the Measurement Period with respect to
the Award is not at least equal to a minimum stated in the Award.
(3) The Committee shall establish, for each Measurement Period, the goals
based on one or more Management Objectives. These goals will be established
on or before the date any Award relating to said Measurement Period is
granted. The goals will be established with consideration given to the
economic conditions existing at the time said goals are established. A
portion, or all, of each Award shall be forfeited and canceled in all
respects, and no cash shall be delivered or paid with respect to the
portion of such Award so forfeited and canceled, in the event that the
goals established for the Measurement Period are not achieved, all as
prescribed by the Committee. The Committee shall deliver to each
Participant written notice of the goals established for the Measurement
Period to which said Award relates, along with the forfeiture provisions
relating to said Award. Even though performance goals established for each
Measurement Period are met or exceeded, the Committee shall have the
discretion, as to each Participant, to reduce the amount of an Award that
would otherwise be paid or to determine that no portion should be paid. The
Committee may not increase the amount of an Award that would otherwise be
paid.
(4) Nothing contained in this Article VI or elsewhere in this Plan shall
eliminate, impair or otherwise affect the right of the Employer to
terminate or change the employment of any Eligible Executive at any time,
and the grant of an Award to any such Eligible Executive shall not be
deemed to, and shall not, result in any agreement, expressed or implied, by
the Employer to retain such person in any specific position or in its
employ for the duration of the Measurement Period with respect to such
Award or for any other period.
(5) Subject to the provisions of this paragraph, the terms of an Award may
provide, if the Committee so directs in each instance, that each
Participant may elect, by delivering written notice of such election to the
Secretary of the Company during the period defined below, to surrender his
or her right to receive up to the full value of the Award that would
otherwise be paid to the Participant at the end of the Measurement Period,
in exchange for the right to receive an equity interest as described below.
In order to be effective, such written notice of election must be delivered
to the Secretary of the Company during a period beginning on the third
business day following release for publication (in the manner hereinafter
set forth) of the Company's quarterly statements of sales and earnings for
the final fiscal quarter ending within the
4
<PAGE>
Measurement Period and ending on the twelfth business day following said
release for publication. Any such election shall be subject to the right of
the Committee to disapprove the same, in whole or in part, at any time
after such election but prior to the issuance of cash with respect to the
particular Award in accordance with the provisions of this Plan. In the
event of the death, disability or retirement of a Participant, at any time
during the Measurement Period to which an Award relates, the Award shall be
distributed as provided in Article VII hereof regardless of any election
made by such Participant. The release for publication of the Company's
quarterly statements as referred to in the second sentence of this
paragraph shall be deemed to have been made at the time such data appears
(i) on a wire service, (ii) in a financial news service, (iii) in a
newspaper of general circulation or (iv) is otherwise made publicly
available. For purposes of this paragraph, the determination of the
appropriate equity interest into which the cash award is converted shall be
made based on rules adopted by the Committee and uniformly applied, and
said rules shall be adopted prior to or at the time of the grant of the
Award in question, and the aggregate value of the cash portion and the
value of the equity interest for any individual, determined at the date of
grant, shall not exceed the maximum referred to in Article V. The equity
interest may be an option for purchase of Common Stock, restricted shares
of Common Stock, or any other equity interest determined by the Committee.
The equity interest may be issued by the Committee on its own action or
pursuant to the Company's 2000 Stock Incentive Plan.
ARTICLE VII
Death, Disability or Retirement of Eligible Executive
or Change in Control of the Company
(A) In the event of the termination of employment with the Employer during any
Measurement Period of any Participant by reason of the death or disability or
retirement of such Participant, the Committee may, but shall not be obligated
to, waive the continuation of the employment requirement set forth in paragraph
(A)(1)(a) of Article VI above. In the event that such requirement is waived,
such Participant or his estate, as the case may be, will be entitled to receive
an Award in cash equivalent to a pro rata portion of the amount which said
Participant would have received, if the employment of such Participant had
continued through the Measurement Period for such Award. For purposes of Article
VI and this Article VII, a Participant shall not be deemed to have terminated
his employment although he retires from said employment, if he continues to
serve as an elected officer of Equifax Inc. or a subsidiary of the Company and
to serve as a Director of Equifax Inc.; said Eligible Executive shall be deemed
to have terminated his employment when his term of office expires and he is not
re-elected thereto, or when he is removed or resigns from office, if earlier.
(B) This pro rata portion shall be computed as follows:
The cash Award which would have been earned based on the level of actual
achievement of the Management Objective at the end of the Measurement
Period will be multiplied by a fraction, the numerator of which shall be
the number of full calendar months during the Measurement Period prior to
the Participant's death, disability or retirement, and the denominator of
which shall be the number of full calendar months contained in the complete
Measurement Period.
5
<PAGE>
(C) In the event of the termination of employment with the Employer of any
Participant after completing a Measurement Period, but before distribution of
his Award is made, such Participant or his estate, as the case may be, will be
entitled to receive the Award to the same extent, in the same manner and at the
same time as if the employment of such Eligible Executive had not terminated,
except that if the Participant has directly or indirectly engaged in any
activity that is harmful to the Company or the Employer, as determined by the
Committee in its sole discretion (including without limitation the disclosure or
misuse of any confidential information or trade secrets of the Company or the
Employer), then Participant shall forfeit any entitlement to such Award.
(D) If there is a "change in control of the Company," as hereinafter defined,
during any Measurement Period, then, notwithstanding any other provision of this
Plan to the contrary, any Participant holding any Award shall be irrevocably
entitled to receive an amount in cash which is equal to (i) the target award if
the change in control occurs during the first measurement year, or (ii) 150% of
the target award if the change in control occurs after said first year (but no
less than the projected payout determined on the effective date of the change in
control if the change in control occurs during the last three months of the
Measurement Period). Such payment will be made within sixty (60) days following
the change in control of the Company.
(E) For purposes of this Article VII, a "change in control of the Company"
shall be deemed to have occurred upon the occurrence of any of the following
events:
(1) Voting Stock Accumulations. The accumulation by any Person of
Beneficial Ownership of twenty percent (20%) or more of the combined voting
power of the Company's Voting Stock; provided that for purposes of this
Article VII(E)(1), a Change in Control will not be deemed to have occurred
if the accumulation of twenty percent (20%) or more of the voting power of
the Company's Voting Stock results from any acquisition of Voting Stock (i)
directly from the Company that is approved by the Incumbent Board, (ii) by
the Company, (iii) by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any Subsidiary, or (d) by any
Person pursuant to a Business Combination that complies with clauses (i),
(ii) and (iii) of subparagraph VII(E)(2); or
(2) Business Combinations. Consummation of a Business Combination, unless,
immediately following that Business Combination, (i) all or substantially
all of the Persons who were the beneficial owners of Voting Stock of the
Company immediately prior to that Business Combination beneficially own,
directly or indirectly, more than sixty-six and two-thirds percent (66
2/3%) of the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of Directors of the entity resulting from that
Business Combination (including, without limitation, an entity that as a
result of that transaction owns the Company or all or substantially all of
the Company's assets either directly or through one or more subsidiaries)
in substantially the same proportions relative to each other as their
ownership, immediately prior to that Business Combination, of the Voting
Stock of the Company, (ii) no Person (other than the Company, that entity
resulting from that Business Combination, or any employee benefit plan (or
related trust) sponsored or maintained by the Company, any Eighty Percent
(80%) Subsidiary or that entity resulting from that Business Combination)
beneficially owns, directly or indirectly, twenty percent (20%) or more of
the then
6
<PAGE>
outstanding shares of common stock of the entity resulting from that
Business Combination or the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors
of that entity, and (iii) at least a majority of the members of the Board
of Directors of the entity resulting from that Business Combination were
members of the Incumbent Board at the time of the of the action of the
Board of Directors providing for that Business Combination; or
(3) Sale of Assets. A sale or other disposition of all or substantially
all of the assets of the Company; or
(4) Liquidations or Dissolutions. Approval by the shareholders of the
Company of a complete liquidation or dissolution of the Company, except
pursuant to a Business Combination that complies with clauses (i), (ii) and
(iii) of subparagraph (E)(2) of this Article VII.
For purposes of this Article VII, the following definitions will apply:
"Beneficial Ownership" means beneficial ownership as that term is used in
Rule 13d-3 promulgated under the Exchange Act.
"Business Combination" means a reorganization, merger or consolidation of
the Company.
"Eighty Percent (80%) Subsidiary" means an entity in which the Company
directly or indirectly beneficially owns eighty percent (80%) or more of
the outstanding Voting Stock.
"Exchange Act" means the Securities Exchange Act of 1934, including
amendments, or successor statutes of similar intent.
"Incumbent Board" means a Board of Directors at least a majority of whom
consist of individuals who either are (a) members of the Company's Board of
Directors as of January 1, 2000, or (b) members who become members of the
Company's Board of Directors subsequent to January 1, 2000, whose election,
or nomination for election by the Company's shareholders, was approved by a
vote of at least two-thirds (/2//3) of the directors then comprising the
Incumbent Board (either by a specific vote or by approval of the proxy
statement of the Company in which that person is named as a nominee for
director, without objection to that nomination), but excluding, for that
purpose, any individual whose initial assumption of office occurs as a
result of an actual or threatened election contest (within the meaning of
Rule 14a-11 of the Exchange Act) with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board of Directors.
"Person" means any individual, entity or group (within the meaning of
Section 13(d)(3) or 14 (d)(2) of the Exchange Act).
"Voting Stock" means the then outstanding securities of an entity entitled
to vote generally in the election of members of that entity's Board.
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<PAGE>
"Disability" means permanently and totally disabled as defined in Code
Section 22(e)(3).
ARTICLE VIII
Nonalienation of Benefits
Neither the Award nor any other right or benefit under this Plan shall be
subject to anticipation, alienation, sale, assignment, pledge, encumbrance or
charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber
or charge the same shall be void and shall not be recognized or given effect by
the Company.
ARTICLE IX
Certificates of Award
The Company shall execute and deliver to each Participant to whom an Award is
granted a certificate, in the form prescribed by the Committee, evidencing such
Award and stating the date thereof and cash amount that is the subject of the
Award.
ARTICLE X
Amendment, Suspension or Termination of Plan
The Board of Directors of the Company may amend, suspend or terminate this Plan
in whole or in part at any time; provided that no such amendment, suspension or
termination shall adversely affect the rights of the holders of any Award then
outstanding.
8
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.23
<SEQUENCE>7
<FILENAME>0007.txt
<DESCRIPTION>2000 STOCK INCENTIVE PLAN
<TEXT>
<PAGE>
EXHIBIT 10.23
EQUIFAX INC.
2000 Stock Incentive Plan
1. Purpose. The purpose of the 2000 Stock Incentive Plan is to attract and
retain directors, officers and other key employees for Equifax Inc., a Georgia
corporation and its Subsidiaries and to provide those persons with incentives
and rewards for superior performance.
2. Definitions. As used in this Plan,
"Appreciation Right" means a right granted pursuant to Section 5 of this Plan,
and shall include both Tandem Appreciation Rights and Free-Standing Appreciation
Rights.
"Base Price" means the price to be used as the basis for determining the Spread
upon the exercise of a Free-Standing Appreciation Right and a Tandem
Appreciation Right.
"Board" means the Board of Directors of Equifax Inc.
"Change in Control" shall have the meaning provided in Section 11 of this Plan.
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
"Committee" means the Equifax Inc. Compensation and Human Resources Committee of
the Board, or any successor committee to which the responsibilities of that
Committee are assigned.
"Common Shares" means the Common Shares, par value $1.25 per share, of the
Company or any security into which such Common Shares may be changed by reason
of any transaction or event of the type referred to in Section 10 of this Plan.
"Company" means Equifax Inc., a Georgia corporation.
"Covered Employee" means a Participant who is, or is determined by the Board to
be likely to become, a "covered employee" within the meaning of Section 162(m)
of the Code (or any successor provision).
"Date of Grant" means the date specified by the Board on which a grant of Option
Rights or Appreciation Rights, or a grant or sale of Restricted Shares or
Deferred Shares shall become effective (which date shall not be earlier than the
date on which the Board takes action with respect thereto).
"Deferral Period" means the period of time during which Deferred Shares are
subject to deferral limitations under Section 7 of this Plan.
"Deferred Shares" means an award made pursuant to Section 7 of this Plan of the
right to receive Common Shares at the end of a specified Deferral Period.
"Director" means a member of the Board of Directors of the Company.
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<PAGE>
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder, as such law, rules and regulations may be
amended from time to time, including any successor statutes of similar intent.
"Free-Standing Appreciation Right" means an Appreciation Right granted pursuant
to Section 5 of this Plan that is not granted in tandem with an Option Right.
"Immediate Family" has the meaning ascribed thereto in Rule 16a-1(e) under the
Exchange Act (or any successor rule to the same effect).
"Incentive Stock Options" means Option Rights that are intended to qualify as
"incentive stock options" under Section 422 of the Code or any successor
provision.
"Management Objectives" means the measurable performance objective or objectives
established pursuant to this Plan for Participants who have received grants of
Option Rights, Appreciation Rights, Restricted Shares and dividend credits
pursuant to this Plan, which are subject to the achievement of Management
Objectives. Management Objectives may be described in terms of Company-wide
objectives or objectives that are related to the performance of the individual
Participant or of the Subsidiary, division, department, region or function
within the Company or Subsidiary in which the Participant is employed. The
Management Objectives may be made relative to the performance of other
corporations. The Management Objectives applicable to any award to a Covered
Employee shall be based on specified levels of, or growth in, one or more of the
following criteria, as determined for a single year, or cumulatively for a
stated number of years, or as an average over a stated number of years, or
otherwise as determined by the Committee at the time the Management Objective is
established:
1. earnings per share;
2. economic value added;
3. revenue;
4. operating profit;
5. net income;
6. total return to shareholders;
7. cash flow/net assets ratio;
8. debt/capital ratio;
9. return on total capital;
10. return on equity; and
11. common stock price.
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<PAGE>
If the Committee determines that a change in the business, operations, corporate
structure or capital structure of the Company, or the manner in which it
conducts its business, or other events or circumstances render the Management
Objectives unsuitable, the Committee may in its discretion modify such
Management Objectives or the related minimum acceptable level of achievement, in
whole or in part, as the Committee deems appropriate and equitable, except in
the case of a Covered Employee where such action would result in the loss of the
otherwise available exemption of the award under Section 162(m) of the Code. In
such case, the Committee shall not make any modification of the Management
Objectives or minimum acceptable level of achievement unless the Committee
specifically acknowledges that effect.
"Market Value per Share" means, (i) the closing sale price per Common Share as
reported on the principal exchange on which Common shares are then trading, if
any, or, if applicable, the NASDAQ National Market System, on the Date of Grant,
or if there are no sales on such day, on the next preceding trading day during
which a sale occurred, or (ii) if clause (i) does not apply, the fair market
value of the Common Shares as determined by the Board.
"Non-Employee Director" means a Director who is not an employee of the Company
or any Subsidiary.
"Optionee" means the optionee named in an agreement evidencing an outstanding
Option Right.
"Option Price" means the purchase price payable on exercise of an Option Right.
"Option Right" means the right to purchase Common Shares upon exercise of an
option granted pursuant to Section 4 or Section 8 of this Plan.
"Participant" means a person who is selected by the Committee to receive
benefits under this Plan and who is at the time an officer, or other key
employee of the Company or any one or more of its Subsidiaries, or who has
agreed to commence serving in any of such capacities within 60 days of the Date
of Grant, and shall also include each Non-Employee Director who receives an
award of Option Rights or Restricted Shares.
"Plan" means this Equifax Inc. 2000 Stock Incentive Plan, as it may be amended
from time to time.
"Reload Option Rights" means additional Option Rights granted automatically to
an Optionee upon the exercise of Option Rights pursuant to Section 4(f) of this
Plan.
"Restricted Shares" means Common Shares granted or sold pursuant to Section 6 or
Section 8 of this Plan as to which neither the substantial risk of forfeiture
nor the prohibition on transfers referred to in Section 6 has expired.
"Rule 16b-3" means Rule 16b-3 under the Exchange Act (or any successor rule to
the same effect) as in effect from time to time.
"Spread" means the excess of the Market Value per Share on the date when an
Appreciation Right is exercised, or on the date when Option Rights are
surrendered in payment of the Option
3
<PAGE>
Price of other Option Rights, over the Option Price or Base Price provided for
in the related Option Right or Free-Standing Appreciation Right, respectively.
"Subsidiary" means a corporation, company or other entity (i) more than 50
percent of whose outstanding shares or securities (representing the right to
vote for the election of directors or other managing authority) are, or (ii)
which does not have outstanding shares or securities (as may be the case in a
partnership, joint venture or unincorporated association), but more than 50
percent of whose ownership interest representing the right generally to make
decisions for such other entity is, now or hereafter, owned or controlled,
directly or indirectly, by the Company, except that for purposes of determining
whether any person may be a Participant for purposes of any grant of Incentive
Stock Options, "Subsidiary" means any corporation in which, at the time of the
grant, the Company owns or controls, directly or indirectly, more than 50
percent of the total combined voting power represented by all classes of stock
issued by such corporation.
"Tandem Appreciation Right" means an Appreciation Right granted pursuant to
Section 5 of this Plan that is granted in tandem with an Option Right.
"Voting Power" means at any time, the total votes relating to the then-
outstanding securities entitled to vote generally in the election of Directors.
3. Shares Available Under the Plan. (a) Subject to adjustment as provided in
Section 3(b) and Section 10 of this Plan, the number of Common Shares that may
be issued or transferred (i) upon the exercise of Option Rights or Appreciation
Rights, (ii) as Restricted Shares and released from substantial risks of
forfeiture thereof, (iii) as Deferred Shares, (iv) as awards to Non-Employee
Directors or in payment of dividend equivalents paid with respect to awards made
under the Plan shall not exceed in the aggregate 1,500,000 Common Shares, plus
any shares described in Section 3(b). Such shares may be shares of original
issuance or treasury shares or a combination of the foregoing.
(b) The number of shares available in Section 3(a) above shall be adjusted to
account for shares relating to awards that expire, are forfeited or are
transferred, surrendered or relinquished upon the payment of any Option Price by
the transfer to the Company of Common Shares or upon satisfaction of any
withholding amount. Upon payment in cash of the benefit provided by any award
granted under this Plan, any shares that were covered by that award shall again
be available for issue or transfer hereunder. In addition to these adjustments,
commencing on January 1, 2001, and on each January 1, thereafter ending on
January 1, 2007, an additional number of Common Shares shall be added to the
total available under Section 3(a), equal to one percent (1%) of the number of
Common Shares issued and outstanding on that date.
