Form 10-Q
United States Securities And Exchange Commission
Washington, D.C. 20549
|X| Quarterly Report pursuant to Section 13 or 15(D) of the Securities Exchange
Act of 1934 for the fiscal quarter ended November 30, 1998
|_| 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: 1-11869
FactSet Research Systems Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-3362547
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Greenwich Plaza, Greenwich, Connecticut 06830
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (203) 863-1500
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No|_|
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Title of each class Outstanding at November 30, 1998
................... ................................
Common Stock, par value $.01 10,097,122
<PAGE>
FactSet Research Systems Inc.
Form 10-Q
Table of Contents
Part I FINANCIAL INFORMATION
Page
Item 1. Financial Statements
Consolidated Statements of Income
for the three months ended November 30, 1998 and 1997..............3
Consolidated Statements of Financial Condition
at November 30, 1998 and at August 31, 1998........................4
Consolidated Statements of Cash Flows
for the three months ended November 30, 1998 and 1997..............5
Notes to the Consolidated Financial Statements......................6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...........................................8
Part II OTHER INFORMATION
Item 1. Legal Proceedings...................................................14
Item 2. Changes in Securities...............................................14
Item 3. Defaults Upon Senior Securities.....................................14
Item 4. Submission of Matters to a Vote of Security Holders.................14
Item 5. Other Information...................................................14
Item 6. Exhibits and Reports on Form 8-K....................................14
Signatures....................................................................14
<PAGE>
<TABLE>
<CAPTION>
FactSet Research Systems Inc.
CONSOLIDATED STATEMENTS OF INCOME
In thousands, except per share data and unaudited
Three Months Ended November 30, 1998 1997
................................................................................
<S> <C> <C>
Subscription Revenues
Commissions $9,446 $7,776
Cash fees 14,384 9,718
------ ------
Total subscription revenues 23,830 17,494
------ ------
................................................................................
Expenses
Cost of services 8,511 6,871
Selling, general, and administrative 8,725 6,025
------ -----
Total operating expenses 17,236 12,896
------ ------
................................................................................
Income from operations 6,594 4,598
Other income 493 367
----- -----
Income before income taxes 7,087 4,965
Income taxes 2,767 2,190
------ ------
Net income $4,320 $2,775
====== ======
................................................................................
Basic earnings per common share $0.43 $0.29
................................................................................
Diluted earnings per common share $0.39 $0.25
................................................................................
Weighted average common shares (Basic) 10,031 9,596
................................................................................
Weighted average common shares (Diluted) 11,075 10,970
................................................................................
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
FactSet Research Systems Inc.
<CAPTION>
ASSETS
November 30, August 31,
In thousands and unaudited 1998 1998
................................................................................
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $44,262 $37,631
Receivables from clients and clearing brokers 10,638 11,121
Receivables from employees 564 533
Deferred taxes 4,434 4,034
Other current assets 833 921
------ ------
Total current assets 60,731 54,240
................................................................................
LONG TERM ASSETS
Property, equipment, and leasehold improvements, at cost 41,843 38,839
Less accumulated depreciation (26,068) (24,159)
------ ------
Property, equipment, and leasehold improvements, net 15,775 14,680
................................................................................
OTHER LONG TERM ASSETS
Deferred taxes 1,384 1,250
Other assets 276 386
------- -------
TOTAL ASSETS $78,166 $70,556
======= =======
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
November 30, August 31,
In thousands and unaudited 1998 1998
................................................................................
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable and accrued expenses $5,661 $4,755
Accrued compensation 6,228 6,155
Deferred cash fees and commissions 4,574 4,546
Current taxes payable 4,206 3,513
Deferred rent 82 92
------ ------
Total current liabilities 20,751 19,061
------ ------
................................................................................
NON-CURRENT LIABILITIES
Deferred rent 457 470
------ ------
Total liabilities 21,208 19,531
------ ------
................................................................................
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, 10,000,000 shares
authorized, none issued - -
Common stock 101 97
Capital in excess of par value 4,577 2,934
Retained earnings 52,759 48,439
Less treasury stock (479) (445)
------ ------
Total stockholders' equity 56,958 51,025
------ ------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $78,166 $70,556
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
FactSet Research Systems Inc.
<CAPTION>
In thousands and unaudited Three Months Ended November 30, 1998 1997
................................................................................
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income $4,320 $2,775
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 1,909 1,125
Deferred tax (benefit) (534) (36)
Accrued ESOP contribution 250 188
----- -----
Net income adjusted for non-cash items 5,945 4,052
Changes in working capital
Receivable from clients and clearing brokers 483 (671)
Receivable from employees (31) 77
Accounts payable and accrued expenses 906 1,182
Accrued compensation 574 495
Deferred fees and commissions 28 (768)
Current taxes payable 693 (540)
Other working capital accounts, net 175 278
----- -----
Net cash provided by operating activities 8,773 4,105
................................................................................
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, equipment, and
leasehold improvements (3,004) (838)
----- ------
Net cash used in investing activities (3,004) (838)
................................................................................
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase of common stock from employees (35) (4)
Proceeds from exercise of stock options 897 8
-- ---
Net cash provided by financing activities 862 4
................................................................................
Net increase in cash and cash equivalents 6,631 3,271
Cash and cash equivalents at beginning of period 37,631 26,816
------- -------
Cash and cash equivalents at end of period $44,262 $30,087
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FactSet Research Systems Inc.
November 30, 1998
(Unaudited)
1. ORGANIZATION AND NATURE OF BUSINESS
FactSet Research Systems Inc. (the "Company") provides online integrated
database services to the financial community. The Company's revenues are derived
from subscription charges. Solely at the option of each client, these charges
may be paid either in commissions on securities transactions (in which case
subscription revenues are recorded as commissions) or on a cash basis (in which
case subscription revenues are recorded as cash fees).
To facilitate the receipt of subscription revenues on a commission basis, the
Company's wholly owned subsidiary, FactSet Data Systems, Inc. ("FDS"), is a
member of the National Association of Securities Dealers, Inc. and is a
registered broker-dealer under Section 15 of the Securities Exchange Act of
1934.
Subscription revenues paid in commissions are derived from securities
transactions introduced and cleared on a fully disclosed basis primarily through
two clearing brokers. That is, a client paying subscription charges on a
commission basis directs the clearing broker, at the time the client executes a
securities transaction, to credit the commission on the transaction to FDS's
account.
FactSet Limited and FactSet Pacific, Inc. are wholly owned subsidiaries of the
Company and are U.S. corporations with foreign branch operations in London,
Tokyo, Hong Kong, and Sydney.
2. ACCOUNTING POLICIES
The accompanying interim consolidated financial statements of the Company have
been prepared in conformity with generally accepted accounting principles,
consistent in all material respects with those applied in the Annual Report on
Form 10-K for the fiscal year ended August 31, 1998. Interim financial
information is unaudited, but reflects all normal adjustments which are, in the
opinion of management, necessary to present fairly the results for the interim
periods presented. The interim financial statements should be read in connection
with the financial statements in the Company's Annual Report on Form 10-K for
the fiscal year ended August 31, 1998.
The significant accounting policies of the Company and its subsidiaries are
summarized below.
Financial Statement Presentation
The accompanying consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant intercompany activity and balances
have been eliminated from the consolidated financial statements. Immaterial
reclassifications to prior year balances in the consolidated statements of
income have been made to conform to the current fiscal year presentation.
Cost of services is composed of employee compensation and benefits for the
application engineering and consulting groups, clearing fees, data costs,
computer maintenance and depreciation expenses, and communication costs.
Selling, general, and administrative expenses include employee compensation and
benefits for the sales, product development and various other support
departments, promotional expenses, rent, amortization of leasehold improvements,
depreciation of furniture and fixtures, office expenses, professional fees, and
miscellaneous expenses.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results may differ from those estimates.
<PAGE>
Revenue Recognition
Subscription charges are quoted to clients on an annual basis, but are earned
monthly as services are provided. Subscription revenues recorded as commissions
and subscription revenues recorded as cash fees are each recorded as earned each
month, based on one-twelfth of the annual subscription charge quoted to each
client. Amounts that have been earned but not yet paid through the receipt of
commissions on securities transactions or through cash payments are reflected on
the Consolidated Statements of Financial Condition as receivables from clients.
Amounts that have been received through commissions on securities transactions
or through cash payments that are in excess of earned subscription revenues are
reflected on the Consolidated Statements of Financial Condition as deferred cash
fees and commissions.
Clearing Fees
When subscription charges are paid on a commission basis, the Company incurs
clearing fees, which are the charges imposed by the clearing brokers used to
execute and settle clients' securities transactions.
Cash and Cash Equivalents
Cash and cash equivalents consist of demand deposits and money market
investments.
Property, Equipment, and Leasehold Improvements
Depreciation of computers and related equipment acquired before September 1,
1994 is recognized using the double declining balance method over estimated
useful lives of five years. Computers and related equipment acquired after
September 1, 1994 are depreciated on a straight-line basis over estimated useful
lives of three years. Depreciation of furniture and fixtures is recognized using
the double declining balance method over estimated useful lives of five years.
Leasehold improvements are amortized on a straight-line basis over the terms of
the related leases or estimated useful lives of the improvements, whichever
period is shorter.
Deferred Taxes
Deferred taxes are determined by calculating the future tax consequences
associated with differences between financial accounting and tax bases of assets
and liabilities. A valuation allowance is established to the extent management
considers it more likely than not that some portion or all of the deferred tax
assets will not be realized. The effect on deferred taxes from income tax law
changes is recognized immediately upon enactment. The deferred tax provision is
derived from changes in deferred taxes on the balance sheet and reflected on the
Consolidated Statements of Income as a component of income taxes.
The Company records deferred taxes for such items as accrued compensation,
deferred cash fees and commissions; deferred rent; and property, equipment, and
leasehold improvements.
Earnings Per Share
The computation of basic earnings per share in each year is based on the
weighted average number of common shares outstanding. The weighted average
number of common shares outstanding includes shares issued to the Company's
employee stock ownership plan at the date authorized by the Board of Directors.
Diluted earnings per share is based on the weighted average number of common
shares and common share equivalents outstanding. Shares available pursuant to
grants made under the Company's stock option plans are included as common share
equivalents using the treasury stock method.
Stock-Based Compensation
The Company follows the disclosure-only provisions of Statement of Financial
Accounting Standards "SFAS" No. 123, Accounting for Stock-Based Compensation.
New Accounting Pronouncements
In March 1998, Statement of Position 98-1, Accounting for The Costs of Computer
Software Developed or Obtained for Internal Use was issued. This statement is
effective for the Company's fiscal year ending in 2000. The potential impact
from adopting this statement on the Company's results is under evaluation.
3. COMPREHENSIVE INCOME
In the first quarter of fiscal 1999, the Company adopted SFAS No. 130, Reporting
Comprehensive Income. SFAS No. 130 establishes standards for the reporting and
display of comprehensive income and its components in the financial statements.
For the quarter ending November 30, 1998, there were no differences between
comprehensive income and net income. This statement did not have any effect on
the Company's financial position or results of operation, as it requires only
additions to current disclosures.
<PAGE>
4. SEGMENTS
In fiscal 1998, the Company adopted SFAS No. 131, Disclosures About Segments of
an Enterprise and Related Information. The Company has two reportable segments
based on geographic operations: the United States and International. Each
segment markets online integrated database services to investment managers,
investment banks, and other financial services professionals. The U.S. segment
consists of services provided to financial institutions throughout North America
while the International segment consists of services provided to investment
professionals primarily in Europe and the Pacific Rim. The International segment
includes two foreign branch operations that are primarily staffed by sales and
consulting personnel. Segment revenues reflect direct sales of products and
services to clients based on their geographic location. There are no
intersegment or intercompany sales. Each segment records compensation, travel,
office, and other direct expenses related to its employees. Expenses for
software development, expenditures related to the Company's computing centers,
data costs, clearing fees, income taxes, and corporate headquarters charges are
recorded by the U.S. segment and are not allocated to the foreign segments. The
accounting policies of the segments are the same as those described in Note 2,
"Accounting Policies."
<TABLE>
<CAPTION>
Segment Information
Thousands U.S. International Total
................................................................................
Quarter Ended November 30, 1998
<S> <C> <C> <C>
Revenues from external clients $20,541 $3,289 $23,830
Segment operating profit* 4,832 1,762 6,594
Total assets 73,847 4,319 78,166
Capital expenditures 2,688 316 3,004
................................................................................
Quarter Ended November 30, 1997
Revenues from external clients $15,411 $2,083 $17,494
Segment operating profit* 3,541 1,057 4,598
Total assets 51,624 2,559 54,183
Capital expenditures 783 55 838
................................................................................
</TABLE>
* Expenses are not allocated or charged between segments. Expenditures
associated with the Company's computer centers, software development costs,
clearing fees, data fees, income taxes, and corporate headquarter charges are
recorded by the U.S. segment.
MANAGEMENT'S DISCUSSION AND ANALYSIS
REVENUES
First quarter fiscal 1999 revenues increased 36.2% to $23.8 million from $17.5
million in the year ago quarter. For the eighth straight quarter, revenue growth
exceeded 30%. Revenue growth was driven by client additions, and incremental
subscriptions to the Company's services, databases and passwords by existing
clients.
Client Count
Clients serviced by FactSet rose to 584 as of November 30, 1998, a net increase
of 72 clients over the past 12 months. New clients accounted for approximately
one-half of the increase in revenue commitments (discussed below) during the
quarter ended November 30, 1998.
Passwords
The number of desktops using FactSet at quarter-end increased 57% compared to
levels a year ago. Passwords reached a record total of nearly 18,000 at November
30, 1998. Continued penetration of existing clients with new services and
databases was the main contributor to this high rate of growth.
International
Quarterly revenues from international sources rose 58% to $3.3 million. In
comparison, the three months ended November 1997, overseas revenues were $2.1
million. Revenues derived from Europe increased 59% and Asia Pacific revenues
increased 56%. International revenues accounted for 14% of consolidated revenues
for the first 3 months of fiscal 1999, up from 12% for the comparable period a
year earlier. Revenue growth is a result of buoyant demand for international
data and the Company's services by its overseas clients.
<PAGE>
Commitments
Client commitments at November 30, 1998 rose 35.3% to $98.2 million. In
comparison, commitments at the end of the fiscal 1997's first quarter were $72.6
million. The average commitments per client at quarter-end rose 18% over the
twelve months to $168,000, reflecting the growth of the Company's value-added
services. ("Commitments" represent at a given point in time an estimate of the
forward looking revenues for the next twelve months assuming all services
currently being supplied to clients remain unchanged.) As a matter of policy,
the Company does not seek to enter into written contracts with its clients.
Clients are free to add to, delete from, or terminate the service at any time.
Historically, over the last 100 months, commitments have increased in all months
but one.
Client Concentration
At November 30 1998, no individual client accounted for more than 4% of total
commitments or total revenues. The ten largest clients accounted for less than
15% of both revenues and commitments.
Client Retention
During the first fiscal quarter, the annual client retention rate continued, as
it has for the past nine years, at a rate in excess of 95%.
<TABLE>
OPERATING EXPENSES
% of Revenues 3 Months Ended November 30, 1998 1997
................................................................................
<S> <C> <C>
Cost of services 35.7% 39.3%
Selling, general, and administrative 36.6 34.4
---- ----
Operating expenses 72.3 73.7
==== ====
Operating margins 27.7% 26.3%
==== ====
................................................................................
</TABLE>
COST OF SERVICES
Cost of services represented 35.7% of total revenues for the three months ended
November 30, 1998, a decline of 3.6% from the fiscal 1998 first quarter. This
improvement was the result of declining clearing fees and data costs as a
percentage of revenues partially offset by increased compensation costs and
depreciation expenses.
Expressed in dollar terms, cost of services increased 23.9% to $8.5 for the
November 1998 quarter. Comparable quarterly expense in the prior year was $6.9
million. The increase was primarily the result of higher compensation and
benefit expenses and increased depreciation expense.
Clearing Fees
Cash fees generate higher margins than commission revenues, although net
revenues to the Company are approximately the same under both payment methods.
Clients electing to settle obligations using commissions on securities
transactions pay a higher amount than cash-paying clients in order to cover
broker clearing charges paid by the Company. Over the past year, commissions as
a percentage of total revenues have been declining. Commission revenues
represented 40% of total revenues in the first quarter of fiscal 1999 compared
to 44% for the year earlier period.
Data Costs
Data costs declined as a percentage of revenues from 7.1% to 3.6% primarily due
to robusr revenue growth and certain database charges formerly paid through
FactSet moving to direct billing by the database supplier to the client in
January 1998. This changeover had the effect of raising FactSet's operating
margins.
<PAGE>
Employee Compensation and Benefits
Compensation and benefits for the applications engineering and consulting groups
rose $1.2 million in the first quarter of fiscal 1999. Employee additions and
merit raises drove this increase. To meet the programming and support
requirements of the Company's expanded array of services, the applications
engineering and consulting departments increased staff by 48% over the past
twelve months.
Depreciation expense
Depreciation expense on computers increased by $640,000 million for the three
months ended November 30, 1998 versus the November 1997 quarter. This increase
was the result of higher levels of computer equipment capital spending to
upgrade and increase mainframe capacity in support of the Company's expanded
user base over the past twelve months.
SELLING, GENERAL, AND ADMINISTRATIVE
Selling, general, and administrative expenses ("SG&A") expressed as a percentage
of revenues was 36.6% for the fiscal quarter ended November 30, 1998, up 2.2
percentage points from the comparable period a year earlier. In dollar terms,
SG&A rose 44.8% to $8.7 million from $6.0 million. This increase was primarily
the result of additional employee compensation and expansion of office
facilities.
Employee Compensation and Benefits
Employee compensation and benefits for the sales, product development, and
various other support departments increased $1.4 million in the first quarter of
fiscal 1999. Employee headcount grew by 30% for these departments during the 12
months ended November 30, 1998.
Rent Expense and Amortization of Leasehold Improvements
Rent and amortization expense increased by $510,000 for the first three months
of fiscal 1999 compared to the year earlier quarter. Office facility openings in
New York, Stamford, Hong Kong and Sydney during the past 12 months and expansion
of the Tokyo and San Mateo offices were the primary drivers of the increase.
Foreign Currency
The majority of international clients pay for services in U.S. dollars and the
net monetary assets held by the Company's foreign offices are insignificant.
More than 95% of the Company's revenues are billed in U.S. dollars. Accordingly,
the Company's exposure to foreign currency fluctuations is immaterial.
INCOME TAXES
Income taxes expressed as a percentage of revenues declined .9% for the three
months ended November 30, 1999. This decline was caused primarily by the
exercise of non-qualified stock options and disqualifying dispositions of
incentive stock options during the quarter. As a result, the Company's effective
tax rate dropped to 39% compared to 44% for the year ago quarter.
LIQUIDITY
Cash from Operations
Cash generated by operating activities was $8.8 million for the first three
months of fiscal 1999 compared to $4.1 million in the same period a year ago.
This increase reflected higher levels of profitability as well as additional
depreciation and amortization expenses.
Capital Expenditures
Cash used in investing activities was $3.0 million in the first three months of
fiscal 1999. Major capital expenditures included leasehold improvements and
furniture and fixtures for the new offices in Stamford, Connecticut and New York
City and expansion of the San Mateo facility.
Financing Operations and Capital Needs
Capital and operating expense requirements have been financed, in their
entirety, by cash from operations. FactSet has no outstanding debt. Cash and
cash equivalents at November 30, 1998 totaled $44.3 million, representing 57% of
the Company's total assets.
<PAGE>
Stock Split and Cash Dividend
On January 8, 1999 the Company announced that its Board of Directors had
approved a three-for-two stock split of the Company's shares of Common Stock and
had declared a regular quarterly cash dividend of $0.05 per share on the
post-split shares (equivalent to $.20 per annum). The three-for-two Common Stock
split will be effected as a stock dividend. The additional shares of Common
Stock will be distributed on February 5, 1999 to Common Stockholders of record
at the close of business on January 22, 1999. As a result of the three-for-two
Common Stock split, the Company's outstanding shares of Common Stock will
increase 50% from 10.1 million shares to approximately 15.2 million shares. The
cash dividend will be paid on March 22, 1999 to Common Stockholders of record at
the close of business on February 26, 1999. The Company expects to fully finance
dividend requirements from cash generated by operations.
Revolving Credit Facilities
In November 1998, the Company entered into $25 million of revolving credit
facilities for working capital and general corporate purposes, including
acquisitions. The facilities are split in two equal tranches of $12.5 million.
The facilities have terms of 364 days and three years, respectively. The Company
is obligated to pay a commitment fee on the unused portion of the facilities at
a weighted average annual rate of .175%.
The Company has not drawn down on either facility and has no present plans to
utilize any portion of the available credit.
Forward-Looking Factors
Recent Market Trends
The strength of the U.S. and European financial markets over the past several
fiscal years supported a robust business environment for both investment
management and investment banking firms. In early January 1999 the U.S. stock
markets again reached record highs. In Asia, the equity markets have been more
volatile, particularly during 1998, with the Nikkei index hitting a 13-year low.
Despite these difficult conditions, revenues from the Company's Pacific Rim
operations grew 56% in the first quarter of fiscal 1999.
The Company has a very small share of a market in which companies spend annually
more than $10 billion on financial information. While the strong U.S. and
European stock markets have positively impacted FactSet, the Company believes
that the correlation between performance of the financial markets and its
results of operations is moderate.
A declining trend in the global stock markets would likely adversely impact the
profitability of some the Company's clients. As a result, the likelihood of
personnel reductions among clients increases, as does the possibility that more
clients would reduce or cancel services. Therefore, a prolonged bear market
could interrupt Company revenue growth and could adversely impact future results
of operations.
Capital Spending
The Company, in a continuing effort to expand in the global marketplace, has
made significant investments in its infrastructure, particularly in technology
and people. Capital spending in fiscal 1998 was $12 million and is likely to
exceed $15 million in fiscal 1999. Approximately 25% of capital spending in
fiscal 1999 will relate to leasehold improvements in connection with expansion
of the Company's office facilities.
Office Facility Expansion
The Company signed leases during the fiscal year 1998 for new office space in
New York, Stamford (Connecticut), San Mateo (California), Hong Kong, and Tokyo.
In October 1998, the Company opened an office in Sydney, Australia. Incremental
future rent expense is expected to be immaterial.
Year 2000
Almost all companies are confronted with business risks associated with the Year
2000 because many computer hardware systems and software programs use only two
digits to indicate a year. These systems and programs, therefore, may
incorrectly process dates beyond 1999, which may result in information errors or
system failures.
The Year 2000 issue extends beyond the Company's internal back-office systems to
its mainframe centers and related application programs that support the entire
client base. Given the relative importance of this issue, the Company recognizes
the need to remain vigilant and is vigorously pursuing its analysis, assessment,
and planning for the Y2K issue.
The Company has completed testing of its mainframe systems and application
interfaces and believes no further significant Y2K alterations to these systems
are necessary to be Y2K compliant.
<PAGE>
Given the vast amount of flexibility provided by the FactSet online system for
users to create customized reports, formulas and screens, a certain amount of
remediation effort must still responsibly be undertaken by the Company's client
base, regardless of what FactSet does to provide a seamless Y2K transition.
FactSet is proactively facilitating the remediation process of its users and is
developing extensive tools for this purpose. For example, a Y2K test bed is
being developed for the FactSet online system and is expected to be available on
March 31, 1999. The purpose of the test bed is to provide users with the ability
to interact with the same online system that FactSet currently provides in an
environment where the databases and system times have been altered to simulate
operation at some point at or beyond January 1, 2000. Additionally the test bed
will allow the Company's clients to perform remediation testing on their
internal systems that may depend on information returned by FactSet's online
system. Another application is also scheduled for release in the first calender
quarter of 1999 to further facilitate remediation testing by users. The purpose
of this application is to help users identify items contained within the
information they either store on the FactSet system or pass through the FactSet
system that could potentially need to be altered to insure proper behavior. The
application will allow users to scan through the various repositories where date
specific information or request codes for date specific information is stored
both on users' personal computers and on FactSet mainframes. This will include
private database files, universal screens and the screening parameters that
define them, user saved formulas within formula libraries and spreadsheet
templates.
The assessment of Y2K readiness of data from third-party suppliers and data
storage capabilities is ongoing. The Company maintains regular discussions with
its data suppliers and has been encouraging them to prepare and transmit data
that is Y2K compliant. The extent of preparation and readiness varies among
suppliers. Contingency plans have been arranged with a view that the Company
will not rely on the ability of data suppliers to provide Y2K compliant data.
Programs have been tested and are planned to adjust data to be Y2K compliant if
a data supplier does not provide it in a specifically compliant format.
The suppliers of significant internal back-office systems (accounting and
payroll) have been queried for confirmation that their software is Y2K ready.
The Company has received written confirmations from these suppliers and to date
there has been no indication that the systems/software provided by these
suppliers will not be Y2K compliant.
The Company also faces Y2K issues with third-party telecommunications systems
over which clients access its products and services. The Company has reviewed
correspondence from each of its significant telecommunications providers
concerning Y2K compliance. There has been no indication from such review that
Y2K issues are anticipated to cause a significant failure or interruption of
telecommunications services. However, a significant service interruption on the
telecommunications networks over which the Company conducts its business may
result in a material adverse effect on the Company's financial condition,
results of operations, and cash flows.
Past and future costs to prepare all FactSet systems to be Y2K compliant have
not been and are not expected to be material. Y2K changes take place at the
Company's mainframe centers and do not require a separate program installation
on each user's personal computer or supporting network. Y2K compliance matters
have not delayed and are not expected to delay any critical information
technology projects.
There can be no assurances that the databases distributed by the Company, or
related applications, mainframe, telecommunications, and back-office systems do
not contain undetected errors or defects associated with Year 2000 date
functions. Although the Company believes its efforts will be successful and does
not anticipate the cost of compliance to be material, any failure or delay to
address Y2K issues could result in major disruption of its business, damage to
the Company's reputation, and a material, adverse change in its results of
operations.
The Euro
On January 1, 1999, 11 of the 15 member countries of the European Union shifted
to a new single currency, the euro. The exchange rates for the participating
currencies have been irreversibly fixed against the euro. The Company's online
system was equipped and successfully handled the euro conversion. The impact on
the Company's results of operations from the euro conversion was not material.
There are no competitive implications to the Company from increased price
transparency, as all European clients are billed in U.S. dollars. In addition,
the euro is expected to have minimal impact on the Company's products and
services.
<PAGE>
Income Taxes
Income tax deductions derived from the exercise of nonqualified stock options or
disqualifying disposition of incentive stock options has a positive impact on
the Company's effective tax rate. Stock option exercises in the first quarter of
fiscal 1999 primarily caused the Company's effective tax rate to drop to 39%
compared to 44% for the year ago quarter. Approximately 70% of the 1.6 million
outstanding stock options have an exercise price of $2.70 (on a pre-split basis)
and will be fully vested on January 3, 2000. The Company believes that as more
employees exercise these options over the next several years that the Company's
future effective tax rate will remain at levels comparable to the November 1998
quarter.
The Company's tax filings are subject to audit by federal and state tax
authorities in the normal course of business. While the Company does not
anticipate that any such audits currently in process will result in tax
assessments that would have a material adverse effect on the results of
operations or financial position of the Company, there is inherent uncertainty
In this process.
