<PAGE> FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
Commission file number 1-1969
CERIDIAN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 52-0278528
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8100 34th Avenue South, Minneapolis, Minnesota 55425
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612)853-8100
(Former name, former address and former fiscal year if changed from last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
The number of shares of registrant's Common Stock, par value $.50 per
share, outstanding as of July 31, 1995, was 45,696,230.
<PAGE>
CERIDIAN CORPORATION AND SUBSIDIARIES
FORM 10-Q
INDEX
Pages
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Operations
for the three and six month periods ended
June 30, 1995 and 1994 ............................. 3
Consolidated Balance Sheets as of
June 30, 1995 and December 31, 1994 ................ 4
Consolidated Statements of Cash Flows for the six
month periods ended June 30, 1995 and 1994 ......... 5
Notes to Consolidated Financial Statements .............. 6-7
In the opinion of the Company, the unaudited consolidated
financial statements reflect all adjustments (consisting only of
normal recurring accruals, except as set forth in the notes to
consolidated financial statements) necessary to present fairly
the financial position as of June 30, 1995, and results of
operations for the three and six month periods and cash flows
for the six month periods ended June 30, 1995 and 1994.
The results of operations for the six month period ended
June 30, 1995, are not necessarily indicative of the results to
be expected for the full year.
The consolidated financial statements should be read in
conjunction with the notes to consolidated financial statements.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ................. 8-16
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders.. 17
Item 6. Exhibits and Reports on Form 8-K .................... 17
Signature ......................................................... 18
- 2 -
<PAGE>
FORM 10-Q
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS Ceridian Corporation
(Unaudited) and Subsidiaries
For Periods Ended June 30,
Three Months Six Months
1995 1994 1995 1994
(Dollars in millions, except per share data)
<S> <C> <C> <C> <C>
Revenue
Product sales $ 135.1 $ 124.3 $ 273.3 $ 236.8
Services 118.4 94.2 238.0 203.0
Total 253.5 218.5 511.3 439.8
Cost of revenue
Product sales 100.6 99.0 208.1 189.3
Services 59.0 44.5 110.1 92.8
Total 159.6 143.5 318.2 282.1
Gross profit 93.9 75.0 193.1 157.7
Operating expenses
Selling, general and
administrative 55.4 48.2 110.2 97.0
Technical expense 16.1 11.7 32.3 22.6
Other expense (income) 0.7 0.1 0.2 0.5
Earnings before interest
and taxes 21.7 15.0 50.4 37.6
Interest income 2.8 3.2 5.5 5.1
Interest expense (0.4) (0.4) (0.7) (0.8)
Earnings before income taxes 24.1 17.8 55.2 41.9
Income tax provision 2.1 1.4 4.8 3.3
Net earnings $ 22.0 $ 16.4 $ 50.4 $ 38.6
Primary earnings per share $ 0.40 $ 0.29 $ 0.94 $ 0.70
Fully diluted earnings
per share $ 0.38 $ 0.29 $ 0.88 $ 0.69
Weighted average common shares
and equivalents (000's)
Primary 47,068 45,840 46,944 45,716
Fully diluted 57,452 56,224 57,328 56,100
See notes to consolidated financial statements.