(c) Notwithstanding anything in this Section 3, or elsewhere in this Plan, to
the contrary and subject to adjustment as provided in Section 10 of this Plan,
the aggregate number of Common Shares actually issued or transferred by the
Company upon the exercise of Incentive Stock Options shall not exceed 1,000,000
Common Shares per year for each calendar year or portion thereof in which this
Plan exists prior to the date determined according to Section 17, and Incentive
Stock Options shall not be issued for more than 1,000,000 Common Shares during
any such year. No Participant shall be granted Option Rights and Appreciation
Rights, in the aggregate, for more than 750,000 Common Shares during any period
of one calendar year; the number of shares issued as Restricted Shares shall not
in the aggregate exceed 500,000 Common Shares; and no Non-Employee Director
shall be granted Option Rights, Appreciation
4
<PAGE>
Rights and Restricted Shares, in the aggregate, for more than 100,000 Common
Shares during any calendar year.
4. Option Rights. The Committee may, from time to time and upon such terms and
conditions as it may determine, authorize the granting to Participants of
options to purchase Common Shares. Each such grant may utilize any or all of the
authorizations, and shall be subject to all of the requirements contained in the
following provisions:
(a) Each grant shall specify the number of Common Shares to which it pertains
subject to the limitations set forth in Section 3 of this plan.
(b) Each grant shall specify an Option Price per share, which may not be less
than the Market Value per Share on the Date of Grant.
(c) Each grant shall specify whether the Option Price shall be payable (i) in
cash or by check acceptable to the Company, (ii) by the actual or
constructive transfer to the Company of Common Shares owned by the Optionee
for at least 6 months (or other consideration authorized pursuant to Section
4(d)) having a value at the time of exercise equal to the total Option Price,
or (iii) by a combination of such methods of payment.
(d) The Committee may determine, at or after the Date of Grant, that payment
of the Option Price of any Option Right (other than an Incentive Stock
Option) may also be made in whole or in part in the form of Restricted Shares
or other Common Shares that are forfeitable or subject to restrictions on
transfer, Deferred Shares, (based, in each case, on the Market Value per
Share on the date of exercise), or other Option Rights (based on the Spread
on the date of exercise). Unless otherwise determined by the Committee at or
after the Date of Grant, whenever any Option Price is paid in whole or in
part by means of any of the forms of consideration specified in this Section
4(d), the Common Shares received upon the exercise of the Option Rights shall
be subject to such risks of forfeiture or restrictions on transfer as may
correspond to any that apply to the consideration surrendered, but only to
the extent, determined with respect to the consideration surrendered, of (i)
the number of shares, or (ii) the Spread of any unexercisable portion of
Option Rights.
(e) Any grant may provide for deferred payment of the Option Price from the
proceeds of sale through a bank or broker on a date satisfactory to the
Company of some or all of the shares to which such exercise relates.
(f) Any grant may, at or after the Date of Grant, provide for the automatic
grant of Reload Option Rights to an Optionee upon the exercise of Option
Rights (including Reload Option Rights) using Common Shares or other
consideration specified in Section 4(d). Reload Option Rights shall cover up
to the number of Common Shares, Deferred Shares, or Option Rights surrendered
to the Company upon any such exercise in payment of the Option Price or to
meet any withholding obligations. Reload Options may not have an Option Price
that is less than the applicable Market Value per Share at the time of
exercise and shall be on such other terms as may be specified by the
Committee, which may be the same as or different from those of the original
Option Rights.
(g) Successive grants may be made to the same Participant whether or not any
Option Rights previously granted to such Participant remain unexercised.
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<PAGE>
(h) Each grant shall specify the period or periods of continuous service by
the Optionee with the Company or any Subsidiary that is necessary before the
Option Rights or installments thereof will become exercisable and may provide
for the earlier exercise of such Option Rights in the event of a Change in
Control.
(i) Any grant of Option Rights may specify Management Objectives that must be
achieved as a condition to the exercise of such rights.
(j) Option Rights granted under this Plan may be (i) options, including,
without limitation, Incentive Stock Options that are intended to qualify
under particular provisions of the Code, (ii) options that are not intended
so to qualify, or (iii) combinations of the foregoing.
(k) The Committee may, at or after the Date of Grant of any Option Rights
(other than Incentive Stock Options), provide for the payment of dividend
equivalents to the Optionee on either a current or deferred or contingent
basis or may provide that such equivalents shall be credited against the
Option Price.
(l) The exercise of an Option Right shall result in the cancellation on a
share-for-share basis of any Tandem Appreciation Right authorized under
Section 5 of this Plan.
(m) No Option Right shall be exercisable more than 10 years from the Date of
Grant.
(n) Each grant of Option Rights shall be evidenced by an agreement or other
written notice from the Company by an officer and delivered to the Optionee
and containing such terms and provisions, consistent with this Plan, as the
Committee may approve.
5. Appreciation Rights. (a) The Committee may authorize the granting (i) to any
Optionee, of Tandem Appreciation Rights in respect of Option Rights granted
hereunder, and (ii) to any Participant, of Free-Standing Appreciation Rights. A
Tandem Appreciation Right shall be a right of the Optionee, exercisable by
surrender of the related Option Right, to receive from the Company an amount
determined by the Board, which shall be expressed as a percentage of the Spread
(not exceeding 100 percent) at the time of exercise. Tandem Appreciation Rights
may be granted at any time prior to the exercise or termination of the related
Option Rights; provided, however, that a Tandem Appreciation Right awarded in
relation to an Incentive Stock Option must be granted concurrently with such
Incentive Stock Option. A Free-Standing Appreciation Right shall be a right of
the Participant to receive from the Company an amount determined by the
Committee, which shall be expressed as a percentage of the Spread (not exceeding
100 percent) at the time of exercise.
(b) Each grant of Appreciation Rights may utilize any or all of the
authorizations, and shall be subject to all of the requirements, contained in
the following provisions:
(i) Any grant may specify that the amount payable on exercise of an
Appreciation Right may be paid by the Company in cash, in Common Shares or
in any combination thereof and may either grant to the Participant or retain
in the Committee the right to elect among those alternatives.
6
<PAGE>
(ii) Any grant may specify that the amount payable on exercise of an
Appreciation Right may not exceed a maximum specified by the Committee at
the Date of Grant.
(iii) Any grant may specify waiting periods before exercise and permissible
exercise dates or periods.
(iv) Any grant may specify that such Appreciation Right may be exercised
only in the event of, or earlier in the event of, a Change in Control.
(v) Any grant may provide for the payment to the Participant of dividend
equivalents thereon in cash or Common Shares on a current, deferred or
contingent basis.
(vi) Any grant of Appreciation Rights may specify Management Objectives
that must be achieved as a condition of the exercise of such Rights.
(vii) Each grant of Appreciation Rights shall be evidenced by an agreement
executed on behalf of the Company by an officer and delivered to and
accepted by the Participant, which agreement shall describe such
Appreciation Rights, identify the related Option Rights (if applicable),
state that such Appreciation Rights are subject to all the terms and
conditions of this Plan, and contain such other terms and provisions,
consistent with this Plan, as the Committee may approve.
(c) Any grant of Tandem Appreciation Rights shall provide that such Rights may
be exercised only at a time when the related Option Right is also exercisable
and at a time when the Spread is positive, and by surrender of the related
Option Right for cancellation.
(d) Regarding Free-standing Appreciation Rights only:
(i) Each grant shall specify in respect of each Free-standing
Appreciation Right a Base Price, which shall be equal to or greater than
the Market Value per Share on the Date of Grant;
(ii) Successive grants may be made to the same Participant regardless of
whether any Free-standing Appreciation Rights previously granted to the
Participant remain unexercised; and
(iii) No Free-standing Appreciation Right granted under this Plan may be
exercised more than 10 years from the Date of Grant.
6. Restricted Shares. The Committee may also authorize the grant or sale of
Restricted Shares to Participants. Each such grant or sale may utilize any or
all of the authorizations, and shall be subject to all of the requirements,
contained in the following provisions:
(a) Each such grant or sale shall constitute an immediate transfer of the
ownership of Common Shares to the Participant in consideration of the
performance of services, entitling such Participant to voting, dividend and
other ownership rights, but subject to the substantial risk of forfeiture
and restrictions on transfer hereinafter referred to.
7
<PAGE>
(b) Each such grant or sale may be made without additional consideration or
in consideration of a payment by such Participant that is less than Market
Value per Share at the Date of Grant.
(c) Each such grant or sale shall provide that the Restricted Shares
covered by such grant or sale shall be subject to a "substantial risk of
forfeiture" within the meaning of Section 83 of the Code for a period of
not less than two years to be determined by the Committee at the Date of
Grant and may provide for the earlier lapse of such substantial risk of
forfeiture in the event of a Change in Control.
(d) Each such grant or sale shall provide that during the period for which
such substantial risk of forfeiture is to continue, the transferability of
the Restricted Shares shall be prohibited or restricted in the manner and
to the extent prescribed by the Board at the Date of Grant (which
restrictions may include, without limitation, rights of repurchase or first
refusal in the Company or provisions subjecting the Restricted Shares to a
continuing substantial risk of forfeiture in the hands of any transferee).
(e) Any grant of Restricted Shares may specify Management Objectives that,
if achieved, will result in termination or early termination of the
restrictions applicable to such shares. Each grant may specify in respect
of such Management Objectives a minimum acceptable level of achievement and
may set forth a formula for determining the number of Restricted Shares on
which restrictions will terminate if performance is at or above the minimum
level, but falls short of full achievement of the specified Management
Objectives.
(f) Any grant or sale of Restricted Shares may require that any or all
dividends or other distributions paid thereon during the period of such
restrictions be automatically deferred and reinvested in additional
Restricted Shares, which may be Subject to the same restrictions as the
underlying award.
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<PAGE>
(g) Each grant or sale of Restricted Shares shall be evidenced by an
agreement executed on behalf of the Company by any officer and delivered to
and accepted by the Participant and shall contain such terms and
provisions, consistent with this Plan, as the Committee may approve. Unless
otherwise directed by the Committee, all certificates representing
Restricted Shares shall be held in custody by the Company until all
restrictions thereon shall have lapsed, together with a stock power or
powers executed by the Participant in whose name such certificates are
registered, endorsed in blank and covering such Shares.
7. Deferred Shares. The Committee may also authorize the granting or sale of
Deferred Shares to Participants. Each such grant or sale may utilize any or all
of the authorizations, and shall be subject to all of the requirements contained
in the following provisions:
(a) Each such grant or sale shall constitute the agreement by the Company
to deliver Common Shares to the Participant in the future in consideration
of the performance of services, but subject to the fulfillment of such
conditions during the Deferral Period as the Committee may specify.
(b) Each such grant or sale may be made without additional consideration or
in consideration of a payment by such Participant that is less than the
Market Value per Share at the Date of Grant.
(c) Each such grant or sale shall be subject to a Deferral Period of not
less than one year, as determined by the Committee at the Date of Grant,
and may provide for the earlier lapse or other modification of such
Deferral Period in the event of a Change in Control.
(d) During the Deferral Period, the Participant shall have no right to
transfer any rights under his or her award and shall have no rights of
ownership in the Deferred Shares and shall have no right to vote them, but
the Committee may, at or after the Date of Grant, authorize the payment of
dividend equivalents on such Shares on either a current or deferred or
contingent basis, either in cash or in additional Common Shares.
(e) Each grant or sale of Deferred Shares shall be evidenced by an
agreement executed on behalf of the Company by any officer and delivered to
and accepted by the Participant and shall contain such terms and
provisions, consistent with this Plan, as the Committee may approve.
8. Awards to Non-Employee Directors. The Committee may, from time to time and
upon such terms and conditions as it may determine, authorize the granting to
Non-Employee Directors of Option Rights and may also authorize the grant or sale
of Restricted Shares to Non-Employee Directors.
(a) Each grant of Option Rights awarded pursuant to this Section 8 shall be
upon terms and conditions consistent with Section 4 of this Plan and shall be
evidenced by an agreement in such form as shall be approved by the Committee.
Each grant shall specify an Option Price per share, which shall not be less than
the Market Value per Share on the Date of Grant. Each such Option Right granted
under the Plan shall expire not more than 10 years from the Date of Grant and
shall be subject to earlier termination as hereinafter provided. Unless
otherwise determined by the Committee, such Option Rights shall be subject to
the following additional terms and conditions:
9
<PAGE>
(i) Each grant shall specify the number of Common Shares to which it
pertains subject to the limitations set forth in Section 3 of this plan.
(ii) In the event of the death or disability of the holder of any such
Option Rights, each of the then outstanding vested Option Rights of such
holder may be exercised at any time within a stated period after such death
or disability, as provided in the grant, but in no event after the
expiration date of the term of such Option Rights.
(iii) If a Non-Employee Director subsequently becomes an employee of the
Company or a Subsidiary while remaining a member of the Board, any Option
Rights held under the Plan by such individual at the time of such
commencement of employment shall not be affected thereby.
(iv) Option Rights may be exercised by a Non-Employee Director only upon
payment to the Company in full of the Option Price of the Common Shares to
be delivered. Such payment shall be made in cash or in Common Shares then
owned by the optionee for at least six months, or in a combination of cash
and such Common Shares.
(v) Any grant may provide for deferred payment of the Option Price from
the proceeds of sale through a bank or broker on a date satisfactory to the
Company of some or all of the shares to which such exercise relates.
(b) Each grant or sale of Restricted Shares pursuant to this Section 8 shall be
upon terms and conditions consistent with Section 6 of this Plan.
9. Transferability. (a) Except as otherwise determined by the Committee, no
Option Right, Appreciation Right or other derivative security granted under the
Plan shall be transferable by a Participant other than by will or the laws of
descent and distribution. Except as otherwise determined by the Committee,
Option Rights and Appreciation Rights shall be exercisable during the Optionee's
lifetime only by him or her or by his or her guardian or legal representative.
(b) The Committee may specify at the Date of Grant that part or all of the
Common Shares that are (i) to be issued or transferred by the Company upon the
exercise of Option Rights or Appreciation Rights, or upon the termination of the
Deferral Period applicable to Deferred Shares or (ii) no longer subject to the
substantial risk of forfeiture and restrictions on transfer referred to in
Section 6 of this Plan, shall be subject to further restrictions on transfer.
(c) Notwithstanding the provisions of Section 9(a), the Committee may provide
that any grant of Option Rights (other than Incentive Stock Options),
Appreciation Rights, Restricted Shares, and Deferred Shares shall be
transferable by a Participant, without payment of consideration therefor by the
transferee, to any one or more members of the Participant's Immediate Family (or
to one or more trusts established solely for the benefit of one or more members
of the Participant's Immediate Family or to one or more partnerships in which
the only partners are members of the Participant's Immediate Family); provided,
however, that (i) no such transfer shall be effective unless reasonable prior
notice thereof is delivered to the Company and such transfer is thereafter
effected in accordance with any terms and conditions that shall have been
10
<PAGE>
made applicable thereto by the Company or the Board and (ii) any such transferee
shall be subject to the same terms and conditions hereunder as the Participant.
10. Adjustments. The Committee may make or provide for such adjustments in the
numbers of Common Shares covered by outstanding Option Rights, Appreciation
Rights and Deferred Shares granted hereunder, and in the Option Price and Base
Price, and in the kind of shares covered thereby, as the Committee, in its sole
discretion, exercised in good faith, may determine is equitably required to
prevent dilution or enlargement of the rights of Participants or Optionees that
otherwise would result from (a) any stock dividend, stock split, combination of
shares, recapitalization or other change in the capital structure of the
Company, or (b) any merger, consolidation, spin-off, split-off, spin-out, split-
up, reorganization, partial or complete liquidation or other distribution of
assets, issuance of rights or warrants to purchase securities, or (c) any other
corporate transaction or event having an effect similar to any of the foregoing.
Moreover, in the event of any such transaction or event, the Committee, in its
discretion, may provide in substitution for any or all outstanding awards under
this Plan such alternative consideration as it, in good faith, may determine to
be equitable in the circumstances and may require in connection therewith the
surrender of all awards so replaced. The Committee may also make or provide for
such adjustments in the numbers of shares specified in Section 3 of this Plan as
the Committee in its sole discretion, exercised in good faith, may determine is
appropriate to reflect any transaction or event described in this Section 10;
provided, however, that any such adjustment to the number specified in Section
3(c)(i) shall be made only if and to the extent that such adjustment would not
cause any Option intended to qualify as an Incentive Stock Option to fail so to
qualify, and the Committee may take into consideration, as to any award subject
to a proposed adjustment, the potential adverse effect thereof under applicable
tax or other laws, and may adjust such awards inconsistently as a consequence of
those effects.
11. Change in Control. For purposes of this Plan, except as may be otherwise
prescribed by the Committee in an agreement evidencing a grant or award made
under the Plan, a "Change in Control" shall mean if at any time any of the
following events shall have occurred:
(a) Voting Stock Accumulations. The accumulation by any Person of
Beneficial Ownership of twenty percent (20%) or more of the combined voting
power of the Company's Voting Stock; provided that for purposes of this
Section 11(a), a Change in Control will not be deemed to have occurred if
the accumulation of twenty percent (20%) or more of the voting power of the
Company's Voting Stock results from any acquisition of Voting Stock (i)
directly from the Company that is approved by the Incumbent Board, (ii) by
the Company, (iii) by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any Subsidiary, or (d) by any
Person pursuant to a Business Combination that complies with clauses (i),
(ii) and (iii) of Section 11(b); or
(b) Business Combinations. Consummation of a Business Combination, unless,
immediately following that Business Combination, (i) all or substantially
all of the Persons who were the beneficial owners of Voting Stock of the
Company immediately prior to that Business Combination beneficially own,
directly or indirectly, more than sixty-six and two-thirds percent
(66 2/3%) of the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of Directors of the entity resulting from that
Business Combination (including, without limitation, an entity that as a
result of that transaction owns the Company or all or substantially all of
the Company's assets either directly or through one or more
11
<PAGE>
subsidiaries) in substantially the same proportions relative to each other
as their ownership, immediately prior to that Business Combination, of the
Voting Stock of the Company, (ii) no Person (other than the Company, that
entity resulting from that Business Combination, or any employee benefit
plan (or related trust) sponsored or maintained by the Company, any Eighty
Percent (80%) Subsidiary or that entity resulting from that Business
Combination) beneficially owns, directly or indirectly, twenty percent
(20%) or more of the then outstanding shares of common stock of the entity
resulting from that Business Combination or the combined voting power of
the then outstanding voting securities entitled to vote generally in the
election of directors of that entity, and (iii) at least a majority of the
members of the Board of Directors of the entity resulting from that
Business Combination were members of the Incumbent Board at the time of the
action of the Board of Directors providing for that Business Combination;
or
(c) Sale of Assets. A sale or other disposition of all or substantially all
of the assets of the Company; or
(d) Liquidations or Dissolutions. Approval by the shareholders of the
Company of a complete liquidation or dissolution of the Company, except
pursuant to a Business Combination that complies with clauses (i), (ii) and
(iii) of Section 11(b).