Accounting Pronouncements
In the first quarter of fiscal 1999 the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 130, Reporting Comprehensive Income. This
statement did not and will not have any effect on the Company's financial
position or results of operations, as it requires only additions to current
disclosures. In March 1998, Statement of Position 98-1, Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use, was issued and is
effective for the Company's fiscal Year 2000. The potential impact on the
Company's results from adopting this statement is under review.
Forward-Looking Statements. This Management's Discussion and Analysis contains
forward-looking statements that are based on management's current expectations
and beliefs. The phrases "commitments," "believes," "would likely," "could," "is
likely," "continues," "would reduce," "could interrupt," could adversely," "may
incorrectly," "will allow," "are anticipated," "will not," "is expected," "may,"
"are planned," "is not expected," "may result," "are not expected," "will
relate," "does not anticipate," "could result," "remains uncertain," "are
uncertain," and "will have," are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and
involve certain risks, uncertainties, and assumptions which are difficult to
predict ("future factors"). Therefore, actual results may differ materially from
what is expressed or forecasted in such forward-looking statements. The Company
undertakes no obligation to publicly update any forward-looking statements as a
result of new information, future events, or otherwise.
Future factors include the ability to hire qualified personnel; maintenance of
the Company's leading technological position; the impact of global market trends
on the Company's revenue growth rate and future results of operations; the
success of the Y2K and euro compliance activities; the negotiation of contract
terms supporting new and existing databases; the successful resolution of
ongoing audits by tax authorities; the continued employment of key personnel;
the absence of U.S. or foreign governmental regulation restricting international
business; and the sustainability of historical levels of profitability and
growth rates in cash flow generation.
<PAGE>
Part II OTHER INFORMATION
Item 1. Legal Proceedings: None
Item 2. Changes in Securities: None
Item 3. Defaults Upon Senior Securities: None
Item 4. Submission of Matters to a Vote of Security Holders: None
Item 5. Other Information: None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit Number
3.1....................................Restated Certificate of Incorporation (1)
3.2..................................................................By-laws (1)
4.1.....................................................Form of Common Stock (1)
10.1............................Form of Employment Agreement between the Company
and Howard E. Wille and Charles J. Snyder (1)
10.2.................Letter Agreement between the Company and Ernest S. Wong (1)
10.31...................................................364-Day Credit Agreement
10.32................................................Three Year Credit Agreement
27......................................................Financial Data Schedules
(1)Incorporated by reference to the Company's Registration Statement on Form S-1
(File No.333-4238)
(b) Reports on Form 8-K: None
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
FACTSET RESEARCH SYSTEMS INC.
Date: January 14, 1999 BY: /s/ ERNEST S. WONG
Ernest S. Wong,
Senior Vice President, Chief Financial Officer
and Secretary
<PAGE>
EXHIBIT 10.31
$12,500,000
364-DAY CREDIT AGREEMENT
dated as of November 20, 1998
between
FACTSET RESEARCH SYSTEMS INC.
and
THE CHASE MANHATTAN BANK
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.01. Defined Terms.......... ........................................1
SECTION 1.02. Terms Generally................................................13
SECTION 1.03. Accounting Terms; GAAP.........................................14
ARTICLE II
The Credits
SECTION 2.01. Commitment.....................................................14
SECTION 2.02. Loans..........................................................14
SECTION 2.03. Requests for Loans.............................................15
SECTION 2.04. Funding of Loans...............................................15
SECTION 2.05. Interest Elections.............................................15
SECTION 2.06. Termination and Reduction of Commitment........................16
SECTION 2.07. Repayment of Loans; Evidence of Debt...........................17
SECTION 2.08. Prepayment of Loans............................................17
SECTION 2.09. Fees...........................................................18
SECTION 2.10. Interest.......................................................18
SECTION 2.11. Alternate Rate of Interest.....................................19
SECTION 2.12. Increased Costs................................................19
SECTION 2.13. Break Funding Payments.........................................20
SECTION 2.14. Taxes..........................................................21
SECTION 2.15. Mitigation Obligations; Replacement of Lenders.................22
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers...........................................23
SECTION 3.02. Authorization; Enforceability..................................23
SECTION 3.03. Governmental Approvals; No Conflicts...........................23
SECTION 3.04. Financial Condition; No Material Adverse Change................23
SECTION 3.05. Properties.....................................................24
SECTION 3.06. Litigation and Environmental Matters...........................24
<PAGE>
SECTION 3.07. Compliance with Laws and Agreements............................24
SECTION 3.08. Investment and Holding Company Status..........................25
SECTION 3.09. Taxes..........................................................25
SECTION 3.10. ERISA..........................................................25
SECTION 3.11. Disclosure.....................................................25
SECTION 3.12. Year 2000......................................................25
ARTICLE IV
Conditions
SECTION 4.01. Effective Date.................................................26
SECTION 4.02. Each Loan......................................................27
ARTICLE V
Affirmative Covenants
SECTION 5.01. Financial Statements and Other Information.....................27
SECTION 5.02. Notices of Material Events.....................................28
SECTION 5.03. Existence; Conduct of Business.................................29
SECTION 5.04 Payment of Obligations.........................................29
SECTION 5.05. Maintenance of Properties; Insurance...........................29
SECTION 5.06. Books and Records; Inspection Rights...........................29
SECTION 5.07. Compliance with Laws...........................................29
SECTION 5.08. Use of Proceeds................................................29
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness...................................................30
SECTION 6.02. Liens..........................................................31
SECTION 6.03. Fundamental Changes............................................32
SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions......33
SECTION 6.05. Hedging Agreements.............................................34
SECTION 6.06. Restricted Payments............................................35
SECTION 6.07. Transactions with Affiliates...................................35
SECTION 6.08. Restrictive Agreements.........................................35
SECTION 6.09. Certain Financial Covenants....................................36
<PAGE>
ARTICLE VII
Events of Default............................................36
ARTICLE VIII
Miscellaneous
SECTION 8.01. Notices........................................................38
SECTION 8.02. Waivers; Amendments............................................38
SECTION 8.03. Expenses; Indemnity; Damage Waiver.............................39
SECTION 8.04. Successors and Assigns.........................................40
SECTION 8.05. Survival.......................................................41
SECTION 8.06. Counterparts; Integration; Effectiveness......................42
SECTION 8.07. Severability...................................................42
SECTION 8.08. Right of Setoff................................................42
SECTION 8.09. Governing Law; Jurisdiction; Consent to Service of Process.....42
SECTION 8.10. WAIVER OF JURY TRIAL...........................................43
SECTION 8.11. Headings.......................................................43
SECTION 8.12. Confidentiality................................................43
SECTION 8.13. Interest Rate Limitation.......................................44
SCHEDULES:
Schedule 3.06 -- Disclosed Matters
Schedule 3.09 -- Disclosed Taxes
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Existing Liens
Schedule 6.08 -- Existing Restrictions
EXHIBITS:
Exhibit A -- Form of Opinion of Borrower's Counsel
<PAGE>
364-DAY CREDIT AGREEMENT dated as of November 20, 1998, between FACTSET RESEARCH
SYSTEMS INC. and THE CHASE MANHATTAN BANK.
The parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the following terms have
the meanings specified below:
"ABR", when used in reference to any Loan, refers to whether such Loan is
bearing interest at a rate determined by reference to the Alternate Base Rate.
"Adjusted LIBO Rate" means, with respect to any Eurodollar Loan for any Interest
Period, an interest rate per annum (rounded upwards, if necessary, to the next
1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by
(b) the Statutory Reserve Rate.
"Affiliate" means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Alternate Base Rate" means, for any day, a rate per annum equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on
such day plus 1% and (c) the Federal Funds Effective Rate in effect on such day
plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change in the
Prime Rate, the Base CD Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime
Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.
"Applicable Rate" means, for any day, with respect to any Eurodollar Loan, or
with respect to the facility fees payable hereunder, as the case may be, the
applicable rate per annum set forth below under the caption "Eurodollar Spread"
or "Commitment Fee Rate", as the case may be:
Eurodollar Spread Commitment Fee Rate
0.50% 0.15%
"Assessment Rate" means, for any day, the annual assessment rate in effect on
such day that is payable by a member of the Bank Insurance Fund classified as
"well-capitalized" and
<PAGE>
within supervisory subgroup "B" (or a comparable successor risk classification)
within the meaning of 12 C.F.R. Part 327 (or any successor provision) to the
Federal Deposit Insurance Corporation for insurance by such Corporation of time
deposits made in dollars at the offices of such member in the United States.
"Assignment and Acceptance" means an assignment entered into by a Lender and an
assignee pursuant to Section 8.04, and accepted by Chase, in a form approved by
Chase.
"Availability Period" means the period from and including the Effective Date to
but excluding the earlier of the Maturity Date and the date of termination of
the Commitment.
"Bank" means The Chase Manhattan Bank.
"Base CD Rate" means the sum of (a) the Three-Month Secondary CD Rate multiplied
by the Statutory Reserve Rate plus (b) the Assessment Rate.
"Board" means the Board of Governors of the Federal Reserve System of the United
States of America.
"Borrower" means FactSet Research Systems Inc., a Delaware corporation.
"Borrowing Request" means a request by the Borrower for a Loan in accordance
with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed; provided that, when used in connection with a Eurodollar Loan,
the term "Business Day" shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.
"Capital Expenditures" of any Person means, for any period, expenditures
(including the aggregate amount of Capital Lease Obligations incurred during
such period) made by the Borrower or any of its Subsidiaries to acquire or
construct fixed assets, plant and equipment (including renewals, improvements
and replacements, but excluding repairs, other than expenditures of proceeds of
asset sales, insurance settlements, condemnation awards and other settlements in
respect of lost, destroyed, damaged or condemned assets, equipment or other
property to the extent such expenditures are made to replace or repair such
lost, destroyed, damaged or condemned assets, equipment or other property or
otherwise to acquire assets or properties useful in the business of the Borrower
and its Subsidiaries within 12 months of receipt of such proceeds), during such
period computed in accordance with GAAP.
"Capital Lease Obligations" of any Person means the obligations of such Person
to pay rent or other amounts under any lease of (or other arrangement conveying
the right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and
<PAGE>
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Change in Control" means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof) (other than
any employee stock ownership program and members of management of the Borrower
holding voting stock of the Borrower or options to acquire such stock on the
Effective Date or receiving options or voting stock upon the exercise of such
options after the Effective Date (collectively, the "Designated Persons")), of
shares representing more than 35% of the aggregate ordinary voting power
represented by the issued and outstanding capital stock of the Borrower; (b)
occupation of a majority of the seats (other than vacant seats) on the board of
directors of the Borrower by Persons who were neither (i) nominated by the board
of directors of the Borrower nor (ii) appointed by directors so nominated; or
(c) the acquisition of direct or indirect Control of the Borrower by any Person
or group (other than the Designated Persons).
"Change in Law" means (a) the adoption of any law, rule or regulation after the
date of this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by the Bank with any request, guideline
or directive (whether or not having the force of law) of any Governmental
Authority made or issued after the date of this Agreement.
"Chase" means The Chase Manhattan Bank.
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
"Commitment" means, with respect to each Lender, the commitment of such Lender
to make Loans hereunder, expressed as an amount representing the maximum
aggregate amount of such Lender's Revolving Credit Exposure hereunder, (a) as
such commitment may be reduced from time to time pursuant to Section 2.09 and
(b) reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 8.04. The initial amount of the Bank's Commitment is
$12,500,000.
"Consolidated Net Income" means for any fiscal period, the consolidated net
income (or net loss) after taxes for such period of the Borrower and its
Subsidiaries determined in accordance with GAAP.
"Consolidated Net Worth" means, as of the date of determination, all items which
in conformity with GAAP would be included under shareholders' equity on a
consolidated balance sheet of the Borrower and its Subsidiaries at such date.
"Control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise
<PAGE>
voting power, by contract or otherwise. "Controlling" and "Controlled" have
meanings correlative thereto.
"Default" means any event or condition which constitutes an Event of Default or
which upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.
"Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.
"dollars" or "$" refers to lawful money of the United States of America.
"EBITDA" means for any fiscal period, an amount equal to Consolidated Net Income
for such period plus the following (without duplication), to the extent deducted
from gross revenues in computing such Consolidated Net Income: (a) the aggregate
amount of Interest Expense, (b) the aggregate amount of tax expense for such
period, (c) all amounts attributable to depreciation, amortization, and other
similar noncash charges for such period, including amortization of goodwill,
capitalized software development expenses, financing costs and other
intangibles, (d) all extraordinary, non-recurring or unusual charges during such
period, (e) compensation expense previously deducted from Consolidated Net
Income resulting from the issuance of capital stock, stock options or stock
appreciation rights issued to employees, including officers of the Borrower or
any Subsidiary, or the exercise of such options or rights, in each case to the
extent the obligation (if any) associated therewith is not expected to be
settled by the payment of cash by the Borrower or any Affiliate of the Borrower,
and compensation expense resulting from the repurchase of any such capital
stock, options and rights, (f) all noncash charges deducted in determining
Consolidated Net Income for such period, and (g) post-closing restructuring
charges in connection with any financing, refinancing or Permitted Acquisition
(whether or not consummated), provided that in the event that the Borrower or
any of its Subsidiaries makes a Permitted Acquisition on any date during such
period, the Consolidated EBITDA for such period shall be calculated on a pro
forma basis as if such Permitted Acquisition had occurred on the first day of
such period.
"Effective Date" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 8.02).
"Environmental Laws" means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material or to health
and safety matters.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or
<PAGE>
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
that, together with the Borrower, is treated as a single employer under Section
414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under Section 414 of
the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan, refers to whether such Loan is
bearing interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in Article VII.
"Excluded Taxes" means, with respect to the Bank, (a) income or franchise taxes
imposed on (or measured by) its net income by the United States of America, or
by the jurisdiction under the laws of which such recipient is organized or in
which its principal office is located or, in the case of any Lender, in which
its applicable lending office is located, (b) any branch profits taxes imposed
by the United States of America or any similar tax imposed by any other
jurisdiction described in clause (a) above and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by the Borrower under
Section 2.15(b)), any withholding tax (i) that is in effect and would apply to
amounts payable to such Foreign Lender at the time such Foreign Lender becomes a
party to this Agreement (or designates a new lending office) except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with
<PAGE>
respect to any withholding tax pursuant to Section 2.14(a), or (ii) that is
attributable to such Foreign Lender's failure to comply with Section 2.14(e).
"Federal Funds Effective Rate" means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average (rounded upwards, if necessary, to
the next 1/100 of 1%) of the quotations for such day for such transactions
received by the Bank from three Federal funds brokers of recognized standing
selected by it.
"Financial Officer" means the chief financial officer, principal accounting
officer, treasurer or controller of the Borrower.
"Fixed Charge Ratio" means, as of the end of any fiscal quarter of the Borrower,
the ratio of (a) EBITDA, plus rental payments made, minus Capital Expenditures
(exclusive of Capital Lease Obligations), to (b) Interest Expense plus rental
payments plus Required Debt Payments, in each case for the four consecutive
fiscal quarters then ended.
"Foreign Lender" means any successor or assignee under Section 8.04 that is
organized under the laws of a jurisdiction other than that in which the Borrower
is located. For purposes of this definition, the United States of America, each
State thereof and the District of Columbia shall be deemed to constitute a
single jurisdiction.
"Funded Indebtedness" of any Person means, without duplication (a) all funded
recourse obligations of such Person for borrowed money whether secured or
unsecured, which by its terms matures more than one year after the date of
calculation, (b) all obligations of such Person evidenced by bonds, debentures,
notes or similar instruments, (c) all obligations of such Person upon which
interest charges are customarily paid, (d) all obligations of such Person under
conditional sale or other title retention agreements relating to property
acquired by such Person, (e) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business), (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h)
all Capital Lease Obligations of such Person, (i) all obligations, contingent or
otherwise, of such Person as an account party in respect of letters of credit
and letters of guaranty and (j) all obligations, contingent or otherwise, of
such Person in respect of bankers' acceptances.
"GAAP" means generally accepted accounting principles in the United States of
America.
"Governmental Authority" means the government of the United States of America,
any other nation or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising
<PAGE>
executive, legislative, judicial, taxing, regulatory or administrative powers or
functions of or pertaining to government.
"Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.
"Hazardous Materials" means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.
"Hedging Agreement" means any interest rate protection agreement, foreign
currency exchange agreement, commodity price protection agreement or other
interest or currency exchange rate or commodity price hedging arrangement.
"Indebtedness" of any Person means, without duplication, (a) all obligations of
such Person for borrowed money or with respect to deposits or advances of any
kind, (b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person upon which interest
charges are customarily paid, (d) all obligations of such Person under
conditional sale or other title retention agreements relating to property
acquired by such Person, (e) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business), (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h)
all Capital Lease Obligations of such Person, (i) all obligations, contingent or
otherwise, of such Person as an account party in respect of letters of credit
and letters of guaranty and (j) all obligations, contingent or otherwise, of
such Person in respect of bankers' acceptances. The Indebtedness of any Person
shall include the Indebtedness of any other entity (including any partnership in
which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.
<PAGE>
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Interest Election Request" means a request by the Borrower to convert or
continue a Loan in accordance with Section 2.08.
"Interest Expense" means, for any period, the sum, for the Borrower and its
Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), of the following: (a) all interest in respect of
Indebtedness (including the interest component of any payments in respect of
Capital Lease Obligations) accrued or capitalized during such period (whether or
not actually paid during such period) plus (b) the net amount payable (or minus
the net amount receivable) under Hedging Agreements during such period (whether
or not actually paid or received during such period) net of any corresponding
interest income recorded during such period under such Hedging Agreements.
"Interest Payment Date" means (a) with respect to any ABR Loan, the last day of
each March, June, September and December, and (b) with respect to any Money
Market or Eurodollar Loan, the last day of the Interest Period therefor and, in
the case of a Eurodollar Loan with an Interest Period of more than three months'
duration or a Money Market Loan with an Interest Period of more than 90 days'
duration, each day prior to the last day of such Interest Period that occurs at
intervals of three months' duration or 90 days' duration, as the case may be,
after the first day of such Interest Period.
"Interest Period" means (a) with respect to any Eurodollar Loan, the period
commencing on the date of such Loan and ending on the numerically corresponding
day in the calendar month that is one, two, three or six months (or, with the
consent of the Bank, nine months) thereafter, as the Borrower may elect, and (b)
with respect to a Money Market Loan, the period commencing on the date of such
Loan and ending on the last day of the period for which such loan is offered, as
recorded by the Bank on its books; provided, that (i) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless, in the case of a Eurodollar
Loan only, such next succeeding Business Day would fall in the next calendar
month, in which case such Interest Period shall end on the next preceding
Business Day and (ii) any Interest Period pertaining to a Eurodollar Loan that
commences on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the last calendar month of such
Interest Period) shall end on the last Business Day of the last calendar month
of such Interest Period. For purposes hereof, the date of a Loan initially shall
be the date on which such Loan is made and, thereafter shall be the effective
date of the most recent conversion or continuation of such Loan.
"Joint Venture" means any corporation, partnership or other legal entity or
arrangement (a) in which the Borrower has any direct or indirect equity interest
and (b) that is not a Subsidiary of the Borrower.
<PAGE>
"Lenders" means Chase and any other Person that shall have become a party hereto
pursuant to an Assignment and Acceptance, other than any such Person that ceases
to be a party hereto pursuant to an Assignment and Acceptance.
"Leverage Ratio" means, as of the end of any fiscal quarter of the Borrower, the
ratio of (a) total Funded Indebtedness of the Borrower and its Subsidiaries as
of the end of such fiscal quarter, to (b) EBITDA for the four consecutive fiscal
quarters then ended.
"LIBO Rate" means, with respect to any Eurodollar Loan for any Interest Period,
the rate (rounded upwards, if necessary, to the next 1/16 of 1%) at which dollar
deposits in an amount and for a maturity comparable to such Interest Period are
offered by the principal London office of the Bank in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of
such asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
"Loans" means the loans made by the Bank to the Borrower pursuant to this
Agreement.
"Material Adverse Effect" means a material adverse effect on (a) the business,
assets, operations, or condition, financial or otherwise, of the Borrower and
the Subsidiaries taken as a whole, (b) the ability of the Borrower to perform
any of its obligations under this Agreement or (c) the rights of or benefits
available to the Bank under this Agreement.
"Material Indebtedness" means Indebtedness (other than the Loans), or
obligations in respect of one or more Hedging Agreements, of any one or more of
the Borrower and its Subsidiaries in an aggregate principal amount exceeding
$1,000,000. For purposes of determining Material Indebtedness, the "principal
amount" of the obligations of the Borrower or any Subsidiary in respect of any
Hedging Agreement at any time shall be the maximum aggregate amount (giving
effect to any netting agreements) that the Borrower or such Subsidiary would be
required to pay if such Hedging Agreement were terminated at such time.
"Maturity Date" means November 18, 1999.
"Money Market", when used in reference to any Loan, refers to whether such Loan
is bearing interest at a rate determined by reference to the Money Market Rate.
"Money Market Rate" means, with respect to any Money Market Loan, an interest
rate per annum as offered by the Bank from time to time on any single borrowing
during the Interest
<PAGE>
Period offered on such Loan. The Money Market Rate of interest available for any
subsequent borrowings may differ since Money Market Rates may fluctuate on a
daily basis.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan as defined in Section 4001(a)(3)
of ERISA.
"Other Taxes" means any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement.
"Participant" has the meaning set forth in Section 8.04.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions.
"Permitted Acquisitions" means any acquisition as a going concern of all or
substantially all the assets of, or shares or other equity interests in, a
Person or division or line of business of a Person (or any subsequent investment
made in a previously acquired Permitted Acquisition) that satisfies the
following requirements:
(a) if it involves a merger or consolidation, the Borrower or a wholly owned
Subsidiary shall be the surviving party;
(b) at the time of such acquisition no Default or Event of Default shall have
occurred or be continuing;
(c) no Default or Event of Default or violation of any covenant under this
Agreement shall arise as a result of such acquisition, which the Borrower shall
confirm by furnishing to the Bank at least five (5) days prior to the closing
date for such acquisition pro forma financial statements and corresponding
covenant calculations reasonably satisfactory to the Bank giving effect to such
acquisition;
(d) the target of such acquisition must be engaged in a line of business similar
to the then current business of the Borrower and its Subsidiaries; and
(e) in the case of an acquisition of stock or any other equity interest, the
Borrower must be the majority shareholder or otherwise evidence a controlling
interest upon completion of the acquisition, provided that the Borrower may be a
minority shareholder or evidence less than a controlling interest in
acquisitions which, in the aggregate, total no more than $15,000,000 in purchase
price or acquisition cost (in addition to investments, loans, advances and
guarantees permitted under Sections 6.04(i) and 6.04(j)).
<PAGE>
Pro forma calculations made pursuant to clause (c) of the immediately preceding
sentence may include adjustments (a) to reflect operating expense reductions
reasonably expected to result during the 12-month period following the date of
the applicable acquisition, or (b) to eliminate the effect of any extraordinary
accounting event with respect to any acquired person or assets on EBITDA, in
each case as determined reasonably and in good faith by the Chief Financial
Officer of the Borrower and approved by the Board of Directors of the Borrower,
as set forth in an officer's certificate delivered to the Bank.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet delinquent, or which are for
less than $250,000 in the aggregate, or which are being contested in compliance
with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's and other
like Liens imposed by law, arising in the ordinary course of business and
securing obligations that are not overdue by more than 30 days or are being
contested in compliance with Section 5.04;
(c) pledges and deposits made in the ordinary course of business in compliance
with workers' compensation, unemployment insurance and other social security
laws or regulations and deposits securing liability to insurance carriers or
under self-insurance arrangements in respect of such obligations;
(d) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of business,
including those incurred to secure health, safety and environmental obligations
in the ordinary course of business;
(e) easements, zoning restrictions, trackage rights, leases, licenses,
rights-of-way and similar encumbrances on real property imposed by law or
arising in the ordinary course of business which, in the aggregate, are not
substantial in amount and do not materially detract from the value of the
affected property or interfere with the ordinary conduct of business of the
Borrower or any Subsidiary;
(f) judgment liens in respect of judgments that do not constitute an Event of
Default under clause (k) of Article VII; and
(g) leases or subleases granted to others not interfering in any material
respect with the business of the Borrower or any of its Subsidiaries;
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"Permitted Investments" means investments made pursuant to the Borrower's
corporate investment policy (a true and accurate copy of which has been provided
to the Bank) as may be
<PAGE>
amended, supplemented or modified from time to time on prior written notice to,
and consent of, the Bank.
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"Plan" means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Prime Rate" means the rate of interest per annum publicly announced from time
to time by the Bank as its prime rate in effect at its principal office in New
York City; each change in the Prime Rate shall be effective from and including
the date such change is publicly announced as being effective.
"Related Parties" means, with respect to any specified Person, such Person's
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person's Affiliates.
"Required Debt Payments" means all regularly scheduled payments of principal and
interest of Indebtedness made or scheduled to be made during the four
consecutive fiscal quarters preceding the date of calculation of the amount of
"Required Debt Payments"; provided, that "Required Debt Payments" shall not
include any amount due under this Agreement.
"Required Lenders" means, at any time, Lenders having Revolving Credit Exposures
and unused Commitments representing at least fifty percent (50%) of the sum of
the total Revolving Credit Exposures and unused Commitments at such time.
"Restricted Payment" means any dividend or other distribution (whether in cash,
securities or other property) with respect to any shares of any class of capital
stock of the Borrower or any Subsidiary, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any such shares of capital stock of the Borrower or any option,
warrant or other right to acquire any such shares of capital stock of the
Borrower.
"Revolving Credit Exposure" means, with respect to any Lender at any time, the
sum of the outstanding principal amount of such Lender's Loans at such time.
"S&P" means Standard & Poor's.
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of
<PAGE>
the maximum reserve percentages (including any marginal, special, emergency or
supplemental reserves) expressed as a decimal established by the Board to which
the Bank is subject (a) with respect to the Base CD Rate, for new negotiable
nonpersonal time deposits in dollars of over $100,000 with maturities
approximately equal to three months, in the case of the Base CD Rate, and (b)
with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board). Such
reserve percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"subsidiary" means, with respect to any Person (the "parent") at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the parent in the
parent's consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
of which securities or other ownership interests representing more than 50% of
the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held.
"Subsidiary" means any subsidiary of the Borrower.
"Taxes" means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
"Three-Month Secondary CD Rate" means, for any day, the secondary market rate
for three-month certificates of deposit reported as being in effect on such day
(or, if such day is not a Business Day, the next preceding Business Day) by the
Board through the public information telephone line of the Federal Reserve Bank
of New York (which rate will, under the current practices of the Board, be
published in Federal Reserve Statistical Release H.15(519) during the week
following such day) or, if such rate is not so reported on such day or such next
preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 a.m., New York City time, on such day (or, if
such day is not a Business Day, on the next preceding Business Day) by the Bank
from three negotiable certificate of deposit dealers of recognized standing
selected by it.
"Transactions" means the execution, delivery and performance by the Borrower of
this Agreement, the borrowing of Loans and the use of the proceeds thereof.
"Type", when used in reference to any Loan, refers to whether the rate of
interest on such Loan is determined by reference to the Adjusted LIBO Rate, the
Money Market Rate or the Alternate Base Rate.