</TABLE>
- 3 -
<PAGE>
<TABLE>
<CAPTION>
FORM 10-Q
CONSOLIDATED Ceridian Corporation
BALANCE SHEETS (Unaudited) and Subsidiaries
June 30, December 31,
Assets 1995 1994
(In Millions)
<S> <C> <C>
Cash and equivalents $ 114.0 $ 116.8
Short-term investments 84.5 54.6
Trade and other receivables, net 157.3 141.4
Inventories 28.3 25.8
Other current assets 23.8 7.5
Total current assets 407.9 346.1
Investments and advances 5.3 14.5
Property, plant and equipment, net 102.9 97.8
Prepaid pension cost 83.6 78.0
Goodwill and other intangibles 123.8 128.0
Capitalized software and other
noncurrent assets 40.7 25.9
Total assets $ 764.2 $ 690.3
Liabilities And Stockholders' Equity
Short-term debt and current
portion of long-term obligations $ 1.5 $ 1.2
Accounts payable 28.2 30.7
Customer advances 58.9 17.1
Deferred income 76.6 68.6
Accrued taxes 57.9 56.9
Employee compensation and benefits 44.4 53.5
Restructure reserves, current portion 17.3 18.8
Other accrued expenses 61.9 60.0
Total current liabilities 346.7 306.8
Long-term obligations, less current portion 12.9 17.5
Deferred income taxes 8.6 7.7
Restructure reserves, less current portion 55.7 69.5
Employee benefit plans 81.4 80.5
Deferred income and other
noncurrent liabilities 21.8 21.8
Stockholders' equity 237.1 186.5
Total liabilities and stockholders'
equity $ 764.2 $ 690.3
See notes to consolidated financial statements.
</TABLE>
- 4 -
<PAGE>
<TABLE>
<CAPTION>
FORM 10-Q
CONSOLIDATED STATEMENTS OF Ceridian Corporation
CASH FLOWS (Unaudited) and Subsidiaries
For Periods Ended June 30,
Six Months
1995 1994
(In Millions)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 50.4 $ 38.6
Adjustments to reconcile net earnings
to net cash provided by (used for)
operating activities:
Depreciation 15.9 12.6
Amortization of deferred assets 6.5 1.8
Restructure reserves utilized (15.6) (34.7)
Net change in working capital items:
Trade and other receivables (16.0) (5.6)
Inventories (2.5) 3.6
Other current assets (6.3) 1.6
Accounts payable 5.2 (4.8)
Customer advances 41.7 (38.8)
Deferred income 8.1 26.6
Other current liabilities (6.2) 8.0
Other 1.0 --
Net cash provided by (used for)
operating activities 82.2 8.9
CASH FLOWS FROM INVESTING ACTIVITIES
Expended for capital assets and software (38.4) (20.3)
Expended for business acquisitions (9.8) (56.3)
Short-term investments (29.9) 39.7
Proceeds from sales of businesses,
investments and capital assets -- 33.5
Other 0.3 0.2
Net cash provided by (used for)
investing activities (77.8) (3.2)
CASH FLOWS FROM FINANCING ACTIVITIES
Short-term debt, net -- (1.6)
Repayment of other debt (4.0) --
Proceeds from sale of 5-1/2% Preferred Stock -- 15.5
Preferred stock dividends (6.5) (6.5)
Exercise of stock options and other 3.1 3.6
Net cash provided by (used for)
financing activities (7.4) 11.0
Effect of exchange rate changes on cash 0.2 (0.3)
NET CASH PROVIDED (USED) (2.8) 16.4
Cash and equivalents at beginning of period 116.8 112.4
Cash and equivalents at end of period $ 114.0 $ 128.8
See notes to consolidated financial statements.
</TABLE>
- 5 -
<PAGE>
FORM 10-Q
CERIDIAN CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1995
(Dollars in millions)
(Unaudited)
<TABLE>
<CAPTION>
RECEIVABLES
June 30, December 31,
1995 1994
<S> <C> <C>
Trade and Other Receivables, Net:
Trade, less allowance of $6.1 and $6.2 $ 76.8 $ 73.9
Unbilled 73.6 57.3
Other 6.9 10.2
Total $ 157.3 $ 141.4
</TABLE>
FOREIGN CURRENCY FORWARD CONTRACTS
In March 1995, the Company's subsidiary in the United Kingdom ("CDCL UK")
entered into an agreement with its principal bank to purchase U.S. dollars,
for an aggregate amount of 5,150,256 pounds sterling, at specified dates,
generally on a monthly basis, between November 1995 and September 1998. The
U.S. dollar value of these contracts at June 30, 1995 was $8.0 which was
not materially different from the value at inception, and no amount of
deferred gain or loss had been amortized to operations. The forward
contracts will serve as a hedge of an identifiable foreign currency
commitment; namely, the delivery of goods manufactured in a U.S. facility
of the Company to satisfy a customer contract of CDCL UK. The forward
contracts are intended to eliminate economic and accounting risks arising
from fluctuations in the exchange rate between the two currencies by
matching forward contract maturities to customer contract performance. Any
gain or loss on the forward contracts, measured by the difference between
the contract rate and the spot rate at the current balance sheet date, will
be deferred (unless the deferral is expected to lead to recognizing losses
in future periods) and included in cost of sales along with the related
inventoried costs, effectively converting the dollar costs to pounds.