For purposes of this Section 11, the following definitions will apply:
"Beneficial Ownership" means beneficial ownership as that term is used in
Rule 13d-3 promulgated under the Exchange Act.
"Business Combination" means a reorganization, merger or consolidation of
the Company.
"Eighty Percent (80%) Subsidiary" means an entity in which the Company
directly or indirectly beneficially owns eighty percent (80%) or more of
the outstanding Voting Stock.
"Exchange Act" means the Securities Exchange Act of 1934, including
amendments, or successor statutes of similar intent.
"Incumbent Board" means a Board of Directors at least a majority of whom
consist of individuals who either are (a) members of the Company's Board of
Directors as of January 1, 2000, or (b) members who become members of the
Company's Board of Directors subsequent to January 1, 2000, whose election,
or nomination for election by the Company's shareholders, was approved by a
vote of at least two-thirds (2/3) of the directors then comprising the
Incumbent Board (either by a specific vote or by approval of the proxy
statement of the Company in which that person is named as a nominee for
director, without objection to that nomination), but excluding, for that
purpose, any individual whose initial assumption of office occurs as a
result of an actual or threatened election contest (within the meaning of
Rule 14a-11 of the Exchange Act) with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board of Directors.
"Person" means any individual, entity or group (within the meaning of
Section 13(d)(3) or 14 (d)(2) of the Exchange Act).
12
<PAGE>
"Voting Stock" means the then outstanding securities of an entity entitled
to vote generally in the election of members of that entity's Board.
12. Fractional Shares. The Company shall not be required to issue any fractional
Common Shares pursuant to this Plan. The Committee may provide for the
elimination of fractions or for the settlement of fractions in cash.
13. Withholding Taxes. To the extent that the Company is required to withhold
federal, state, local or foreign taxes in connection with any payment made or
benefit realized by a Participant or other person under this Plan, and the
amounts available to the Company for such withholding are insufficient, it shall
be a condition to the receipt of such payment or the realization of such benefit
that the Participant or such other person make arrangements satisfactory to the
Company for payment of the balance of such taxes required to be withheld, which
arrangements (in the discretion of the Committee) may include relinquishment of
a portion of such benefit. The Company and a Participant or such other person
may also make similar arrangements with respect to the payment of any taxes with
respect to which withholding is not required.
14. Foreign Employees. In order to facilitate the making of any grant or
combination of grants under this Plan, the Committee may provide for such
special terms for awards to Participants who are foreign nationals or who are
employed by the Company or any Subsidiary outside of the United States of
America as the Committee may consider necessary or appropriate to accommodate
differences in local law, tax policy or custom. Moreover, the Committee may
approve such supplements to or amendments, restatements or alternative versions
of this Plan as it may consider necessary or appropriate for such purposes,
without thereby affecting the terms of this Plan as in effect for any other
purpose, and the Secretary or other appropriate officer of the Company may
certify any such document as having been approved and adopted in the same manner
as this Plan. No such special terms, supplements, amendments or restatements,
however, shall include any provisions that are inconsistent with the terms of
this Plan as then in effect unless this Plan could have been amended to
eliminate such inconsistency without further approval by the shareholders of the
Company.
15. Administration of the Plan. (a) This Plan shall be administered by the
Committee. A majority of the Committee shall constitute a quorum, and the action
of the members of the Committee present at any meeting at which a quorum is
present, or acts unanimously approved in writing, shall be the acts of the
Committee.
(b) The Committee, in its discretion, may delegate to one or more officers of
the Company, all or part of the Committee's authority and duties with respect to
Participants who are not subject to the reporting and other provisions of
Section 16 of the Exchange Act or any successor rule to the same effect. In the
event of such delegation, and as to matters encompassed by the delegation,
references in the Plan to the Committee shall be interpreted as a reference to
the Committee's delegate or delegates. The Committee may revoke or amend the
terms of a delegation at any time but such action shall not invalidate any prior
actions of the Committee's delegate or delegates that were consistent with the
terms of the Plan.
(c) The interpretation and construction by the Committee of any provision of
this Plan or of any agreement, notification or document evidencing the grant of
Option Rights, Appreciation Rights, Restricted Shares, or Deferred Shares, and
any determination by the Committee pursuant to any provision of this Plan or of
any such agreement, notification or document shall
13
<PAGE>
be final and conclusive. No member of the Committee shall be liable for any such
action or determination made in good faith.
16. Amendments, Etc. (a) The Committee may at any time and from time to time
amend the Plan in whole or in part; provided, however, that any amendment which
must be approved by the shareholders of the Company in order to comply with
applicable law or the rules of the New York Stock Exchange or, if the Common
Shares are not traded on the New York Stock Exchange, the principal national
securities exchange upon which the Common Shares are traded or quoted, shall not
be effective unless and until such approval has been obtained. Presentation of
this Plan or any amendment hereof for shareholder approval shall not be
construed to limit the Company's authority to offer similar or dissimilar
benefits under other plans without shareholder approval. No amendment shall,
without a Participant's consent, adversely affect any rights of any Participant
with respect to any award outstanding at the time such amendment is made. No
amendment to this Plan shall become effective until shareholder approval is
obtained if (i) the amendment increases the aggregate number of Common Shares
that may be issued under the Plan, (ii) the amendment changes the class of
individuals eligible to become Participants, or (iii) the amendment extends the
duration of the Plan.
(b) The Committee shall not, without the further approval of the shareholders of
the Company, authorize the amendment of any outstanding Option Right to reduce
the Option Price. Furthermore, no Option Right shall be canceled and replaced
with awards having a lower Option Price without further approval of the
shareholders of the Company. This Section 16(b) is intended to prohibit the
repricing of "underwater" Option Rights and shall not be construed to prohibit
the adjustments provided for in Section 10 of this Plan.
(c) The Committee also may permit Participants to elect to defer the issuance of
Common Shares or the settlement of awards in cash under the Plan pursuant to
such rules, procedures or programs as it may establish for purposes of this
Plan. The Committee also may provide that deferred issuances and settlements
include the payment or crediting of dividend equivalents or interest on the
deferral amounts.
(d) The Committee may condition the grant of any award or combination of awards
authorized under this Plan on the surrender or deferral by the Participant of
his or her right to receive a cash bonus or other compensation otherwise payable
by the Company or a Subsidiary to the Participant.
(e) In case of termination of employment by reason of death, disability or
normal or early retirement, or in the case of hardship or other special
circumstances, of a Participant who holds an Option Right or Appreciation Right
not immediately exercisable in full, or any Restricted Shares as to which the
substantial risk of forfeiture or the prohibition or restriction on transfer has
not lapsed, or any Deferred Shares as to which the Deferral Period has not been
completed, or who holds Common Shares subject to any transfer restriction
imposed pursuant to Section 9(b) of this Plan, the Committee may, in its sole
discretion, accelerate the time at which such Option Right or Appreciation Right
may be exercised or the time at which such substantial risk of forfeiture or
prohibition or restriction on transfer will lapse or the time when such Deferral
Period will end or the time when such transfer restriction will terminate or may
waive any other limitation or requirement under any such award.
14
<PAGE>
(f) This Plan shall not confer upon any Participant any right with respect to
continuance of employment or other service with the Company or any Subsidiary,
nor shall it interfere in any way with any right the Company or any Subsidiary
would otherwise have to terminate such Participant's employment or other service
at any time.
(g) To the extent that any provision of this Plan would prevent any Option Right
that was intended to qualify as an Incentive Stock Option from qualifying as
such, that provision shall be null and void with respect to such Option Right.
Such provision, however, shall remain in effect for other Option Rights and
there shall be no further effect on any provision of this Plan.
17. Termination. No grant shall be made under this Plan more than 10 years after
the date on which this Plan is first approved by the shareholders of the
Company, but all grants made on or prior to such date shall continue in effect
thereafter subject to the terms thereof and of this Plan. The Committee may
terminate the Plan at any time.
18. United Kingdom Awards.
(a) UK Provisions. The terms and conditions used in this Section 18 shall apply
exclusively to Participants who are resident in the United Kingdom ("UK
Participants") and shall not apply to Participants residing anywhere else.
(b) Overriding nature. The Plan terms and conditions shall govern all Option
Rights granted to Optionholders, subject to the modifications set out in this
Section 18. If the provisions contained in this Section 18 conflict with those
contained in other Sections of the Plan, the provisions set forth in this
Section 18 shall, subject to Section 18 (y), govern as they relate to Option
Rights granted to Optionholders.
(c) Interpretation. The following definitions shall apply in this Section 18:
"Appropriate Period" has the meaning given in Paragraph 15 (2) of Schedule
9;
"Associated Company" has the meaning given in section 187 (2) of the Taxes
Act;
"Control" has the meaning given by section 187 (2) of the Taxes Act;
"Date of UK Grant" means, in relation to any Option Rights, the date upon
which the Committee resolves to grant the Option Rights;
"Employee" means a UK Participant who is an employee of any Group Company
and any director of any Group Company, who is required to devote not less
than 25 hours per week (exclusive of meal breaks) to his duties to the
Group;
"Group" means the Company and any companies of which the Company has
Control and "Group Company" means any such Company;
"Market Value" has the meaning given in part VIII of the Taxation of
Chargeable Gains Act 1992;
15
<PAGE>
"Optionholder" means the holder of an Option Right granted subject to the
terms and conditions contained in this Section 18. A person shall not,
however, be an Optionholder in relation to Option Rights which are
restricted in whole or in part under Section 18 (y);
"Schedule 9" means Schedule 9 to the Taxes Act;
"Shares" means Common Shares satisfying the conditions specified in
paragraphs 10-14 (inclusive) of Schedule 9;
"Taxes Act" means the UK Income and Corporation Taxes Act 1988;
(d) Statutory interpretation. Where the context so admits, any reference in this
Section 18:
(i) to the singular number shall be construed as if it referred also to
the plural number and vice versa;
(ii) to the masculine gender shall be construed as though it referred also
to the feminine gender;
(iii) to a statute or statutory provision as for the time being amended or
reenacted; and
(iv) to the Act or any provision of the Act shall be construed as including
a reference to the Act or provision repealed by and corresponding to the
Act.
(e) Eligibility. Subject to the following provisions of this Section 18, the
Committee may grant Option Rights to any Employee in any case where the
Committee so determines provided that no Option Right shall be granted to any
Employee unless the company by which that Employee is employed has first been
nominated by the Committee to participate in the Plan.
(f) Restrictions on eligibility. The Committee may not grant an Option Right to
any individual who is not an Employee at the Date of UK Grant or who is
otherwise required by paragraph 8 of Schedule 9 to be precluded from having an
Option Right granted to him on that date.
(g) Limit on individual grants. Irrespective of the number of Shares over which
an Option Right is expressed to have been granted, an Option Right shall take
effect and, if necessary, be limited, so that the total Market Value of the
Shares which the Optionholder may acquire on the exercise of all Approved
Options held by him shall not exceed the amount specified in paragraph 28 of
Schedule 9 (which is, currently, (Pounds)30,000). For this purpose "Approved
Options" shall include all options granted under a share option scheme approved
by the United Kingdom Board of the Inland Revenue under Schedule 9 and
established by the Company or any Associated Company of the Company but
excluding any savings related share option scheme.
(h) Restriction on exercises for certain people. An Optionholder may not
exercise an Option Right at the time when he must be precluded from doing so in
order to satisfy the requirements of paragraph 8 of Schedule 9 and neither may
the personal representatives of an Optionholder exercise such an option if, in
order to satisfy those requirements, he was so precluded at the date of his
death.
16
<PAGE>
(i) Restrictions on types of shares. The Committee may not grant an Option Right
over Shares which do not satisfy the conditions in paragraphs 10-14 (inclusive)
of Schedule 9. An Optionholder may not exercise an Option Right if the Shares to
be delivered would not satisfy the conditions of paragraphs 10-14 (inclusive) of
Schedule 9.
(j) Option agreements. Where the Committee determines to grant an Option Right
to a UK Participant, the UK Participant shall enter into an agreement as
referred to in section 4 (n) of the Plan within thirty (30) days of such
determination failing which the Option Rights will be deemed not to have been
granted.
(k) Inland Revenue approval of option agreements. The Committee shall ensure
that the provisions of any such agreements evidencing option grants are approved
in advance by the United Kingdom Board of the Inland Revenue and no amendment or
adjustment shall be made to such agreements after option grants which they
evidence have been granted.
(l) Performance Conditions. The Committee may grant an Option Right on the terms
that it shall be subject to additional objective conditions. Such conditions
must be set out in the option agreement. If the conditions are or include a
performance target, then upon the occurrence of such event or events as a result
of which the Committee considers it fair and reasonable to adjust the
performance target, the Committee may vary the performance target provided that
the effect of such variation is not to make the target more onerous.
(m) Market Value of Shares. The Market Value of Shares over which an Option
Grant has been or is to be granted shall be calculated at the time or times as
may have been agreed by the United Kingdom Board of Inland Revenue pursuant to
paragraph 29 of Schedule 9 and, where relevant, shall be converted into sterling
at the rate of exchange ruling in London after about 11am at such time or times.
The Option Price shall not be manifestly less than the Market Value of the
Shares over which an Option Right is to be exercised as shall be determined at
the Date of UK Grant or such earlier date as may be agreed in writing with the
United Kingdom Board of the Inland Revenue.
(n) Latest date for exercise. The last date for the exercise of an Option Right
shall be determined by the Committee but shall not, except where Section 18 (q)
below applies, be later than the date preceding the 10th anniversary of the Date
of UK Grant.
(o) Date of exercise. The date or dates after which an Option Right may be
exercised in whole or in part shall be determined at the Date of UK Grant and
shall not be altered thereafter.
(p) Exercise restrictions. An Option Right may only be exercised by the
Optionholder or his legal personal representatives and accordingly where an
Optionholder transfers, assigns, charges, encumbers or otherwise alienates his
Option Right or creates in favor of any third party any interest therein or, in
any case, attempts so to do or is adjudicated bankrupt, that Option Right shall
lapse.
(q) Death of Optionholder. The personal representatives of an Optionholder may
not exercise his Option Right more than twelve months after the date of the
Optionholder's death.
(r) Currency of exercise. The payment upon the exercise of an Option Right may
only be made in cash in US dollars.
17
<PAGE>
(s) Delivery restrictions. Unless prohibited by federal tax laws and regulations
or the rules of any domestic stock exchange on which Shares may be listed,
Shares shall be delivered upon the exercise of an Option Right within 30 days of
the exercise of the Option Right and any new shares issued shall rank pari passu
in all respects with any other shares of the same class in issue save as regards
any rights attaching to shares by reference to a record date prior to the date
of issue.
(t) No restrictions on Shares. The Committee shall not impose any restrictions
and conditions on the disposition of Shares delivered upon the exercise of an
Option Right.
(u) Takeovers. If any company ("the Acquiring Company") obtains Control of the
Company as a result of a general offer to acquire all the Shares not owned by it
or any person acting in concert with it or by virtue of a compromise or
arrangement sanctioned by the court under section 425 of the UK Companies Act
1985 or becomes bound or entitled to acquire Shares under sections 428 to 430 of
that act then an Optionholder may at any time within the Appropriate Period with
the agreement of the Acquiring Company release any Option Right in consideration
of the grant to him of rights ("New Option") which satisfy the following
conditions:
(i) the New Option shall be over shares in the Acquiring Company or another
company which satisfies paragraph (b) or (c) of Paragraph 10 of Schedule 9 in
relation to the Acquiring Company and shall otherwise satisfy the conditions
specified in paragraphs 10 to 14 inclusive of Schedule 9;
(ii) the New Option shall be a right to acquire such number of such shares in
the Acquiring Company (or such other company) as shall have immediately after
the grant of the New Option an aggregate market value equal to the aggregate
market value of the Shares subject to the Option Right immediately before its
release;
(iii) the New Option shall have an Option Price such that the aggregate price
payable on its exercise in full shall equal the aggregate price which would
have been payable on exercise in full of the Option Right; and
(iv) the New Option shall be otherwise identical in terms to the Option
Right.
The New Option shall be deemed for all purposes to have been granted at the same
time as the released Option Right and the Plan and this Section 18 shall apply
to the New Option so that "Company" shall mean the company over whose share
capital the New Option is granted and "Shares" shall mean shares in that
company.
(v) Adjustments. The Committee may adjust, in such manner as it deems
appropriate and the United Kingdom Board of Inland Revenue shall approve, the
class and number of shares covered by an Option Right and the Option Price of
the Option Right only in the event of any capitalization or rights issue by the
Company, or any consolidation, subdivision or reduction of its share capital.
(w) Appreciation Rights and Restricted Shares. The Committee shall not grant
Option Rights, comprising Appreciation Rights or Restricted Shares to UK
Participants. Where an Option
18
<PAGE>
Right is granted to an Optionholder, a corresponding Tandem Appreciation Right
shall not be granted in relation to the Option Right.
(x) Amendments. No amendments to the provisions of this Section 18 shall have
effect unless such amendment has been approved by the United Kingdom Board of
the Inland Revenue. No amendments to the provision of the Plan shall have effect
in relation to Option Rights granted to Optionholders unless such amendments
have been approved by the United Kingdom Board of Inland Revenue.
(y) Non-approved options. If the grant or exercise of any Option Right is
inconsistent with the terms of this Section 18 or the provisions of Schedule 9,
the Option Right shall in whole or in part be deemed to have been granted or
exercised pursuant to the other Sections of this Plan. The UK Participant shall
not be an Optionholder in respect of all or any of such Option Rights. In
particular, any Option Right granted to a UK Participant under this Section 18
shall be limited to take effect so that the limits specified in Section 18 (g)
are not exceeded. Any Option Rights in excess of those limits will be deemed to
have been granted under the other sections of the Plan.