<PAGE>
"Withdrawal Liability" means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 1.03. Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if the
Borrower notifies the Bank that the Borrower requests an amendment to any
provision hereof to eliminate the effect of any change occurring after the date
hereof in GAAP or in the application thereof on the operation of such provision
(or if the Bank notifies the Borrower that the Bank requests an amendment to any
provision hereof for such purpose), regardless of whether any such notice is
given before or after such change in GAAP or in the application thereof, then
such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such
notice shall have been withdrawn or such provision amended in accordance
herewith.
ARTICLE II
The Credit
SECTION 2.01. Commitment. Subject to the terms and conditions set forth herein,
the Bank agrees to make Loans to the Borrower from time to time during the
Availability Period in an aggregate principal amount that will not result in
outstanding Loans exceeding the Commitment. Within the foregoing limits and
subject to the terms and conditions set forth herein, the Borrower may borrow,
prepay and reborrow Loans.
<PAGE>
SECTION 2.02. Loans.
(a) At the commencement of each Interest Period for any Money Market Loan or
Eurodollar Loan, such Loan shall be in an amount that is an integral multiple of
$100,000 and not less than $500,000. At the time that each ABR Loan is made,
such Loan shall be in an aggregate amount that is an integral multiple of
$100,000 and not less than $100,000; provided that an ABR Loan may be in an
aggregate amount that is equal to the entire unused balance of the total
Commitment. Loans of more than one Type and Class may be outstanding at the same
time; provided that there shall not at any time be more than five Money Market
and five Eurodollar Loans outstanding.
(b) Notwithstanding any other provision of this Agreement, the Borrower shall
not be entitled to request, or to elect to convert or continue, any Loan if the
Interest Period requested with respect thereto would end after the Maturity
Date.
SECTION 2.03. Requests for Loans. To request a Loan, the Borrower shall notify
the Bank of such request by telephone (a) in the case of a Eurodollar Loan, not
later than 11:00 a.m., New York City time, three Business Days before the date
of the proposed Loan, (b) in the case of a Money Market Loan, not later than
11:00 a.m., New York City time, two Business Days before the date of the
proposed Loan, or (c) in the case of an ABR Loan, not later than 11:00 a.m., New
York City time, one Business Day before the date of the proposed Loan. Each such
telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Bank of a written Borrowing Request
in a form approved by the Bank and signed by the Borrower. Each such telephonic
and written Borrowing Request shall specify the following information in
compliance with Section 2.02:
(i) the amount of the requested Loan;
(ii) the date of such Loan, which shall be a Business Day;
(iii) whether such Loan is to be an ABR Loan, a Money Market Loan or a
Eurodollar Loan;
(iv) in the case of a Money Market Loan or a Eurodollar Loan, the initial
Interest Period to be applicable thereto, which shall be a period contemplated
by the definition of the term "Interest Period"; and
(v) the location and number of the Borrower's account to which funds are to be
disbursed, which shall comply with the requirements of Section 2.04.
If no election as to the Type of Loan is specified, then the requested Loan
shall be an ABR Loan. If no Interest Period is specified with respect to any
requested Eurodollar Loan, then the Borrower shall be deemed to have selected an
Interest Period of one month's duration.
<PAGE>
SECTION 2.04. Funding of Loans. The Bank shall make each Loan available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower maintained with the Bank in New York City and designated
by the Borrower in the applicable Borrowing Request.
SECTION 2.05. Interest Elections. (a) Each Loan initially shall be of the Type
specified in the applicable Borrowing Request and, in the case of a Money Market
or Eurodollar Loan, shall have an initial Interest Period as specified in such
Borrowing Request. Thereafter, the Borrower may elect to convert such Loan to a
different Type or to continue such Loan and, in the case of a Money Market or
Eurodollar Loan, may elect Interest Periods therefor, all as provided in this
Section. The Borrower may elect different options with respect to different
portions of the affected Loan and each such portion shall be considered a
separate Loan.
(b) To make an election pursuant to this Section, the Borrower shall notify the
Loan of such election by telephone by the time that a Borrowing Request would be
required under Section 2.03 if the Borrower were requesting a Loan of the Type
resulting from such election to be made on the effective date of such election.
Each such telephonic Interest Election Request shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to the Bank of a written
Interest Election Request in a form approved by the Bank and signed by the
Borrower.
(c) Each telephonic and written Interest Election Request shall specify the
following information in compliance with Section 2.02:
(i) the Loan to which such Interest Election Request applies and, if different
options are being elected with respect to different portions thereof, the
portions thereof to be allocated to each resulting Loan (in which case the
information to be specified pursuant to clauses (iii) and (iv) below shall be
specified for each resulting Loan);
(ii) the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day;
(iii) whether the resulting Loan is to be an ABR Loan, a Money Market Loan or a
Eurodollar Loan; and
(iv) if the resulting Loan is a Money Market Loan or a Eurodollar Loan, the
Interest Period to be applicable thereto after giving effect to such election,
which shall be a period contemplated by the definition of the term "Interest
Period".
If any such Interest Election Request requests a Money Market Loan or a
Eurodollar Loan but does not specify an Interest Period, then the Borrower shall
be deemed to have selected an Interest Period of 30 days' duration, in the case
of a Money Market Loan, or one month's duration in the case of a Eurodollar
Loan.
(d) If the Borrower fails to deliver a timely Interest Election Request with
respect to a Money Market or Eurodollar Loan prior to the end of the Interest
Period applicable thereto, then,
<PAGE>
unless such Loan is repaid as provided herein, at the end of such Interest
Period such Loan shall be converted to an ABR Loan. Notwithstanding any contrary
provision hereof, if an Event of Default has occurred and is continuing and the
Bank so notifies the Borrower, then, so long as an Event of Default is
continuing (i) no outstanding Loan may be converted to or continued as a Money
Market or Eurodollar Loan and (ii) unless repaid, each Money Market and
Eurodollar Loan shall be converted to an ABR Loan at the end of the Interest
Period applicable thereto.
SECTION 2.06. Termination and Reduction of Commitment. (a) Unless previously
terminated, the Commitment shall terminate on the Maturity Date.
(b) The Borrower may at any time terminate, or from time to time reduce, the
Commitment; provided that (i) each reduction of the Commitment shall be in an
amount that is an integral multiple of $100,000 and not less than $1,000,000 and
(ii) the Borrower shall not terminate or reduce the Commitment if, after giving
effect to any concurrent prepayment of the Loans in accordance with Section
2.08, the aggregate amount of Loans outstanding exceeds the Commitment.
(c) The Borrower shall notify the Bank of any election to terminate or reduce
the Commitment under paragraph (b) of this Section at least three Business Days
prior to the effective date of such termination or reduction, specifying such
election and the effective date thereof. Each notice delivered by the Borrower
pursuant to this Section shall be irrevocable; provided that a notice of
termination of the Commitment delivered by the Borrower may state that such
notice is conditioned upon the effectiveness of other credit facilities, in
which case such notice may be revoked by the Borrower (by notice to the Bank on
or prior to the specified effective date) if such condition is not satisfied.
Any termination or reduction of the Commitment shall be permanent.
SECTION 2.07. Repayment of Loans; Evidence of Debt. (a) The Borrower hereby
unconditionally promises to pay to the Bank the then unpaid principal amount of
each Loan on the Maturity Date.
(b) The Bank shall maintain in accordance with its usual practice an account or
accounts evidencing (i) the indebtedness of the Borrower to the Bank resulting
from each Loan made by the Bank, including the amounts of principal and interest
payable and paid to the Bank from time to time hereunder, (ii) the amount of
each Loan made hereunder, the Type thereof and the Interest Period applicable
thereto, and (iii) the amount of any principal or interest due and payable or to
become due and payable from the Borrower to the Bank hereunder.
(c) The entries made in the accounts maintained pursuant to paragraph (b) of
this Section shall be prima facie evidence of the existence and amounts of the
obligations recorded therein; provided that the failure of the Bank to maintain
such accounts or any error therein shall not in any manner affect the obligation
of the Borrower to repay the Loans in accordance with the terms of this
Agreement.
<PAGE>
(d) The Bank may request that Loans be evidenced by a promissory note. In such
event, the Borrower shall prepare, execute and deliver to the Bank a promissory
note payable to the order of the Bank (or, if requested by the Bank, to the Bank
and its registered assigns). Thereafter, the Loans evidenced by such promissory
note and interest thereon shall at all times (including after assignment
pursuant to Section 8.04) be represented by one or more promissory notes in such
form payable to the order of the payee named therein (or, if such promissory
note is a registered note, to such payee and its registered assigns).
SECTION 2.08. Prepayment of Loans. (a) The Borrower shall have the right at any
time and from time to time to prepay any Loan in whole or in part, subject to
prior notice in accordance with paragraph (b) of this Section.
(b) The Borrower shall notify the Bank by telephone (confirmed by telecopy) of
any prepayment hereunder (i) in the case of prepayment of a Eurodollar Loan, not
later than 11:00 a.m., New York City time, three Business Days before the date
of prepayment, (ii) in the case of prepayment of a Money Market Loan, not later
than 11:00 a.m., New York City time, two Business Days before the date of
prepayment, (iii) in the case of prepayment of an ABR Loan, not later than 11:00
a.m., New York City time, one Business Day before the date of prepayment. Each
such notice shall be irrevocable and shall specify the prepayment date and the
principal amount of each Loan or portion thereof to be prepaid; provided that,
if a notice of prepayment is given in connection with a conditional notice of
termination of the Commitment as contemplated by Section 2.06, then such notice
of prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.06. Each partial prepayment of any Loan shall be in an
amount that would be permitted in the case of an advance of a Loan of the same
Type as provided in Section 2.02. Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.10.
SECTION 2.09. Fees. (a) The Borrower agrees to pay to the Bank a commitment fee,
which shall accrue at the Applicable Rate on the daily unused amount of the
Commitment during the period from and including the Effective Date to but
excluding the date on which the Commitment terminates. Accrued commitment fees
shall be payable in arrears on the last day of March, June, September and
December of each year and on the date on which the Commitment terminates,
commencing on the first such date to occur after the date hereof; provided that
the Bank agrees to send the Borrower an invoice with respect to such fees, but
failure to send such invoice shall not constitute a waiver, or extension of the
due date, of such fees. All commitment fees shall be computed on the basis of a
year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).
(b) All fees payable hereunder shall be paid on the dates due, in immediately
available funds. Fees paid shall not be refundable under any circumstances.
SECTION 2.10. Interest. (a) The ABR Loans shall bear interest at the Alternate
Base Rate.
<PAGE>
(b) The Money Market Loans shall bear interest at the Money Market Rate for the
Interest Period in effect for such Loan.
(c) The Eurodollar Loans shall bear interest at the Adjusted LIBO Rate for the
Interest Period in effect for such Loan plus the Applicable Rate.
(d) Notwithstanding the foregoing, if any principal of or interest on any Loan
or any fee or other amount payable by the Borrower hereunder is not paid when
due, whether at stated maturity, upon acceleration or otherwise, such overdue
amount shall bear interest, after as well as before judgment, at a rate per
annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Loans as provided in paragraph (a) of this Section.
(e) Accrued interest on each Loan shall be payable in arrears on each Interest
Payment Date for such Loan and upon termination of the Commitment; provided that
(i) interest accrued pursuant to paragraph (d) of this Section shall be payable
on demand, (ii) in the event of any repayment or prepayment of any Loan (other
than a prepayment of an ABR Loan prior to the end of the Availability Period),
accrued interest on the principal amount repaid or prepaid shall be payable on
the date of such repayment or prepayment and (iii) in the event of any
conversion of any Money Market or Eurodollar Loan prior to the end of the
current Interest Period therefor, accrued interest on such Loan shall be payable
on the effective date of such conversion.
(f) All interest hereunder shall be computed on the basis of a year of 360 days,
except that interest computed by reference to the Alternate Base Rate at times
when the Alternate Base Rate is based on the Prime Rate shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), and in each case shall
be payable for the actual number of days elapsed (including the first day but
excluding the last day). The applicable Alternate Base Rate, Money Market Rate,
Adjusted LIBO Rate or LIBO Rate shall be determined by the Bank, and such
determination shall be conclusive absent manifest error.
SECTION 2.11. Alternate Rate of Interest. If prior to the commencement of any
Interest Period for a Money Market Loan or Eurodollar Loan:
(a) the Bank determines (which determination shall be conclusive absent manifest
error) that adequate and reasonable means do not exist for ascertaining the
Money Market Rate, the Adjusted LIBO Rate or the LIBO Rate, as applicable, for
such Interest Period; or
(b) the Bank determines (which determination shall be conclusive absent manifest
error) that the Money Market Rate or the Adjusted LIBO Rate, as applicable, for
such Interest Period will not adequately and fairly reflect the cost to the bank
of making or maintaining the Loan for such Interest Period;
then the Bank shall give notice thereof to the Borrower by telephone or telecopy
as promptly as practicable thereafter and, until the Bank notifies the Borrower
that the circumstances giving rise
<PAGE>
to such notice no longer exist, (i) any Interest Election Request that requests
the conversion of any Loan to, or continuation of any Loan as, a Money Market
Loan or Eurodollar Loan shall be ineffective and (ii) if any Borrowing Request
requests a Money Market or Eurodollar Loan, such Loan shall be made as an ABR
Loan; provided that if the circumstances giving rise to such notice affect only
one Type of Loan, then the other Type of Loans shall be permitted.
SECTION 2.12. Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, the Bank (except any such reserve requirement reflected in the
Adjusted LIBO Rate); or
(ii) impose on the Bank or the London interbank market any other condition
affecting this Agreement or Money Market Loans or Eurodollar Loans made by the
Bank;
and the result of any of the foregoing shall be to increase the cost to the Bank
of making or maintaining any Money Market Loan or Eurodollar Loan (or of
maintaining its obligation to make any such Loan) or to reduce the amount of any
sum received or receivable by the Bank hereunder (whether of principal, interest
or otherwise), then the Borrower will pay to the Bank such additional amount or
amounts as will compensate the Bank for such additional costs incurred or
reduction suffered.
(b) If the Bank determines that any Change in Law regarding capital requirements
has or would have the effect of reducing the rate of return on the Bank's
capital or on the capital of the Bank's holding company, if any, as a
consequence of this Agreement or the Loans made by the Bank to a level below
that which the Bank or the Bank's holding company could have achieved but for
such Change in Law (taking into consideration the Bank's policies and the
policies of the Bank's holding company with respect to capital adequacy), then
from time to time the Borrower will pay to the Bank such additional amount or
amounts as will compensate the Bank or the Bank's holding company for any such
reduction suffered.
(c) A certificate of the Bank setting forth the amount or amounts necessary to
compensate the Bank or its holding company, as the case may be, as specified in
paragraph (a) or (b) of this Section shall be delivered to the Borrower and
shall be conclusive absent manifest error. The Borrower shall pay the Bank the
amount shown as due on any such certificate within 10 days after receipt
thereof.
(d) Failure or delay on the part of the Bank to demand compensation pursuant to
this Section shall not constitute a waiver of the Bank's right to demand such
compensation; provided that the Borrower shall not be required to compensate the
Bank pursuant to this Section for any increased costs or reductions incurred
more than 270 days prior to the date that the Bank notifies the Borrower of the
Change in Law giving rise to such increased costs or reductions and of the
Bank's intention to claim compensation therefor; provided further that, if the
Change in Law giving rise to such increased costs or reductions is retroactive,
then the 270-day period referred to above shall be extended to include the
period of retroactive effect thereof.
<PAGE>
SECTION 2.13. Break Funding Payments. In the event of (a) the payment of any
principal of any Money Market Loan (to the extent such Loan has a specific
Interest Period) or Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Money Market Loan or Eurodollar Loan other than on the
last day of the Interest Period applicable thereto, (c) the failure to borrow,
convert, continue or prepay any Money Market Loan or Eurodollar Loan on the date
specified in any notice delivered pursuant hereto (regardless of whether such
notice may be revoked under Section 2.11(b) and is revoked in accordance
therewith), then, in any such event, the Borrower shall compensate the Bank for
the loss, cost and expense attributable to such event. In the case of a
Eurodollar Loan, such loss, cost or expense to the Bank shall be deemed to
include an amount determined by the Bank to be the excess, if any, of (i) the
amount of interest which would have accrued on the principal amount of such Loan
had such event not occurred, at the Adjusted LIBO Rate that would have been
applicable to such Loan, for the period from the date of such event to the last
day of the then current Interest Period therefor (or, in the case of a failure
to borrow, convert or continue, for the period that would have been the Interest
Period for such Loan), over (ii) the amount of interest which would accrue on
such principal amount for such period at the interest rate which the Bank would
bid were it to bid, at the commencement of such period, for dollar deposits of a
comparable amount and period from other banks in the eurodollar market. A
certificate of the Bank setting forth any amount or amounts that the Bank is
entitled to receive pursuant to this Section shall be delivered to the Borrower
and shall be conclusive absent manifest error. The Borrower shall pay the Bank
the amount shown as due on any such certificate within 10 days after receipt
thereof.
SECTION 2.14. Taxes. (a) Any and all payments by or on account of any obligation
of the Borrower hereunder shall be made free and clear of and without deduction
for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) the Bank receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make such
deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Bank within 10 days after written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by
the Bank on or with respect to any payment by or on account of any obligation of
the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of
<PAGE>
such payment or liability delivered to the Borrower by the Bank on its own
behalf or on behalf of the Bank shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes
by the Borrower to a Governmental Authority, the Borrower shall deliver to the
Bank the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Bank.
(e) Any Foreign Lender that is entitled to an exemption from or reduction of a
withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower, at the time or
times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate.
(f) If a Lender shall become aware that it is entitled to receive a refund of
any Taxes as to which it has been indemnified by the Borrower or with respect to
which the Borrower has paid additional amounts pursuant to this Section 2.14, it
shall promptly notify the Borrower of the availability of such refund and shall,
within 30 days after receipt of a request by the Borrower, apply for such refund
at the expense of the Borrower. If any Lender has received a refund of any Taxes
as to which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section 2.14, it shall pay
over such refund to the Borrower, net of all out-of-pocket expenses of such
Lender and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund); provided, however, that the
Borrower, upon the request of any Lender, agrees to repay the amount paid over
to the Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to any Lender in the event any Lender is
required to repay such refund to such Governmental Authority. Nothing contained
in this Section 2.14(f) shall require any Lender to make available its tax
returns (or any other information relating to its Taxes which it deems
confidential) to the Borrower or any other Person.
SECTION 2.15. Mitigation Obligations; Replacement of Lenders. (a) If any Lender
requests compensation under Section 2.12, or if the Borrower is required to pay
any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.14, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 2.12 or 2.14, as the case may be, in the future and
(ii) would not subject such Lender to any unreimbursed cost of expense and would
not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to
pay all reasonable costs and expenses incurred by any Lender in connection with
any such designation or assignment.
<PAGE>
(b) If any Lender requests compensation under Section 2.12, or if the Borrower
is required to pay any additional amount to such Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.14, or if the Bank
defaults in its obligations to fund Loans hereunder, then the Borrower may, at
its sole expense and effort, upon notice to such Lender, require such Lender to
assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 8.04), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations; provided that (i) such Lender shall have received payment of an
amount equal to the outstanding principal of its Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts), together with all
requirements of Section 8.04, and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.12 or payments required
to be made pursuant to Section 2.14, such assignment will result in a reduction
in such compensation or payments. A Lender shall not be required to make any
such assignment and delegation if, prior thereto, as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply.
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Bank that:
SECTION 3.01. Organization; Powers. Each of the Borrower and its Subsidiaries is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority to carry
on its business as now conducted and, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.
SECTION 3.02. Authorization; Enforceability. The Transactions are within the
Borrower's corporate powers and have been duly authorized by all necessary
corporate and, if required, stockholder action. This Agreement has been duly
executed and delivered by the Borrower and constitutes a legal, valid and
binding obligation of the Borrower, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions (a) do not
require any consent or approval of, registration or filing with, or any other
action by, any Governmental Authority, except (i) such as have been obtained or
made and are in full force and effect, and (ii) such actions, consents and
approvals the failure to obtain or make which could not reasonably be expected
to result in a Material Adverse Effect; (b) will not violate any applicable
<PAGE>
law or regulation or the charter, by-laws or other organizational documents of
the Borrower or any of its Subsidiaries or any order of any Governmental
Authority, (c) will not violate or result in a default under any material
indenture, agreement or other instrument binding upon the Borrower or any of its
Subsidiaries or its assets, or give rise to a right thereunder to require any
payment to be made by the Borrower or any of its Subsidiaries, except to the
extent that the failure to comply herewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect, and (d) will not
result in the creation or imposition of any Lien on any asset of the Borrower or
any of its Subsidiaries, except to the extent that the failure to comply
herewith could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
SECTION 3.04. Financial Condition; No Material Adverse Change. (a) The Borrower
has heretofore furnished to the Bank its consolidated balance sheet and
statements of income, stockholders equity and cash flows (i) as of and for the
fiscal year ended August 31, 1997, reported on by Price Waterhouse, LLP,
independent public accountants, and (ii) as of and for the fiscal quarter and
the portion of the fiscal year ended May 31, 1998, certified by its chief
financial officer. Such financial statements present fairly, in all material
respects, the financial position and results of operations and cash flows of the
Borrower and its consolidated Subsidiaries as of such dates and for such periods
in accordance with GAAP, subject to year-end audit adjustments and the absence
of footnotes in the case of the statements referred to in clause (ii) above.
(b) Except for the matters disclosed on Schedule 3.09 and the Disclosed Matters,
since May 31, 1998, there has been no material adverse change in the business,
assets, operations or condition, financial or otherwise, of the Borrower and its
Subsidiaries, taken as a whole.
SECTION 3.05. Properties. (a) Each of the Borrower and its Subsidiaries has good
title to, or valid leasehold interests in, all its real and personal property
material to the business of the Borrower and its Subsidiaries, taken as a whole,
except for minor defects in title that do not materially interfere with its
ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes.
(b) Each of the Borrower and its Subsidiaries owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual property
material to the business of the Borrower and its Subsidiaries taken as a whole,
and the use thereof by the Borrower and its Subsidiaries does not infringe upon
the rights of any other Person, except for any such infringements that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.
SECTION 3.06. Litigation and Environmental Matters. (a) There are no actions,
suits or proceedings by or before any arbitrator or Governmental Authority
pending against or, to the knowledge of the Borrower, threatened against or
affecting the Borrower or any of its Subsidiaries (i) as to which there is a
reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect (other than the Disclosed Matters) or (ii)
that involve this Agreement or the Transactions.
<PAGE>
(b) Except for the Disclosed Matters and except with respect to any other
matters that, individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Effect, neither the Borrower nor any of its
Subsidiaries (i) has failed to comply with any Environmental Law or to obtain,
maintain or comply with any permit, license or other approval required under any
Environmental Law, (ii) has become subject to any Environmental Liability, (iii)
has received notice of any claim with respect to any Environmental Liability or
(iv) knows of any basis for any Environmental Liability.
(c) Since the date of this Agreement, there has been no change in the status of
the Disclosed Matters that, individually or in the aggregate, has resulted in a
Material Adverse Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each of the Borrower and its
Subsidiaries is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.
SECTION 3.08. Investment and Holding Company Status. Neither the Borrower nor
any of its Subsidiaries is (a) an "investment company" as defined in, or subject
to regulation under, the Investment Company Act of 1940 or (b) a "holding
company" as defined in, or subject to regulation under, the Public Utility
Holding Company Act of 1935.
SECTION 3.09. Taxes. Each of the Borrower and its Subsidiaries has timely filed
or caused to be filed all Tax returns and reports required to have been filed
and has paid or caused to be paid all Taxes required to have been paid by it,
except (a) Taxes that are being contested in good faith by appropriate
proceedings and for which the Borrower or such Subsidiary, as applicable, has
set aside on its books adequate reserves, or as set forth on Schedule 3.09, or
(b) to the extent that the failure to do so could not reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected to
occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed the fair
market value of the assets of such Plan, and the present value of all
accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed the fair market value of the assets of all such
underfunded Plans.
<PAGE>
SECTION 3.11. Disclosure. The Borrower has disclosed to the Bank all material
agreements, instruments and corporate or other restrictions to which it or any
of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. None of the material reports, financial statements,
certificates or other information, taken as a whole, furnished by or on behalf
of the Borrower to the Bank in connection with the negotiation of this Agreement
or delivered hereunder (as modified or supplemented by other information so
furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with
respect to projected financial information, the Borrower represents only that
such information was prepared in good faith based upon assumptions believed by
the Borrower to be reasonable at the time.
SECTION 3.12. Year 2000. Any reprogramming required to permit the proper
functioning without Material Adverse Effect, in and following the Year 2000, of
(i) the Borrower's computer systems and (ii) equipment containing embedded
microchips and the testing of all such systems and equipment, as so
reprogrammed, will be completed in all material respects by June 30, 1999. To
the Borrower's knowledge, the cost to the Borrower of such reprogramming and
testing and of the reasonably foreseeable consequences of Year 2000 to the
Borrower will not result in a Default or a Material Adverse Effect. Except for
such of the reprogramming referred to in the preceding sentence as may be
necessary, the computer and management information systems of the Borrower and
its Subsidiaries, taken as a whole, are and, with ordinary course upgrading and
maintenance, will continue for the term of this Agreement to be, sufficient in
all material respects to permit the Borrower to conduct its business without
Material Adverse Effect.
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligation of the Bank to make Loans hereunder
shall not become effective until the date on which each of the following
conditions is satisfied (or waived in accordance with Section 8.02):
(a) The Bank (or its counsel) shall have received from each party hereto either
(i) a counterpart of this Agreement signed on behalf of such party or (ii)
written evidence satisfactory to the Bank (which may include telecopy
transmission of a signed signature page of this Agreement) that such party has
signed a counterpart of this Agreement.
(b) The Bank shall have received a favorable written opinion (addressed to the
Bank and dated the Effective Date) of Cravath, Swaine & Moore, counsel for the
Borrower, substantially in the form of Exhibit A, and covering such other
matters relating to the Borrower, this Agreement or the Transactions as the Bank
shall reasonably request. The Borrower hereby requests such counsel to deliver
such opinion.
<PAGE>
(c) The Bank shall have received such documents and certificates as the Bank or
its counsel may reasonably request relating to the organization, existence and
good standing of the Borrower, the authorization of the Transactions and any
other legal matters relating to the Borrower, this Agreement or the
Transactions, all in form and substance reasonably satisfactory to the Bank and
its counsel.
(d) The Bank shall have received a certificate, dated the Effective Date and
signed by the President, a Vice President or a Financial Officer of the
Borrower, confirming that (i) the representations and warranties of the Borrower
set forth in this Agreement are true in all material respects and (ii) on the
Effective Date no Default shall have occurred and be continuing.
(e) The Bank shall have received all fees and other amounts due and payable on
or prior to the Effective Date, including, to the extent invoiced, reimbursement
or payment of all out-of-pocket expenses required to be reimbursed or paid by
the Borrower hereunder.