- 6 -
<PAGE>
FORM 10-Q
CERIDIAN CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1995
(Dollars in millions)
(Unaudited)
<TABLE>
<CAPTION>
STOCKHOLDERS' EQUITY
June 30, December 31,
1995 1994
<S> <C> <C>
5-1/2% Cumulative Convertible Exchangeable
Preferred Stock, $100 par value
(liquidation preference of $236.0)
Shares issued and outstanding 47,200 $ 4.7 $ 4.7
Common Stock
Par value - $.50
Shares authorized - 100,000,000
Shares issued - 45,720,195 and 45,515,123 22.9 22.8
Shares outstanding - 45,665,955 and
45,401,593
Additional paid-in capital 859.4 849.6
Accumulated deficit (620.2) (664.2)
Foreign currency translation adjustments (2.1) (2.2)
Restricted stock awards (22.3) (17.6)
Pension liability adjustment (4.2) (4.2)
Treasury stock, at cost (54,240 and 113,530
common shares) (1.1) (2.4)
Total stockholders' equity $ 237.1 $ 186.5
</TABLE>
INTEREST RATE COLLARS AND SWAPS
During second quarter 1995, Ceridian executed a series of six interest rate
collar transactions of $100.0 each for the purpose of hedging interest rate
risk on invested customer deposits held in its tax filing trust. The
counterparties to these arrangements are domestic commercial banks with
debt ratings of A or better. Under current accounting standards, neither
the collar arrangements nor the related trust investments and offsetting
liability to customers are reflected in the Company's balance sheet. These
arrangements, which do not require collateral, provide for the bank to pay
Ceridian the amount by which a certain index of short-term interest rates
falls below a floor strike level (5% or 5.5%). Alternatively, when that
index exceeds a cap strike level (ranging from 6.15% to 8.47% and averaging
7.45%), Ceridian pays out the excess above the cap strike level. The
remaining terms of the collars range from 11 to 41 months. In addition to
the collar arrangements, the Company continued to hold at June 30, 1995,
three interest rate swap agreements, maturing in the first half of 1996,
with an A-rated financial institution for an aggregate notional amount of
$75.0 with no collateral required. The risk of accounting loss through
non-performance by the counterparties under any of these arrangements is
considered negligible.
- 7 -
<PAGE>
CERIDIAN CORPORATION AND SUBSIDIARIES
FORM 10-Q
June 30, 1995
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
For the quarter ended June 30, 1995, Ceridian Corporation (the
"Company") reported net earnings of $22.0 million, or $.38 per fully
diluted share of common stock, on revenue of $253.5 million, compared to
net earnings of $16.4 million, or $.29 per fully diluted common share, on
revenue of $218.5 million for the second quarter 1994. For the six months
ended June 30, 1995, the Company reported net earnings of $50.4 million, or
$.88 per fully diluted share of common stock, on revenue of $511.3 million,
compared to net earnings of $38.6 million, or $.69 per fully diluted common
share, on revenue of $439.8 million for the first half of 1994.