19
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.24
<SEQUENCE>8
<FILENAME>0008.txt
<DESCRIPTION>BONUS EXCHANGE PROGRAM
<TEXT>
<PAGE>
EXHIBIT 10.24
BONUS EXCHANGE PROGRAM
At the discretion of the Compensation and Human Resources Committee of the Board
of Directors, in any year, Executive Officers may elect to forego cash payment
of all of part of an earned Annual Incentive and receive instead options to
purchase Company stock. The Committee believes that this election opportunity
provides an excellent vehicle for expanding Executive Officer's stock ownership
and identification with shareholder interests, which serves to further encourage
management's commitment to long-term performance of the Company. To promote
conversion elections and in recognition of the associated market risk and
deferral of economic benefit, conversion is based on a formula approved by the
Committee that employs a greater multiple as higher percentages of Incentive are
converted.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13.1
<SEQUENCE>9
<FILENAME>0009.txt
<DESCRIPTION>SUMMARY OF SELECTED FINANCIAL DATA
<TEXT>
<PAGE>
EXHIBIT 13.1
SUMMARY OF SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Year Ended December 31
------------------------------------------------
2000 1999
------------------------------------------------
(Dollars in thousands, except per share amounts)
<S> <C> <C>
SUMMARY OF OPERATIONS
Operating revenue $ 1,965,881 $ 1,772,694
Operating costs and expenses before unusual items 1,510,466 1,358,155
------------ ------------
Unusual items - -
Operating income 455,415 414,539
Other income, net 5,905 12,356
Interest expense (75,951) (60,971)
------------ ------------
Income from continuing operations before income
taxes and cumulative effect of accounting change 385,369 365,924
Provision for income taxes 157,347 150,047
------------ ------------
Income from continuing operations before
cumulative effect of accounting change 228,022 215,877
Discontinued operations, net of income taxes - -
Cumulative effect of accounting change,
net of income taxes* - -
------------ ------------
Net income $ 228,022 $ 215,877
============ ============
Dividends paid $ 52,374 $ 51,961
PER COMMON SHARE (diluted)
Income from continuing operations before
cumulative effect of accounting change $ 1.68 $ 1.55
Discontinued operations - -
Cumulative effect of accounting change - -
------------ ------------
Net income $ 1.68 $ 1.55
============ ============
Dividends $ 0.370 $ 0.363
Weighted average common shares outstanding (diluted) 136,016,000 139,603,000
BALANCE SHEET DATA (at December 31)
Total assets - continuing operations $ 2,069,637 $ 1,839,781
Total assets $ 2,069,637 $ 1,839,781
Long-term debt $ 993,569 $ 933,708
Shareholders' equity $ 383,578 $ 215,625
Common shares outstanding 135,835,000 134,001,000
OTHER INFORMATION (at December 31)
Stock price per share** $ 28.69 $ 23.56
Book value per share $ 2.82 $ 1.61
Market capitalization** $ 3,896,757 $ 3,157,388
Employees - continuing operations 12,200 12,700
</TABLE>
* The 1997 accounting change relates to EITF No. 97-13 regarding accounting
for business process reengineering costs.
** Stock prices and market capitalization prior to 1997 have been adjusted to
reflect the spin-off of ChoicePoint.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY OF SELECTED FINANCIAL DATA
SUMMARY OF OPERATIONS
Continued
1998 1997 1996 1995 1994 1993 1992
------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,620,978 $ 1,366,087 $ 1,222,798 $ 1,105,309 $ 968,660 $ 813,235 $ 724,030
1,255,326 1,042,179 955,897 883,405 770,779 649,135 584,204
------------ ------------ ------------ ------------ ------------ ------------ ------------
- (25,000) (10,313) 9,243 - (48,438) -
365,652 298,908 256,588 231,147 197,881 115,662 139,826
4,294 45,027 22,400 7,335 8,643 3,881 7,474
(42,701) (20,797) (16,439) (15,342) (12,986) (8,742) (3,031)
------------ ------------ ------------ ------------ ------------ ------------ ------------
327,245 323,138 262,549 223,140 193,538 110,801 144,269
133,812 137,613 109,452 90,355 79,804 48,525 59,056
------------ ------------ ------------ ------------ ------------ ------------ ------------
193,433 185,525 153,097 132,785 113,734 62,276 85,213
- 1,449 24,520 14,865 6,612 1,239 133
- (3,237) - - - - -
------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 193,433 $ 183,737 $ 177,617 $ 147,650 $ 120,346 $ 63,515 $ 85,346
============ ============ ============ ============ ============ ============ ============
$ 52,063 $ 52,030 $ 49,704 $ 50,223 $ 47,161 $ 42,041 $ 42,770
$ 1.34 $ 1.26 $ 1.03 $ 0.86 $ 0.75 $ 0.41 $ 0.52
- 0.01 0.16 0.10 0.04 0.01 -
- (0.02) - - - - -
------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 1.34 $ 1.24 $ 1.19 $ 0.96 $ 0.79 $ 0.42 $ 0.52
============ ============ ============ ============ ============ ============ ============
$ 0.353 $ 0.345 $ 0.330 $ 0.315 $ 0.303 $ 0.280 $ 0.260
144,403,000 147,818,000 149,207,000 154,375,000 150,691,000 151,631,000 164,746,000
$ 1,828,795 $ 1,177,104 $ 1,011,104 $ 871,489 $ 836,728 $ 629,318 $ 621,322
$ 1,828,795 $ 1,177,104 $ 1,207,518 $ 976,173 $ 934,832 $ 643,279 $ 638,375
$ 869,486 $ 339,301 $ 304,942 $ 302,665 $ 211,962 $ 200,070 $ 191,749
$ 366,466 $ 349,397 $ 424,950 $ 353,465 $ 361,935 $ 254,031 $ 257,990
140,042,000 142,609,000 144,876,000 147,245,000 151,790,000 149,618,000 151,550,000
$ 34.19 $ 35.44 $ 27.41 $ 19.13 $ 11.80 $ 12.25 $ 9.23
$ 2.62 $ 2.45 $ 2.93 $ 2.40 $ 2.38 $ 1.70 $ 1.70
$ 4,787,686 $ 5,053,706 $ 3,970,444 $ 2,816,061 $ 1,790,667 $ 1,832,821 $ 1,399,413
14,000 10,000 9,500 9,800 9,600 8,000 7,500
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13.2
<SEQUENCE>10
<FILENAME>0010.txt
<DESCRIPTION>MANAGEMENT'S DISCUSSION & ANALYSIS OF RESULTS
<TEXT>
<PAGE>
EXHIBIT 13.2
Management's Discussion & Analysis Of Results
Of Operations & Financial Condition
Overview
This discussion and analysis should be read in conjunction with the consolidated
financial statements and accompanying notes. The following table summarizes the
consolidated results for each of the three years ended December 31, 2000.
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------
2000 1999 1998
------------------------------------
(millions, except per share amounts)
<S> <C> <C> <C>
Revenue $1,965.9 $1,772.7 $1,621.0
Operating income $ 455.4 $ 414.5 $ 365.7
Other income, net $ 5.9 $ 12.4 $ 4.3
Interest expense $ (76.0) $ (61.0) $ (42.7)
Net income $ 228.0 $ 215.9 $ 193.4
Diluted earnings per share $ 1.68 $ 1.55 $ 1.34
</TABLE>
Revenue
Revenue in 2000 of $1.97 billion was an increase of $193.2 million, or 10.9%,
over 1999. Revenue increased $151.7 million in 1999, 9.4% over 1998. North
American Information Services revenue grew 6.3% in 2000, driven largely by an
increase in Marketing Services. Payment Services revenue increased 14.2% in 2000
from growth in both Check Solutions and Card Solutions.
The growth in 2000 revenue was also influenced by the acquisition of Consumer
Information Services ("CIS") on May 1, 2000, the dispositions of the global risk
management businesses on October 1, 2000, and the vehicle information business
in the U.K. on December 22, 2000 ("Divested Operations"), and the effects of
changes in foreign exchange rates. CIS generated revenue of $110.5 million
during 2000. In total, the Divested Operations generated revenue of $132.5
million prior to disposition in 2000 compared with $175.0 million for full year
1999. The strengthening of the U.S. dollar against foreign currencies during
2000, particularly the British pound and Spanish peseta, reduced 2000 revenue
growth by approximately $23 million as compared with 1999.
The increase in revenue during 1999 was driven by growth in the U.S. Card and
Check operations as well as international acquisitions in Equifax Europe,
Equifax Latin America and Card Solutions. The strengthening of the U.S. dollar
against foreign currencies during 1999, particularly the Brazilian real, reduced
1999 revenue growth by approximately $36 million as compared with 1998.
Operating Income
Operating income of $455.4 million in 2000 increased $40.9 million, or 9.9%,
over 1999. In 1999, operating income increased $48.9 million, or 13.4%, over
1998. Consolidated operating margins were 23.2% in 2000, 23.4% in 1999 and 22.6%
in 1998.
Increased operating income in 2000 and 1999 resulted from revenue growth as well
as cost reduction initiatives throughout the Company. Cost reduction
achievements in both years included headcount reductions, the outsourcing of
certain administrative functions, improved pricing from service providers in
data processing and telecommunications, and lower benefit costs.
<PAGE>
During 1999 and 1998, expense amounting to $26.4 million and $24.2 million,
respectively, was incurred in connection with assessment, remediation planning,
remediation, testing and contingency planning activities for application
software and host environments of the Company's information technology systems
associated with preparation for year 2000. Minimal costs were incurred during
2000 as the Company did not experience any discernable interruptions related to
this matter. Approximately half of this annual cost was from internal resources
that have been redeployed to manage ongoing system maintenance and development
throughout the Company.
Other Income, Net
Other income includes interest income of $9.2 million in 2000, $6.5 million in
1999 and $4.8 million in 1998.
During 2000, sales of the Divested Operations and the sale of an investment in a
card processing operation in India resulted in a net pretax loss of $2.0
million. In 1999, the Company sold its investment in Proceda S.A. in Brazil and
three risk management offices located in the U.S. that resulted in a $7.1
million pretax gain. These amounts were recorded in other income.
Interest Expense
Interest expense increased $15 million in 2000 and $18.3 million in 1999 as
compared with prior years. The increase in both years resulted from higher
average debt outstanding associated with acquisition activity in 2000 and 1998
and treasury stock purchases in 1999 and 1998. Average total debt outstanding
was $1,101.3 million in 2000, $975.8 million in 1999 and $633.9 million in 1998.
Effective Tax Rate
The effective tax rates were 40.8%, 41.0% and 40.9% in 2000, 1999 and 1998,
respectively. The effective rate in 2001 is expected to decline to approximately
40.5%, due to the effects of tax planning strategies and a higher level of
foreign earnings in lower tax rate jurisdictions.
Net Income and Diluted Earnings per Share
The percentage growth in diluted earnings per share of 8.4% in 2000 and 15.7% in
1999 exceeded the comparable growth rates in net income of 5.6% and 11.6%,
respectively, due to the accretive effects of treasury stock purchases in 1999
and 1998. Average diluted shares outstanding were 136.0 million in 2000, 139.6
million in 1999 and 144.4 million in 1998.
Segment Results
The following table summarizes the segment results for each of the three years
ended December 31, 2000. The results of businesses sold in the fourth quarter of
2000, which include the Company's risk management businesses located in the
U.S., Canada, and the U.K., as well as the vehicle information business in the
U.K., have been classified as Divested Operations. Prior year information has
been restated to conform to the current year presentation.
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------
Revenue Operating Income (Loss)
---------------------------- ----------------------------
2000 1999 1998 2000 1999 1998
(In millions)
<S> <C> <C> <C> <C> <C> <C>
Information Services
North American Information Services $ 673.4 $ 633.2 $ 616.8 $274.5 $261.0 $248.0
Consumer Information Services 110.5 - - 7.9 - -
Equifax Europe 143.4 148.7 127.0 13.0 3.3 (6.9)
Equifax Latin America 119.5 125.5 103.9 25.0 22.9 21.4
Divested Operations 132.5 175.0 197.6 13.8 18.9 22.8
Other 9.6 9.6 9.6 8.9 8.9 8.9
-------- -------- -------- ------ ------ ------
Total Information Services 1,188.9 1,092.0 1,054.9 343.1 315.0 294.2
-------- -------- -------- ------ ------ ------
Payment Services
Card Solutions 517.5 443.4 357.0 109.7 96.9 78.4
Check Solutions 259.5 237.3 209.1 44.4 38.6 30.9
-------- -------- -------- ------ ------ ------
Total Payment Services 777.0 680.7 566.1 154.1 135.5 109.3
-------- -------- -------- ------ ------ ------
(41.8) (36.0) (37.8)
-------- -------- -------- ------ ------ ------
General Corporate Expense $1,965.9 $1,772.7 $1,621.0 $455.4 $414.5 $365.7
======== ======== ======== ====== ====== ======
</TABLE>
<PAGE>
Information Services
North American Information Services
North American Information Services includes U.S. Credit Information and
Marketing Services, Mortgage Services, Canadian Operations, Knowledge
Engineering, Consumer Direct and Equifax Secure. Revenue in this segment
increased 6.3% in 2000 and 2.7% in 1999.
U.S. Credit Information and Marketing Services' revenue increased 7.7% in 2000
and 3.2% in 1999. Credit information volume growth of approximately 11.5% in
2000 and 7% in 1999 were partially offset by average price declines of about 9%
and 4%, respectively. Average pricing has been impacted by mix of business, with
many of our largest customers driving increasing volumes at lower than average
unit prices. Many of these customers are also large customers of the Company's
marketing services, which include prescreening, portfolio review, database and
other marketing products. Revenue in Marketing Services grew 28.4% in 2000,
compared with 3.2% in 1999.
During 2000, declining demand for information from mortgage industry customers,
caused by an increasing interest rate environment, resulted in a 21% contraction
in Mortgage Services' revenue, compared with a 6.7% increase in 1999. The growth
in 1999 was achieved despite an 18% decline during the last half of the year, as
compared to the last half of 1998, as rising interest rates began to
significantly curtail refinancing activity. A return to revenue growth is
anticipated in 2001, if interest rates continue to decline.
Canadian revenue increased 0.8% in 2000 after declining 2.7% in 1999. The 1999
decline was driven by increased competition in the consumer information
business.
Revenue in the Company's developing businesses of Knowledge Engineering,
Consumer Direct and Equifax Secure totaled $20.6 million in 2000, $14.0 million
in 1999, and $13.6 million in 1998. Consumer Direct generated approximately 75%
of the revenue growth in 2000.
Operating income for North American Information Services increased 5.2% in both
2000 and 1999. Operating margins were 40.8% in 2000, 41.2% in 1999 and 40.2% in
1998. During 2000, operating losses in the Company's developing businesses
increased approximately $8.5 million. Absent this increased investment in
developing businesses, operating income in 2000 would have grown 8.4% over 1999
and the 2000 operating margin would have approximated 42%.
Consumer Information Services
Consumer Information Services includes Direct Marketing Solutions and City
Directory, which were acquired on May 1, 2000. Total revenue for this eight-
month period amounted to $110.5 million and includes $8.4 million of revenue
generated by Canadian operations that have been subsequently exited by the
Company.
Equifax Europe
Revenue in Equifax Europe, which consists of operations in the United Kingdom,
Spain, Portugal and Italy, declined 3.6% in 2000 and increased 17.1% in 1999.
During the second quarter of 1998, the Company increased its ownership to 58% in
the Spanish operation. Gaining the control necessary for financial reporting
consolidation in Spain accounted for approximately $14.1 million of the 1999
revenue growth.
<PAGE>
The strengthening of the U.S. dollar in 2000 and 1999 against the British pound
and Spanish peseta reduced Equifax Europe's revenue growth by approximately
$12.5 million in 2000 and $4.9 million in 1999. On a local currency basis, this
segment's revenue grew 4.8% in 2000.
Operating income for Equifax Europe improved $9.7 million in 2000 and $10.2
million in 1999. Over the past two years this segment has made significant
progress in achieving operational efficiencies through cost reduction efforts,
improving operating margins to 9.1% in 2000 from 2.2% in 1999 and a loss in
1998.
Equifax Latin America
Equifax Latin America includes operations in Brazil, Argentina, Chile, Peru and
El Salvador. Revenue declined 4.8% in 2000 and increased 20.8% in 1999. The
strengthening of the U.S. dollar in 2000 and 1999 against the Brazilian real and
the Chilean peso reduced this segment's revenue growth by approximately $2.5
million in 2000 and $16.9 million in 1999. In August 1998, the Company acquired
an 80% interest in the Brazilian operation. This acquisition generated $38.3
million of the 1999 growth in revenue.
Operating income for Equifax Latin America increased 8.9% in 2000 and 7.2% in
1999. Cost reductions have contributed to an increase in operating margins to
20.9% in 2000 from 18.3% in 1999.
Divested Operations
The Company sold its risk management businesses in the U.S., Canada, and the
U.K. on October 1, 2000, and also sold its vehicle information business in the
U.K. on December 22, 2000. These information services businesses, which were
divested because they no longer fit the Company's ongoing business strategy,
have been classified as Divested Operations and prior year segment information
has been reclassified to conform with this presentation. Revenue declined $42.5
million in 2000 and $22.6 million in 1999. The decline in 2000 revenue is
primarily caused by the disposition of the risk management businesses at the
beginning of the fourth quarter.
Other
Other consists solely of a lottery contract, which expires at the end of May
2002, with the State of California that was subcontracted to GTECH Corporation.
Revenue and operating income remained comparable at $9.6 million and $8.9
million, respectively, for 2000, 1999 and 1998. Revenue and operating income
will remain comparable until the contract's expiration.
Payment Services
Card Solutions
Card Solutions includes card processing operations in the U.S., U.K., Brazil and
Chile and a card software business principally supporting the international
operations. Over the past three years, Card Solutions has focused its efforts
upon growth in international markets. In September 1998, Card Solutions expanded
its operations into Latin America by acquiring a 59.3% interest in UNNISA, a
card services business in Brazil. In June 1999, start-up of the U.K. operation
commenced. In January 2000, the Company acquired Procard, Chile's second-largest
credit card processor. Also in 2000, the Company signed a five-year agreement
with the National Australia Bank to process cards in Australia, New Zealand,
U.K. and Ireland, starting in the second quarter of 2001. This customer will be
serviced from a new card processing operation being established in Australia.
Card Solutions plans to utilize this Australian operation to pursue further card
processing opportunities in the Asian and Pacific Rim markets.
<PAGE>
Card Solutions' revenue increased 16.7% in 2000 and 24.2% in 1999, as
approximately 15% growth in U.S. revenue in each year was complemented with
international revenue growth of 24.9% in 2000 and 75.8% in 1999.
Revenue in the U.S. of $304.8 million in 1998 has grown to $351.7 million in
1999 and $402.9 million in 2000, driven by year-over-year increases in card
issuing transactions and merchant volumes.
International revenue of $52.2 million in 1998 has grown to $114.5 million in
2000, as a focused investment in these markets has grown the number of cards
from none at the beginning of 1998 to approximately 13.3 million at year-end
2000. Total international cards are expected to increase to approximately 16.4
million with commencement of the Australian operation in 2001. International
revenue includes card software revenue, which has declined from $27.1 million in
1998 to $23.2 million in 1999 and $13.0 million in 2000. Card Solutions has de-
emphasized card software sales as it grows its global processing operations,
which will utilize this proprietary software to service its customers. Partially
offsetting international revenue growth was the strengthening of the U.S. dollar
in 2000 and 1999. Exchange rate changes of the Brazilian real and the British
pound reduced revenue growth by approximately $3.0 million in 2000 and $11.5
million in 1999.