The Bank shall notify the Borrower of the Effective Date, and such notice shall
be conclusive and binding. Notwithstanding the foregoing, the obligation of the
Bank to make Loans hereunder shall not become effective unless each of the
foregoing conditions is satisfied (or waived pursuant to Section 8.02) at or
prior to 3:00 p.m., New York City time, on November 30, 1998 (and, in the event
such conditions are not so satisfied or waived, the Commitment shall terminate
at such time).
SECTION 4.02. Each Loan. The obligation of the Bank to make any Loan (including
the initial Loan) is subject to the satisfaction of the following conditions:
(a) The representations and warranties of the Borrower set forth in this
Agreement shall be true and correct in all material respects on and as of the
date of such Loan.
(b) At the time of and immediately after giving effect to such Loan no Default
shall have occurred and be continuing.
The borrowing of each Loan shall be deemed to constitute a representation and
warranty by the Borrower on the date thereof as to the matters specified in
paragraphs (a) and (b) of this Section.
ARTICLE V
Affirmative Covenants
Until the Commitment has expired or been terminated and the principal of and
interest on each Loan and all fees payable hereunder shall have been paid in
full, the Borrower covenants and agrees with the Bank that:
<PAGE>
SECTION 5.01. Financial Statements and Other Information. The Borrower will
furnish to the Bank:
(a) within 90 days after the end of each fiscal year of the Borrower, its
audited consolidated balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such year, setting
forth in each case in comparative form the figures for the previous fiscal year,
all reported on by PriceWaterhouseCoopers, LLP, or other independent public
accountants of recognized national standing (without a "going concern" or like
qualification or exception and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied;
(b) within 45 days after the end of each of the first three fiscal quarters of
each fiscal year of the Borrower, its consolidated balance sheet and related
statements of operations, stockholders' equity and cash flows as of the end of
and for such fiscal quarter and the then elapsed portion of the fiscal year,
setting forth in each case in comparative form the figures for the corresponding
period or periods of (or, in the case of the balance sheet, as of the end of)
the previous fiscal year, all certified by one of its Financial Officers as
presenting fairly in all material respects the financial condition and results
of operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;
(c) concurrently with any delivery of financial statements under clause (a) or
(b) above, a certificate of a Financial Officer of the Borrower (i) certifying
as to whether a Default has occurred and, if a Default has occurred, specifying
the details thereof and any action taken or proposed to be taken with respect
thereto, (ii) setting forth reasonably detailed calculations demonstrating
compliance with Section 6.09 and (iii) stating whether any change in GAAP or in
the application thereof has occurred since the date of the audited financial
statements referred to in Section 3.04 and, if any such change has occurred,
specifying the effect of such change on the financial statements accompanying
such certificate;
(d) concurrently with any delivery of financial statements under clause (a)
above, a certificate of the accounting firm that reported on such financial
statements stating whether they obtained knowledge during the course of their
examination of such financial statements of any Default (which certificate may
be limited to the extent required by accounting rules or guidelines);
(e) promptly after the same become publicly available, copies of all periodic
and other reports, proxy statements and other materials filed by the Borrower or
any Subsidiary with the Securities and Exchange Commission, or any Governmental
Authority succeeding to any or all of the functions of said Commission, or with
any national securities exchange, or distributed by the Borrower to its
shareholders generally, as the case may be; and
<PAGE>
(f) promptly following any request therefor, such other information regarding
the operations, business affairs and financial condition of the Borrower or any
Subsidiary, or compliance with the terms of this Agreement, as the Bank may
reasonably request (subject to any confidentiality agreements to which the
Borrower or its Subsidiaries may be subject).
SECTION 5.02. Notices of Material Events. The Borrower will furnish to the Bank
prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by or before
any arbitrator or Governmental Authority against or affecting the Borrower or
any Affiliate thereof that could reasonably be expected to result in a Material
Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with any other
ERISA Events that have occurred, could reasonably be expected to result in
liability of the Borrower and its Subsidiaries in an aggregate amount exceeding
$500,000; and
(d) any other development that results in, or could reasonably be expected to
result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 5.03. Existence; Conduct of Business. The Borrower will, and will cause
each of its Subsidiaries to, do or cause to be done all things reasonably
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of the business of the Borrower and its Subsidiaries, taken as a
whole; provided that the foregoing shall not prohibit any merger, consolidation,
liquidation or dissolution permitted under Section 6.03.
SECTION 5.04. Payment of Obligations. The Borrower will, and will cause each of
its Subsidiaries to, pay its obligations, including Tax liabilities, that, if
not paid, could result in a Material Adverse Effect before the same shall become
delinquent or in default, except where (a) the validity or amount thereof is
being contested in good faith by appropriate proceedings, (b) the Borrower or
such Subsidiary has set aside on its books adequate reserves with respect
thereto in accordance with GAAP and (c) the failure to make payment pending such
contest could not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.05. Maintenance of Properties; Insurance. The Borrower will, and will
cause each of its Subsidiaries to, (a) keep and maintain all property material
to the conduct of the business of the Borrower and its Subsidiaries, taken as a
whole, in good working order and condition, ordinary wear and tear excepted, and
(b) maintain, with financially sound and
<PAGE>
reputable insurance companies, insurance in such amounts and against such risks
as the Borrower reasonably believes is necessary to adequately protect the
business of the Borrower and its Subsidiaries, taken as a whole.
SECTION 5.06. Books and Records; Inspection Rights. The Borrower will, and will
cause each of its Subsidiaries to, keep proper books of record and account in
which full, true and correct entries are made of all dealings and transactions
in relation to its business and activities. The Borrower will, and will cause
each of its Subsidiaries to, permit any representatives designated by the Bank,
upon reasonable prior notice, to visit and inspect its properties, to examine
and make extracts from its books and records, and to discuss its affairs,
finances and condition with its officers and independent accountants, all at
such reasonable times and as often as reasonably requested.
SECTION 5.07. Compliance with Laws. The Borrower will, and will cause each of
its Subsidiaries to, comply with all laws, rules, regulations and orders of any
Governmental Authority applicable to it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.08. Use of Proceeds. The proceeds of the Loans will be used only for
general corporate purposes, including Permitted Acquisitions. No part of the
proceeds of any Loan will be used, whether directly or indirectly, for any
purpose that entails a violation of any of the Regulations of the Board,
including Regulations G, U and X.
<PAGE>
ARTICLE VI
Negative Covenants
Until the Commitment has expired or terminated and the principal of and interest
on each Loan and all fees payable hereunder have been paid in full, the Borrower
covenants and agrees with the Bank that:
SECTION 6.01. Indebtedness. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Indebtedness,
except:
(a) Indebtedness created hereunder;
(b) Indebtedness existing on the date hereof and set forth in Schedule 6.01, and
any extensions, renewals or replacements of any such Indebtedness that do not
increase the outstanding principal amount thereof;
(c) Indebtedness of the Borrower to any Subsidiary and of any Subsidiary to the
Borrower or any other Subsidiary;
(d) Guarantees by the Borrower of Indebtedness of any Subsidiary and by any
Subsidiary of Indebtedness of the Borrower or any other Subsidiary;
(e) Indebtedness of the Borrower or any Subsidiary incurred to finance the
acquisition, construction or improvement of any fixed or capital assets,
including Capital Lease Obligations and any Indebtedness assumed in connection
with the acquisition of any such assets or secured by a Lien on any such assets
prior to the acquisition thereof, and extensions, renewals and replacements of
any such Indebtedness that do not increase the outstanding principal amount
thereof; provided that (i) such Indebtedness is incurred prior to or within 90
days after such acquisition or the completion of such construction or
improvement and (ii) the aggregate principal amount of Indebtedness permitted by
this clause (e) shall not exceed $10,000,000 at any time outstanding;
(f) Indebtedness of any Person that becomes a Subsidiary after the date hereof
and Indebtedness of a corporation merged or consolidated with or into the
Borrower or any Subsidiary after the date hereof; provided that, in each case,
(i) such Indebtedness exists at the time of such acquisition, merger,
consolidation or conversion of such Person into a Subsidiary and is not created
in contemplation of or in connection with such event, and (ii) the aggregate
principal amount of Indebtedness permitted by this clause (f) shall not exceed
$7,500,000 at any time outstanding;
(g) Indebtedness of the Borrower or any Subsidiary as an account party in
respect of trade letters of credit;
<PAGE>
(h) other Indebtedness of the Borrower and its Subsidiaries in an aggregate
principal amount not exceeding $7,500,000 at any time outstanding;
(i) Indebtedness of the Borrower and its Subsidiaries in the maximum aggregate
amount at any time of $10,000,000 pursuant to Hedging Agreements entered into in
order to fix the effective rate of interest, or to hedge against currency
fluctuations, on Indebtedness and other investments, provided that such
transactions shall be entered into to hedge actual interest rate exposures or
currency exchange rate exposures and not for the purpose of speculation; and
(j) Indebtedness of the Borrower or any of its Subsidiaries to any Joint
Venture; and
(k) Guarantees by the Borrower of loans to officers, directors and employees of
the Borrower or any Subsidiary from one or more financial institutions
reasonably acceptable to Chase, provided, that any Guarantees pursuant to this
clause (k) shall be subject to Section 6.04(m).
SECTION 6.02. Liens. The Borrower will not, and will not permit any Subsidiary
to, create, incur, assume or permit to exist any Lien on any property or asset
now owned or hereafter acquired by it, or assign or sell any income or revenues
(including accounts receivable) or rights in respect of any thereof, except:
(a) Permitted Encumbrances;
(b) any Lien on any property or asset of the Borrower or any Subsidiary existing
on the date hereof and set forth in Schedule 6.02; provided that (i) such Lien
shall not apply to any other property or asset of the Borrower or any Subsidiary
(other than pursuant to existing after acquired property clauses specifically
described and set forth in Schedule 6.02 and other than to accessions to such
property or assets and provided that individual financings of equipment provided
by a single lender may be cross-collateralized to other financings of equipment
provided solely by such lender); and (ii) such Lien shall secure only those
obligations which it secures on the date hereof, and extensions, renewals and
refinancings of such obligations permitted by Section 6.01(b));
(c) any Lien existing on any property or asset prior to the acquisition thereof
by the Borrower or any Subsidiary or existing on any property or asset of any
Person that becomes a Subsidiary after the date hereof prior to the time such
Person becomes a Subsidiary; provided that (i) such Lien is not created in
contemplation of or in connection with such acquisition or such Person becoming
a Subsidiary, as the case may be, (ii) such Lien shall not apply to any other
property or assets of the Borrower or any Subsidiary and (iii) such Lien shall
secure only those obligations which it secures on the date of such acquisition
or the date such Person becomes a Subsidiary, as the case may be;
(d) Liens on fixed or capital assets acquired, constructed or improved by the
Borrower or any Subsidiary; provided that (i) such security interests secure
Indebtedness permitted by clause (e) of Section 6.01, (ii) such security
interests and the Indebtedness secured thereby are
<PAGE>
incurred prior to or within 90 days after such acquisition or the completion of
such construction or improvement, (iii) the Indebtedness secured thereby does
not exceed 100% of the cost of acquiring, constructing or improving such fixed
or capital assets and (iv) such security interests shall not apply to any other
property or assets of the Borrower or any Subsidiary (other than to accessions
to such fixed or capital assets and provided that individual financings of
equipment provided by a single lender may be cross-collateralized to other
financings of equipment provided solely by such lender);
(e) Liens consisting of interests of lessors under Capital Lease Obligations
permitted by Section 6.01;
(f) the sale of accounts receivable in connection with collection in the
ordinary course of business;
(g) any Lien on any property or asset of a Subsidiary securing Indebtedness
permitted by Section 6.01(f), provided that such Lien does not apply to any
other property or assets of the Borrower or any Subsidiary not securing such
Indebtedness at the date of acquisition of such property or asset; and
(h) the replacement, extension or renewal of any Lien permitted by clause (b),
(c), (d) or (g) above, provided that such replacement, extension or renewal Lien
shall not cover any property other than the property that was subject to such
Lien prior to such replacement, extension or renewal (other than accessions to
such property and provided that individual financings of equipment provided by a
single lender may be cross-collateralized to other financings of equipment
provided solely by such lender); and provided further that the Indebtedness and
other obligations secured by such replacement, extension or renewal Lien are
permitted by this Agreement.
SECTION 6.03. Fundamental Changes. (a) The Borrower will not, and will not
permit any Subsidiary to, merge into or consolidate with any other Person, or
permit any other Person to merge into or consolidate with it, or sell, transfer,
lease or otherwise dispose of (in one transaction or in a series of
transactions) all or any substantial part of its assets, or all or substantially
all of the stock of any of its Subsidiaries (in each case, whether now owned or
hereafter acquired), or liquidate or dissolve, except that, if at the time
thereof and immediately after giving effect thereto no Default shall have
occurred and be continuing (i) any Subsidiary may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation, (ii) any
Subsidiary may merge into any Subsidiary in a transaction in which the surviving
entity is a Subsidiary, (iii) any Subsidiary may sell, transfer, lease or
otherwise dispose of its assets to the Borrower or to another Subsidiary and
(iv) any Subsidiary may liquidate or dissolve if the Borrower determines in good
faith that such liquidation or dissolution is in the best interests of the
Borrower and is not materially disadvantageous to the Bank; provided that any
such merger involving a Person that is not a wholly owned Subsidiary immediately
prior to such merger shall not be permitted unless also permitted by Section
6.04.
<PAGE>
(b) The Borrower will not, and will not permit any of its Subsidiaries to,
engage to any material extent in any business other than businesses of the type
conducted by the Borrower and its Subsidiaries on the date of execution of this
Agreement and businesses reasonably related thereto.
SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions. The
Borrower will not, and will not permit any of its Subsidiaries to, purchase,
hold or acquire (including pursuant to any merger with any Person that was not a
wholly owned Subsidiary prior to such merger) any capital stock, evidences of
indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, make or permit to exist any loans or
advances to, Guarantee any obligations of, or make or permit to exist any
investment or any other interest in, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) any assets of any other
Person constituting a business unit, except:
(a) Permitted Investments;
(b) investments by the Borrower existing on the date hereof in the capital stock
of its Subsidiaries;
(c) loans or advances made by the Borrower to any Subsidiary and made by any
Subsidiary to the Borrower or any other Subsidiary;
(d) Guarantees constituting Indebtedness permitted by Section 6.01;
(e) Permitted Acquisitions;
(f) investments arising out of the receipt by the Borrower or any Subsidiary of
noncash consideration for any sale of assets permitted by this Agreement, not to
exceed $2,500,000 in the aggregate at any time outstanding;
(g) loans and advances to employees of the Borrower or any of its Subsidiaries,
provided that such loans and advances shall not exceed $5,000,000 in the
aggregate at any time outstanding;
(h) Hedging Agreements permitted pursuant to Section 6.01(i);
(i) investments by the Borrower or any Subsidiary in the capital stock or other
equity interest of any Joint Venture, provided that the aggregate amount of such
investments permitted under this clause (i) shall not exceed at any one time
outstanding $15,000,000 (calculated, on any date (the "Reference Date") by
adding, to the extent such amount is outstanding, the sum of (a) the aggregate
amount of all cash dividends and other cash distributions received by the
Borrower or any Subsidiary from any Joint Venture on or prior to the Reference
Date (other than the portion of any such dividends and other distributions that
is used by the Borrower or any Subsidiary to pay taxes), (b) the aggregate
amount of all cash repayments of principal received by the Borrower or any
Subsidiary from any Joint Venture on or prior to the Reference Date in
<PAGE>
respect of loans made by the Borrower or any Subsidiary to such Joint Venture,
and (c) the aggregate amount of all net cash proceeds received by the Borrower
or any Subsidiary in connection with the sale, transfer or other disposition of
its ownership interest in any Joint Venture on or prior to the Reference Date)
less the aggregate amount of loans, advances and Indebtedness outstanding under
Section 6.04(j);
(j) loans and advances made by the Borrower or any Subsidiary to, and Guarantees
of Indebtedness on behalf of, any Joint Venture, provided that the aggregate
amount of such loans, advances and Guarantees permitted under this clause (j)
shall not exceed at any one time outstanding $15,000,000 (calculated, on any
date (the "Reference Date") by adding, to the extent such amount is outstanding,
the sum of (a) the aggregate amount of all cash dividends and other cash
distributions received by the Borrower or any Subsidiary from any Joint Venture
on or prior to the Reference Date (other than the portion of any such dividends
and other distributions that is used by the Borrower or any Subsidiary to pay
taxes), (b) the aggregate amount of all cash repayments of principal received by
the Borrower or any Subsidiary from any Joint Venture on or prior to the
Reference Date in respect of loans made by the Borrower or any Subsidiary to
such Joint Venture, and (c) the aggregate amount of all net cash proceeds
received by the Borrower or any Subsidiary in connection with the sale, transfer
or other disposition of its ownership interest in any Joint Venture on or prior
to the Reference Date) less the amount of investments outstanding under Section
6.04(i);
(k) investments received in connection with the bankruptcy or reorganization of,
or settlement of delinquent accounts and disputes with, customers and suppliers,
in each case in the ordinary course of business;
(l) investments by the Borrower or any Subsidiary in the capital stock of any
wholly owned Subsidiary; or
(m) Guarantees constituting Indebtedness pursuant to Section 6.01(k), provided
that such Guarantees shall not be given with respect to Indebtedness that
exceeds in the aggregate at any time outstanding $5,000,000 minus the aggregate
amount of loans and advances outstanding under Section 6.04(g).
SECTION 6.05. Hedging Agreements. The Borrower will not, and will not permit any
of its Subsidiaries to, enter into any Hedging Agreement, other than Hedging
Agreements entered into in the ordinary course of business to hedge or mitigate
risks to which the Borrower or any Subsidiary is exposed in the conduct of its
business or the management of its liabilities.
SECTION 6.06. Restricted Payments. The Borrower will not, and will not permit
any of its Subsidiaries to, declare or make, or agree to pay or make, directly
or indirectly, any Restricted Payment, except (a) the Borrower may declare and
pay dividends with respect to its capital stock (i) payable solely in additional
shares of its common stock at any time and from time to time, and (ii) payable
in cash at any time and from time to time, provided that, in the case of clause
(ii), the Consolidated Net Worth at the time of declaration is greater than or
equal to an amount equal to (A) $47,000,000 plus (B) an amount equal to 40% of
Consolidated Net Income for each fiscal
<PAGE>
quarter beginning after November 30, 1998 that precedes the declaration date of
such cash dividend, after giving pro forma effect to such cash dividend, (b)
Subsidiaries may declare and pay dividends ratably with respect to their capital
stock, and (c) the Borrower may make Restricted Payments pursuant to and in
accordance with stock option plans or other benefit plans for management or
employees of the Borrower and its Subsidiaries.
SECTION 6.07. Transactions with Affiliates. The Borrower will not, and will not
permit any of its Subsidiaries to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) in the ordinary course of business at prices and on terms
and conditions not less favorable to the Borrower or such Subsidiary than could
be obtained on an arm's-length basis from unrelated third parties, (b)
transactions between or among the Borrower and its wholly owned Subsidiaries not
involving any other Affiliate and (c) any Restricted Payment permitted by
Section 6.06.
SECTION 6.08. Restrictive Agreements. The Borrower will not, and will not permit
any of its Subsidiaries to, directly or indirectly, enter into, incur or permit
to exist any agreement or other arrangement that prohibits, restricts or imposes
any condition upon (a) the ability of the Borrower or any Subsidiary to create,
incur or permit to exist any Lien upon any of its property or assets, or (b) the
ability of any Subsidiary to pay dividends or other distributions with respect
to any shares of its capital stock or to make or repay loans or advances to the
Borrower or any other Subsidiary or to Guarantee Indebtedness of the Borrower or
any other Subsidiary; provided that (i) the foregoing shall not apply to
restrictions and conditions imposed by law or by this Agreement, (ii) the
foregoing shall not apply to restrictions and conditions existing on the date
hereof identified on Schedule 6.08 (but shall apply to any extension or renewal
of, or any amendment or modification expanding the scope of, any such
restriction or condition), (iii) the foregoing shall not apply to customary
restrictions and conditions contained in agreements relating to the sale of a
Subsidiary pending such sale, provided that such restrictions and conditions
apply only to the Subsidiary that is to be sold and such sale is permitted
hereunder, (iv) clause (a) of the foregoing shall not apply to restrictions or
conditions imposed by any agreement relating to secured Indebtedness permitted
by this Agreement if such restrictions or conditions apply only to the property
or assets securing such Indebtedness and (v) clause (a) of the foregoing shall
not apply to customary provisions in leases and other contracts restricting the
assignment thereof.
SECTION 6.09. Certain Financial Covenants.
(a) Leverage Ratio. The Borrower will not permit the Leverage Ratio to exceed
2.0 to 1.0 as at the last day of any fiscal quarter.
(b) Consolidated Net Worth. The Borrower will not permit its Consolidated Net
Worth to be less than $47,000,000 at any time.
(c) Fixed Charge Ratio. The Borrower will not permit the Fixed Charge Ratio to
be less than 2.5 to 1.0 as at the last day of any fiscal quarter.
<PAGE>
ARTICLE VII
Events of Default
If any of the following events ("Events of Default") shall occur:
(a) the Borrower shall fail to pay any principal of any Loan when and as the
same shall become due and payable, whether at the due date thereof or at a date
fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any fee or any
other amount (other than an amount referred to in clause (a) of this Article)
payable under this Agreement, when and as the same shall become due and payable,
and such default shall continue unremedied for a period of five Business Days;
(c) any representation or warranty made or deemed made by or on behalf of the
Borrower or any Subsidiary in or in connection with this Agreement or any
amendment or modification hereof or waiver hereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with this Agreement or any amendment or modification hereof or waiver
hereunder, shall prove to have been incorrect, in any material respect, when
made or deemed made;
(d) the Borrower shall fail to observe or perform any covenant, condition or
agreement contained in Section 5.02, 5.03 (with respect to the Borrower's
existence) or 5.08 or in Article VI;
(e) the Borrower shall fail to observe or perform any covenant, condition or
agreement contained in this Agreement (other than those specified in clause (a),
(b) or (d) of this Article), and such failure shall continue unremedied for a
period of 30 days after notice thereof from the Bank to the Borrower;
(f) the Borrower or any Subsidiary shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material
Indebtedness, when and as the same shall become due and payable (after all
requisite notices have been given and all applicable grace periods have
expired);
(g) any event or condition occurs that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that enables or permits (with or
without the giving of notice), the lapse of time or both) the holder or holders
of any Material Indebtedness or any trustee or agent on its or their behalf to
cause any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity;
provided that this clause (g) shall not apply to secured Indebtedness that
becomes due as a result of the voluntary sale or transfer of the property or
assets securing such Indebtedness;
<PAGE>
(h) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief in
respect of the Borrower or any Subsidiary or its debts, or of a substantial part
of its assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for the Borrower or any Subsidiary or for a substantial part of its assets, and,
in any such case, such proceeding or petition shall continue undismissed for
60 days or an order or decree approving or ordering any of the foregoing shall
be entered;
(i) the Borrower or any Subsidiary shall (i) voluntarily commence any proceeding
or file any petition seeking liquidation, reorganization or other relief under
any Federal, state or foreign bankruptcy, insolvency, receivership or similar
law now or hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition described
in clause (h) of this Article, (iii) apply for or consent to the appointment of
a receiver, trustee, custodian, sequestrator, conservator or similar official
for the Borrower or any Subsidiary or for a substantial part of its assets, (iv)
file an answer admitting the material allegations of a petition filed against it
in any such proceeding, (v) make a general assignment for the benefit of
creditors or (vi) take any action for the purpose of effecting any of the
foregoing;
(j) the Borrower or any Subsidiary shall become unable, admit in writing or fail
generally to pay its debts as they become due;
(k) one or more judgments for the payment of money in an aggregate amount in
excess of $1,000,000 (except to the extent covered by insurance) shall be
rendered against the Borrower, any Subsidiary or any combination thereof and the
same shall remain undischarged for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be legally taken
by a judgment creditor to attach or levy upon any assets of the Borrower or any
Subsidiary to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the Required
Lenders, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in a Material Adverse Effect; or
(m) a Change in Control shall occur;
then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Bank may, by notice to the Borrower,
take either or both of the following actions, at the same or different times:
(i) terminate the Commitment, and thereupon the Commitment shall terminate
immediately, and (ii) declare the Loans then outstanding to be due and payable
in whole (or in part, in which case any principal not so declared to be due and
payable may thereafter be declared to be due and payable), and thereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of the Borrower accrued
hereunder, shall become due and payable immediately,
<PAGE>
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower; and in case of any event with respect to the
Borrower described in clause (h) or (i) of this Article, the Commitment shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of the
Borrower accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower.
ARTICLE VIII
Miscellaneous
SECTION 8.01. Notices. Except in the case of notices and other communications
expressly permitted to be given by telephone, all notices and other
communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows:
(a) if to the Borrower, to it at One Greenwich Plaza, Greenwich, Connecticut
06830-6352, Attention of Ernest S. Wong, Senior Vice President & Chief Financial
Officer (Telecopy No. 203-863-1725);
(b) if to Bank, to it at 999 Broad Street, Bridgeport, Connecticut 06604,
Attention of T. David Short, Vice President (Telecopy No. 203-382-6314);
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 8.02. Waivers; Amendments. (a) No failure or delay by the Bank in
exercising any right or power hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Bank hereunder are cumulative and
are not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provision of this Agreement or consent to any departure by the
Borrower therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) of this Section, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan
shall not be construed as a waiver of any Default, regardless of whether the
Bank may have had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Borrower and the Required Lenders; provided that no such agreement shall
(i) increase the Commitment of
<PAGE>
any Lender without the written consent of such Lender, (ii) reduce the principal
amount of any Loan or reduce the rate of interest thereon, or reduce any fees
payable hereunder, without the written consent of each Lender affected thereby,
(iii) postpone the date of any scheduled payment of the principal amount of any
Loan, or any interest thereon, or any fees payable hereunder, or reduce the
amount of, waive or excuse any such scheduled payment, or postpone the scheduled
date of expiration of any Commitment, without the written consent of each Lender
affected thereby or (iv) change any of the provisions of this Section or the
definition of "Required Lenders" or any other provision hereof specifying the
number or percentage of Lenders required to waive, amend or modify any rights
hereunder or make any determination or grant any consent hereunder, without the
written consent of each Lender.
SECTION 8.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall pay (i)
all reasonable out-of-pocket expenses incurred by the Bank and its Affiliates,
including the reasonable fees, charges and disbursements of counsel for the Bank
and costs allocated by its internal legal department, in connection with the
preparation and administration of this Agreement or any amendments,
modifications or waivers of the provisions hereof (whether or not the
transactions contemplated hereby or thereby shall be consummated) and (ii) all
reasonable out-of-pocket expenses incurred by the Bank, including the fees,
charges and disbursements of any counsel for the Bank, in connection with the
enforcement or protection of its rights in connection with this Agreement,
including its rights under this Section, or in connection with the Loans made
hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans.
(b) The Borrower shall indemnify the Bank, and each Related Party of the Bank
(each such Person being called an "Indemnitee") against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the fees, charges and disbursements of any counsel
for any Indemnitee, incurred by or asserted against any Indemnitee arising out
of, in connection with, or as a result of (i) the execution or delivery of this
Agreement or any agreement or instrument contemplated hereby, the performance by
the parties hereto of their respective obligations hereunder or the consummation
of the Transactions or any other transactions contemplated hereby, (ii) any Loan
or the proceeds therefrom, (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property owned or operated by the Borrower or
any of its Subsidiaries, or any Environmental Liability related in any way to
the Borrower or any of its Subsidiaries, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee.