The following table sets forth revenue for the Company, its two
industry segments and the businesses that comprise those segments for the
three and six month periods ended June 30, 1995 and June 30, 1994,
respectively:
For Periods Ended June 30,
Three Months Six Months
1995 1994 1995 1994
(Dollars in millions)
Information Services Segment
Arbitron $ 36.4 $ 31.3 $ 64.6 $ 59.7
Ceridian Employer Services 90.0 65.9 190.4 143.3
Other Services (1) -- 0.8 -- 5.4
Total Information Services 126.4 98.0 255.0 208.4
Defense Electronics Segment
Computing Devices International 127.1 120.5 256.3 231.4
Total Revenue $ 253.5 $ 218.5 $ 511.3 $ 439.8
(1) Primarily consists of revenue from TeleMoney Services and the
Company's related network and computer center operations, which were sold
in May 1994.
- 8 -
<PAGE>
CERIDIAN CORPORATION AND SUBSIDIARIES
FORM 10-Q
June 30, 1995
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations (cont.)
The following table sets forth the percentage of the Company's total
revenue by industry segment, the gross profit of each of the Company's
industry segments as a percentage of that segment's revenue, and certain
items in the consolidated statements of operations as a percentage of total
revenue, for the periods indicated.
For Periods Ended June 30,
Three Months Six Months
1995 1994 1995 1994
Revenue:
Information Services 49.9% 44.8% 49.9% 47.4%
Defense Electronics 50.1% 55.2% 50.1% 52.6%
Total revenue 100.0% 100.0% 100.0% 100.0%
Gross profit:
Information Services 52.8% 52.3% 55.3% 53.9%
Defense Electronics 21.4% 19.8% 20.3% 19.6%
Total gross profit 37.0% 34.4% 37.8% 35.9%
Operating expenses
Selling, general and
administrative 21.9% 22.1% 21.6% 22.1%
Technical expense 6.4% 5.4% 6.3% 5.1%
Other expense (income) 0.3% 0.0% 0.0% 0.1%
Total operating expenses 28.5% 27.5% 27.9% 27.3%
Earnings before interest
and taxes 8.6% 6.9% 9.9% 8.5%
Interest income (expense) 0.9% 1.3% 0.9% 1.0%
Earnings before taxes 9.5% 8.1% 10.8% 9.5%
Income tax provision 0.8% 0.6% 0.9% 0.8%
Net earnings 8.7% 7.5% 9.9% 8.8%
Revenue. The Company's revenue growth of 16.0% and 16.3% in the
quarterly and six month periods, respectively, was primarily due to
Information Services, whose revenue increased 28.9% in the quarterly
comparison and 22.4% in the six month comparison. Employer Services was
the most significant contributor to this increase, reporting revenue growth
of 36.6% and 32.9% in the respective quarterly and year-to-date
comparisons. Almost 40% of Employer Services' revenue growth in quarterly
and year-to-date comparisons was due to acquisitions made during 1994,
principally Tesseract Corporation ("Tesseract") and User Technology
Services, Inc. Apart from acquisitions, Employer Services' revenue
- 9 -
<PAGE>
CERIDIAN CORPORATION AND SUBSIDIARIES
FORM 10-Q
June 30, 1995
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations (cont.)
increased 20% in the year-to-date comparison, which included an increase in
the average annual yield on the investment of payroll tax filing deposits
of 188 basis points. Excluding additional revenue derived from increased
investment yields, Employer Services' revenue increased 13% in the year-to-
date comparison. This internal revenue growth was primarily due to new
customer installations for payroll processing services and a 20% increase
in average invested tax filing balances to $1.1 billion, reflecting growth
in the tax filing customer base. The annualized revenue value of orders
received by Employer Services during the first half of 1995 increased by
more than 20% compared to the year earlier period, although such growth
could moderate if significant numbers of potential payroll processing
customers elect to defer placing an order until the introduction of
Employer Services' enhanced payroll processing system in 1996.
Because of the significance to Employer Services' revenue of
investment income from tax filing deposits, and the interest rate
sensitivity of that income, the Company entered into a series of six
interest rate collar transactions, each with a notional amount of $100
million, during the second quarter 1995. These transactions, along with
three interest rate swap transactions with an aggregate notional amount of
$75 million, are described more fully in the financial statement note
entitled "Interest Rate Swaps and Collars."