Card Solutions' operating income increased 13.1% in 2000 and 23.6% in 1999,
principally driven by the U.S. operations. Reduction of card software sales and
start-up costs of the international operations have tempered the growth in
operating income in 2000. Operating margins were 21.2% in 2000, 21.9% in 1999
and 22.0% in 1998.
Check Solutions
Check Solutions, which consists of operations in the U.S., Canada, U.K.,
Ireland, France, Australia and New Zealand grew revenue 9.4% in 2000 and 13.5%
in 1999.
The U.S. check operations increased revenue to $209.2 million in 2000 from
$187.1 million in 1999 and $161.1 million in 1998. Growth in U.S. revenue has
been driven by increased volume, largely resulting from the addition of new
customers. The face amount of checks authorized in the U.S. totaled $25.7
billion in 2000, $23.5 billion in 1999 and $19.8 billion in 1998. International
revenue of $50.3 million in 2000 approximated 1999 revenue of $50.2 million
after growing 4.6% in 1999 from $48.0 million in 1998. The face amount of checks
authorized in the international operations totaled $3.2 billion in 2000, $2.9
billion in 1999 and $3.0 billion in 1998. The strengthening of the U.S. dollar
against the British pound reduced international check revenue growth by $3.2
million in 2000 and $1.1 million in 1999. On a local currency basis,
international revenue increased approximately 6.6% in 2000 and 6.9% in 1999.
Check Solutions' operating income increased 15.0% in 2000 and 24.8% in 1999.
Increased operating cost efficiencies in both the U.S. and international
operations contributed to growth in profitability as operating margins improved
each year. Margins were 17.1% in 2000, 16.3% in 1999 and 14.8% in 1998.
General Corporate
General corporate expense increased $5.8 million in 2000 due primarily to higher
technology costs and one-time expenses associated with headquarters relocation.
General corporate expense declined $1.8 million in 1999 from 1998 due primarily
to lower performance share plan expense. The decline in performance share
expense was driven by the Company's lower stock price, as these plans have
certain measurement criteria based on both the period end stock price and the
average price during the last year of their measurement periods.
<PAGE>
Financial Condition
Net cash provided by operating activities amounted to $284.2 million in 2000 as
compared with $326.8 million in 1999. This decline is due primarily to the
timing of cash receipts and disbursements related to Payment Services'
settlement receivable and payable accounts, which accounted for $46.4 million of
the change in operating cash flow in 2000 versus 1999. Operating activities
provided cash of $305.5 million in 2000, $301.7 million in 1999 and $315.8
million in 1998 before the effect of this settlement activity. Cash balances
associated with the clearing system amounted to $29.0 million, $50.4 million and
$25.4 million at December 31, 2000, 1999 and 1998, respectively. Operating cash
flow has been sufficient to fund capital expenditures, dividend payments and
scheduled maturities of long-term debt.
Net cash used by investing activities amounted to $339.4 million in 2000, $117.8
million in 1999 and $607.7 million in 1998. Capital expenditures, exclusive of
acquisitions and investments, amounted to $110.7 million in 2000, $120.9 million
in 1999 and $119.3 million in 1998. Total capital expenditures are anticipated
to approximate $100 million in 2001. Acquisitions, net of cash acquired, and
other investments totaled $393.1 million in 2000, $22.9 million in 1999 and
$501.2 million in 1998 (Note 2).
Cash proceeds from the sale of businesses and other assets amounted to $164.3
million in 2000 (primarily the Divested Operations), $26.0 million in 1999 and
$12.9 million in 1998.
Financing activities provided $16.0 million of cash in 2000, used $155.1 million
in 1999 and provided $351.4 million in 1998. Treasury stock repurchases amounted
to $6.5 million in 2000, $210.2 million in 1999 and $161.8 million in 1998.
Treasury stock repurchases were temporarily suspended in 2000 to enable the
Company to apply available cash to the repayment of debt incurred in connection
with the CIS acquisition. Net addition to debt amounted to $48.2 million in
2000, as much of the CIS acquisition indebtedness has been repaid. Net additions
to debt amounted to $97.1 million in 1999 and $549.4 million in 1998. Net
borrowings were driven by treasury stock repurchases in 1999 and 1998, as well
as acquisitions in 1998. Dividend payments approximated $52 million in each
year. Other activity, primarily proceeds from the exercise of stock options,
provided cash of $26.7 million, $10.0 million and $15.9 million in 2000, 1999
and 1998, respectively.
At December 31, 2000, $359.5 million was available to the Company under its $750
million revolving credit facility. Should CSC exercise its option to sell its
credit reporting business to the Company (Note 8), additional sources of
financing would be required. However, the agreement with CSC requires a six-
month notice period, and management believes the Company could arrange
alternative sources of financing within that time to fund this potential
purchase, including public debt markets and additional lines of bank credit.
<PAGE>
Forward-Looking Information
Spin-off of Payment Services
On October 2, 2000, the Company announced that its Board of Directors approved a
plan to separate the Company into two independent public companies. The Company
intends to accomplish the separation through a spin-off of Payment Services to
its shareholders in the form of a tax-free stock dividend. The Information
Services businesses will retain the Equifax Inc. corporate identity. Separating
Payment Services from Equifax Inc. will create two companies, each with its own
management and Board of Directors focused on taking advantage of growth
opportunities in their respective markets. As independent companies, each will
set its own strategy for acquisitions, alliances, resource allocation and
marketing more effectively for its individual needs. Management expects this
transaction, which is subject to a favorable tax ruling and certain regulatory
approvals, to be completed during the third quarter of 2001.
General
This Management's Discussion and Analysis, and other portions of this Annual
Report, include forward-looking statements which are based upon management's
beliefs and assumptions, as well as current expectations, estimates, and
projections. Forward-looking statements are not guarantees, but involve risks,
uncertainties and assumptions which may prove to be incorrect and may cause the
Company's results to differ materially from those implied or indicated by such
statements. All statements other than statements of historical fact are forward-
looking statements. Forward-looking statements may be identified by the use of
words such as "believe", "continue", "may", "will", or the negative of these or
similar terms, and include statements concerning expectations or goals, possible
or assumed future results of operations, competitive position, financing,
economic conditions, business strategies, projections of earnings, revenues or
financial results, and statements of belief or assumptions regarding any of the
foregoing. Except as required by law, the Company has no intention or obligation
to update forward-looking statements. Some of the risks and uncertainties that
may affect our performance include economic changes in countries where the
Company conducts business; changes in demand for credit and consumer debt;
change in marketing plans or techniques of customers; U.S. and international
regulatory or legislative changes which may adversely affect the businesses
conducted by the Company; retaining and hiring employees; the successful spin-
off of the Payment Services Division; successful development and marketing of
new products and services; protection and validity of patent and other
intellectual property rights; successful incorporation of technological change;
control and reduction of cost and expense; interest rate and currency exchange
rate fluctuations; and, other risks or unforeseen factors including those
described from time to time in the reports which the Company files with the
Securities and Exchange Commission, including, but not limited to, the Annual
Report on Form 10-K for the years ending December 31, 2000 and 1999.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13.3
<SEQUENCE>11
<FILENAME>0011.txt
<DESCRIPTION>FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TEXT>
<PAGE>
EXHIBIT 13.3
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
(In thousands)
- ----------------------------------------------------------------------------------
December 31 2000 1999
- ----------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 89,413 $ 136,596
Trade accounts receivable, net of allowance for doubtful
accounts of $18,650 in 2000 and $14,057 in 1999 325,444 302,809
Settlement receivables 48,173 67,963
Other receivables 75,827 19,910
Deferred income tax assets 23,236 28,015
Other current assets 42,816 54,140
---------- ----------
Total current assets 604,909 609,433
---------- ----------
Property and Equipment:
Land, buildings and improvements 40,220 39,140
Data processing equipment and furniture 235,296 258,314
---------- ----------
275,516 297,454
Less accumulated depreciation 176,705 181,964
---------- ----------
98,811 115,490
---------- ----------
Goodwill 717,939 612,551
---------- ----------
Purchased Data Files 209,379 157,701
---------- ----------
Other Assets 438,599 344,606
---------- ----------
$2,069,637 $1,839,781
========== ==========
</TABLE>
The accompanying notes are an integral part
of these consolidated balance sheets.
<PAGE>
CONSOLIDATED BALANCE SHEETS (continued)
<TABLE>
<CAPTION>
(In thousands, except par values)
- ----------------------------------------------------------------------------------------
December 31 2000 1999
- ----------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term debt and current maturities of long-term debt $ 54,609 $ 79,866
Accounts payable, trade 35,262 59,071
Settlement payables 77,213 118,356
Accrued salaries and bonuses 36,961 38,203
Income taxes payable 22,404 12,005
Other current liabilities 199,775 197,294
---------- ----------
Total current liabilities 426,224 504,795
---------- ----------
Long-Term Debt, Less Current Maturities 993,569 933,708
---------- ----------
Long-Term Deferred Revenue 32,864 22,547
---------- ----------
Deferred Income Tax Liabilities 90,198 73,132
---------- ----------
Other Long-Term Liabilities 143,204 89,974
---------- ----------
Commitments and Contingencies (Note 8)
Shareholders' Equity:
Common stock, $1.25 par value; shares authorized - 300,000;
issued - 175,991 in 2000 and 174,259 in 1999;
outstanding - 135,835 in 2000 and 134,001 in 1999 219,989 217,824
Preferred stock, $0.01 par value; shares authorized - 10,000;
issued and outstanding - none in 2000 or 1999 - -
Paid-in capital 336,527 304,532
Retained earnings 902,475 726,827
Accumulated other comprehensive income (206,163) (161,982)
Treasury stock, at cost, 33,078 shares in 2000
and 34,640 shares in 1999 (Note 6) (778,955) (816,213)
Stock held by employee benefits trusts, at cost,
7,079 shares in 2000 and 5,619 shares in 1999 (Note 6) (90,295) (55,363)
---------- ----------
Total shareholders' equity 383,578 215,625
---------- ----------
$2,069,637 $1,839,781
========== ==========
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(In thousands, except per share amounts)
- ------------------------------------------------------------------------------------------
Year Ended December 31 2000 1999 1998
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating revenue $1,965,881 $1,772,694 $1,620,978
---------- ---------- ----------
Costs and expenses:
Costs of services 1,119,148 1,032,389 943,833
Selling, general and administrative expenses 391,318 325,766 311,493
---------- ---------- ----------
Total costs and expenses 1,510,466 1,358,155 1,255,326
---------- ---------- ----------
Operating income 455,415 414,539 365,652
Other income, net 5,905 12,356 4,294
Interest expense 75,951 60,971 42,701
---------- ---------- ----------
Income before income taxes 385,369 365,924 327,245
Provision for income taxes 157,347 150,047 133,812
---------- ---------- ----------
Net income $ 228,022 $ 215,877 $ 193,433
========== ========== ==========
Net income per common share (basic) $ 1.70 $ 1.57 $ 1.37
========== ========== ==========
Shares used in computing basic earnings per share 134,400 137,457 141,397
========== ========== ==========
Net income per common share (diluted) $ 1.68 $ 1.55 $ 1.34
========== ========== ==========
Shares used in computing diluted earnings per share 136,016 139,603 144,403
========== ========== ==========
Dividends per common share $ 0.370 $ 0.363 $ 0.353
========== ========== ==========
</TABLE>
The accompanying notes are an integral part
of these consolidated statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(In thousands)
- ---------------------------------------------------------------------------------------
Year Ended December 31 2000 1999 1998
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 228,022 $ 215,877 $ 193,433
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 148,783 125,263 103,825
Income tax benefit from stock plans 5,638 2,046 8,085
Loss (gain) from sale of businesses 2,044 (7,095) -
Changes in assets and liabilities,
excluding effects of acquisitions:
Accounts receivable, net (27,562) (22,754) (19,012)
Current liabilities, excluding debt (17,934) 4,499 39,078
Settlement receivables and payables, net (21,353) 25,020 (18,583)
Other current assets (13,364) 5,369 (3,049)
Deferred income taxes 16,691 20,885 34,595
Other long-term liabilities, excluding debt (12,062) (3,609) (16,831)
Other assets (24,738) (38,743) (24,328)
--------- --------- ---------
Net cash provided by operating activities 284,165 326,758 297,213
--------- --------- ---------
Cash flows from investing activities:
Additions to property and equipment (37,132) (39,033) (44,921)
Additions to other assets, net (73,530) (81,838) (74,411)
Acquisitions, net of cash acquired (382,831) (22,162) (478,463)
Investments in unconsolidated affiliates (10,248) (700) (22,752)
Proceeds from sale of businesses 156,001 25,957 12,874
Proceeds from sale of assets 8,299 - -
--------- --------- ---------
Net cash used by investing activities (339,441) (117,776) (607,673)
--------- --------- ---------
Cash flows from financing activities:
Net short-term borrowings (21,026) 33,114 28,988
Additions to long-term debt 92,170 70,244 524,068
Payments on long-term debt (22,983) (6,256) (3,692)
Treasury stock purchases (6,517) (210,175) (161,797)
Dividends paid (52,374) (51,961) (52,063)
Proceeds from exercise of stock options 23,165 6,996 12,245
Other 3,538 2,965 3,619
--------- --------- ---------
Net cash provided (used) by financing activities 15,973 (155,073) 351,368
--------- --------- ---------
Effect of foreign currency exchange rates on cash (7,880) (7,930) (2,542)
--------- --------- ---------
Net cash (used) provided (47,183) 45,979 38,366
Cash and cash equivalents, beginning of year 136,596 90,617 52,251
--------- --------- ---------
Cash and cash equivalents, end of year $ 89,413 $ 136,596 $ 90,617
========= ========= =========
</TABLE>
The accompanying notes are an integral part
of these consolidated statements.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME
Common Stock:
-------------
Shares Paid-In Retained
(In thousands) Outstanding Amount Capital Earnings
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1997 142,609 $215,581 $244,496 $421,541
1998 changes:
Net income - - - 193,433
Foreign currency translation adjustment - - - -
Adjustment for minimum liability under
supplemental retirement plan - - - -
Shares issued under stock plans 1,451 1,572 18,952 -
Shares contributed to U.S. retirement plan 390 - 10,392 -
Treasury stock purchased (4,555) - - -
Treasury stock reissued for acquisitions 147 - 2,346 -
Cash dividends - - - (52,063)
Income tax benefit from stock plans - - 8,085 -
Dividends from employee benefits trusts - - 2,240 -
- -------------------------------------------------------------------------------------------
Balance, December 31, 1998 140,042 217,153 286,511 562,911
1999 changes:
Net income - - - 215,877
Foreign currency translation adjustment - - - -
Adjustment for minimum liability under
supplemental retirement plan - - - -
Shares issued under stock plans 599 671 6,945 -
Shares contributed to U.S. retirement plan 304 - 7,003 -
Treasury stock purchased (6,944) - - -
Cash dividends - - - (51,961)
Income tax benefit from stock plans - - 2,046 -
Dividends from employee benefits trusts - - 2,027 -
- -------------------------------------------------------------------------------------------
Balance, December 31, 1999 134,001 217,824 304,532 726,827
2000 changes:
Net income - - - 228,022
Foreign currency translation adjustment - - - -
Adjustment for minimum liability under
supplemental retirement plan - - - -
Shares issued under stock plans 1,789 2,165 21,051 -
Treasury stock purchased (296) - - -
Treasury stock reissued for acquisitions 341 - 2,605 -
Cost of treasury stock transferred to
employee benefits trust - - - -
Cash dividends - - - (52,374)
Income tax benefit from stock plans - - 5,638 -
Dividends from employee benefits trusts - - 2,701 -
- -------------------------------------------------------------------------------------------
Balance, December 31, 2000 135,835 $219,989 $336,527 $902,475
===========================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME (CONTINUED)
Accumulated Other Comprehensive Income:
Minimum Stock Held
Foreign Liability Under By Employee Total
Currency Supplemental Treasury Benefits Shareholders' Comprehensive
Translation Retirement Plan Total Stock Trust Equity Income
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$(13,684) $(6,392) $ (20,076) $(447,578) $(64,567) $ 349,397
- - - - - 193,433 $ 193,433
(15,313) - (15,313) - - (15,313) (15,313)
- 326 326 - - 326 326
- - - 279 1,770 22,573 -
- - - - 3,843 14,235 -
- - - (161,797) - (161,797) -
- - - 3,004 - 5,350 -
- - - - - (52,063) -
- - - - - 8,085 -
- - - - - 2,240 -
- --------------------------------------------------------------------------------------------------------------------
(28,997) (6,066) (35,063) (606,092) (58,954) 366,466 $ 178,446
=========
- - - - - 215,877 $ 215,877
(128,283) - (128,283) - - (128,283) (128,283)
- 1,364 1,364 - - 1,364 1,364
- - - 54 594 8,264 -
- - - - 2,997 10,000 -
- - - (210,175) - (210,175) -
- - - - - (51,961) -
- - - - - 2,046 -
- - - - - 2,027 -
- --------------------------------------------------------------------------------------------------------------------
(157,280) (4,702) (161,982) (816,213) (55,363) 215,625 $ 88,958
=========
- - - - - 228,022 $ 228,022
(45,549) - (45,549) - - (45,549) (45,549)
- 1,368 1,368 - - 1,368 1,368
- - - 431 392 24,039 -
- - - (6,517) - (6,517) -
- - - 8,020 - 10,625 -
- - - 35,324 (35,324) - -
- - - - - (52,374) -
- - - - - 5,638 -
- - - - - 2,701 -
- --------------------------------------------------------------------------------------------------------------------
$(202,829) $(3,334) $(206,163) $(778,955) $(90,295) $ 383,578 $ 183,841
====================================================================================================================
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting and Reporting Policies
Principles of Consolidation The consolidated financial statements include the
accounts of the Company and its majority-owned and controlled subsidiaries. All
significant intercompany transactions and balances have been eliminated. Certain
prior year amounts have been reclassified to conform with the current year
presentation.
Nature of Operations and Spin-off The Company principally provides information
services to businesses to help them grant credit, authorize and process credit
card and check transactions, and market to their customers. The principal lines
of business are information services and payment services (see Note 10 for
segment information). The principal markets for both information and payment
services are retailers, banks, and other financial institutions, with
information services also serving the transportation, telecommunication,
utility, manufacturing, and media industries. The Company's operations are
predominantly located within the United States, with foreign operations
principally located within Canada, the United Kingdom, and Brazil.
On October 2, 2000, the Company announced its intention to split into two
independent, publicly traded companies by spinning off its Payment Services
industry segment. The spin-off would be effected through a tax-free dividend of
stock in the new company to existing Equifax shareholders and is contingent on
receiving a favorable ruling from the IRS regarding the tax-free nature of the
dividend, among other things. The timing of the distribution has not yet been
finalized, but is expected to occur third quarter 2001.