(c) To the extent permitted by applicable law, the Borrower shall not assert,
and hereby waives, any claim against any Indemnitee, on any theory of liability,
for special, indirect, consequential or punitive damages (as opposed to direct
or actual damages) arising out of, in
<PAGE>
connection with, or as a result of, this Agreement or any agreement or
instrument contemplated hereby, the Transactions, any Loan or the use of the
proceeds thereof.
(d) All amounts due under this Section shall be payable promptly after written
demand therefor.
SECTION 8.04. Successors and Assigns. (a) The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that the Borrower may
not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of the Bank (and any attempted assignment or
transfer by the Borrower without such consent shall be null and void). Nothing
in this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby and, to the extent expressly contemplated hereby, the Related
Parties of the Bank) any legal or equitable right, remedy or claim under or by
reason of this Agreement.
(b) The Bank may assign to one or more assignees all or a portion of its rights
and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it); provided that, except in the
case of an assignment to an Affiliate of the Bank, the Borrower must give its
prior written consent to such assignment (which consent shall not be
unreasonably withheld); and provided further that any consent of the Borrower
otherwise required under this paragraph shall not be required if an Event of
Default under clause (h) or (i) of Article VII has occurred and is continuing.
Subject to notification of an assignment, the assignee shall be a party hereto
and, to the extent of the interest assigned, have the rights and obligations of
the Bank under this Agreement, and the Bank shall, to the extent of the interest
assigned, be released from its obligations under this Agreement (and, in the
case of an assignment covering all of the Bank's rights and obligations under
this Agreement, the Bank shall cease to be a party hereto but shall continue to
be entitled to the benefits of Sections 2.12, 2.13, 2.14 and 8.03). Any
assignment or transfer by the Bank of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by the Bank of a participation in such rights and
obligations in accordance with paragraph (e) of this Section.
(c) Chase, acting for this purpose as an agent of the Borrower, will maintain at
one of its offices in The City of New York a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitment of, and principal amount of the
Loans owing to, each Lender pursuant to the terms hereof from time to time (the
"Register"). The entries in the Register shall be conclusive, and the Borrower
and the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance executed by
an assigning Lender and an assignee and any written consent to such assignment
required by
<PAGE>
paragraph (b) of this Section, Chase shall accept such Assignment and Acceptance
and record the information contained therein in the Register. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this paragraph.
(e) The Bank may, without the consent of the Borrower, sell participations to
one or more banks or other entities (a "Participant") in all or a portion of the
Bank's rights and obligations under this Agreement (including all or a portion
of its Commitment and the Loans owing to it); provided that (i) the Bank's
obligations under this Agreement shall remain unchanged, (ii) the Bank shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrower shall continue to deal solely and
directly with the Bank in connection with the Bank's rights and obligations
under this Agreement. Any agreement or instrument pursuant to which the Bank
sells such a participation shall provide that the Bank shall retain the sole
right to enforce this Agreement and to approve any amendment, modification or
waiver of any provision of this Agreement; provided that such agreement or
instrument may provide that the Bank will not, without the consent of the
Participant, agree to any amendment, modification or waiver described in the
first proviso to Section 8.02(b) that affects such Participant. Subject to
paragraph (d) of this Section, the Borrower agrees that each Participant shall
be entitled to the benefits of Sections 2.12, 2.13 and 2.14 to the same extent
as if it were the Bank and had acquired its interest by assignment pursuant to
paragraph (b) of this Section.
(f) A Participant shall not be entitled to receive any greater payment under
Section 2.12 or 2.14 than the Bank would have been entitled to receive with
respect to the participation sold to such Participant, unless the sale of the
participation to such Participant is made with the Borrower's prior written
consent.
(g) The Bank may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement to secure obligations of the Bank,
including any pledge or assignment to secure obligations to a Federal Reserve
Bank, and this Section shall not apply to any such pledge or assignment of a
security interest; provided that no such pledge or assignment of a security
interest shall release the Bank from any of its obligations hereunder or
substitute any such pledgee or assignee for the Bank as a party hereto.
SECTION 8.05. Survival. All covenants, agreements, representations and
warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the Bank and shall survive the execution
and delivery of this Agreement and the making of any Loans, regardless of any
investigation made by the Bank or on its behalf and notwithstanding that the
Bank may have had notice or knowledge of any Default or incorrect representation
or warranty at the time any credit is extended hereunder, and shall continue in
full force and effect as long as the principal of or any accrued interest on any
Loan or any fee or any other amount payable under this Agreement is outstanding
and unpaid and so long as the Commitment has not expired or terminated. The
provisions of Sections 2.12, 2.13, 2.14 and 8.03 and Article VII shall survive
and remain in full force and effect regardless of the consummation of the
transactions
<PAGE>
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Commitment or the termination of this Agreement or any provision hereof.
SECTION 8.06. Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and any
separate letter agreements with respect to fees payable to the Bank constitute
the entire contract among the parties relating to the subject matter hereof and
supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof. Except as provided in Section 4.01, this
Agreement shall become effective when it shall have been executed by the Bank
and when the Bank shall have received a counterpart hereof which bears the
signature of the Borrower, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Delivery of an executed counterpart of a signature page of this Agreement by
telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.
SECTION 8.07. Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.
SECTION 8.08. Right of Setoff. If an Event of Default shall have occurred and be
continuing, the Bank and each of its Affiliates is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other obligations at any time owing by the Bank and
such Affiliate to or for the credit or the account of the Borrower against any
of and all the obligations of the Borrower now or hereafter existing under this
Agreement held by the Bank, irrespective of whether or not the Bank shall have
made any demand under this Agreement and although such obligations may be
unmatured. The rights of the Bank under this Section are in addition to other
rights and remedies (including other rights of setoff) which the Bank may have.
SECTION 8.09. Governing Law; Jurisdiction; Consent to Service of Process. (a)
This Agreement shall be construed in accordance with and governed by the law of
the State of New York.
(b) The Borrower hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of the Supreme Court of the State
of New York sitting in New York County and of the United States District Court
of the Southern District of New York, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in
<PAGE>
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Bank may otherwise
have to bring any action or proceeding relating to this Agreement against the
Borrower or its properties in the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement in any court referred to in paragraph (b)
of this Section. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 8.01. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.
SECTION 8.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 8.11. Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 8.12. Confidentiality. The Bank agrees to maintain the confidentiality
of the Information (as defined below), except that Information may be disclosed
(a) to its and its Affiliates' directors, officers, employees and agents,
including accountants, legal counsel and other advisors (it being understood
that the Persons to whom such disclosure is made will be informed of the
confidential nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or the enforcement of rights hereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement, (g) with the consent of the Borrower or (h) to the extent
<PAGE>
such Information (i) becomes publicly available other than as a result of a
breach of this Section or (ii) becomes available to the Bank on a
nonconfidential basis from a source other than the Borrower. For the purposes of
this Section, "Information" means all information received from the Borrower
relating to the Borrower or its business, other than any such information that
is available to the Bank on a nonconfidential basis prior to disclosure by the
Borrower; provided that, in the case of information received from the Borrower
after the date hereof, such information is clearly identified at the time of
delivery as confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.
SECTION 8.13. Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with
all fees, charges and other amounts which are treated as interest on such Loan
under applicable law (collectively the "Charges"), shall exceed the maximum
lawful rate (the "Maximum Rate") which may be contracted for, charged, taken,
received or reserved by the Bank in accordance with applicable law, the rate of
interest payable in respect of such Loan hereunder, together with all Charges
payable in respect thereof, shall be limited to the Maximum Rate and, to the
extent lawful, the interest and Charges that would have been payable in respect
of such Loan but were not payable as a result of the operation of this Section
shall be cumulated and the interest and Charges payable to the Bank in respect
of other Loans or periods shall be increased (but not above the Maximum Rate
therefor) until such cumulated amount, together with interest thereon at the
Federal Funds Effective Rate to the date of repayment, shall have been received
by the Bank.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK - SIGNATURE PAGE FOLLOWS
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
FACTSET RESEARCH SYSTEMS INC.
By /s/ ERNEST S. WONG
Ernest S. Wong
Senior Vice President, Chief Financial Officer
and Secretary
THE CHASE MANHATTAN BANK
By /s/ DAVID SHORT
David Short
Vice President
<PAGE>
EXHIBIT A
OPINION OF COUNSEL FOR THE BORROWER
[APPROVED VERSION TO BE SUPPLIED BY COUNSEL]
<PAGE>
Schedule 3.06
Disclosed Matters
None
<PAGE>
Schedule 3.09
Tax Matters
New York State Franchise Tax Inquiry
FYE 8/31/93 (refund claim of $167 open only), 8/31/94, 8/31/95, 8/31/96
New York State Sales/Use Tax Inquiry
The period from 9/1/86 to 8/31/96
Connecticut State Income Tax Inquiry
The period from 9/1/92 to 8/31/97
City of New York Income Tax Inquiry
The period from 0/1/96 to 8/31/97
Other Sales/Use Tax filing compliance issues
<PAGE>
Schedule 6.01
Existing Indebtedness
Issuing Bank Amount Beneficiary
- ---------------------------------- ------------------ --------------------------
The Chase Manhattan Bank $40,541.67 Conair Corporation
(Expiration date 4/28/99)
- ---------------------------------- ------------------ --------------------------
The Chase Manhattan Bank $170,865.00 Greenwich Plaza Inc.
c/o Ashforth Properties
(Expiration date 5/5/99)
- ---------------------------------- ------------------ --------------------------
Morgan Guaranty Trust $68,010.00 Ninety Park Avenue LLC
Company of New York Expiration date 12/31/98)
<PAGE>
Schedule 6.02
Existing Liens
None
<PAGE>
Schedule 6.08
Existing Restrictions
None
<PAGE>
EXHIBIT 10.32
$12,500,000
THREE YEAR CREDIT AGREEMENT
dated as of November 20, 1998
between
FACTSET RESEARCH SYSTEMS INC.
and
THE CHASE MANHATTAN BANK
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.01. Defined Terms..................................................1
SECTION 1.02. Terms Generally...............................................14
SECTION 1.03. Accounting Terms; GAAP........................................14
ARTICLE II
The Credits
SECTION 2.01. Commitment....................................................15
SECTION 2.02. Loans.........................................................15
SECTION 2.03. Requests for Loans............................................15
SECTION 2.04. Funding of Loans..............................................16
SECTION 2.05. Interest Elections............................................16
SECTION 2.06 Letters of Credit 17
SECTION 2.07. Termination and Reduction of Commitment.......................19
SECTION 2.08. Repayment of Loans; Evidence of Debt..........................20
SECTION 2.09. Prepayment of Loans...........................................20
SECTION 2.10. Fees..........................................................21
SECTION 2.11. Interest......................................................21
SECTION 2.12. Alternate Rate of Interest....................................22
SECTION 2.13. Increased Costs...............................................23
SECTION 2.14. Break Funding Payments........................................24
SECTION 2.15. Taxes.........................................................24
SECTION 2.16. Mitigation Obligations; Replacement of Lenders................25
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers..........................................26
SECTION 3.02. Authorization; Enforceability.................................26
SECTION 3.03. Governmental Approvals; No Conflicts..........................26
SECTION 3.04. Financial Condition; No Material Adverse Change...............27
<PAGE>
SECTION 3.05. Properties....................................................27
SECTION 3.06. Litigation and Environmental Matters..........................27
SECTION 3.07. Compliance with Laws and Agreements...........................28
SECTION 3.08. Investment and Holding Company Status.........................28
SECTION 3.09. Taxes.........................................................28
SECTION 3.10. ERISA.........................................................28
SECTION 3.11. Disclosure....................................................28
SECTION 3.12. Year 2000.....................................................29
ARTICLE IV
Conditions
SECTION 4.01. Effective Date................................................29
SECTION 4.02. Each Loan.....................................................30
ARTICLE V
Affirmative Covenants
SECTION 5.01. Financial Statements and Other Information....................30
SECTION 5.02. Notices of Material Events....................................32
SECTION 5.03. Existence; Conduct of Business................................32
SECTION 5.04 Payment of Obligations........................................32
SECTION 5.05. Maintenance of Properties; Insurance..........................32
SECTION 5.06. Books and Records; Inspection Rights..........................32
SECTION 5.07. Compliance with Laws..........................................33
SECTION 5.08. Use of Proceeds and Letters of Credit.........................33
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness..................................................33
SECTION 6.02. Liens.........................................................34
SECTION 6.03. Fundamental Changes...........................................36
SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions.....36
SECTION 6.05. Hedging Agreements............................................38
SECTION 6.06. Restricted Payments...........................................38
SECTION 6.07. Transactions with Affiliates..................................38
SECTION 6.08. Restrictive Agreements........................................38
<PAGE>
SECTION 6.09. Certain Financial Covenants...................................39
ARTICLE VII
Events of Default.............................................39
ARTICLE VIII
Miscellaneous
SECTION 8.01. Notices.......................................................41
SECTION 8.02. Waivers; Amendments...........................................41
SECTION 8.03. Expenses; Indemnity; Damage Waiver............................42
SECTION 8.04. Successors and Assigns........................................43
SECTION 8.05. Survival......................................................45
SECTION 8.06. Counterparts; Integration; Effectiveness.....................45
SECTION 8.07. Severability..................................................45
SECTION 8.08. Right of Setoff...............................................45
SECTION 8.09. Governing Law; Jurisdiction; Consent to Service of Process....46
SECTION 8.10. WAIVER OF JURY TRIAL..........................................46
SECTION 8.11. Headings......................................................47
SECTION 8.12. Confidentiality...............................................47
SECTION 8.13. Interest Rate Limitation......................................47
SCHEDULES:
Schedule 3.06 -- Disclosed Matters
Schedule 3.09 -- Disclosed Taxes
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Existing Liens
Schedule 6.08 -- Existing Restrictions
EXHIBITS:
Exhibit A -- Form of Opinion of Borrower's Counsel
<PAGE>
THREE YEAR CREDIT AGREEMENT dated as of November 20, 1998, between FACTSET
RESEARCH SYSTEMS INC. and THE CHASE MANHATTAN BANK.
The parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the following terms have
the meanings specified below:
"ABR", when used in reference to any Loan, refers to whether such Loan is
bearing interest at a rate determined by reference to the Alternate Base Rate.
"Adjusted LIBO Rate" means, with respect to any Eurodollar Loan for any Interest
Period, an interest rate per annum (rounded upwards, if necessary, to the next
1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by
(b) the Statutory Reserve Rate.
"Affiliate" means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Alternate Base Rate" means, for any day, a rate per annum equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on
such day plus 1% and (c) the Federal Funds Effective Rate in effect on such day
plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change in the
Prime Rate, the Base CD Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime
Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.
"Applicable Rate" means, for any day, with respect to any Eurodollar Loan, or
with respect to the facility fees payable hereunder, as the case may be, the
applicable rate per annum set forth below under the caption "Eurodollar Spread"
or "Commitment Fee Rate", as the case may be:
Eurodollar Spread Commitment Fee Rate
0.50% 0.20%
"Assessment Rate" means, for any day, the annual assessment rate in effect on
such day that is payable by a member of the Bank Insurance Fund classified as
"well-capitalized" and
<PAGE>
within supervisory subgroup "B" (or a comparable successor risk classification)
within the meaning of 12 C.F.R. Part 327 (or any successor provision) to the
Federal Deposit Insurance Corporation for insurance by such Corporation of time
deposits made in dollars at the offices of such member in the United States.
"Assignment and Acceptance" means an assignment entered into by a Lender and an
assignee pursuant to Section 8.04, and accepted by Chase, in a form approved by
Chase.
"Availability Period" means the period from and including the Effective Date to
but excluding the earlier of the Maturity Date and the date of termination of
the Commitment.
"Bank" means The Chase Manhattan Bank.
"Base CD Rate" means the sum of (a) the Three-Month Secondary CD Rate multiplied
by the Statutory Reserve Rate plus (b) the Assessment Rate.
"Board" means the Board of Governors of the Federal Reserve System of the United
States of America.
"Borrower" means FactSet Research Systems Inc., a Delaware corporation.
"Borrowing Request" means a request by the Borrower for a Loan in accordance
with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed; provided that, when used in connection with a Eurodollar Loan,
the term "Business Day" shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.
"Capital Expenditures" of any Person means, for any period, expenditures
(including the aggregate amount of Capital Lease Obligations incurred during
such period) made by the Borrower or any of its Subsidiaries to acquire or
construct fixed assets, plant and equipment (including renewals, improvements
and replacements, but excluding repairs, other than expenditures of proceeds of
asset sales, insurance settlements, condemnation awards and other settlements in
respect of lost, destroyed, damaged or condemned assets, equipment or other
property to the extent such expenditures are made to replace or repair such
lost, destroyed, damaged or condemned assets, equipment or other property or
otherwise to acquire assets or properties useful in the business of the Borrower
and its Subsidiaries within 12 months of receipt of such proceeds), during such
period computed in accordance with GAAP.
"Capital Lease Obligations" of any Person means the obligations of such Person
to pay rent or other amounts under any lease of (or other arrangement conveying
the right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of such Person under GAAP, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with GAAP.
<PAGE>
"Change in Control" means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof) (other than
any employee stock ownership program and members of management of the Borrower
holding voting stock of the Borrower or options to acquire such stock on the
Effective Date or receiving options or voting stock upon the exercise of such
options after the Effective Date (collectively, the "Designated Persons")), of
shares representing more than 35% of the aggregate ordinary voting power
represented by the issued and outstanding capital stock of the Borrower; (b)
occupation of a majority of the seats (other than vacant seats) on the board of
directors of the Borrower by Persons who were neither (i) nominated by the board
of directors of the Borrower nor (ii) appointed by directors so nominated; or
(c) the acquisition of direct or indirect Control of the Borrower by any Person
or group (other than the Designated Persons).
"Change in Law" means (a) the adoption of any law, rule or regulation after the
date of this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by the Bank with any request, guideline
or directive (whether or not having the force of law) of any Governmental
Authority made or issued after the date of this Agreement.
"Chase" means The Chase Manhattan Bank.
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
"Commitment" means, with respect to each Lender, the commitment of such Lender
to make Loans hereunder and to issue or acquire participations in Letters of
Credit, expressed as an amount representing the maximum aggregate amount of such
Lender's Revolving Credit Exposure hereunder, (a) as such commitment may be
reduced from time to time pursuant to Section 2.10 and (b) reduced or increased
from time to time pursuant to assignments by or to such Lender pursuant to
Section 8.04. The initial amount of the Bank's Commitment is $12,500,000.
"Consolidated Net Income" means for any fiscal period, the consolidated net
income (or net loss) after taxes for such period of the Borrower and its
Subsidiaries determined in accordance with GAAP.
"Consolidated Net Worth" means, as of the date of determination, all items which
in conformity with GAAP would be included under shareholders' equity on a
consolidated balance sheet of the Borrower and its Subsidiaries at such date.
"Control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
<PAGE>
"Default" means any event or condition which constitutes an Event of Default or
which upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.
"Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.
"dollars" or "$" refers to lawful money of the United States of America.
"EBITDA" means for any fiscal period, an amount equal to Consolidated Net Income
for such period plus the following (without duplication), to the extent deducted
from gross revenues in computing such Consolidated Net Income: (a) the aggregate
amount of Interest Expense, (b) the aggregate amount of tax expense for such
period, (c) all amounts attributable to depreciation, amortization, and other
similar noncash charges for such period, including amortization of goodwill,
capitalized software development expenses, financing costs and other
intangibles, (d) all extraordinary, non-recurring or unusual charges during such
period, (e) compensation expense previously deducted from Consolidated Net
Income resulting from the issuance of capital stock, stock options or stock
appreciation rights issued to employees, including officers of the Borrower or
any Subsidiary, or the exercise of such options or rights, in each case to the
extent the obligation (if any) associated therewith is not expected to be
settled by the payment of cash by the Borrower or any Affiliate of the Borrower,
and compensation expense resulting from the repurchase of any such capital
stock, options and rights, (f) all noncash charges deducted in determining
Consolidated Net Income for such period, and (g) post-closing restructuring
charges in connection with any financing, refinancing or Permitted Acquisition
(whether or not consummated), provided that in the event that the Borrower or
any of its Subsidiaries makes a Permitted Acquisition on any date during such
period, the Consolidated EBITDA for such period shall be calculated on a pro
forma basis as if such Permitted Acquisition had occurred on the first day of
such period.
"Effective Date" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 8.02).
"Environmental Laws" means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material or to health
and safety matters.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
<PAGE>
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
that, together with the Borrower, is treated as a single employer under Section
414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under Section 414 of
the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan, refers to whether such Loan is
bearing interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in Article VII.
"Excluded Taxes" means, with respect to the Bank, (a) income or franchise taxes
imposed on (or measured by) its net income by the United States of America, or
by the jurisdiction under the laws of which such recipient is organized or in
which its principal office is located or, in the case of any Lender, in which
its applicable lending office is located, (b) any branch profits taxes imposed
by the United States of America or any similar tax imposed by any other
jurisdiction described in clause (a) above and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by the Borrower under
Section 2.16(b)), any withholding tax (i) that is in effect and would apply to
amounts payable to such Foreign Lender at the time such Foreign Lender becomes a
party to this Agreement (or designates a new lending office) except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to any withholding tax
pursuant to Section 2.15(a), or (ii) that is attributable to such Foreign
Lender's failure to comply with Section 2.15(e).
"Federal Funds Effective Rate" means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds
<PAGE>
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average (rounded upwards, if necessary, to the next 1/100
of 1%) of the quotations for such day for such transactions received by the Bank
from three Federal funds brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer, principal accounting
officer, treasurer or controller of the Borrower.
"Fixed Charge Ratio" means, as of the end of any fiscal quarter of the Borrower,
the ratio of (a) EBITDA, plus rental payments made, minus Capital Expenditures
(exclusive of Capital Lease Obligations), to (b) Interest Expense plus rental
payments plus Required Debt Payments, in each case for the four consecutive
fiscal quarters then ended.
"Foreign Lender" means any successor or assignee under Section 8.04 that is
organized under the laws of a jurisdiction other than that in which the Borrower
is located. For purposes of this definition, the United States of America, each
State thereof and the District of Columbia shall be deemed to constitute a
single jurisdiction.
"Funded Indebtedness" of any Person means, without duplication (a) all funded
recourse obligations of such Person for borrowed money whether secured or
unsecured, which by its terms matures more than one year after the date of
calculation, (b) all obligations of such Person evidenced by bonds, debentures,
notes or similar instruments, (c) all obligations of such Person upon which
interest charges are customarily paid, (d) all obligations of such Person under
conditional sale or other title retention agreements relating to property
acquired by such Person, (e) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business), (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h)
all Capital Lease Obligations of such Person, (i) all obligations, contingent or
otherwise, of such Person as an account party in respect of letters of credit
and letters of guaranty and (j) all obligations, contingent or otherwise, of
such Person in respect of bankers' acceptances.
"GAAP" means generally accepted accounting principles in the United States of
America.
"Governmental Authority" means the government of the United States of America,
any other nation or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government.
"Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner,
<PAGE>
whether directly or indirectly, and including any obligation of the guarantor,
direct or indirect, (a) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation or to purchase (or
to advance or supply funds for the purchase of) any security for the payment
thereof, (b) to purchase or lease property, securities or services for the
purpose of assuring the owner of such Indebtedness or other obligation of the
payment thereof, (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness or other obligation or (d)
as an account party in respect of any letter of credit or letter of guaranty
issued to support such Indebtedness or obligation; provided, that the term
Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business.
"Hazardous Materials" means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.
"Hedging Agreement" means any interest rate protection agreement, foreign
currency exchange agreement, commodity price protection agreement or other
interest or currency exchange rate or commodity price hedging arrangement.
"Indebtedness" of any Person means, without duplication, (a) all obligations of
such Person for borrowed money or with respect to deposits or advances of any
kind, (b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person upon which interest
charges are customarily paid, (d) all obligations of such Person under
conditional sale or other title retention agreements relating to property
acquired by such Person, (e) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business), (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g) all Guarantees by such Person of Indebtedness of others,
(h) all Capital Lease Obligations of such Person, (i) all obligations,
contingent or otherwise, of such Person as an account party in respect of
letters of credit and letters of guaranty and (j) all obligations, contingent or
otherwise, of such Person in respect of bankers' acceptances. The Indebtedness
of any Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such Person
is liable therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Interest Election Request" means a request by the Borrower to convert or
continue a Loan in accordance with Section 2.09.
<PAGE>
"Interest Expense" means, for any period, the sum, for the Borrower and its
Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), of the following: (a) all interest in respect of
Indebtedness (including the interest component of any payments in respect of
Capital Lease Obligations) accrued or capitalized during such period (whether or
not actually paid during such period) plus (b) the net amount payable (or minus
the net amount receivable) under Hedging Agreements during such period (whether
or not actually paid or received during such period) net of any corresponding
interest income recorded during such period under such Hedging Agreements.
"Interest Payment Date" means (a) with respect to any ABR Loan, the last day of
each March, June, September and December, and (b) with respect to any Money
Market or Eurodollar Loan, the last day of the Interest Period therefor and, in
the case of a Eurodollar Loan with an Interest Period of more than three months'
duration or a Money Market Loan with an Interest Period of more than 90 days'
duration, each day prior to the last day of such Interest Period that occurs at
intervals of three months' duration or 90 days' duration, as the case may be,
after the first day of such Interest Period.
"Interest Period" means (a) with respect to any Eurodollar Loan, the period
commencing on the date of such Loan and ending on the numerically corresponding
day in the calendar month that is one, two, three or six months (or, with the
consent of the Bank, nine months) thereafter, as the Borrower may elect, and
(b) with respect to a Money Market Loan, the period commencing on the date of
such Loan and ending on the last day of the period for which such loan is
offered, as recorded by the Bank on its books; provided, that (i) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless, in the case
of a Eurodollar Loan only, such next succeeding Business Day would fall in the
next calendar month, in which case such Interest Period shall end on the next
preceding Business Day and (ii) any Interest Period pertaining to a Eurodollar
Loan that commences on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the last calendar month
of such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period. For purposes hereof, the date of a Loan initially
shall be the date on which such Loan is made and, thereafter shall be the
effective date of the most recent conversion or continuation of such Loan.
"Issuing Bank" means The Chase Manhattan Bank, in its capacity as the issuer of
Letters of Credit hereunder, and any Lenders as successors in such capacity. The
Issuing Bank may, in its discretion, arrange for one or more Letters of Credit
to be issued by Affiliates of the Issuing Bank, in which case the term "Issuing
Bank" shall include any such Affiliate with respect to Letters of Credit issued
by such Affiliate.
"Joint Venture" means any corporation, partnership or other legal entity or
arrangement (a) in which the Borrower has any direct or indirect equity interest
and (b) that is not a Subsidiary of the Borrower.
"LC Disbursement" means a payment made by the Issuing Bank pursuant to a Letter
of Credit.
<PAGE>
"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn amount of
all outstanding Letters of Credit at such time plus (b) the aggregate amount of
all LC Disbursements that have not yet been reimbursed by or on behalf of the
Borrower at such time. The LC Exposure of any Lender at any time shall be its
Applicable Percentage of the total LC Exposure at such time.