Use of Estimates The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions. These estimates and assumptions affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements as well as reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.
Revenue Recognition Revenue is recognized principally as services and products
are provided to and accepted by customers. Amounts billed in advance are
recorded as current or long-term deferred revenue on the balance sheet, with
current deferred revenue reflecting services expected to be provided within the
next twelve months. Current deferred revenue is included with other current
liabilities in the accompanying consolidated balance sheets, and as of December
31, 2000 and 1999, totaled $34,256,000 and $31,523,000, respectively. In 1996,
the Company received a one-time payment of $58,000,000 related to a lottery
subcontract and recognized $5,400,000 in revenue. The remaining balance is being
recognized as revenue over the term of the contract, with $9,636,000 per year
recognized in 1997 through 2000. The unrecognized balance at December 31, 2000,
totaled $14,056,000, with $4,420,000 included in long-term deferred revenue in
the accompanying consolidated balance sheets. In conjunction with the
divestiture of the Company's U.S. risk management and Canadian risk management
businesses in October 2000 (Note 3), certain of the proceeds received related to
contracts to provide credit information products and services to the buyers over
the next five to six years and was recorded in current and long-term deferred
revenue. At December 31, 2000, $25,527,000 remained unrecognized, with
$21,195,000 included in long-term deferred revenue in the accompanying
consolidated balance sheets. This deferred revenue will be recognized as the
contracted products and services are provided.
Earnings Per Share Basic EPS is calculated as income available to common
stockholders divided by the weighted average number of common shares outstanding
during the period. Diluted EPS is calculated to reflect the potential dilution
that would occur if stock options or other contracts to issue common stock were
exercised and resulted in additional common shares outstanding. The income
amount used in the Company's EPS calculations is the same for both basic and
diluted EPS. A reconciliation of the average outstanding shares used in the two
calculations is as follows:
<PAGE>
<TABLE>
<CAPTION>
(In thousands) 2000 1999 1998
- -----------------------------------------------------------
<S> <C> <C> <C>
Weighted average shares
outstanding (basic) 134,400 137,457 141,397
Effect of dilutive securities:
Stock options 1,439 1,880 2,714
Performance share plan 177 266 292
- -----------------------------------------------------------
Weighted average shares
outstanding (diluted) 136,016 139,603 144,403
===========================================================
</TABLE>
Settlement Receivables and Payables Settlement receivables and payables result
from timing differences in the Company's settlement process with merchants,
financial institutions, and credit card associations related to merchant and
card transaction processing. Cash balances associated with the clearing system
amounted to $29.0 million, $50.4 million and $25.4 million at December 31, 2000,
1999 and 1998, respectively.
Property and Equipment The cost of property and equipment is depreciated
primarily on the straight-line basis over estimated asset lives of 30 to 50
years for buildings; useful lives, not to exceed lease terms, for leasehold
improvements; 3 to 5 years for data processing equipment; and 8 to 20 years for
other fixed assets.
Goodwill Goodwill is amortized on a straight-line basis predominantly over
periods from 20 to 40 years. Amortization expense was $32,382,000 in 2000,
$26,926,000 in 1999, and $21,536,000 in 1998. As of December 31, 2000 and 1999,
accumulated amortization balances were $99,681,000 and $87,533,000,
respectively.
Purchased Data Files Purchased data files are amortized on a straight-line
basis primarily over 15 years. Amortization expense was $20,167,000 in 2000,
$17,566,000 in 1999, and $14,982,000 in 1998. As of December 31, 2000 and 1999,
accumulated amortization balances were $118,005,000 and $109,269,000,
respectively.
Other Assets Other assets at December 31, 2000 and 1999 consist of the
following:
<TABLE>
<CAPTION>
(In thousands) 2000 1999
- ---------------------------------------------------
<S> <C> <C>
Systems development
and other deferred costs $163,225 $154,301
Purchased software 57,107 55,013
Purchased merchant contracts 23,667 -
Prepaid pension cost 98,215 86,764
Risk management purchased
paper (Note 3) 59,073 29,619
Investments in unconsolidated
companies 12,800 5,558
Other 24,512 13,351
- ---------------------------------------------------
$438,599 $344,606
===================================================
</TABLE>
Purchased software, purchased merchant contracts, and systems development and
other deferred costs are being amortized on a straight-line basis over five to
eleven years. Amortization expense for other assets was $57,432,000 in 2000,
$43,156,000 in 1999, and $32,078,000 in 1998. As of December 31, 2000 and 1999,
accumulated amortization balances were $176,759,000 and $159,840,000,
respectively.
<PAGE>
Long-Lived Assets Long-lived assets include property and equipment, goodwill,
purchased data files, and other assets. The Company regularly evaluates whether
events and circumstances have occurred which indicate that the carrying amount
of long-lived assets may warrant revision or may not be recoverable. When
factors indicate that long-lived assets should be evaluated for possible
impairment, the Company uses an estimate of the future undiscounted net cash
flows of the related business over the remaining life of the asset in measuring
whether the asset is recoverable.
Foreign Currency Translation The functional currency of the Company's foreign
subsidiaries are those subsidiaries' local currencies. The assets and
liabilities of foreign subsidiaries are translated at the year-end rate of
exchange, and income statement items are translated at the average rates
prevailing during the year. The resulting translation adjustment is recorded as
a component of shareholders' equity. Gains and losses resulting from the
translation of intercompany balances of a long-term investment nature are also
recorded as a component of shareholders' equity. Other foreign currency
translation gains and losses, which are not material, are recorded in the
consolidated statements of income.
Consolidated Statements of Cash Flows The Company considers cash equivalents to
be short-term cash investments with original maturities of three months or less.
Cash paid for income taxes and interest is as follows:
<TABLE>
<CAPTION>
(In thousands) 2000 1999 1998
- ---------------------------------------------------
<S> <C> <C> <C>
Income taxes, net of
amounts refunded $124,717 $127,611 $98,905
Interest 76,177 60,379 28,885
</TABLE>
In 2000, 1999, and 1998, the Company acquired various businesses that were
accounted for as purchases (Note 2). In conjunction with these transactions,
liabilities were assumed as follows:
<TABLE>
<CAPTION>
(In thousands) 2000 1999 1998
- -----------------------------------------------------------
<S> <C> <C> <C>
Fair value of assets
acquired $415,657 $24,783 $540,078
Cash paid for acquisitions 383,938 24,182 485,076
Value of treasury stock
reissued for acquisitions 10,625 - 6,000
- -----------------------------------------------------------
Liabilities assumed $ 21,094 $ 601 $ 49,002
===========================================================
</TABLE>
Financial Instruments The Company's financial instruments consist primarily of
cash and cash equivalents, accounts and notes receivable, accounts payable, and
short-term and long-term debt. The carrying amounts of these items, other than
long-term debt, approximate their fair market values due to their short
maturity. As of December 31, 2000, the fair value of the Company's long-term
debt (determined primarily by broker quotes) was $981,953,000 compared to its
carrying value of $993,569,000. During 2000, the Company's derivative financial
instruments consisted of several interest rate swap agreements used to fix
portions of the Company's floating rate obligations.
Recent Accounting Pronouncements and Accounting Change In June 1998, the FASB
issued Statement of Financial Accounting Standards No. 133 (SFAS 133),
"Accounting for Derivative Instruments and Hedging Activities." SFAS 133
establishes accounting and reporting standards for derivative instruments and
hedging activities and is effective (as amended by SFAS No. 137) on January 1,
2001 for the Company. Based on its current level of derivative instruments and
hedging activities, the Company does not believe that the adoption of SFAS 133
will have a significant impact on its financial statements or reported earnings.
<PAGE>
2. ACQUISITIONS AND INVESTMENTS IN UNCONSOLIDATED AFFILIATES
During 2000, the Company acquired or increased its ownership in the following
businesses:
<TABLE>
<CAPTION>
Month Industry Percentage
Business Acquired Segment Ownership
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Organizacion Veraz S.A. (Argentina) December Latin America 79.5% 1
SEK S.r.l. and AIF Gruppo Securitas S.r.l. (Italy) November Europe 100.0%
Compliance Data Center, Inc. October North America 100.0%
Equifax Card Solutions Limited (U.K.) September Card Solutions 100.0% 2
Consumer Information Solutions (CIS)
Group of R.L. Polk & Co. May Consumer Services 100.0%
Check-A-Cheque Ltd. (U.K.) March Check Solutions 100.0%
Procard, S.A. (Chile) January Card Solutions 100.0%
Propago, S.A. (Chile) January Latin America 100.0%
</TABLE>
1 Increased to 79.5% from 66.7% acquired in 1997 and 1994
2 Increased from 51.0% ownership started in 1999
In 2000, in addition to the businesses above, the Company acquired the credit
files of 12 credit affiliates located in the United States and 14 affiliates in
Canada, as well as a portfolio of credit card merchant contracts from Heartland
Payment Systems. These acquisitions were accounted for as purchases and had an
aggregate purchase price of $394,563,000, with $242,873,000 allocated to
goodwill and $78,770,000 allocated to purchased data files. They were purchased
with a combination of cash totaling $383,938,000 and the reissuance of treasury
stock with a fair market value of $10,625,000. Their results of operations have
been included in the consolidated statements of income from the dates of
acquisition and were not material.
In 1999, the Company acquired the credit files of 14 credit affiliates located
in the United States and three credit affiliates in Canada. They were accounted
for as purchases and had an aggregate purchase price of $24,182,000, with
$7,508,000 allocated to goodwill and $15,954,000 allocated to purchased data
files. Their results of operations have been included in the consolidated
statements of income from the dates of acquisition and were not material.
During 1998, the Company acquired, made equity investments, or increased its
ownership in the following businesses:
<TABLE>
<CAPTION>
Month Industry Percentage
Business Acquired Segment Ownership
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Unnisa Ltda. (Brazil) September Card Solutions 59.3%
Proceda S.A. (Brazil) September Card Solutions 34.0%
Seguranca ao Credito e Informacoes (SCI-Brazil) August Latin America 80.0%
Credit Bureau of Vancouver (Canada) July North America 100.0%
Equifax Canada Inc. July North America 100.0% 1
Decisioneering Group, Inc. July North America 100.0%
ASNEF-Equifax Servicios de Informacion
de Credito, S.L. (Spain) May Europe 58.0% 2
Infocorp (Peru) April Latin America 51.0% 3
CCI Group Plc (U.K.) March Europe 100.0%
</TABLE>
1 Increased to 100.0% from 84.4%
2 Increased from 49.0% acquired in 1994
3 Increased from 35.0% acquired with DICOM S.A. in 1994
<PAGE>
In 1998, in addition to the businesses above, the Company acquired the credit
files of 14 credit affiliates located in the United States and the collection
businesses of Computer Sciences Corporation (CSC), which was subsequently sold
(Note 8). Also, during the first quarter of 1998, the Company obtained the
control necessary and began to consolidate the operations of its 66.7% owned
investment in Organizacion Veraz S.A. in Argentina. The investment in Proceda
S.A., along with increases in certain other equity investments, totaled $22.8
million and were accounted for under the equity method. They were purchased with
cash and recorded as other assets. The remaining 1998 business and credit file
acquisitions were accounted for as purchases and had an aggregate purchase price
of $491,076,000. They were purchased with a combination of cash totaling
$485,076,000 and the reissuance of treasury stock with a fair market value of
$6,000,000. These acquisitions and the consolidation of Veraz resulted in
$389,013,000 of goodwill, $86,259,000 of purchased data files, and $22,170,000
of other assets (primarily software and deferred systems costs). These
allocations include $26.0 million reallocated from other assets related to
investments in companies previously accounted for under the equity method. Their
results of operations have been included in the consolidated statements of
income from the dates of acquisition. The following unaudited pro forma
information has been prepared as if these acquisitions had occurred on January
1, 1998. The information is based on the historical results of the separate
companies, and may not necessarily be indicative of the results that could have
been achieved, or of results that may occur in the future.
<TABLE>
<CAPTION>
(In thousands, except per share amounts) 1998
- ------------------------------------------------------
<S> <C>
Revenue $1,751,184
Net income 181,598
Net income per common share (diluted) 1.26
</TABLE>
3. Divestitures
In September 2000, the Company sold its 50% interest in a credit card processing
operation in India. In October 2000, the Company sold its risk management
businesses located in the U.S., Canada, and the U.K., and in December 2000 sold
its vehicle information business in the U.K. as well as a direct marketing
business in Canada that was a small component of the CIS group acquired earlier
in the year from R.L. Polk & Co. Proceeds from these sales included cash of
$156,001,000 (net of cash sold) and a $41 million note receivable from one of
the buyers, and resulted in a pretax loss of $2,044,000 recorded in other
income. Approximately $25.5 million of the proceeds received in the U.S. and
Canadian risk management sales related to exclusive contracts to provide the
buyers with credit information products and services over several years, and was
recorded in current and long-term deferred revenue. In conjunction with the U.S.
risk management sale, the Company guaranteed approximately $60 million of the
buyer's third-party acquisition financing which related to a portfolio of
purchased paper. Since this purchased paper financing was entirely guaranteed by
the Company, the amount guaranteed (approximately $59.1 million at December 31,
2000) has been recorded in other assets and other long-term liabilities in the
accompanying consolidated balance sheets. These corresponding asset and
liability balances will be reduced as the buyer makes principal payments on
their loan and the Company's guarantee is reduced. At December 31, 1999, the
U.S. risk management business had approximately $51.5 million in purchased
paper, with $21.9 million included in other current assets and $29.6 million
included in other assets in the accompanying consolidated balance sheets.
In April 1999, the Company sold its 34% equity interest in Proceda S.A. in
Brazil, and in June 1999 also sold three risk management offices located in the
U.S. Proceeds from these sales totaled $25,957,000 and resulted in a gain of
$7,095,000 recorded in other income ($2,888,000 after tax, or $.02 per share).
In October 1998, the Company sold the collection businesses it had purchased
from CSC earlier in the year (Note 8).
<PAGE>
4. LONG-TERM DEBT AND SHORT-TERM BORROWINGS
Long-term debt at December 31, 2000 and 1999 was as follows:
<TABLE>
(In thousands) 2000 1999
- ----------------------------------------------------------
<S> <C> <C>
Senior Notes, 6.5%, due 2003,
net of unamortized discount of
$255 in 2000 and $357 in 1999 $199,745 $199,643
Senior Notes, 6.3%, due 2005,
net of unamortized discount of
$754 in 2000 and $921 in 1999 249,246 249,079
Senior Debentures, 6.9%, due 2028,
net of unamortized discount of
$1,375 in 2000 and $1,425 in 1999 148,625 148,575
Borrowings under $750 million
revolving credit facility, weighted
average rate of 6.8% at
December 31, 2000 390,533 318,000
Other 8,513 22,581
- ----------------------------------------------------------
996,662 937,878
Less current maturities 3,093 4,170
- ----------------------------------------------------------
$993,569 $933,708
==========================================================
</TABLE>
In June 1998, the Company issued new 6.3% seven-year notes with a face value of
$250,000,000 in a public offering. The notes were sold at a discount of
$1,172,500. In July 1998, the Company issued new 6.9% 30-year debentures with a
face value of $150,000,000 in a public offering. The debentures were sold at a
discount of $1,500,000. The discounts and related issuance costs are being
amortized on a straight-line basis over the respective term of the notes and
debentures.
In November 1997, the Company replaced its $550 million revolving credit
facility with a new, committed $750 million revolving credit facility with a
group of commercial banks. The new facility expires November 2002. The agreement
provides interest rate options tied to Base Rate, LIBOR, or Money Market indexes
and contains certain financial covenants related to interest coverage, funded
debt to cash flow, and limitations on subsidiary indebtedness. At December 31,
2000, $34,533,000 of the revolving credit facility's outstanding balance was
denominated in foreign currencies. These foreign denominated obligations are
used to hedge the impacts of foreign exchange rate fluctuations related to
intercompany advances between the Company and several of its foreign
subsidiaries.
Scheduled maturities of long-term debt during the five years subsequent to
December 31, 2000, are as follows:
<TABLE>
<CAPTION>
(In thousands) Amount
- --------------------------
<S> <C>
2001 $ 3,093
2002 395,387
2003 200,311
2004 -
2005 249,246
</TABLE>
The Company's short-term borrowings at December 31, 2000 and 1999, totaled
$51,516,000 and $75,696,000, respectively, and consisted primarily of notes
payable to banks. These notes had a weighted average interest rate of 6.25% at
December 31, 2000 and 5.20% at December 31, 1999. In October 1999, a Canadian
subsidiary of the Company entered into a C$100,000,000 loan, renewable annually,
with a group of banks. The loan agreement provides interest rate options tied to
Prime, Base Rate, LIBOR, and Canadian Banker's Acceptances, and contains
financial covenants related to interest coverage, funded debt to cash flow, and
limitations on subsidiary indebtedness. Borrowings under this loan (which are
included in the short-term borrowings totals above) at December 31, 2000 and
1999 were C$69,000,000 and C$100,000,000 respectively.
<PAGE>
5. Income Taxes
The Company records deferred income taxes using enacted tax laws and rates for
the years in which the taxes are expected to be paid. Deferred income tax assets
and liabilities are recorded based on the differences between the financial
reporting and income tax bases of assets and liabilities.