"Lenders" means Chase and any other Person that shall have become a party hereto
pursuant to an Assignment and Acceptance, other than any such Person that ceases
to be a party hereto pursuant to an Assignment and Acceptance.
"Letter of Credit" means any letter of credit issued pursuant to this Agreement.
"Leverage Ratio" means, as of the end of any fiscal quarter of the Borrower, the
ratio of (a) total Funded Indebtedness of the Borrower and its Subsidiaries as
of the end of such fiscal quarter, to (b) EBITDA for the four consecutive fiscal
quarters then ended.
"LIBO Rate" means, with respect to any Eurodollar Loan for any Interest Period,
the rate (rounded upwards, if necessary, to the next 1/16 of 1%) at which dollar
deposits in an amount and for a maturity comparable to such Interest Period are
offered by the principal London office of the Bank in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of
such asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
"Loans" means the loans made by the Bank to the Borrower pursuant to this
Agreement.
"Material Adverse Effect" means a material adverse effect on (a) the business,
assets, operations, or condition, financial or otherwise, of the Borrower and
the Subsidiaries taken as a whole, (b) the ability of the Borrower to perform
any of its obligations under this Agreement or (c) the rights of or benefits
available to the Bank under this Agreement.
"Material Indebtedness" means Indebtedness (other than the Loans), or
obligations in respect of one or more Hedging Agreements, of any one or more of
the Borrower and its Subsidiaries in an aggregate principal amount exceeding
$1,000,000. For purposes of determining Material Indebtedness, the "principal
amount" of the obligations of the Borrower or any Subsidiary in respect of any
Hedging Agreement at any time shall be the maximum aggregate amount (giving
effect to any netting agreements) that the Borrower or such Subsidiary would be
required to pay if such Hedging Agreement were terminated at such time.
<PAGE>
"Maturity Date" means November 20, 2001.
"Money Market", when used in reference to any Loan, refers to whether such Loan
is bearing interest at a rate determined by reference to the Money Market Rate.
"Money Market Rate" means, with respect to any Money Market Loan, an interest
rate per annum as offered by the Bank from time to time on any single borrowing
during the Interest Period offered on such Loan. The Money Market Rate of
interest available for any subsequent borrowings may differ since Money Market
Rates may fluctuate on a daily basis.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan as defined in Section 4001(a)(3)
of ERISA.
"Other Taxes" means any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement.
"Participant" has the meaning set forth in Section 8.04.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions.
"Permitted Acquisitions" means any acquisition as a going concern of all or
substantially all the assets of, or shares or other equity interests in, a
Person or division or line of business of a Person (or any subsequent investment
made in a previously acquired Permitted Acquisition) that satisfies the
following requirements:
(a) if it involves a merger or consolidation, the Borrower or a wholly owned
Subsidiary shall be the surviving party;
(b) at the time of such acquisition no Default or Event of Default shall have
occurred or be continuing;
(c) no Default or Event of Default or violation of any covenant under this
Agreement shall arise as a result of such acquisition, which the Borrower shall
confirm by furnishing to the Bank at least five (5) days prior to the closing
date for such acquisition pro forma financial statements and corresponding
covenant calculations reasonably satisfactory to the Bank giving effect to such
acquisition;
(d) the target of such acquisition must be engaged in a line of business similar
to the then current business of the Borrower and its Subsidiaries; and
<PAGE>
(e) in the case of an acquisition of stock or any other equity interest, the
Borrower must be the majority shareholder or otherwise evidence a controlling
interest upon completion of the acquisition, provided that the Borrower may be a
minority shareholder or evidence less than a controlling interest in
acquisitions which, in the aggregate, total no more than $15,000,000 in purchase
price or acquisition cost (in addition to investments, loans, advances and
guarantees permitted under Sections 6.04(i) and 6.04(j)).
Pro forma calculations made pursuant to clause (c) of the immediately preceding
sentence may include adjustments (a) to reflect operating expense reductions
reasonably expected to result during the 12-month period following the date of
the applicable acquisition, or (b) to eliminate the effect of any extraordinary
accounting event with respect to any acquired person or assets on EBITDA, in
each case as determined reasonably and in good faith by the Chief Financial
Officer of the Borrower and approved by the Board of Directors of the Borrower,
as set forth in an officer's certificate delivered to the Bank.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet delinquent, or which are for
less than $250,000 in the aggregate, or which are being contested in compliance
with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's and other
like Liens imposed by law, arising in the ordinary course of business and
securing obligations that are not overdue by more than 30 days or are being
contested in compliance with Section 5.04;
(c) pledges and deposits made in the ordinary course of business in compliance
with workers' compensation, unemployment insurance and other social security
laws or regulations and deposits securing liability to insurance carriers or
under self-insurance arrangements in respect of such obligations;
(d) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of business,
including those incurred to secure health, safety and environmental obligations
in the ordinary course of business;
(e) easements, zoning restrictions, trackage rights, leases, licenses,
rights-of-way and similar encumbrances on real property imposed by law or
arising in the ordinary course of business which, in the aggregate, are not
substantial in amount and do not materially detract from the value of the
affected property or interfere with the ordinary conduct of business of the
Borrower or any Subsidiary;
(f) judgment liens in respect of judgments that do not constitute an Event of
Default under clause (k) of Article VII; and
(g) leases or subleases granted to others not interfering in any material
respect with the business of the Borrower or any of its Subsidiaries;
<PAGE>
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"Permitted Investments" means investments made pursuant to the Borrower's
corporate investment policy (a true and accurate copy of which has been provided
to the Bank) as may be amended, supplemented or modified from time to time on
prior written notice to, and consent of, the Bank.
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"Plan" means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Prime Rate" means the rate of interest per annum publicly announced from time
to time by the Bank as its prime rate in effect at its principal office in New
York City; each change in the Prime Rate shall be effective from and including
the date such change is publicly announced as being effective.
"Related Parties" means, with respect to any specified Person, such Person's
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person's Affiliates.
"Required Debt Payments" means all regularly scheduled payments of principal and
interest of Indebtedness made or scheduled to be made during the four
consecutive fiscal quarters preceding the date of calculation of the amount of
"Required Debt Payments"; provided, that "Required Debt Payments" shall not
include any amount due under this Agreement or under the 364-Day Agreement after
the second anniversary of the Effective Date, at which time Required Debt
Payments shall include the aggregate amounts due under this Agreement and the
364-Day Credit Agreement, divided by five.
"Required Lenders" means, at any time, Lenders having Revolving Credit Exposures
and unused Commitments representing at least fifty percent (50%) of the sum of
the total Revolving Credit Exposures and unused Commitments at such time.
"Restricted Payment" means any dividend or other distribution (whether in cash,
securities or other property) with respect to any shares of any class of capital
stock of the Borrower or any Subsidiary, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any such shares of capital stock of the Borrower or any option,
warrant or other right to acquire any such shares of capital stock of the
Borrower.
<PAGE>
"Revolving Credit Exposure" means, with respect to any Lender at any time, the
sum of the outstanding principal amount of such Lender's Loans and its LC
Exposure at such time.
"S&P" means Standard & Poor's.
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Bank is subject (a) with respect to the
Base CD Rate, for new negotiable nonpersonal time deposits in dollars of over
$100,000 with maturities approximately equal to three months, in the case of the
Base CD Rate, and (b) with respect to the Adjusted LIBO Rate, for eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of
the Board). Such reserve percentages shall include those imposed pursuant to
such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency
funding and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D or any comparable regulation. The
Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
"subsidiary" means, with respect to any Person (the "parent") at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the parent in the
parent's consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
of which securities or other ownership interests representing more than 50% of
the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held.
"Subsidiary" means any subsidiary of the Borrower.
"Taxes" means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
"364-Day Credit Agreement" means the 364-Day Credit Agreement between the Bank
and the Borrower of same date herewith, and as may be subsequently amended or
modified.
"Three-Month Secondary CD Rate" means, for any day, the secondary market rate
for three-month certificates of deposit reported as being in effect on such day
(or, if such day is not a Business Day, the next preceding Business Day) by the
Board through the public information telephone line of the Federal Reserve Bank
of New York (which rate will, under the current practices of the Board, be
published in Federal Reserve Statistical Release H.15(519) during the week
following such day) or, if such rate is not so reported on such day or such next
preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 a.m., New York City time, on such day (or, if
such day is not a Business Day, on the next preceding
<PAGE>
Business Day) by the Bank from three negotiable certificate of deposit dealers
of recognized standing selected by it.
"Transactions" means the execution, delivery and performance by the Borrower of
this Agreement, the borrowing of Loans and the use of the proceeds thereof, and
the issuance of Letters of Credit hereunder.
"Type", when used in reference to any Loan, refers to whether the rate of
interest on such Loan is determined by reference to the Adjusted LIBO Rate, the
Money Market Rate or the Alternate Base Rate.
"Withdrawal Liability" means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 1.03. Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if the
Borrower notifies the Bank that the Borrower requests an amendment to any
provision hereof to eliminate the effect of any change occurring after the date
hereof in GAAP or in the application thereof on the operation of such provision
(or if the Bank notifies the Borrower that the Bank requests an amendment to any
provision hereof for such purpose), regardless of whether any such notice is
given before or after such change in GAAP or in the application thereof, then
such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such
notice shall have been withdrawn or such provision amended in accordance
herewith.
<PAGE>
ARTICLE II
The Credit
SECTION 2.01. Commitment. Subject to the terms and conditions set forth herein,
the Bank agrees to make Loans to the Borrower from time to time during the
Availability Period in an aggregate principal amount that will not result in the
Revolving Credit Exposure exceeding the Commitment. Within the foregoing limits
and subject to the terms and conditions set forth herein, the Borrower may
borrow, prepay and reborrow Loans.
SECTION 2.02. Loans.
(a) At the commencement of each Interest Period for any Money Market Loan or
Eurodollar Loan, such Loan shall be in an amount that is an integral multiple of
$100,000 and not less than $500,000. At the time that each ABR Loan is made,
such Loan shall be in an aggregate amount that is an integral multiple of
$100,000 and not less than $100,000; provided that an ABR Loan may be in an
aggregate amount that is equal to the entire unused balance of the total
Commitment. Loans of more than one Type and Class may be outstanding at the same
time; provided that there shall not at any time be more than five Money Market
and five Eurodollar Loans outstanding.
(b) Notwithstanding any other provision of this Agreement, the Borrower shall
not be entitled to request, or to elect to convert or continue, any Loan if the
Interest Period requested with respect thereto would end after the Maturity
Date.
SECTION 2.03. Requests for Loans. To request a Loan, the Borrower shall notify
the Bank of such request by telephone (a) in the case of a Eurodollar Loan, not
later than 11:00 a.m., New York City time, three Business Days before the date
of the proposed Loan, (b) in the case of a Money Market Loan, not later than
11:00 a.m., New York City time, two Business Days before the date of the
proposed Loan, or (c) in the case of an ABR Loan, not later than 11:00 a.m., New
York City time, one Business Day before the date of the proposed Loan, provided
that any such notice of an ABR Loan to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.06(d) may be given not later than
10:00 a.m., New York City time, on the date of the proposed ABR Loan. Each such
telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Bank of a written Borrowing Request
in a form approved by the Bank and signed by the Borrower. Each such telephonic
and written Borrowing Request shall specify the following information in
compliance with Section 2.02:
(i) the amount of the requested Loan;
(ii) the date of such Loan, which shall be a Business Day;
(iii) whether such Loan is to be an ABR Loan, a Money Market Loan or a
Eurodollar Loan;
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(iv) in the case of a Money Market Loan or a Eurodollar Loan, the initial
Interest Period to be applicable thereto, which shall be a period contemplated
by the definition of the term "Interest Period"; and
(v) the location and number of the Borrower's account to which funds are to be
disbursed, which shall comply with the requirements of Section 2.04.
If no election as to the Type of Loan is specified, then the requested Loan
shall be an ABR Loan. If no Interest Period is specified with respect to any
requested Eurodollar Loan, then the Borrower shall be deemed to have selected an
Interest Period of one month's duration.
SECTION 2.04. Funding of Loans. The Bank shall make each Loan available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower maintained with the Bank in New York City and designated
by the Borrower in the applicable Borrowing Request.
SECTION 2.05. Interest Elections. (a) Each Loan initially shall be of the Type
specified in the applicable Borrowing Request and, in the case of a Money Market
or Eurodollar Loan, shall have an initial Interest Period as specified in such
Borrowing Request. Thereafter, the Borrower may elect to convert such Loan to a
different Type or to continue such Loan and, in the case of a Money Market or
Eurodollar Loan, may elect Interest Periods therefor, all as provided in this
Section. The Borrower may elect different options with respect to different
portions of the affected Loan and each such portion shall be considered a
separate Loan.
(b) To make an election pursuant to this Section, the Borrower shall notify the
Loan of such election by telephone by the time that a Borrowing Request would be
required under Section 2.03 if the Borrower were requesting a Loan of the Type
resulting from such election to be made on the effective date of such election.
Each such telephonic Interest Election Request shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to the Bank of a written
Interest Election Request in a form approved by the Bank and signed by the
Borrower.
(c) Each telephonic and written Interest Election Request shall specify the
following information in compliance with Section 2.02:
(i) the Loan to which such Interest Election Request applies and, if different
options are being elected with respect to different portions thereof, the
portions thereof to be allocated to each resulting Loan (in which case the
information to be specified pursuant to clauses (iii) and (iv) below shall be
specified for each resulting Loan);
(ii) the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day;
(iii) whether the resulting Loan is to be an ABR Loan, a Money Market Loan or a
Eurodollar Loan; and
<PAGE>
(iv) if the resulting Loan is a Money Market Loan or a Eurodollar Loan, the
Interest Period to be applicable thereto after giving effect to such election,
which shall be a period contemplated by the definition of the term "Interest
Period".
If any such Interest Election Request requests a Money Market Loan or a
Eurodollar Loan but does not specify an Interest Period, then the Borrower shall
be deemed to have selected an Interest Period of 30 days' duration, in the case
of a Money Market Loan, or one month's duration in the case of a Eurodollar
Loan.
(d) If the Borrower fails to deliver a timely Interest Election Request with
respect to a Money Market or Eurodollar Loan prior to the end of the Interest
Period applicable thereto, then, unless such Loan is repaid as provided herein,
at the end of such Interest Period such Loan shall be converted to an ABR Loan.
Notwithstanding any contrary provision hereof, if an Event of Default has
occurred and is continuing and the Bank so notifies the Borrower, then, so long
as an Event of Default is continuing (i) no outstanding Loan may be converted to
or continued as a Money Market or Eurodollar Loan and (ii) unless repaid, each
Money Market and Eurodollar Loan shall be converted to an ABR Loan at the end of
the Interest Period applicable thereto.
SECTION 2.06. Letters of Credit. (a) General. Subject to the terms and
conditions set forth herein, the Borrower may request the issuance of Letters of
Credit for its own account, in a form reasonably acceptable to the Issuing Bank,
at any time and from time to time during the Availability Period. In the event
of any inconsistency between the terms and conditions of this Agreement and the
terms and conditions of any form of letter of credit application or other
agreement submitted by the Borrower to, or entered into by the Borrower with,
the Issuing Bank relating to any Letter of Credit, the terms and conditions of
this Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To
request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), the Borrower shall hand deliver
or telecopy (or transmit by electronic communication, if arrangements for doing
so have been approved by the Issuing Bank) to the Issuing Bank (reasonably in
advance of the requested date of issuance, amendment, renewal or extension) a
notice requesting the issuance of a Letter of Credit, or identifying the Letter
of Credit to be amended, renewed or extended, and specifying the date of
issuance, amendment, renewal or extension (which shall be a Business Day), the
date on which such Letter of Credit is to expire (which shall comply with
paragraph (c) of this Section), the amount of such Letter of Credit, the name
and address of the beneficiary thereof and such other information as shall be
necessary to prepare, amend, renew or extend such Letter of Credit. If requested
by the Issuing Bank, the Borrower also shall submit a letter of credit
application on the Issuing Bank's standard form in connection with any request
for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or
extended only if (and upon issuance, amendment, renewal or extension of each
Letter of Credit the Borrower shall be deemed to represent and warrant that),
after giving effect to such issuance, amendment, renewal or extension (i) the LC
Exposure shall not exceed $10,000,000 and (ii) the total Revolving Credit
Exposures shall not exceed the total Commitments.
(c) Expiration Date. Each Letter of Credit shall expire at or prior to the close
of business
<PAGE>
on the earlier of (i) the date one year after the date of the issuance of such
Letter of Credit (or, in the case of any renewal or extension thereof, one year
after such renewal or extension) and (ii) the date that is five Business Days
prior to the Maturity Date.
(d) Reimbursement. If the Issuing Bank shall make any LC Disbursement in respect
of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by
paying to the Issuing Bank an amount equal to such LC Disbursement not later
than 12:00 noon, New York City time, on the date that such LC Disbursement is
made, if the Borrower shall have received notice of such LC Disbursement prior
to 10:00 a.m., New York City time, on such date, or, if such notice has not been
received by the Borrower prior to such time on such date, then not later than
12:00 noon, New York City time, on (i) the Business Day that the Borrower
receives such notice, if such notice is received prior to 10:00 a.m., New York
City time, on the day of receipt, or (ii) the Business Day immediately following
the day that the Borrower receives such notice, if such notice is not received
prior to such time on the day of receipt; provided that the Borrower may,
subject to the conditions to borrowing set forth herein, request in accordance
with Section 2.03 or 2.05 that such payment be financed with an ABR Loan in an
equivalent amount and, to the extent so financed, the Borrower's obligation to
make such payment shall be discharged and replaced by the resulting ABR Loan.
(e) Obligations Absolute. The Borrower's obligation to reimburse LC
Disbursements as provided in paragraph (d) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower's obligations hereunder. Neither
the Issuing Bank, nor any of its Related Parties, shall have any liability or
responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence arising from
causes beyond the control of the Issuing Bank; provided that the foregoing shall
not be construed to excuse the Issuing Bank from liability to the Borrower to
the extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by the Issuing Bank's
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof. The parties
hereto expressly agree that, in the absence of gross negligence or willful
misconduct on the part of the Issuing Bank (as finally determined by a court of
competent jurisdiction), the Issuing Bank shall be deemed to have exercised care
in each such determination. In furtherance of the foregoing and
<PAGE>
without limiting the generality thereof, the parties agree that, with respect to
documents presented which appear on their face to be in substantial compliance
with the terms of a Letter of Credit, the Issuing Bank may, in its sole
discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.
(f) Disbursement Procedures. The Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify the
Borrower by telephone (confirmed by telecopy) of such demand for payment and
whether the Issuing Bank has made or will make an LC Disbursement thereunder;
provided that any failure to give or delay in giving such notice shall not
relieve the Borrower of its obligation to reimburse the Issuing Bank with
respect to any such LC Disbursement.
(g) Interim Interest. If the Issuing Bank shall make any LC Disbursement, then,
unless the Borrower shall reimburse such LC Disbursement in full on the date
such LC Disbursement is made, the unpaid amount thereof shall bear interest, for
each day from and including the date such LC Disbursement is made to but
excluding the date that the Borrower reimburses such LC Disbursement, at the
rate per annum then applicable to ABR Revolving Loans; provided that, if the
Borrower fails to reimburse such LC Disbursement when due pursuant to
paragraph (d) of this Section, then Section 2.11(d) shall apply.
(h) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives notice from the
Issuing Bank demanding the deposit of cash collateral pursuant to this
paragraph, the Borrower shall deposit in an account with the Issuing Bank, in
the name of the Issuing Bank and for its benefit, an amount in cash equal to the
LC Exposure as of such date plus any accrued and unpaid interest thereon;
provided that the obligation to deposit such cash collateral shall become
effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of any
Event of Default with respect to the Borrower described in clause (h) or (i) of
Article VII. Such deposit shall be held by the Issuing Bank as collateral for
the payment and performance of the obligations of the Borrower under this
Agreement. The Issuing Bank shall have exclusive dominion and control, including
the exclusive right of withdrawal, over such account. Other than any interest
earned on the investment of such deposits, which investments shall be made at
the option and sole discretion of the Issuing Bank and at the Borrower's risk
and expense, such deposits shall not bear interest. Interest or profits, if any,
on such investments shall accumulate in such account. Moneys in such account
shall be applied by the Issuing Bank to reimburse the Issuing Bank for LC
Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
the Borrower for the LC Exposure at such time or, if the maturity of the Loans
has been accelerated, be applied to satisfy other obligations of the Borrower
under this Agreement. If the Borrower is required to provide an amount of cash
collateral hereunder as a result of the occurrence of an Event of Default, such
amount (to the extent not applied as aforesaid) shall be returned to the
Borrower within three Business Days after all Events of Default have been cured
or waived.
<PAGE>
SECTION 2.07. Termination and Reduction of Commitment. (a) Unless previously
terminated, the Commitment shall terminate on the Maturity Date.
(b) The Borrower may at any time terminate, or from time to time reduce, the
Commitment; provided that (i) each reduction of the Commitment shall be in an
amount that is an integral multiple of $100,000 and not less than $1,000,000 and
(ii) the Borrower shall not terminate or reduce the Commitment if, after giving
effect to any concurrent prepayment of the Loans in accordance with Section
2.09, the amount of the Revolving Credit Exposure exceeds the Commitment.
(c) The Borrower shall notify the Bank of any election to terminate or reduce
the Commitment under paragraph (b) of this Section at least three Business Days
prior to the effective date of such termination or reduction, specifying such
election and the effective date thereof. Each notice delivered by the Borrower
pursuant to this Section shall be irrevocable; provided that a notice of
termination of the Commitment delivered by the Borrower may state that such
notice is conditioned upon the effectiveness of other credit facilities, in
which case such notice may be revoked by the Borrower (by notice to the Bank on
or prior to the specified effective date) if such condition is not satisfied.
Any termination or reduction of the Commitment shall be permanent.
SECTION 2.08. Repayment of Loans; Evidence of Debt. (a) The Borrower hereby
unconditionally promises to pay to the Bank the then unpaid principal amount of
each Loan on the Maturity Date.
(b) The Bank shall maintain in accordance with its usual practice an account or
accounts evidencing (i) the indebtedness of the Borrower to the Bank resulting
from each Loan made by the Bank, including the amounts of principal and interest
payable and paid to the Bank from time to time hereunder, (ii) the amount of
each Loan made hereunder, the Type thereof and the Interest Period applicable
thereto, and (iii) the amount of any principal or interest due and payable or to
become due and payable from the Borrower to the Bank hereunder.
(c) The entries made in the accounts maintained pursuant to paragraph (b) of
this Section shall be prima facie evidence of the existence and amounts of the
obligations recorded therein; provided that the failure of the Bank to maintain
such accounts or any error therein shall not in any manner affect the obligation
of the Borrower to repay the Loans in accordance with the terms of this
Agreement.
(d) The Bank may request that Loans be evidenced by a promissory note. In such
event, the Borrower shall prepare, execute and deliver to the Bank a promissory
note payable to the order of the Bank (or, if requested by the Bank, to the Bank
and its registered assigns). Thereafter, the Loans evidenced by such promissory
note and interest thereon shall at all times (including after assignment
pursuant to Section 8.04) be represented by one or more promissory notes in such
form payable to the order of the payee named therein (or, if such promissory
note is a registered note, to such payee and its registered assigns).
<PAGE>
SECTION 2.09. Prepayment of Loans. (a) The Borrower shall have the right at any
time and from time to time to prepay any Loan in whole or in part, subject to
prior notice in accordance with paragraph (b) of this Section.
(b) The Borrower shall notify the Bank by telephone (confirmed by telecopy) of
any prepayment hereunder (i) in the case of prepayment of a Eurodollar Loan, not
later than 11:00 a.m., New York City time, three Business Days before the date
of prepayment, (ii) in the case of prepayment of a Money Market Loan, not later
than 11:00 a.m., New York City time, two Business Days before the date of
prepayment, (iii) in the case of prepayment of an ABR Loan, not later than 11:00
a.m., New York City time, one Business Day before the date of prepayment. Each
such notice shall be irrevocable and shall specify the prepayment date and the
principal amount of each Loan or portion thereof to be prepaid; provided that,
if a notice of prepayment is given in connection with a conditional notice of
termination of the Commitment as contemplated by Section 2.07, then such notice
of prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.07. Each partial prepayment of any Loan shall be in an
amount that would be permitted in the case of an advance of a Loan of the same
Type as provided in Section 2.02. Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.11.
SECTION 2.10. Fees. (a) The Borrower agrees to pay to the Bank a commitment fee,
which shall accrue at the Applicable Rate on the daily unused amount of the
Commitment during the period from and including the Effective Date to but
excluding the date on which the Commitment terminates. Accrued commitment fees
shall be payable in arrears on the last day of March, June, September and
December of each year and on the date on which the Commitment terminates,
commencing on the first such date to occur after the date hereof; provided that
the Bank agrees to send the Borrower an invoice with respect to such fees, but
failure to send such invoice shall not constitute a waiver, or extension of the
due date, of such fees. All commitment fees shall be computed on the basis of a
year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).
(b) The Borrower agrees to pay to the Issuing Bank a fronting fee, which shall
accrue at the rate or rates per annum separately agreed upon between the
Borrower and the Issuing Bank on the average daily amount of the LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the Effective Date to but excluding the
later of the date of termination of the Commitments and the date on which there
ceases to be any LC Exposure, as well as the Issuing Bank's standard fees with
respect to the issuance, amendment, renewal or extension of any Letter of Credit
or processing of drawings thereunder. Fronting fees accrued through and
including the last day of March, June, September and December of each year shall
be payable on the third Business Day following such last day, commencing on the
first such date to occur after the Effective Date; provided that all such fees
shall be payable on the date on which the Commitments terminate. Any other fees
payable to the Issuing Bank pursuant to this paragraph shall be payable within
10 days after demand. All fronting fees shall be computed on the basis of a year
of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).
<PAGE>
(c) All fees payable hereunder shall be paid on the dates due, in immediately
available funds. Fees paid shall not be refundable under any circumstances.
SECTION 2.11. Interest. (a) The ABR Loans shall bear interest at the Alternate
Base Rate.
(b) The Money Market Loans shall bear interest at the Money Market Rate for the
Interest Period in effect for such Loan.
(c) The Eurodollar Loans shall bear interest at the Adjusted LIBO Rate for the
Interest Period in effect for such Loan plus the Applicable Rate.
(d) Notwithstanding the foregoing, if any principal of or interest on any Loan
or any fee or other amount payable by the Borrower hereunder is not paid when
due, whether at stated maturity, upon acceleration or otherwise, such overdue
amount shall bear interest, after as well as before judgment, at a rate per
annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Loans as provided in paragraph (a) of this Section.
(e) Accrued interest on each Loan shall be payable in arrears on each Interest
Payment Date for such Loan and upon termination of the Commitment; provided that
(i) interest accrued pursuant to paragraph (d) of this Section shall be payable
on demand, (ii) in the event of any repayment or prepayment of any Loan (other
than a prepayment of an ABR Loan prior to the end of the Availability Period),
accrued interest on the principal amount repaid or prepaid shall be payable on
the date of such repayment or prepayment and (iii) in the event of any
conversion of any Money Market or Eurodollar Loan prior to the end of the
current Interest Period therefor, accrued interest on such Loan shall be payable
on the effective date of such conversion.
(f) All interest hereunder shall be computed on the basis of a year of 360 days,
except that interest computed by reference to the Alternate Base Rate at times
when the Alternate Base Rate is based on the Prime Rate shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), and in each case shall
be payable for the actual number of days elapsed (including the first day but
excluding the last day). The applicable Alternate Base Rate, Money Market Rate,
Adjusted LIBO Rate or LIBO Rate shall be determined by the Bank, and such
determination shall be conclusive absent manifest error.
SECTION 2.12. Alternate Rate of Interest. If prior to the commencement of any
Interest Period for a Money Market Loan or Eurodollar Loan:
(a) the Bank determines (which determination shall be conclusive absent manifest
error) that adequate and reasonable means do not exist for ascertaining the
Money Market Rate, the Adjusted LIBO Rate or the LIBO Rate, as applicable, for
such Interest Period; or
(b) the Bank determines (which determination shall be conclusive absent manifest
error) that the Money Market Rate or the Adjusted LIBO Rate, as applicable, for
such Interest Period
<PAGE>
will not adequately and fairly reflect the cost to the bank of making or
maintaining the Loan for such Interest Period;
then the Bank shall give notice thereof to the Borrower by telephone or telecopy
as promptly as practicable thereafter and, until the Bank notifies the Borrower
that the circumstances giving rise to such notice no longer exist, (i) any
Interest Election Request that requests the conversion of any Loan to, or
continuation of any Loan as, a Money Market Loan or Eurodollar Loan shall be
ineffective and (ii) if any Borrowing Request requests a Money Market or
Eurodollar Loan, such Loan shall be made as an ABR Loan; provided that if the
circumstances giving rise to such notice affect only one Type of Loan, then the
other Type of Loans shall be permitted.
SECTION 2.13. Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, the Bank (except any such reserve requirement reflected in the
Adjusted LIBO Rate); or
(ii) impose on the Bank or the London interbank market any other condition
affecting this Agreement or Money Market Loans or Eurodollar Loans made by the
Bank;
and the result of any of the foregoing shall be to increase the cost to the Bank
of making or maintaining any Money Market Loan or Eurodollar Loan (or of
maintaining its obligation to make any such Loan) or to reduce the amount of any
sum received or receivable by the Bank hereunder (whether of principal, interest
or otherwise), then the Borrower will pay to the Bank such additional amount or
amounts as will compensate the Bank for such additional costs incurred or
reduction suffered.
(b) If the Bank determines that any Change in Law regarding capital requirements
has or would have the effect of reducing the rate of return on the Bank's
capital or on the capital of the Bank's holding company, if any, as a
consequence of this Agreement or the Loans made by the Bank to a level below
that which the Bank or the Bank's holding company could have achieved but for
such Change in Law (taking into consideration the Bank's policies and the
policies of the Bank's holding company with respect to capital adequacy), then
from time to time the Borrower will pay to the Bank such additional amount or
amounts as will compensate the Bank or the Bank's holding company for any such
reduction suffered.
(c) A certificate of the Bank setting forth the amount or amounts necessary to
compensate the Bank or its holding company, as the case may be, as specified in
paragraph (a) or (b) of this Section shall be delivered to the Borrower and
shall be conclusive absent manifest error. The Borrower shall pay the Bank the
amount shown as due on any such certificate within 10 days after receipt
thereof.
(d) Failure or delay on the part of the Bank to demand compensation pursuant to
this Section shall not constitute a waiver of the Bank's right to demand such
compensation; provided that the Borrower shall not be required to compensate the
Bank pursuant to this Section for any increased costs or reductions incurred
more than 270 days prior to the date that the Bank notifies
<PAGE>
the Borrower of the Change in Law giving rise to such increased costs or
reductions and of the Bank's intention to claim compensation therefor; provided
further that, if the Change in Law giving rise to such increased costs or
reductions is retroactive, then the 270-day period referred to above shall be
extended to include the period of retroactive effect thereof.
SECTION 2.14. Break Funding Payments. In the event of (a) the payment of any
principal of any Money Market Loan (to the extent such Loan has a specific
Interest Period) or Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Money Market Loan or Eurodollar Loan other than on the
last day of the Interest Period applicable thereto, (c) the failure to borrow,
convert, continue or prepay any Money Market Loan or Eurodollar Loan on the date
specified in any notice delivered pursuant hereto (regardless of whether such
notice may be revoked under Section 2.12(b) and is revoked in accordance
therewith), then, in any such event, the Borrower shall compensate the Bank for
the loss, cost and expense attributable to such event. In the case of a
Eurodollar Loan, such loss, cost or expense to the Bank shall be deemed to
include an amount determined by the Bank to be the excess, if any, of (i) the
amount of interest which would have accrued on the principal amount of such Loan
had such event not occurred, at the Adjusted LIBO Rate that would have been
applicable to such Loan, for the period from the date of such event to the last
day of the then current Interest Period therefor (or, in the case of a failure
to borrow, convert or continue, for the period that would have been the Interest
Period for such Loan), over (ii) the amount of interest which would accrue on
such principal amount for such period at the interest rate which the Bank would
bid were it to bid, at the commencement of such period, for dollar deposits of a
comparable amount and period from other banks in the eurodollar market. A
certificate of the Bank setting forth any amount or amounts that the Bank is
entitled to receive pursuant to this Section shall be delivered to the Borrower
and shall be conclusive absent manifest error. The Borrower shall pay the Bank
the amount shown as due on any such certificate within 10 days after receipt
thereof.
SECTION 2.15. Taxes. (a) Any and all payments by or on account of any obligation
of the Borrower hereunder shall be made free and clear of and without deduction
for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) the Bank receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make such
deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Bank within 10 days after written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by
the Bank on or with respect to any payment by or on account of any obligation of
the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) and any
penalties, interest and reasonable expenses arising therefrom or with
<PAGE>
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability delivered to the
Borrower by the Bank on its own behalf or on behalf of the Bank shall be
conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes
by the Borrower to a Governmental Authority, the Borrower shall deliver to the
Bank the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Bank.
(e) Any Foreign Lender that is entitled to an exemption from or reduction of a
withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower, at the time or
times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate.
(f) If a Lender shall become aware that it is entitled to receive a refund of
any Taxes as to which it has been indemnified by the Borrower or with respect to
which the Borrower has paid additional amounts pursuant to this Section 2.15, it
shall promptly notify the Borrower of the availability of such refund and shall,
within 30 days after receipt of a request by the Borrower, apply for such refund
at the expense of the Borrower. If any Lender has received a refund of any Taxes
as to which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section 2.15, it shall pay
over such refund to the Borrower, net of all out-of-pocket expenses of such
Lender and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund); provided, however, that the
Borrower, upon the request of any Lender, agrees to repay the amount paid over
to the Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to any Lender in the event any Lender is
required to repay such refund to such Governmental Authority. Nothing contained
in this Section 2.15(f) shall require any Lender to make available its tax
returns (or any other information relating to its Taxes which it deems
confidential) to the Borrower or any other Person.
SECTION 2.16. Mitigation Obligations; Replacement of Lenders. (a) If any Lender
requests compensation under Section 2.13, or if the Borrower is required to pay
any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.13, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 2.13 or 2.15, as the case may be, in the future and
(ii) would not subject such Lender to any unreimbursed cost of expense and would
not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to
pay all reasonable costs and expenses incurred by any Lender in connection with
any such designation or assignment.
<PAGE>
(b) If any Lender requests compensation under Section 2.13, or if the Borrower
is required to pay any additional amount to such Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.15, or if the Bank
defaults in its obligations to fund Loans hereunder, then the Borrower may, at
its sole expense and effort, upon notice to such Lender, require such Lender to
assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 8.04), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations; provided that (i) such Lender shall have received payment of an
amount equal to the outstanding principal of its Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts), together with all
requirements of Section 8.04, and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.13 or payments required
to be made pursuant to Section 2.15, such assignment will result in a reduction
in such compensation or payments. A Lender shall not be required to make any
such assignment and delegation if, prior thereto, as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply.
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Bank and the Issuing Bank that:
SECTION 3.01. Organization; Powers. Each of the Borrower and its Subsidiaries is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority to carry
on its business as now conducted and, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.
SECTION 3.02. Authorization; Enforceability. The Transactions are within the
Borrower's corporate powers and have been duly authorized by all necessary
corporate and, if required, stockholder action. This Agreement has been duly
executed and delivered by the Borrower and constitutes a legal, valid and
binding obligation of the Borrower, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions (a) do not
require any consent or approval of, registration or filing with, or any other
action by, any Governmental Authority, except (i) such as have been obtained or
made and are in full force and effect, and (ii) such actions, consents and
approvals the failure to obtain or make which could not reasonably be expected
to result in a Material Adverse Effect; (b) will not violate any applicable law
or regulation or the charter, by-laws or other organizational documents of the
Borrower or
<PAGE>
any of its Subsidiaries or any order of any Governmental Authority, (c) will not
violate or result in a default under any material indenture, agreement or other
instrument binding upon the Borrower or any of its Subsidiaries or its assets,
or give rise to a right thereunder to require any payment to be made by the
Borrower or any of its Subsidiaries, except to the extent that the failure to
comply herewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect, and (d) will not result in the creation or imposition
of any Lien on any asset of the Borrower or any of its Subsidiaries, except to
the extent that the failure to comply herewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
SECTION 3.04. Financial Condition; No Material Adverse Change. (a) The Borrower
has heretofore furnished to the Bank its consolidated balance sheet and
statements of income, stockholders equity and cash flows (i) as of and for the
fiscal year ended August 31, 1997, reported on by Price Waterhouse, LLP,
independent public accountants, and (ii) as of and for the fiscal quarter and
the portion of the fiscal year ended May 31, 1998, certified by its chief
financial officer. Such financial statements present fairly, in all material
respects, the financial position and results of operations and cash flows of the
Borrower and its consolidated Subsidiaries as of such dates and for such periods
in accordance with GAAP, subject to year-end audit adjustments and the absence
of footnotes in the case of the statements referred to in clause (ii) above.
(b) Except for the matters disclosed on Schedule 3.09 and the Disclosed Matters,
since May 31, 1998, there has been no material adverse change in the business,
assets, operations or condition, financial or otherwise, of the Borrower and its
Subsidiaries, taken as a whole.
SECTION 3.05. Properties. (a) Each of the Borrower and its Subsidiaries has good
title to, or valid leasehold interests in, all its real and personal property
material to the business of the Borrower and its Subsidiaries, taken as a whole,
except for minor defects in title that do not materially interfere with its
ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes.
(b) Each of the Borrower and its Subsidiaries owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual property
material to the business of the Borrower and its Subsidiaries taken as a whole,
and the use thereof by the Borrower and its Subsidiaries does not infringe upon
the rights of any other Person, except for any such infringements that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.
SECTION 3.06. Litigation and Environmental Matters. (a) There are no actions,
suits or proceedings by or before any arbitrator or Governmental Authority
pending against or, to the knowledge of the Borrower, threatened against or
affecting the Borrower or any of its Subsidiaries (i) as to which there is a
reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect (other than the Disclosed Matters) or (ii)
that involve this Agreement or the Transactions.
<PAGE>
(b) Except for the Disclosed Matters and except with respect to any other
matters that, individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Effect, neither the Borrower nor any of its
Subsidiaries (i) has failed to comply with any Environmental Law or to obtain,
maintain or comply with any permit, license or other approval required under any
Environmental Law, (ii) has become subject to any Environmental Liability, (iii)
has received notice of any claim with respect to any Environmental Liability or
(iv) knows of any basis for any Environmental Liability.
(c) Since the date of this Agreement, there has been no change in the status of
the Disclosed Matters that, individually or in the aggregate, has resulted in a
Material Adverse Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each of the Borrower and its
Subsidiaries is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.
SECTION 3.08. Investment and Holding Company Status. Neither the Borrower nor
any of its Subsidiaries is (a) an "investment company" as defined in, or subject
to regulation under, the Investment Company Act of 1940 or (b) a "holding
company" as defined in, or subject to regulation under, the Public Utility
Holding Company Act of 1935.
SECTION 3.09. Taxes. Each of the Borrower and its Subsidiaries has timely filed
or caused to be filed all Tax returns and reports required to have been filed
and has paid or caused to be paid all Taxes required to have been paid by it,
except (a) Taxes that are being contested in good faith by appropriate
proceedings and for which the Borrower or such Subsidiary, as applicable, has
set aside on its books adequate reserves, or as set forth on Schedule 3.09, or
(b) to the extent that the failure to do so could not reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected to
occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed the fair
market value of the assets of such Plan, and the present value of all
accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial Accounting Standards No.
87) did not, as of the date of the most recent financial statements reflecting
such amounts, exceed the fair market value of the assets of all such underfunded
Plans.
SECTION 3.11. Disclosure. The Borrower has disclosed to the Bank all material
agreements, instruments and corporate or other restrictions to which it or any
of its Subsidiaries
<PAGE>
is subject, and all other matters known to it, that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
None of the material reports, financial statements, certificates or other
information, taken as a whole, furnished by or on behalf of the Borrower to the
Bank in connection with the negotiation of this Agreement or delivered hereunder
(as modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed by the Borrower to be reasonable at
the time.
SECTION 3.12. Year 2000. Any reprogramming required to permit the proper
functioning without Material Adverse Effect, in and following the Year 2000, of
(i) the Borrower's computer systems and (ii) equipment containing embedded
microchips and the testing of all such systems and equipment, as so
reprogrammed, will be completed in all material respects by June 30, 1999. To
the Borrower's knowledge, the cost to the Borrower of such reprogramming and
testing and of the reasonably foreseeable consequences of Year 2000 to the
Borrower will not result in a Default or a Material Adverse Effect. Except for
such of the reprogramming referred to in the preceding sentence as may be
necessary, the computer and management information systems of the Borrower and
its Subsidiaries, taken as a whole, are and, with ordinary course upgrading and
maintenance, will continue for the term of this Agreement to be, sufficient in
all material respects to permit the Borrower to conduct its business without
Material Adverse Effect.
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligation of the Bank to make Loans hereunder
and of the Issuing Bank to issue Letters of Credit shall not become effective
until the date on which each of the following conditions is satisfied (or waived
in accordance with Section 8.02):
(a) The Bank (or its counsel) shall have received from each party hereto either
(i) a counterpart of this Agreement signed on behalf of such party or (ii)
written evidence satisfactory to the Bank (which may include telecopy
transmission of a signed signature page of this Agreement) that such party has
signed a counterpart of this Agreement.
(b) The Bank shall have received a favorable written opinion (addressed to the
Bank and dated the Effective Date) of Cravath, Swaine & Moore, counsel for the
Borrower, substantially in the form of Exhibit A, and covering such other
matters relating to the Borrower, this Agreement or the Transactions as the Bank
shall reasonably request. The Borrower hereby requests such counsel to deliver
such opinion.
(c) The Bank shall have received such documents and certificates as the Bank or
its counsel may reasonably request relating to the organization, existence and
good standing of the
<PAGE>
Borrower, the authorization of the Transactions and any other legal matters
relating to the Borrower, this Agreement or the Transactions, all in form and
substance reasonably satisfactory to the Bank and its counsel.
(d) The Bank shall have received a certificate, dated the Effective Date and
signed by the President, a Vice President or a Financial Officer of the
Borrower, confirming that (i) the representations and warranties of the Borrower
set forth in this Agreement are true in all material respects and (ii) on the
Effective Date no Default shall have occurred and be continuing.
(e) The Bank shall have received all fees and other amounts due and payable on
or prior to the Effective Date, including, to the extent invoiced, reimbursement
or payment of all out-of-pocket expenses required to be reimbursed or paid by
the Borrower hereunder.
The Bank shall notify the Borrower of the Effective Date, and such notice shall
be conclusive and binding. Notwithstanding the foregoing, the obligation of the
Bank to make Loans and of the Issuing Bank to issue Letters of Credit hereunder
shall not become effective unless each of the foregoing conditions is satisfied
(or waived pursuant to Section 8.02) at or prior to 3:00 p.m., New York City
time, on November 30, 1998 (and, in the event such conditions are not so
satisfied or waived, the Commitment shall terminate at such time).
SECTION 4.02. Each Loan. The obligation of the Bank to make any Loan (including
the initial Loan), and of the Issuing Bank to issue, amend, renew or extend any
Letter of Credit, is subject to the satisfaction of the following conditions:
(a) The representations and warranties of the Borrower set forth in this
Agreement shall be true and correct in all material respects on and as of the
date of such Loan or the date of issuance, amendment, renewal or extension of
such Letter of Credit, as applicable.
(b) At the time of and immediately after giving effect to such Loan or the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Default shall have occurred and be continuing.
The borrowing of each Loan and each issuance, amendment, renewal or extension of
a Letter of Credit shall be deemed to constitute a representation and warranty
by the Borrower on the date thereof as to the matters specified in paragraphs
(a) and (b) of this Section.
ARTICLE V
Affirmative Covenants
Until the Commitment has expired or been terminated and the principal of and
interest on each Loan and all fees payable hereunder shall have been paid in
full, and all Letters of Credit shall have expired or terminated and all LC
Disbursements shall have been reimbursed, the Borrower covenants and agrees with
the Bank and the Issuing Bank that:
<PAGE>
SECTION 5.01. Financial Statements and Other Information. The Borrower will
furnish to the Bank:
(a) within 90 days after the end of each fiscal year of the Borrower, its
audited consolidated balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such year, setting
forth in each case in comparative form the figures for the previous fiscal year,
all reported on by PriceWaterhouseCoopers, LLP, or other independent public
accountants of recognized national standing (without a "going concern" or like
qualification or exception and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied;
(b) within 45 days after the end of each of the first three fiscal quarters of
each fiscal year of the Borrower, its consolidated balance sheet and related
statements of operations, stockholders' equity and cash flows as of the end of
and for such fiscal quarter and the then elapsed portion of the fiscal year,
setting forth in each case in comparative form the figures for the corresponding
period or periods of (or, in the case of the balance sheet, as of the end of)
the previous fiscal year, all certified by one of its Financial Officers as
presenting fairly in all material respects the financial condition and results
of operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;
(c) concurrently with any delivery of financial statements under clause (a) or
(b) above, a certificate of a Financial Officer of the Borrower (i) certifying
as to whether a Default has occurred and, if a Default has occurred, specifying
the details thereof and any action taken or proposed to be taken with respect
thereto, (ii) setting forth reasonably detailed calculations demonstrating
compliance with Section 6.09 and (iii) stating whether any change in GAAP or in
the application thereof has occurred since the date of the audited financial
statements referred to in Section 3.04 and, if any such change has occurred,
specifying the effect of such change on the financial statements accompanying
such certificate;
(d) concurrently with any delivery of financial statements under clause (a)
above, a certificate of the accounting firm that reported on such financial
statements stating whether they obtained knowledge during the course of their
examination of such financial statements of any Default (which certificate may
be limited to the extent required by accounting rules or guidelines);
(e) promptly after the same become publicly available, copies of all periodic
and other reports, proxy statements and other materials filed by the Borrower or
any Subsidiary with the Securities and Exchange Commission, or any Governmental
Authority succeeding to any or all of the functions of said Commission, or with
any national securities exchange, or distributed by the Borrower to its
shareholders generally, as the case may be; and
(f) promptly following any request therefor, such other information regarding
the operations, business affairs and financial condition of the Borrower or any
Subsidiary, or
<PAGE>
compliance with the terms of this Agreement, as the Bank may reasonably request
(subject to any confidentiality agreements to which the Borrower or its
Subsidiaries may be subject).
SECTION 5.02. Notices of Material Events. The Borrower will furnish to the Bank
prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by or before
any arbitrator or Governmental Authority against or affecting the Borrower or
any Affiliate thereof that could reasonably be expected to result in a Material
Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with any other
ERISA Events that have occurred, could reasonably be expected to result in
liability of the Borrower and its Subsidiaries in an aggregate amount exceeding
$500,000; and
(d) any other development that results in, or could reasonably be expected to
result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 5.03. Existence; Conduct of Business. The Borrower will, and will cause
each of its Subsidiaries to, do or cause to be done all things reasonably
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of the business of the Borrower and its Subsidiaries, taken as a
whole; provided that the foregoing shall not prohibit any merger, consolidation,
liquidation or dissolution permitted under Section 6.03.
SECTION 5.04. Payment of Obligations. The Borrower will, and will cause each of
its Subsidiaries to, pay its obligations, including Tax liabilities, that, if
not paid, could result in a Material Adverse Effect before the same shall become
delinquent or in default, except where (a) the validity or amount thereof is
being contested in good faith by appropriate proceedings, (b) the Borrower or
such Subsidiary has set aside on its books adequate reserves with respect
thereto in accordance with GAAP and (c) the failure to make payment pending such
contest could not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.05. Maintenance of Properties; Insurance. The Borrower will, and will
cause each of its Subsidiaries to, (a) keep and maintain all property material
to the conduct of the business of the Borrower and its Subsidiaries, taken as a
whole, in good working order and condition, ordinary wear and tear excepted, and
(b) maintain, with financially sound and reputable insurance companies,
insurance in such amounts and against such risks as the Borrower reasonably
believes is necessary to adequately protect the business of the Borrower and its
Subsidiaries, taken as a whole.
<PAGE>
SECTION 5.06. Books and Records; Inspection Rights. The Borrower will, and will
cause each of its Subsidiaries to, keep proper books of record and account in
which full, true and correct entries are made of all dealings and transactions
in relation to its business and activities. The Borrower will, and will cause
each of its Subsidiaries to, permit any representatives designated by the Bank,
upon reasonable prior notice, to visit and inspect its properties, to examine
and make extracts from its books and records, and to discuss its affairs,
finances and condition with its officers and independent accountants, all at
such reasonable times and as often as reasonably requested.
SECTION 5.07. Compliance with Laws. The Borrower will, and will cause each of
its Subsidiaries to, comply with all laws, rules, regulations and orders of any
Governmental Authority applicable to it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.08. Use of Proceeds and Letters of Credit. The proceeds of the Loans
will be used only for general corporate purposes, including Permitted
Acquisitions. No part of the proceeds of any Loan will be used, whether directly
or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations G, U and X. Letters of Credit
will be issued only to support general corporate obligations.
ARTICLE VI
Negative Covenants
Until the Commitment has expired or been terminated and the principal of and
interest on each Loan and all fees payable hereunder shall have been paid in
full, and all Letters of Credit shall have expired or terminated and all LC
Disbursements shall have been reimbursed, the Borrower covenants and agrees with
the Bank and the Issuing Bank that:
SECTION 6.01. Indebtedness. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Indebtedness,
except:
(a) Indebtedness created hereunder;
(b) Indebtedness existing on the date hereof and set forth in Schedule 6.01, and
any extensions, renewals or replacements of any such Indebtedness that do not
increase the outstanding principal amount thereof;
(c) Indebtedness of the Borrower to any Subsidiary and of any Subsidiary to the
Borrower or any other Subsidiary;
(d) Guarantees by the Borrower of Indebtedness of any Subsidiary and by any
Subsidiary of Indebtedness of the Borrower or any other Subsidiary;
<PAGE>
(e) Indebtedness of the Borrower or any Subsidiary incurred to finance the
acquisition, construction or improvement of any fixed or capital assets,
including Capital Lease Obligations and any Indebtedness assumed in connection
with the acquisition of any such assets or secured by a Lien on any such assets
prior to the acquisition thereof, and extensions, renewals and replacements of
any such Indebtedness that do not increase the outstanding principal amount
thereof; provided that (i) such Indebtedness is incurred prior to or within 90
days after such acquisition or the completion of such construction or
improvement and (ii) the aggregate principal amount of Indebtedness permitted by
this clause (e) shall not exceed $10,000,000 at any time outstanding;
(f) Indebtedness of any Person that becomes a Subsidiary after the date hereof
and Indebtedness of a corporation merged or consolidated with or into the
Borrower or any Subsidiary after the date hereof; provided that, in each case,
(i) such Indebtedness exists at the time of such acquisition, merger,
consolidation or conversion of such Person into a Subsidiary and is not created
in contemplation of or in connection with such event, and (ii) the aggregate
principal amount of Indebtedness permitted by this clause (f) shall not exceed
$7,500,000 at any time outstanding;
(g) Indebtedness of the Borrower or any Subsidiary as an account party in
respect of trade letters of credit;
(h) other Indebtedness of the Borrower and its Subsidiaries in an aggregate
principal amount not exceeding $7,500,000 at any time outstanding;
(i) Indebtedness of the Borrower and its Subsidiaries in the maximum aggregate
amount at any time of $10,000,000 pursuant to Hedging Agreements entered into in
order to fix the effective rate of interest, or to hedge against currency
fluctuations, on Indebtedness and other investments, provided that such
transactions shall be entered into to hedge actual interest rate exposures or
currency exchange rate exposures and not for the purpose of speculation; and
(j) Indebtedness of the Borrower or any of its Subsidiaries to any Joint
Venture; and
(k) Guarantees by the Borrower of loans to officers, directors and employees of
the Borrower or any Subsidiary from one or more financial institutions
reasonably acceptable to Chase, provided, that any Guarantees pursuant to this
clause (k) shall be subject to Section 6.04(m).
SECTION 6.02. Liens. The Borrower will not, and will not permit any Subsidiary
to, create, incur, assume or permit to exist any Lien on any property or asset
now owned or hereafter acquired by it, or assign or sell any income or revenues
(including accounts receivable) or rights in respect of any thereof, except:
(a) Permitted Encumbrances;
(b) any Lien on any property or asset of the Borrower or any Subsidiary existing
on the date hereof and set forth in Schedule 6.02; provided that (i) such Lien
shall not apply to any other
<PAGE>
property or asset of the Borrower or any Subsidiary (other than pursuant to
existing after acquired property clauses specifically described and set forth in
Schedule 6.02 and other than to accessions to such property or assets and
provided that individual financings of equipment provided by a single lender may
be cross-collateralized to other financings of equipment provided solely by such
lender); and (ii) such Lien shall secure only those obligations which it secures
on the date hereof, and extensions, renewals and refinancings of such
obligations permitted by Section 6.01(b));
(c) any Lien existing on any property or asset prior to the acquisition thereof
by the Borrower or any Subsidiary or existing on any property or asset of any
Person that becomes a Subsidiary after the date hereof prior to the time such
Person becomes a Subsidiary; provided that (i) such Lien is not created in
contemplation of or in connection with such acquisition or such Person becoming
a Subsidiary, as the case may be, (ii) such Lien shall not apply to any other
property or assets of the Borrower or any Subsidiary and (iii) such Lien shall
secure only those obligations which it secures on the date of such acquisition
or the date such Person becomes a Subsidiary, as the case may be;
(d) Liens on fixed or capital assets acquired, constructed or improved by the
Borrower or any Subsidiary; provided that (i) such security interests secure
Indebtedness permitted by clause (e) of Section 6.01, (ii) such security
interests and the Indebtedness secured thereby are incurred prior to or within
90 days after such acquisition or the completion of such construction or
improvement, (iii) the Indebtedness secured thereby does not exceed 100% of the
cost of acquiring, constructing or improving such fixed or capital assets and
(iv) such security interests shall not apply to any other property or assets of
the Borrower or any Subsidiary (other than to accessions to such fixed or
capital assets and provided that individual financings of equipment provided by
a single lender may be cross-collateralized to other financings of equipment
provided solely by such lender);
(e) Liens consisting of interests of lessors under Capital Lease Obligations
permitted by Section 6.01;
(f) the sale of accounts receivable in connection with collection in the
ordinary course of business;
(g) any Lien on any property or asset of a Subsidiary securing Indebtedness
permitted by Section 6.01(f), provided that such Lien does not apply to any
other property or assets of the Borrower or any Subsidiary not securing such
Indebtedness at the date of acquisition of such property or asset; and
(h) the replacement, extension or renewal of any Lien permitted by clause (b),
(c), (d) or (g) above, provided that such replacement, extension or renewal Lien
shall not cover any property other than the property that was subject to such
Lien prior to such replacement, extension or renewal (other than accessions to
such property and provided that individual financings of equipment provided by a
single lender may be cross-collateralized to other financings of equipment
provided solely by such lender); and provided further that the
<PAGE>
Indebtedness and other obligations secured by such replacement, extension or
renewal Lien are permitted by this Agreement.