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
(In thousands) 2000 1999 1998
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $105,383 $ 96,342 $ 74,769
State 7,925 15,855 10,854
Foreign 26,766 16,355 17,020
- --------------------------------------------------------------------------
140,074 128,552 102,643
- --------------------------------------------------------------------------
Deferred:
Federal 9,544 11,467 26,309
State 1,906 2,596 4,952
Foreign 5,823 7,432 (92)
- --------------------------------------------------------------------------
17,273 21,495 31,169
- --------------------------------------------------------------------------
$157,347 $150,047 $133,812
==========================================================================
The provision for income taxes is based on income before income taxes as follows:
(In thousands) 2000 1999 1998
- --------------------------------------------------------------------------
United States $346,491 $322,782 $299,815
Foreign 38,878 43,142 27,430
- --------------------------------------------------------------------------
$385,369 $365,924 $327,245
==========================================================================
The provision for income taxes is reconciled with the federal statutory rate as follows:
(In thousands) 2000 1999 1998
- --------------------------------------------------------------------------
Federal statutory rate 35.0% 35.0% 35.0%
=========================================================================
Provision computed at
federal statutory rate $134,879 $128,073 $114,536
State and local taxes,
net of federal tax benefit 6,390 11,993 10,274
Nondeductible
goodwill (including
amounts related
to divestitures) 9,396 2,236 5,357
Other 6,682 7,745 3,645
- --------------------------------------------------------------------------
$157,347 $150,047 $133,812
==========================================================================
</TABLE>
<PAGE>
Components of the Company's deferred income tax assets and liabilities at
December 31, 2000 and 1999 are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
(In thousands) 2000 1999
- ------------------------------------------------------------
Deferred income tax assets:
Reserves and accrued expenses $ 21,597 $ 26,067
Postretirement benefits 9,695 9,515
Employee compensation programs 13,476 15,890
Deferred revenue 9,929 11,517
Net operating loss carryforwards
of subsidiaries 5,494 11,066
Foreign tax credit carryforwards 26,614 18,629
Other 8,380 8,318
- ------------------------------------------------------------
95,185 101,002
- ------------------------------------------------------------
Deferred income tax liabilities:
Data files and other assets (74,807) (71,163)
Depreciation (2,933) (2,940)
Pension expense (38,250) (34,236)
Undistributed earnings
of foreign subsidiaries (33,649) (28,891)
Other (12,508) (8,889)
- ------------------------------------------------------------
(162,147) (146,119)
- ------------------------------------------------------------
Net deferred income tax liability $ (66,962) $ (45,117)
============================================================
</TABLE>
The Company's deferred income tax assets and liabilities at December 31, 2000
and 1999 are included in the accompanying consolidated balance sheets as
follows:
<TABLE>
<CAPTION>
(In thousands) 2000 1999
- ----------------------------------------------------------
<S> <C> <C>
Deferred income tax assets $ 23,236 $ 28,015
Deferred income tax liabilities (90,198) (73,132)
- ----------------------------------------------------------
Net deferred income tax liability $(66,962) $(45,117)
==========================================================
</TABLE>
Accumulated undistributed retained earnings of Canadian subsidiaries amounted to
approximately $29,121,000 at December 31, 2000. No provision for Canadian
withholding taxes or United States federal income taxes is made on these
earnings because they are considered by management to be permanently invested in
those subsidiaries and, under the tax laws, are not subject to such taxes until
distributed as dividends. If the earnings were not considered permanently
invested, approximately $1,456,000 of deferred income taxes would have been
provided. Such taxes, if ultimately paid, may be recoverable as foreign tax
credits in the United States.
<PAGE>
6. Shareholders' Equity
Rights Plan In 1995, the Company's Board of Directors adopted a Shareholder
Rights Plan (Rights Plan). The Rights Plan contains provisions to protect the
Company's shareholders in the event of an unsolicited offer to acquire the
Company, including offers that do not treat all shareholders equally, the
acquisition in the open market of shares constituting control without offering
fair value to all shareholders, and other coercive, unfair or inadequate
takeover bids and practices that could impair the ability of the Board of
Directors to represent shareholders' interests fully. Pursuant to the Rights
Plan, the Board of Directors declared a dividend of one Share Purchase Right (a
Right) for each outstanding share of the Company's common stock, with
distribution to be made to shareholders of record as of November 24, 1995. The
Rights, which will expire in November 2005, initially will be represented by,
and traded together with, the Company's common stock. The Rights are not
currently exercisable and do not become exercisable unless certain triggering
events occur. Among the triggering events is the acquisition of 20% or more of
the Company's common stock by a person or group of affiliated or associated
persons. Unless previously redeemed, upon the occurrence of one of the specified
triggering events, each Right that is not held by the 20% or more shareholder
will entitle its holder to purchase one share of common stock or, under certain
circumstances, additional shares of common stock at a discounted price.
Treasury Stock and Employee Benefits Trusts During 2000, 1999, and 1998, the
Company repurchased 296,000, 6,944,000, and 4,555,000 of its own common shares
through open market transactions at an aggregate cost of $6,517,000,
$210,175,000, and $161,797,000, respectively. At its January 1999 meeting, the
Company's Board of Directors authorized an additional $250,000,000 in share
repurchases, and at December 31, 2000, approximately $94 million remained
available for future purchases. During 2000 and 1998, the Company reissued
341,000 and 164,000 treasury shares, respectively, in connection with
acquisitions (Note 2). Also in 1998, the Company received 17,000 treasury shares
in conjunction with the final settlement of a prior year acquisition.
In 1993, the Company established the Equifax Inc. Employee Stock Benefits Trust
to fund various employee benefit plans and compensation programs and transferred
6,200,000 treasury shares to the Trust. In 1994 and 2000, the Company
transferred 600,000 and 1,500,000 treasury shares, respectively, to two other
employee benefits trusts. Shares held by the trusts are not considered
outstanding for earnings per share calculations until released to the employee
benefit plans or programs. During 2000, 39,830 shares were used for various
employee incentive programs. In 1999, 364,354 shares were used, with 304,183
shares contributed to the Company's U.S. Retirement Plan and 60,171 shares used
for various employee incentive programs. In 1998, 569,655 shares were used for a
contribution to the Company's U.S. Retirement Plan, an employee stock purchase
plan, and an employee bonus plan. The shares contributed to the U.S. Retirement
Plan in 1998 (390,000 shares) were repurchased by the Company at the current
market price and recorded as treasury stock.
Stock Options The Company's shareholders have approved several stock option
plans which provide that qualified and nonqualified options may be granted to
officers and employees at exercise prices not less than market value on the date
of grant. Generally, options vest proportionately over a four-year period and
are exercisable for ten years from grant date. Certain of the plans also provide
for awards of restricted shares of the Company's common stock. At December 31,
2000, there were 1,311,000 shares available for future option grants and
restricted stock awards.
<PAGE>
A summary of changes in outstanding options and the related weighted average
exercise price per share is shown in the following table:
<TABLE>
<CAPTION>
2000 1999 1998
- ---------------------------------------------------------------------------------------
Average Average Average
(Shares in thousands) Shares Price Shares Price Shares Price
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, beginning of year 10,563 $24.14 7,820 $22.40 6,582 $14.89
Granted:
At market price 1,841 $22.39 3,924 $27.62 2,581 $34.90
In excess of market price - - - - 271 $45.97
Canceled (924) $28.75 (591) $34.42 (388) $28.61
Exercised (1,782) $13.70 (590) $13.39 (1,226) $11.20
- ---------------------------------------------------------------------------------------
Balance, end of year 9,698 $25.22 10,563 $24.14 7,820 $22.40
=======================================================================================
Exercisable at end of year 6,069 $22.13 5,165 $17.95 4,230 $15.35
=======================================================================================
</TABLE>
The following table summarizes information about stock options outstanding at
December 31, 2000 (shares in thousands):
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
- ----------------------------------------------------------------------------------------------------------------
Weighted Average Remaining Weighted Average Weighted Average
Range of Exercise Prices Shares Contractual Life in Years Exercise Price Shares Exercise Price
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$7.09 to $21.50 3,244 5.4 $16.45 3,141 $16.30
$22.76 to $24.44 2,619 8.2 $23.49 1,467 $23.50
$24.63 to $36.88 3,280 6.2 $32.63 1,201 $30.97
$37.00 to $49.03 555 6.9 $40.94 260 $43.94
- ----------------------------------------------------------------------------------------------------------------
9,698 6.5 $25.22 6,069 $22.13
================================================================================================================
</TABLE>
The weighted-average grant-date fair value per share of options granted in 2000,
1999, and 1998 is as follows:
2000 1999 1998
- -------------------------------------------------------------------------------
Grants at market price $ 6.14 $9.95 $13.27
Grants in excess of market price - - $ 6.63
The fair value of options granted in 2000, 1999, and 1998 is estimated on the
date of grant using the Black-Scholes option-pricing model based on the
following weighted average assumptions:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
2000 1999 1998
- ----------------------------------------------
Dividend yield 1.7% 1.4% 1.1%
Expected volatility 42.0% 42.4% 41.9%
Risk-free interest rate 6.5% 5.6% 5.6%
Expected life in years 2.3 4.0 4.3
</TABLE>
Performance Share and Long-Term Incentive Plans The Company has a performance
share plan for certain key officers that provides for distribution of the
Company's common stock at the end of three-year measurement periods based on the
growth in earnings per share and certain other criteria. Recipients may elect to
receive up to 50% of their distribution in cash based on the Company's common
stock price at the end of the measurement period. No share units may be awarded
under the plan after January 31, 2000. Units awarded during the year were none
in 2000, 177,000 in 1999, and 187,000 in 1998. Award-date fair value per unit
was $36.88 in 1999, and $32.69 in 1998. Units outstanding at December 31 were
294,778 in 2000, 443,412 in 1999, and 489,753 in 1998.
<PAGE>
In 2000, the Company implemented a key management long-term incentive plan for
certain key officers that provides for cash awards at the end of various length
measurement periods based on the growth in earnings per share and/or various
other criteria over the measurement period. For certain awards, the employee may
elect to receive some or all of their distribution as an equity interest in the
Company. Expense for these plans can vary between years due to revisions of
estimates of future distributions under the plans, which are based on the
likelihood that the performance criteria will be met. The total expense under
these plans was a credit to expense of $3,130,000 in 2000 and $900,000 in 1999,
and a charge to expense of $4,213,000 in 1998.
Pro Forma Information In accordance with the provisions of Statement of
Financial Accounting Standards, "Accounting for Stock-Based Compensation" (SFAS
No. 123), the Company has elected to apply APB Opinion No. 25 and related
interpretations in accounting for its stock option and performance share plans.
Accordingly, the Company does not recognize compensation cost in connection with
its stock option plans and records compensation expense related to its
performance share plan based on the current market price of the Company's common
stock and the extent to which performance criteria are being met. If the Company
had elected to recognize compensation cost for these plans based on the fair
value at grant date as prescribed by SFAS No. 123, net income and net income per
share would have been reduced to the pro forma amounts indicated in the table
below (in thousands, except per share amounts):
<TABLE>
2000 1999 1998
- --------------------------------------------------------------------------------------------------
Reported Pro Forma Reported Pro Forma Reported Pro Forma
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net income $228,022 $211,910 $215,877 $201,006 $193,433 $184,690
==================================================================================================
Net income per share (basic) $ 1.70 $ 1.58 $ 1.57 $ 1.46 $ 1.37 $ 1.31
==================================================================================================
Net income per share (diluted) $ 1.68 $ 1.56 $ 1.55 $ 1.44 $ 1.34 $ 1.28
==================================================================================================
</TABLE>
Because the SFAS No. 123 fair value disclosure requirements apply only to
options and performance share units granted after December 31, 1994, the
resulting pro forma compensation cost may not be representative of that to be
expected in future years.
7. Employee Benefits
In 1998, the Company adopted Statement of Financial Accounting Standards No.
132, "Employers' Disclosures about Pensions and Other Postretirement Benefits."
This statement revises employers' disclosures about pension and other
postretirement benefit plans. It does not change the measurement or recognition
of these plans.
U.S. Retirement Plan The Company has a non-contributory qualified retirement
plan covering most U.S. salaried employees. Benefits are primarily a function of
salary and years of service. A reconciliation of the benefit obligation, plan
assets, and funded status of the plan is as follows (in thousands):
<TABLE>
<CAPTION>
Change in benefit obligation 2000 1999
- --------------------------------------------------------
<S> <C> <C>
Benefit obligation at
beginning of year $387,099 $411,689
Service cost 4,494 5,089
Interest cost 29,016 27,587
Actuarial loss (gain) (17,263) (24,085)
Curtailments (1,344) (3,912)
Benefits paid (29,219) (29,269)
- --------------------------------------------------------
Benefit obligation at end of year $372,783 $387,099
========================================================
</TABLE>
<PAGE>
<TABLE>
Change in plan assets 2000 1999
- -----------------------------------------------------------------------
<S> <C> <C>
Fair value of plan assets at
beginning of year $500,594 $455,727
Actual return on plan assets 41,703 64,137
Employer contribution - 10,000
Benefits paid (29,219) (29,270)
- -----------------------------------------------------------------------
Fair value of plan assets at
end of year $513,078 $500,594
========================================================================
Funded status $140,295 $113,495
Unrecognized actuarial (gain) loss (54,925) (39,300)
Unrecognized prior service cost 181 512
- -----------------------------------------------------------------------
Prepaid pension cost $ 85,551 $ 74,707
========================================================================
Assumptions used in accounting for the plan are as follows:
2000 1999
- ----------------------------------------------------------------------
Discount rate 8.00% 7.75%
Expected return on plan assets 9.50% 9.50%
Rate of compensation increase 4.25% 4.25%
Net pension income for the plan includes the following (income) expense components:
(In thousands) 2000 1999 1998
- ----------------------------------------------------------------------
Service cost $ 4,494 $ 5,089 $ 4,351
Interest cost 29,016 27,587 27,562
Expected return on
plan assets (43,340) (40,066) (34,588)
Amortization of prior
service cost 266 429 846
Recognized actuarial loss - 407 1,517
Curtailment gain (1,280) (3,827) -
- ----------------------------------------------------------------------
Net pension income $(10,844) $(10,381) $ (312)
======================================================================
</TABLE>
The 2000 curtailment gain of $1,280,000 related to the sale of the U.S. risk
management business (Note 3), and was included as a component of the loss on
sale of businesses recorded in other income. The 1999 curtailment gain of
$3,827,000 resulted from workforce reductions related to outsourcing certain
administrative and data processing functions and the sale of three risk
management offices.
At December 31, 2000, the plan's assets included 1,764,538 shares of the
Company's common stock with a market value of approximately $50,620,000.
Foreign Retirement Plans The Company maintains a defined benefits plan for most
salaried employees in Canada. The aggregate fair market value of the Canadian
plan assets approximates the plan's projected benefit obligation, which totaled
$24,922,000 and $25,701,000 at December 31, 2000 and 1999, respectively. Prepaid
pension cost for this plan was $12,521,000 and $12,027,000 at December 31, 2000
and 1999, respectively. The Company also maintains defined contribution plans
for certain employees in the United Kingdom.
<PAGE>
Supplemental Retirement Plan The Company maintains a supplemental executive
retirement program for certain key employees. The plan, which is unfunded,
provides supplemental retirement payments based on salary and years of service.
The expense for this plan was $2,994,000 in 2000, $3,087,000 in 1999, and
$4,182,000 in 1998. The accrued liability for this plan at December 31, 2000 and
1999 was $24,185,000 and $26,371,000, respectively, and is included in other
long-term liabilities in the accompanying consolidated balance sheets.
Employee Retirement Savings Plan The Company's retirement savings plans provide
for annual contributions, within specified ranges, determined at the discretion
of the Board of Directors for the benefit of eligible employees in the form of
cash or shares of the Company's common stock. Expense for these plans was
$3,562,000 in 2000, $5,170,000 in 1999, and $3,346,000 in 1998.
Postretirement Benefits The Company maintains certain unfunded healthcare and
life insurance benefit plans for eligible retired employees. Substantially all
of the Company's U.S. employees may become eligible for these benefits if they
reach normal retirement age while working for the Company and satisfy certain
years of service requirements. The Company accrues the cost of providing these
benefits over the active service period of the employee. Expense for these plans
was $630,000 in 2000, $1,480,000 in 1999, and $1,969,000 in 1998. Expense in
2000 was reduced by an $843,000 curtailment gain related to the sale of the U.S.
risk management business (Note 3). The curtailment gain was included as a
component of the loss on sale of businesses recorded in other income. The
accrued liability for these plans at December 31, 2000 and 1999 was $24,007,000
and $24,386,000, respectively, and is included in other long-term liabilities in
the accompanying consolidated balance sheets.
8. Commitments and Contingencies
Leases The Company's operating leases involve principally office space and
office equipment. Rental expense relating to these leases was $41,287,000 in
2000, $40,232,000 in 1999, and $36,493,000 in 1998.
Future minimum payment obligations for noncancelable operating leases exceeding
one year are as follows as of December 31, 2000:
<TABLE>
<CAPTION>
(In thousands) Amount
- --------------------------
<S> <C>
2001 $ 34,038
2002 25,185
2003 18,936
2004 15,590
2005 13,982
Thereafter 100,865
- --------------------------
$208,596
==========================
</TABLE>
Agreement with Computer Sciences Corporation The Company has an agreement with
Computer Sciences Corporation and certain of its affiliates (CSC) under which
CSC-owned credit reporting agencies utilize the Company's computerized credit
database services. CSC retains ownership of its credit files and the revenues
generated by its credit reporting activity. The Company receives a processing
fee for maintaining the database and for each report supplied. The initial term
of the agreement expired in July 1998 and was renewable at the option of CSC for
successive ten-year periods. CSC has renewed the agreement for the ten-year
period beginning August 1, 1998. The agreement provides CSC with an option to
sell its credit reporting businesses to the Company and provides the Company
with an option to purchase CSC's credit reporting businesses if CSC does not
elect to renew the agreement or if there is a change in control of CSC while the
agreement is in effect. Both options expire in 2013. The option price is
determined by appraisal.
<PAGE>
On November 25, 1997, CSC exercised an option, also contained in the agreement,
to sell its collection businesses to the Company at a purchase price of
approximately $38 million. Subsequent to November 25, 1997, the Company
determined that the fair value of the business being sold (based on its
estimated discounted cash flows) was less than the contractual purchase price
because a major contract expiring in 1998 would not be renewed. Accordingly, in
the fourth quarter of 1997, the Company recorded a $25,000,000 charge
($14,950,000 after tax, or $.10 per share) to reflect a valuation loss on this
acquisition, with a corresponding $25,000,000 liability included in other
current liabilities. This transaction was finalized in the second quarter of
1998, and the $25,000,000 liability was reclassified to reduce the amount of
goodwill recorded with the acquisition. In October 1998, this business was sold
for approximately the carrying amount of its net assets.
Data Processing Services Agreements The Company has separate agreements with
IBM, EDS, and Xerox Connect which outsource portions of its computer data
processing operations and related functions, and expire between 2004 and 2009.
The aggregate contractual obligation remaining under these agreements is
currently estimated to be approximately $1.105 billion as of December 31, 2000,
with no future year expected to exceed $150 million. However, these amounts
could be more or less depending on various factors such as the inflation rate,
the introduction of significant new technologies, or changes in the Company's
data processing needs as a result of acquisitions or divestitures. Under certain
circumstances (e.g., a change in control of the Company, or for the Company's
convenience), the Company may terminate these agreements. However, the
agreements provide that the Company must pay a significant termination charge in
the event of such a termination.
Change in Control Agreements The Company has agreements with 21 of its officers
which provide severance pay and benefits in the event of a termination of the
officer's employment under certain circumstances following a "change in control"
of the Company. "Change in control" is defined as the accumulation by any
person, entity, or group of 20% or more of the combined voting power of the
Company's voting stock or the occurrence of certain other specified events. In
the event of a "change in control," the Company's performance share plan
provides that all shares designated for future distribution will become fully
vested and payable, subject to the achievement of certain levels of growth in
earnings per share and other criteria. At December 31, 2000, the maximum
contingent liability under the agreements and plans was approximately
$21,316,000.
Litigation A number of lawsuits seeking damages are brought against the Company
each year, largely as a result of reports issued by the Company. The Company
provides for estimated legal fees and settlements relating to pending lawsuits.
In the opinion of management, the ultimate resolution of these matters will not
have a materially adverse effect on the Company's financial position, liquidity,
or results of operations.
9. Quarterly Financial (Unaudited)
Quarterly operating revenue and operating income by reportable segment (Note 10)
and other summarized quarterly financial data for 2000 and 1999 are as follows
(in thousands, except per share amounts):
<TABLE>
<CAPTION>
2000 First Second Third Fourth
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating revenue:
Information Services:
North American Information Services $163,594 $170,470 $170,533 $168,718
Consumer Information Services - 24,314 42,918 43,300
Equifax Europe 36,054 36,013 34,749 36,542
Equifax Latin America 28,943 29,696 30,715 30,166
Divested Operations 42,697 42,586 42,419 4,842
Other 2,409 2,409 2,409 2,409
- ----------------------------------------------------------------------------------------------------
273,697 305,488 323,743 285,977
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Payment Services:
<S> <C> <C> <C> <C>
Card Solutions 119,138 129,971 131,204 137,122
Check Solutions 58,246 62,754 62,959 75,582
- ---------------------------------------------------------------------------------------------------
177,384 192,725 194,163 212,704
- ---------------------------------------------------------------------------------------------------
$451,081 $498,213 $517,906 $498,681
===================================================================================================
Operating income (loss):
Information Services:
North American Information Services $ 60,048 $ 70,567 $ 71,737 $ 72,171
Consumer Information Services - (1,973) 3,298 6,577
Equifax Europe 893 2,697 3,124 6,302
Equifax Latin America 4,703 5,505 7,842 6,953
Divested Operations 4,749 4,558 5,187 (685)
Other 2,217 2,217 2,217 2,217
- ---------------------------------------------------------------------------------------------------
72,610 83,571 93,405 93,535
- ---------------------------------------------------------------------------------------------------
Payment Services:
Card Solutions 17,791 28,388 31,288 32,194
Check Solutions 8,694 10,699 10,830 14,134
- ---------------------------------------------------------------------------------------------------
26,485 39,087 42,118 46,328
- ---------------------------------------------------------------------------------------------------
General Corporate Expense (11,491) (13,692) (9,590) (6,951)
- ---------------------------------------------------------------------------------------------------
$ 87,604 $108,966 $125,933 $132,912
===================================================================================================
Net income $ 42,227 $ 53,078 $ 64,317 $ 68,400
===================================================================================================
Net income per common share (basic)1 $0.32 $0.40 $0.48 $0.51
===================================================================================================
Net income per common share (diluted)1 $0.31 $0.39 $0.47 $0.50
===================================================================================================
</TABLE>
1 Quarterly per share amounts do not add to the amounts shown in the
consolidated statements of income due to rounding.
<PAGE>
<TABLE>
<CAPTION>
1999 First Second Third Fourth
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating revenue:
Information Services:
North American Information Services $154,880 $161,048 $157,911 $159,288
Consumer Information Services - - - -
Equifax Europe 34,409 36,644 35,503 42,155
Equifax Latin America 29,921 32,520 32,581 30,516
Divested Operations 48,756 46,363 40,877 39,034
Other 2,409 2,409 2,409 2,409
- ----------------------------------------------------------------------------------
270,375 278,984 269,281 273,402
- ----------------------------------------------------------------------------------
Payment Services:
Card Solutions 100,630 107,329 115,389 120,036
Check Solutions 50,499 56,273 59,695 70,801
- ----------------------------------------------------------------------------------
151,129 163,602 175,084 190,837
- ----------------------------------------------------------------------------------
$421,504 $442,586 $444,365 $464,239
==================================================================================
Operating income (loss):
Information Services:
North American Information Services $ 59,910 $ 65,941 $ 67,779 $ 67,396
Consumer Information Services - - - -
Equifax Europe (2,821) (1,326) 967 6,449
Equifax Latin America 4,187 5,047 7,447 6,273
Divested Operations 6,902 5,792 3,217 3,002
Other 2,217 2,217 2,217 2,217
- ----------------------------------------------------------------------------------
70,395 77,671 81,627 85,337
- ----------------------------------------------------------------------------------
Payment Services:
Card Solutions 22,674 21,659 24,072 28,550
Check Solutions 5,963 8,948 10,684 12,979
- ----------------------------------------------------------------------------------
28,637 30,607 34,756 41,529
- ----------------------------------------------------------------------------------
General Corporate Expense (10,222) (11,398) (4,214) (10,186)
- ----------------------------------------------------------------------------------
$ 88,810 $ 96,880 $112,169 $116,680
==================================================================================
Net income $ 43,901 $ 52,106 $ 58,098 $ 61,772
==================================================================================
Net income per common share (basic)1 $0.32 $0.38 $0.42 $0.46
==================================================================================
Net income per common share (diluted) $0.31 $0.37 $0.42 $0.45
==================================================================================
</TABLE>
1 Quarterly per share amounts do not add to the amounts shown in the
consolidated statements of income due to rounding.
10. Segment Information
Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 131 (SFAS 131), "Disclosures About Segments of an Enterprise and
Related Information." In the fourth quarter of 2000, the Company changed its
segment reporting structure to more closely match management's internal
reporting of business operations. Significant changes included grouping the
segments into the two major product groups (see below), reclassifying the
divested risk management and vehicle information operations (Note 3) out of
North America and Europe, and breaking out Card Solutions and Check Solutions
within Payment Services. The 1999 and 1998 segment data has been restated to
conform with the current year presentation.
<PAGE>
The Company's operations are primarily organized by its two major product
groups, Information Services and Payment Services. Information Services are
organized in six reportable segments, with three segments based on credit
related products within geographic region (North America, Europe, and Latin
America), and three segments based on other criteria (Consumer Information
Services, Divested Operations, and Other). Payment Services are organized in two
reportable segments, Card Solutions and Check Solutions. The accounting policies
of the segments are the same as those described in the Company's summary of
significant accounting and reporting policies (Note 1). The Company evaluates
the segment performance based on its operating income before unusual items (if
any). Intersegment sales and transfers are not material.
A description of segment product and services is as follows:
North American Information Services Consumer credit information; credit card
marketing services; locate services; fraud detection and prevention services;
mortgage loan origination information; analytics and consulting; commercial
credit reporting in Canada; Internet identity verification and digital
certificate services; and through September 2000, risk management and collection
services.
Consumer Information Services Consumer demographic and lifestyle information,
and directories of residents and businesses.
Equifax Europe Consumer and commercial credit information and marketing
services, credit scoring and modeling services, and, through December 2000, auto
lien information.
Equifax Latin America Consumer and commercial credit information and other
commercial, financial, and consumer information.
Divested Operations Include the businesses divested in the fourth quarter of
2000, including the risk management businesses in the U.S., Canada, and the
U.K., as well as the vehicle information business in the U.K. (Note 3).
Other Lottery services.
Card Solutions Credit and debit card authorization and processing; credit card
marketing enhancement; and software products to manage credit card, merchant,
and collection processing.
Check Solutions Check guarantee and verification services.
<PAGE>
Segment information for 2000, 1999, and 1998 is as follows (dollars in
thousands):
<TABLE>
2000 1999 1998
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenue:
Information Services:
North American Information Services $ 673,315 $ 633,127 $ 616,708
Consumer Information Services 110,532 - -
Equifax Europe 143,358 148,711 127,001
Equifax Latin America 119,520 125,538 103,923
Divested Operations 132,544 175,030 197,589
Other 9,636 9,636 9,636
- -----------------------------------------------------------------------------
1,188,905 1,092,042 1,054,857
- -----------------------------------------------------------------------------
Payment Services:
Card Solutions 517,435 443,384 357,014
Check Solutions 259,541 237,268 209,107
- -----------------------------------------------------------------------------
776,976 680,652 566,121
- -----------------------------------------------------------------------------
$1,965,881 $1,772,694 $1,620,978
=============================================================================
Operating Income (loss):
Information Services:
North American Information Services $ 274,523 $ 261,026 $ 248,064
Consumer Information Services 7,902 - -
Equifax Europe 13,016 3,269 (6,977)
Equifax Latin America 25,003 22,954 21,408
Divested Operations 13,809 18,913 22,761
Other 8,868 8,868 8,866
- -----------------------------------------------------------------------------
343,121 315,030 294,122
- -----------------------------------------------------------------------------
Payment Services:
Card Solutions 109,661 96,955 78,412
Check Solutions 44,357 38,574 30,903
- -----------------------------------------------------------------------------
154,018 135,529 109,315
- -----------------------------------------------------------------------------
General Corporate Expense (41,724) (36,020) (37,785)
- -----------------------------------------------------------------------------
$ 455,415 $ 414,539 $ 365,652
=============================================================================
Total Assets at December 31:
Information Services:
North American Information Services $ 607,421 $ 490,339 $ 446,500
Consumer Information Services 264,759 - -
Equifax Europe 225,353 224,870 245,006
Equifax Latin America 251,628 277,015 341,834
Divested Operations - 193,841 183,224
Other 2,948 3,951 3,517
- -----------------------------------------------------------------------------
1,352,109 1,190,016 1,220,081
- -----------------------------------------------------------------------------
Payment Services:
Card Solutions 415,843 418,662 419,389
Check Solutions 83,365 80,984 78,376
- -----------------------------------------------------------------------------
499,208 499,646 497,765
- -----------------------------------------------------------------------------
Corporate 218,320 150,119 110,949
- -----------------------------------------------------------------------------
$2,069,637 $1,839,781 $1,828,795
=============================================================================
</TABLE>
<PAGE>
<TABLE>
2000 1999 1998
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Depreciation and Amortization:
Information Services:
North American Information Services $ 47,821 $ 40,328 $ 35,637
Consumer Information Services 10,840 - -
Equifax Europe 17,893 17,093 12,076
Equifax Latin America 15,680 16,430 12,513
Divested Operations 7,769 9,802 10,254
Other 768 768 768
- ------------------------------------------------------------------------------------------
100,771 84,421 71,248
- ------------------------------------------------------------------------------------------
Payment Services:
Card Solutions 35,907 28,362 20,752
Check Solutions 6,642 7,266 6,957
- ------------------------------------------------------------------------------------------
42,549 35,628 27,709
- ------------------------------------------------------------------------------------------
Corporate 5,463 5,214 4,868
- ------------------------------------------------------------------------------------------
$148,783 $125,263 $103,825
==========================================================================================
2000 1999 1998
- ------------------------------------------------------------------------------------------
Capital Expenditures (excluding property and equipment and
other assets acquired in acquisitions):
Information Services:
North American Information Services $ 35,232 $ 35,482 $ 34,120
Consumer Information Services 5,330 - -
Equifax Europe 13,761 14,595 20,147
Equifax Latin America 12,340 10,108 4,874
Divested Operations 1,388 4,799 3,321
Other - - -
- ------------------------------------------------------------------------------------------
68,051 64,984 62,462
- ------------------------------------------------------------------------------------------
Payment Services:
Card Solutions 35,478 47,502 37,053
Check Solutions 3,302 2,609 10,840
- ------------------------------------------------------------------------------------------
38,780 50,111 47,893
- ------------------------------------------------------------------------------------------
Corporate 3,831 5,776 8,977
- ------------------------------------------------------------------------------------------
$110,662 $120,871 $119,332
==========================================================================================
</TABLE>
<PAGE>
Financial information by geographic area is as follows:
<TABLE>
<CAPTION>
2000 1999 1998
- ----------------------------------------------------------------------------------------
Amount % Amount % Amount %
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating revenue
(based on location of customer):
United States $1,415,153 72% $1,233,983 70% $1,174,733 72%
Canada 99,849 5 97,251 5 96,628 6
United Kingdom 200,195 10 198,333 11 184,161 12
Brazil 127,367 6 115,985 7 62,253 4
Other 123,317 6 127,142 7 103,203 6
- ----------------------------------------------------------------------------------------
$1,965,881 100% $1,772,694 100% $1,620,978 100%
========================================================================================
Long-lived assets at December 31:
United States $ 859,569 59% $ 557,960 45% $ 511,482 39%
Canada 96,773 7 107,687 9 96,840 7
United Kingdom 138,832 9 212,651 17 215,254 16
Brazil 207,230 14 220,298 18 347,355 27
Other 162,324 11 131,752 11 137,499 11
- ----------------------------------------------------------------------------------------
$1,464,728 100% $1,230,348 100% $1,308,430 100%
========================================================================================
</TABLE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
AND REPORT OF MANAGEMENT
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Equifax Inc:
We have audited the accompanying consolidated balance sheets of Equifax Inc. (a
Georgia corporation) and subsidiaries as of December 31, 2000 and 1999 and the
related consolidated statements of income, shareholders' equity, and cash flows
for each of the three years in the period ended December 31, 2000. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Equifax Inc. and subsidiaries
as of December 31, 2000 and 1999 and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 2000 in
conformity with accounting principles generally accepted in the United States.
/s/Arthur Andersen LLP
Atlanta, Georgia
February 23, 2001
REPORT OF MANAGEMENT
The consolidated financial statements presented in this report, which were
prepared by the Company, are based on generally accepted accounting principles
applied on a consistent basis and are considered by management to reflect the
financial position of the Company at December 31, 2000 and 1999, and the results
of operations and cash flows for each of the three years in the period ended
December 31, 2000.
The integrity and objectivity of the data in these financial statements,
including estimates and judgments relating to matters not concluded by year-end,
are the responsibility of management. The Company and its subsidiaries maintain
accounting systems and related controls, including a detailed budget and
reporting system, to provide reasonable assurance that financial records are
reliable for preparing the consolidated financial statements and for maintaining
accountability of assets. The system of controls also provides assurance that
assets are safeguarded against loss from unauthorized use or disposition and
that transactions are executed in accordance with management's authorization.
Periodic reviews of the systems and controls are performed by the Company's
internal auditors.
The system of controls includes the careful selection of people, a division of
responsibility consistent with cost effectiveness, and the application of formal
policies and procedures that are consistent with good standards of accounting
and administrative practices.
/s/Philip J. Mazzilli
Philip J. Mazzilli
Executive Vice President
and Chief Financial Officer
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>12
<FILENAME>0012.txt
<DESCRIPTION>SUBSIDIARIES
<TEXT>
<PAGE>
EXHIBIT 21
----------
SUBSIDIARIES
Registrant - Equifax Inc. (a Georgia corporation).
The Registrant owns, directly or indirectly, 100% of the stock or equity of the
following subsidiaries as of March 20, 2001 (all of which are included in the
consolidated financial statements):
State or
Country of
Name of Subsidiary Incorporation
- ------------------ -------------
3032423 Nova Scotia Company(34) Canada
3651754 Canada Inc. (25) Canada
AIF Srl(33) Italy
Acrofax Inc.(1) Canada
Aircrown Ltd. (21) England
Brentorian Ltd. (16) United Kingdom
Card Brazil Holdings, Inc.(6) Georgia
Card Brazil LLC(29) Georgia
CBI Ventures, Inc.(1) Georgia
Central Credit Services Ltd.(21) Scotland
Compliance Data Center, Inc. Georgia
Compusearch Inc.(8) Canada
Computer Ventures, Inc.(1) Delaware
Credence, Inc. Georgia
Credit Northwest Corporation(1) Washington
Dicom S.A.(18) Chile
Equifax Asia Pacific Holdings, Inc. Georgia
Equifax Australia Plc(21) England
Equifax Canada Inc.(2) Canada
Equifax Card Services, Inc.(3) Florida
Equifax Card Solutions Australia Pty Ltd.(20) Australia
Equifax Card Solutions Ltd.(12) England
Equifax Card Solutions S.A.(9) France
Equifax (Cayman Islands) Ltd.(28) Cayman Islands
Equifax Check Services, Inc.(3) Delaware
<PAGE>
Equifax City Directory Canada, Inc.(8) Canada
Equifax City Directory, Inc. Georgia
Equifax Commercial Services Ltd.(9) Ireland
Equifax Consumer Services, Inc. Georgia
Equifax Credit Information Services, Inc. Georgia
Equifax de Chile, S.A.(17) Chile
Equifax Decision Systems, B.V. The Netherlands
Equifax de Mexico Sociedad de
Informacion Crediticia, S.A.(30)(31) Mexico
Equifax do Brasil Holdings Ltda.(17) Brazil
Equifax Direct Marketing Solutions, Inc. Georgia
Equifax E-Banking Solutions, Inc.(3) Georgia
Equifax Europe Inc. Georgia
Equifax Europe (U.K.) Ltd.(12) United Kingdom
Equifax Finance (1), Inc.(1) Georgia
Equifax Finance (2), Inc.(1) Georgia
Equifax Financial Services (25) Canada
Equifax Healthcare Information Services, Inc. Georgia
Equifax Holdings (Mexico) Inc. Georgia
Equifax Information Technology, Inc. Georgia
Equifax Investment (South America) LLC(17) Georgia
Equifax Investments (Mexico) Inc. Georgia
Equifax Investments (U.S.) Inc. Georgia
Equifax (Isle of Man) Ltd.(9) Isle of Man
Equifax Italy Holdings, Srl(26)(27) Italy
Equifax Italy, Srl(32) Italy
Equifax Knowledge Engineering, Inc. Arizona
Equifax Ltd.(21) New Zealand
Equifax Luxembourg (No. 2) S.A. Luxembourg
Equifax Luxembourg S.A. Luxembourg
Equifax Payment Recovery Services, Inc.(4) Georgia
Equifax Payment Services, Inc. Delaware
Equifax Peru S.r.l.(17) Peru
Equifx Plc(9) England
Equifax Properties, Inc. Georgia
Equifax Pty Ltd.(21) Australia
Equifax Real Estate Mortgage Solutions, LLC(1) Georgia
Equifax-Rochester, Inc.(1) New York
Equifax Secure, Inc. Georgia
Equifax Secure U.K. Ltd.(10) United Kingdom
<PAGE>
Equifax South America, Inc. Georgia
Equifax SNC(22) France
Equifax U.K. Finance Ltd.(27) England
Equifax U.K. Finance (No. 2)(26) England
Equifax Ventures, Inc. Georgia
Financial Insurance Marketing Group, Inc.(3) District of Columbia
First Bankcard Systems, Inc. Georgia
Global Scan Ltd.(13) England
Global Scan Investments Ltd.(14) United Kingdom
High Integrity Systems, Inc.(3) California
H.P. Information Plc(15) United Kingdom
Infocheck On-line Ltd.(13) United Kingdom
Infolink Decision Services Ltd.(15) United Kingdom
Infolink Ltd.(15) England
Light Signatures, Inc.(3) California
Payment South America Holdings, Inc.(5) Georgia
Payment South America LLC(6) Georgia
Procard S.A.(18) Chile
Propago S.A.(18)