SECTION 6.03. Fundamental Changes. (a) The Borrower will not, and will not
permit any Subsidiary to, merge into or consolidate with any other Person, or
permit any other Person to merge into or consolidate with it, or sell, transfer,
lease or otherwise dispose of (in one transaction or in a series of
transactions) all or any substantial part of its assets, or all or substantially
all of the stock of any of its Subsidiaries (in each case, whether now owned or
hereafter acquired), or liquidate or dissolve, except that, if at the time
thereof and immediately after giving effect thereto no Default shall have
occurred and be continuing (i) any Subsidiary may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation, (ii) any
Subsidiary may merge into any Subsidiary in a transaction in which the surviving
entity is a Subsidiary, (iii) any Subsidiary may sell, transfer, lease or
otherwise dispose of its assets to the Borrower or to another Subsidiary and
(iv) any Subsidiary may liquidate or dissolve if the Borrower determines in good
faith that such liquidation or dissolution is in the best interests of the
Borrower and is not materially disadvantageous to the Bank; provided that any
such merger involving a Person that is not a wholly owned Subsidiary immediately
prior to such merger shall not be permitted unless also permitted by Section
6.04.
(b) The Borrower will not, and will not permit any of its Subsidiaries to,
engage to any material extent in any business other than businesses of the type
conducted by the Borrower and its Subsidiaries on the date of execution of this
Agreement and businesses reasonably related thereto.
SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions. The
Borrower will not, and will not permit any of its Subsidiaries to, purchase,
hold or acquire (including pursuant to any merger with any Person that was not a
wholly owned Subsidiary prior to such merger) any capital stock, evidences of
indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, make or permit to exist any loans or
advances to, Guarantee any obligations of, or make or permit to exist any
investment or any other interest in, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) any assets of any other
Person constituting a business unit, except:
(a) Permitted Investments;
(b) investments by the Borrower existing on the date hereof in the capital stock
of its Subsidiaries;
(c) loans or advances made by the Borrower to any Subsidiary and made by any
Subsidiary to the Borrower or any other Subsidiary;
(d) Guarantees constituting Indebtedness permitted by Section 6.01;
(e) Permitted Acquisitions;
<PAGE>
(f) investments arising out of the receipt by the Borrower or any Subsidiary of
noncash consideration for any sale of assets permitted by this Agreement, not to
exceed $2,500,000 in the aggregate at any time outstanding;
(g) loans and advances to employees of the Borrower or any of its Subsidiaries,
provided that such loans and advances shall not exceed $5,000,000 in the
aggregate at any time outstanding;
(h) Hedging Agreements permitted pursuant to Section 6.01(i);
(i) investments by the Borrower or any Subsidiary in the capital stock or other
equity interest of any Joint Venture, provided that the aggregate amount of such
investments permitted under this clause (i) shall not exceed at any one time
outstanding $15,000,000 (calculated, on any date (the "Reference Date") by
adding, to the extent such amount is outstanding, the sum of (a) the aggregate
amount of all cash dividends and other cash distributions received by the
Borrower or any Subsidiary from any Joint Venture on or prior to the Reference
Date (other than the portion of any such dividends and other distributions that
is used by the Borrower or any Subsidiary to pay taxes), (b) the aggregate
amount of all cash repayments of principal received by the Borrower or any
Subsidiary from any Joint Venture on or prior to the Reference Date in respect
of loans made by the Borrower or any Subsidiary to such Joint Venture, and (c)
the aggregate amount of all net cash proceeds received by the Borrower or any
Subsidiary in connection with the sale, transfer or other disposition of its
ownership interest in any Joint Venture on or prior to the Reference Date) less
the aggregate amount of loans, advances and Indebtedness outstanding under
Section 6.04(j);
(j) loans and advances made by the Borrower or any Subsidiary to, and Guarantees
of Indebtedness on behalf of, any Joint Venture, provided that the aggregate
amount of such loans, advances and Guarantees permitted under this clause (j)
shall not exceed at any one time outstanding $15,000,000 (calculated, on any
date (the "Reference Date") by adding, to the extent such amount is outstanding,
the sum of (a) the aggregate amount of all cash dividends and other cash
distributions received by the Borrower or any Subsidiary from any Joint Venture
on or prior to the Reference Date (other than the portion of any such dividends
and other distributions that is used by the Borrower or any Subsidiary to pay
taxes), (b) the aggregate amount of all cash repayments of principal received by
the Borrower or any Subsidiary from any Joint Venture on or prior to the
Reference Date in respect of loans made by the Borrower or any Subsidiary to
such Joint Venture, and (c) the aggregate amount of all net cash proceeds
received by the Borrower or any Subsidiary in connection with the sale, transfer
or other disposition of its ownership interest in any Joint Venture on or prior
to the Reference Date) less the amount of investments outstanding under Section
6.04(i);
(k) investments received in connection with the bankruptcy or reorganization of,
or settlement of delinquent accounts and disputes with, customers and suppliers,
in each case in the ordinary course of business;
(l) investments by the Borrower or any Subsidiary in the capital stock of any
wholly owned Subsidiary; or
<PAGE>
(m) Guarantees constituting Indebtedness pursuant to Section 6.01(k), provided
that such Guarantees shall not be given with respect to Indebtedness that
exceeds in the aggregate at any time outstanding $5,000,000 minus the aggregate
amount of loans and advances outstanding under Section 6.04(g).
SECTION 6.05. Hedging Agreements. The Borrower will not, and will not permit any
of its Subsidiaries to, enter into any Hedging Agreement, other than Hedging
Agreements entered into in the ordinary course of business to hedge or mitigate
risks to which the Borrower or any Subsidiary is exposed in the conduct of its
business or the management of its liabilities.
SECTION 6.06. Restricted Payments. The Borrower will not, and will not permit
any of its Subsidiaries to, declare or make, or agree to pay or make, directly
or indirectly, any Restricted Payment, except (a) the Borrower may declare and
pay dividends with respect to its capital stock (i) payable solely in additional
shares of its common stock at any time and from time to time, and (ii) payable
in cash at any time and from time to time, provided that, in the case of clause
(ii), the Consolidated Net Worth at the time of declaration is greater than or
equal to an amount equal to (A) $47,000,000 plus (B) an amount equal to 40% of
Consolidated Net Income for each fiscal quarter beginning after November 30,
1998 that precedes the declaration date of such cash dividend, after giving pro
forma effect to such cash dividend, (b) Subsidiaries may declare and pay
dividends ratably with respect to their capital stock, and (c) the Borrower may
make Restricted Payments pursuant to and in accordance with stock option plans
or other benefit plans for management or employees of the Borrower and its
Subsidiaries.
SECTION 6.07. Transactions with Affiliates. The Borrower will not, and will not
permit any of its Subsidiaries to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) in the ordinary course of business at prices and on terms
and conditions not less favorable to the Borrower or such Subsidiary than could
be obtained on an arm's-length basis from unrelated third parties, (b)
transactions between or among the Borrower and its wholly owned Subsidiaries not
involving any other Affiliate and (c) any Restricted Payment permitted by
Section 6.06.
SECTION 6.08. Restrictive Agreements. The Borrower will not, and will not permit
any of its Subsidiaries to, directly or indirectly, enter into, incur or permit
to exist any agreement or other arrangement that prohibits, restricts or imposes
any condition upon (a) the ability of the Borrower or any Subsidiary to create,
incur or permit to exist any Lien upon any of its property or assets, or (b) the
ability of any Subsidiary to pay dividends or other distributions with respect
to any shares of its capital stock or to make or repay loans or advances to the
Borrower or any other Subsidiary or to Guarantee Indebtedness of the Borrower or
any other Subsidiary; provided that (i) the foregoing shall not apply to
restrictions and conditions imposed by law or by this Agreement, (ii) the
foregoing shall not apply to restrictions and conditions existing on the date
hereof identified on Schedule 6.08 (but shall apply to any extension or renewal
of, or any amendment or modification expanding the scope of, any such
restriction or condition), (iii) the foregoing shall not apply to customary
restrictions and conditions contained in agreements relating to the sale of a
Subsidiary pending such sale, provided that such restrictions and
<PAGE>
conditions apply only to the Subsidiary that is to be sold and such sale is
permitted hereunder, (iv) clause (a) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness and (v) clause
(a) of the foregoing shall not apply to customary provisions in leases and other
contracts restricting the assignment thereof.
SECTION 6.09. Certain Financial Covenants.
(a) Leverage Ratio. The Borrower will not permit the Leverage Ratio to exceed
2.0 to 1.0 as at the last day of any fiscal quarter.
(b) Consolidated Net Worth. The Borrower will not permit its Consolidated Net
Worth to be less than $47,000,000 at any time.
(c) Fixed Charge Ratio. The Borrower will not permit the Fixed Charge Ratio to
be less than 2.5 to 1.0 as at the last day of any fiscal quarter.
ARTICLE VII
Events of Default
If any of the following events ("Events of Default") shall occur:
(a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any fee or any
other amount (other than an amount referred to in clause (a) of this Article)
payable under this Agreement, when and as the same shall become due and payable,
and such default shall continue unremedied for a period of five Business Days;
(c) any representation or warranty made or deemed made by or on behalf of the
Borrower or any Subsidiary in or in connection with this Agreement or any
amendment or modification hereof or waiver hereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with this Agreement or any amendment or modification hereof or waiver
hereunder, shall prove to have been incorrect, in any material respect, when
made or deemed made;
(d) the Borrower shall fail to observe or perform any covenant, condition or
agreement contained in Section 5.02, 5.03 (with respect to the Borrower's
existence) or 5.08 or in Article VI;
<PAGE>
(e) the Borrower shall fail to observe or perform any covenant, condition or
agreement contained in this Agreement (other than those specified in clause (a),
(b) or (d) of this Article), and such failure shall continue unremedied for a
period of 30 days after notice thereof from the Bank to the Borrower;
(f) the Borrower or any Subsidiary shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material
Indebtedness, when and as the same shall become due and payable (after all
requisite notices have been given and all applicable grace periods have
expired);
(g) any event or condition occurs that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that enables or permits (with or
without the giving of notice), the lapse of time or both) the holder or holders
of any Material Indebtedness or any trustee or agent on its or their behalf to
cause any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity;
provided that this clause (g) shall not apply to secured Indebtedness that
becomes due as a result of the voluntary sale or transfer of the property or
assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief in
respect of the Borrower or any Subsidiary or its debts, or of a substantial part
of its assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for the Borrower or any Subsidiary or for a substantial part of its assets, and,
in any such case, such proceeding or petition shall continue undismissed for 60
days or an order or decree approving or ordering any of the foregoing shall be
entered;
(i) the Borrower or any Subsidiary shall (i) voluntarily commence any proceeding
or file any petition seeking liquidation, reorganization or other relief under
any Federal, state or foreign bankruptcy, insolvency, receivership or similar
law now or hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition described
in clause (h) of this Article, (iii) apply for or consent to the appointment of
a receiver, trustee, custodian, sequestrator, conservator or similar official
for the Borrower or any Subsidiary or for a substantial part of its assets, (iv)
file an answer admitting the material allegations of a petition filed against it
in any such proceeding, (v) make a general assignment for the benefit of
creditors or (vi) take any action for the purpose of effecting any of the
foregoing;
(j) the Borrower or any Subsidiary shall become unable, admit in writing or fail
generally to pay its debts as they become due;
(k) one or more judgments for the payment of money in an aggregate amount in
excess of $1,000,000 (except to the extent covered by insurance) shall be
rendered against the Borrower, any Subsidiary or any combination thereof and the
same shall remain undischarged for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be legally taken
by a judgment creditor to attach or levy upon any assets of the Borrower or any
Subsidiary to enforce any such judgment;
<PAGE>
(l) an ERISA Event shall have occurred that, in the opinion of the Required
Lenders, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in a Material Adverse Effect; or
(m) a Change in Control shall occur;
then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Bank may, by notice to the Borrower,
take either or both of the following actions, at the same or different times:
(i) terminate the Commitment, and thereupon the Commitment shall terminate
immediately, and (ii) declare the Loans then outstanding to be due and payable
in whole (or in part, in which case any principal not so declared to be due and
payable may thereafter be declared to be due and payable), and thereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of the Borrower accrued
hereunder, shall become due and payable immediately, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower; and in case of any event with respect to the Borrower described in
clause (h) or (i) of this Article, the Commitment shall automatically terminate
and the principal of the Loans then outstanding, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall automatically become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower.
ARTICLE VIII
Miscellaneous
SECTION 8.01. Notices. Except in the case of notices and other communications
expressly permitted to be given by telephone, all notices and other
communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows:
(a) if to the Borrower, to it at One Greenwich Plaza, Greenwich, Connecticut
06830-6352, Attention of Ernest S. Wong, Senior Vice President & Chief Financial
Officer (Telecopy No. 203-863-1725);
(b) if to Bank, to it at 999 Broad Street, Bridgeport, Connecticut 06604,
Attention of T. David Short, Vice President (Telecopy No. 203-382-6314);
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
<PAGE>
SECTION 8.02. Waivers; Amendments. (a) No failure or delay by the Bank or the
Issuing Bank in exercising any right or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Bank and the Issuing Bank
hereunder are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of this Agreement or
consent to any departure by the Borrower therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this Section,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Loan or the issuance of a Letter of Credit shall not
be construed as a waiver of any Default, regardless of whether the Bank or the
Issuing Bank may have had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Borrower and the Required Lenders; provided that no such agreement shall
(i) increase the Commitment of any Lender without the written consent of such
Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or
reduce the rate of interest thereon, or reduce any fees payable hereunder,
without the written consent of each Lender affected thereby, (iii) postpone the
date of any scheduled payment of the principal amount of any Loan or LC
Disbursement, or any interest thereon, or any fees payable hereunder, or reduce
the amount of, waive or excuse any such scheduled payment, or postpone the
scheduled date of expiration of any Commitment, without the written consent of
each Lender affected thereby or (iv) change any of the provisions of this
Section or the definition of "Required Lenders" or any other provision hereof
specifying the number or percentage of Lenders required to waive, amend or
modify any rights hereunder or make any determination or grant any consent
hereunder, without the written consent of each Lender.
SECTION 8.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall pay (i)
all reasonable out-of-pocket expenses incurred by the Bank and its Affiliates,
including the reasonable fees, charges and disbursements of counsel for the Bank
and costs allocated by its internal legal department, in connection with the
preparation and administration of this Agreement or any amendments,
modifications or waivers of the provisions hereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable out-of-pocket expenses incurred by the Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder, and (iii) all reasonable out-of-pocket
expenses incurred by the Bank or the Issuing Bank, including the fees, charges
and disbursements of any counsel for the Bank or the Issuing Bank, in connection
with the enforcement or protection of its rights in connection with this
Agreement, including its rights under this Section, or in connection with the
Loans made or Letters of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.
(b) The Borrower shall indemnify the Bank, the Issuing Bank and each Related
Party of any of the foregoing Persons (each such Person being called an
"Indemnitee") against, and hold
<PAGE>
each Indemnitee harmless from, any and all losses, claims, damages, liabilities
and related expenses, including the fees, charges and disbursements of any
counsel for any Indemnitee, incurred by or asserted against any Indemnitee
arising out of, in connection with, or as a result of (i) the execution or
delivery of this Agreement or any agreement or instrument contemplated hereby,
the performance by the parties hereto of their respective obligations hereunder
or the consummation of the Transactions or any other transactions contemplated
hereby, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom
(including any refusal by the Issuing Bank to honor a demand for payment under a
Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), (iii) any actual
or alleged presence or release of Hazardous Materials on or from any property
owned or operated by the Borrower or any of its Subsidiaries, or any
Environmental Liability related in any way to the Borrower or any of its
Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on contract, tort
or any other theory and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
are determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee.
(c) To the extent permitted by applicable law, the Borrower shall not assert,
and hereby waives, any claim against any Indemnitee, on any theory of liability,
for special, indirect, consequential or punitive damages (as opposed to direct
or actual damages) arising out of, in connection with, or as a result of, this
Agreement or any agreement or instrument contemplated hereby, the Transactions,
any Loan or Letter of Credit or the use of the proceeds thereof.
(d) All amounts due under this Section shall be payable promptly after written
demand therefor.
SECTION 8.04. Successors and Assigns. (a) The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby (including any Affiliate of
the Issuing Bank that issues any Letter of Credit), except that the Borrower may
not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of the Bank (and any attempted assignment or
transfer by the Borrower without such consent shall be null and void). Nothing
in this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby (including any Affiliate of the Issuing Bank that issues any
Letter of Credit) and, to the extent expressly contemplated hereby, the Related
Parties of the Bank and the Issuing Bank) any legal or equitable right, remedy
or claim under or by reason of this Agreement.
(b) The Bank may assign to one or more assignees all or a portion of its rights
and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it); provided that, except in the
case of an assignment to an Affiliate of the Bank, the Borrower must give its
prior written consent to such assignment (which consent shall not be
unreasonably withheld); and provided further that any consent of the Borrower
otherwise required under this paragraph shall not be required if an Event of
Default under clause (h) or (i)
<PAGE>
of Article VII has occurred and is continuing. Subject to notification of an
assignment, the assignee shall be a party hereto and, to the extent of the
interest assigned, have the rights and obligations of the Bank under this
Agreement, and the Bank shall, to the extent of the interest assigned, be
released from its obligations under this Agreement (and, in the case of an
assignment covering all of the Bank's rights and obligations under this
Agreement, the Bank shall cease to be a party hereto but shall continue to be
entitled to the benefits of Sections 2.12, 2.13, 2.14 and 8.03). Any assignment
or transfer by the Bank of rights or obligations under this Agreement that does
not comply with this paragraph shall be treated for purposes of this Agreement
as a sale by the Bank of a participation in such rights and obligations in
accordance with paragraph (e) of this Section.
(c) Chase, acting for this purpose as an agent of the Borrower, will maintain at
one of its offices in The City of New York a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitment of, and principal amount of the
Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof
from time to time (the "Register"). The entries in the Register shall be
conclusive, and the Borrower and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Borrower and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance executed by
an assigning Lender and an assignee and any written consent to such assignment
required by paragraph (b) of this Section, Chase shall accept such Assignment
and Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(e) The Bank may, without the consent of the Borrower, sell participations to
one or more banks or other entities (a "Participant") in all or a portion of the
Bank's rights and obligations under this Agreement (including all or a portion
of its Commitment and the Loans owing to it); provided that (i) the Bank's
obligations under this Agreement shall remain unchanged, (ii) the Bank shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrower shall continue to deal solely and
directly with the Bank in connection with the Bank's rights and obligations
under this Agreement. Any agreement or instrument pursuant to which the Bank
sells such a participation shall provide that the Bank shall retain the sole
right to enforce this Agreement and to approve any amendment, modification or
waiver of any provision of this Agreement; provided that such agreement or
instrument may provide that the Bank will not, without the consent of the
Participant, agree to any amendment, modification or waiver described in the
first proviso to Section 8.02(b) that affects such Participant. Subject to
paragraph (d) of this Section, the Borrower agrees that each Participant shall
be entitled to the benefits of Sections 2.12, 2.13 and 2.14 to the same extent
as if it were the Bank and had acquired its interest by assignment pursuant to
paragraph (b) of this Section.
<PAGE>
(f) A Participant shall not be entitled to receive any greater payment under
Section 2.13 or 2.15 than the Bank would have been entitled to receive with
respect to the participation sold to such Participant, unless the sale of the
participation to such Participant is made with the Borrower's prior written
consent.
(g) The Bank may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement to secure obligations of the Bank,
including any pledge or assignment to secure obligations to a Federal Reserve
Bank, and this Section shall not apply to any such pledge or assignment of a
security interest; provided that no such pledge or assignment of a security
interest shall release the Bank from any of its obligations hereunder or
substitute any such pledgee or assignee for the Bank as a party hereto.
SECTION 8.05. Survival. All covenants, agreements, representations and
warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the Bank and shall survive the execution
and delivery of this Agreement and the making of any Loans and the issuance of
any Letters of Credit, regardless of any investigation made by the Bank or on
its behalf and notwithstanding that the Bank or the Issuing Lender may have had
notice or knowledge of any Default or incorrect representation or warranty at
the time any credit is extended hereunder, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
fee or any other amount payable under this Agreement is outstanding and unpaid
or any Letter of Credit is outstanding and so long as the Commitment has not
expired or terminated. The provisions of Sections 2.13, 2.14, 2.15 and 8.03 and
Article VII shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the Commitment
or the termination of this Agreement or any provision hereof.
SECTION 8.06. Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and any
separate letter agreements with respect to fees payable to the Bank constitute
the entire contract among the parties relating to the subject matter hereof and
supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof. Except as provided in Section 4.01, this
Agreement shall become effective when it shall have been executed by the Bank
and when the Bank shall have received a counterpart hereof which bears the
signature of the Borrower, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Delivery of an executed counterpart of a signature page of this Agreement by
telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.
SECTION 8.07. Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.
<PAGE>
SECTION 8.08. Right of Setoff. If an Event of Default shall have occurred and be
continuing, the Bank and each of its Affiliates is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other obligations at any time owing by the Bank and
such Affiliate to or for the credit or the account of the Borrower against any
of and all the obligations of the Borrower now or hereafter existing under this
Agreement held by the Bank, irrespective of whether or not the Bank shall have
made any demand under this Agreement and although such obligations may be
unmatured. The rights of the Bank under this Section are in addition to other
rights and remedies (including other rights of setoff) which the Bank may have.
SECTION 8.09. Governing Law; Jurisdiction; Consent to Service of Process. (a)
This Agreement shall be construed in accordance with and governed by the law of
the State of New York.
(b) The Borrower hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of the Supreme Court of the State
of New York sitting in New York County and of the United States District Court
of the Southern District of New York, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Bank may otherwise have to bring any action or proceeding
relating to this Agreement against the Borrower or its properties in the courts
of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement in any court referred to in paragraph (b)
of this Section. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 8.01. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.
<PAGE>
SECTION 8.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 8.11. Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 8.12. Confidentiality. Each of the Bank and the Issuing Bank agrees to
maintain the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to its and its Affiliates' directors, officers,
employees and agents, including accountants, legal counsel and other advisors
(it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or the enforcement of rights
hereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement, (g) with the consent of the Borrower or (h) to the extent
such Information (i) becomes publicly available other than as a result of a
breach of this Section or (ii) becomes available to the Bank or the Issuing Bank
on a nonconfidential basis from a source other than the Borrower. For the
purposes of this Section, "Information" means all information received from the
Borrower relating to the Borrower or its business, other than any such
information that is available to the Bank on a nonconfidential basis prior to
disclosure by the Borrower; provided that, in the case of information received
from the Borrower after the date hereof, such information is clearly identified
at the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
SECTION 8.13. Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with
all fees, charges and other amounts which are treated as interest on such Loan
under applicable law (collectively the "Charges"), shall exceed the maximum
lawful rate (the "Maximum Rate") which may be
<PAGE>
contracted for, charged, taken, received or reserved by the Bank in accordance
with applicable law, the rate of interest payable in respect of such Loan
hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the interest and
Charges payable to the Bank in respect of other Loans or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated amount,
together with interest thereon at the Federal Funds Effective Rate to the date
of repayment, shall have been received by the Bank.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK - SIGNATURE PAGE FOLLOWS
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
FACTSET RESEARCH SYSTEMS INC.
By /s/ ERNEST S. WONG
Ernest S. Wong
Senior Vice President, Chief Financial Officer
and Secretary
THE CHASE MANHATTAN BANK
By /s/ DAVID SHORT
David Short
Vice President
<PAGE>
EXHIBIT A
OPINION OF COUNSEL FOR THE BORROWER
[APPROVED VERSION TO BE SUPPLIED BY COUNSEL]
<PAGE>
Schedule 3.06
Disclosed Matters
None
<PAGE>
Schedule 3.09
Tax Matters
New York State Franchise Tax Inquiry
FYE 8/31/93 (refund claim of $167 open only), 8/31/94, 8/31/95, 8/31/96
New York State Sales/Use Tax Inquiry
The period from 9/1/86 to 8/31/96
Connecticut State Income Tax Inquiry
The period from 9/1/92 to 8/31/97
City of New York Income Tax Inquiry
The period from 0/1/96 to 8/31/97
Other Sales/Use Tax filing compliance issues
<PAGE>
Schedule 6.01
Existing Indebtedness
Issuing Bank Amount Beneficiary
--------------------------------- ---------------- ----------------------------
The Chase Manhattan Bank $40,541.67 Conair Corporation
(Expiration date 4/28/99)
--------------------------------- ---------------- ----------------------------
The Chase Manhattan Bank $170,865.00 Greenwich Plaza Inc.
c/o Ashforth Properties
(Expiration date 5/5/99)
--------------------------------- ---------------- ----------------------------
Morgan Guaranty Trust $68,010.00 Ninety Park Avenue LLC
Company of New York (Expiration date 12/31/98)
<PAGE>
Schedule 6.02
Existing Liens
None
<PAGE>
Schedule 6.08
Existing Restrictions
None
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27
This schedule contains summary financial information extracted from FactSet
Research Systems Inc. consolidated statement of financial condition,
consolidated statement of income, and consolidated statement of cash flows for
the period ending November 30, 1998, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> NOV-30-1998
<CASH> 44,262
<SECURITIES> 0
<RECEIVABLES> 10,638
<ALLOWANCES> 927
<INVENTORY> 0
<CURRENT-ASSETS> 60,731
<PP&E> 15,775
<DEPRECIATION> 1,909
<TOTAL-ASSETS> 78,166
<CURRENT-LIABILITIES> 20,751
<BONDS> 0
0
0
<COMMON> 101
<OTHER-SE> 56,857
<TOTAL-LIABILITY-AND-EQUITY> 78,166
<SALES> 23,830
<TOTAL-REVENUES> 23,830
<CGS> 0
<TOTAL-COSTS> 17,236
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 7,087
<INCOME-TAX> 2,767
<INCOME-CONTINUING> 4,320
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,320
<EPS-PRIMARY> .43<F1>
<EPS-DILUTED> .39
<FN>
<F1> FOR PURPOSES OF THIS STATEMENT, PRIMARY MEANS BASIC.
</FN>
</TABLE>