On July 13, 1995, the Company announced that it had agreed to acquire
Resumix, Inc., which provides skills management software and services that
enable an organization to manage large volumes of incoming resume data to
identify qualified candidates for hire and match them with available
staffing needs, and to manage the skills of its existing work force by
placing current employees in new jobs or projects. Resumix's 1994 revenue
was $21 million. Consideration for the acquisition, which is subject to
the approval of Resumix's shareholders, will be shares of the Company's
common stock. The Company expects to account for the transaction as a
pooling of interests.
Arbitron's second quarter 1995 revenue increased 16.0% from the year
earlier quarter, which also resulted in an 8.3% revenue increase in the six
month comparison. Revenue from radio audience measurement services and
analytical software increased 10.9% and 9.6% in the quarterly and year-to-
date comparisons, respectively, due to an increased rate of customer
renewals (which in 1995 have also tended to occur earlier in the year), a
higher percentage of syndicated ratings customers also subscribing for
analytical software applications, and price increases related to increases
in the sample size for radio surveys. In the second quarter 1995, the
revenue increase from radio was complemented by a revenue increase
resulting from the Company's year-end 1994 exchange of its interest in the
Competitive Media Reporting ("CMR") joint venture for an interest in the
Scarborough Research Partnership ("SRP"). As a result of this
transaction, Arbitron no longer derives revenue from the sale of commercial
- 10 -
<PAGE>
CERIDIAN CORPORATION AND SUBSIDIARIES
FORM 10-Q
June 30, 1995
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations (cont.)
monitoring services provided by CMR, but SRP's results are consolidated
with Arbitron's. SRP's revenue is heavily weighted toward the second,
third and fourth quarters of each year, coinciding with deliveries of the
Scarborough Report.
Computing Devices' revenue increased 5.5% in the quarterly comparison
and 10.8% in the six month comparison, due to 18% and 27% revenue increases
in the respective periods in its international operations, principally
Canada. Although about 60% of the year-to-date revenue increase from
international operations was attributable to the Iris contract to provide a
communications system to the Canadian defense department, performance under
that contract has progressed to the point that the Company does not expect
it to be the source of revenue increases in future periods. The balance of
the revenue increase from international operations was primarily
attributable to ground systems products of the Canadian operations,
particularly a $105 million, multi-year contract to develop and produce a
light armored vehicle reconnaissance system, and to reconnaissance and
avionics contracts in the United Kingdom operations. Revenue from
Computing Devices' U.S. operations declined about 5% in the year-to-date
comparison. For all of 1995, Computing Devices expects its orders to be
about 15% below the level achieved in 1994, when it achieved its highest
order year ever.
Gross Margin. The Company's gross margin improvement in the quarterly
and year-to-date comparisons reflected margin improvements in each of
industry segments and the relatively greater revenue growth in the
Information Services segment, which has higher gross margins than the
Defense Electronics segment. The improvement in Information Services
primarily reflected the very low gross margin for TeleMoney prior to its
sale in May 1994, and an increase in the gross margin in Arbitron in both
the quarterly and year-to-date comparisons. Arbitron's improvement was
primarily a function of revenue mix, as low margin revenue from the sale of
commercial monitoring services provided by CMR did not continue in 1995 as
a result of the CMR/SRP transaction, and higher margin revenue from radio
audience measurement services and analytical software increased. Employer
Services' gross margin increased only a small amount in the quarterly and
year-to-date comparisons, as improvements that would otherwise have been
expected to result from higher business volume were mostly offset by
incremental costs associated with the transition of customers to a national
telephone customer support center (a transition that was completed in the
second quarter 1995), and with ongoing projects to establish a centralized
payroll data processing system and to upgrade Employer Services' management
information systems. Incremental costs associated with the centralization
of payroll processing, particularly to provide duplicate processing of
payrolls at district offices and at the centralized facilities while
customers are transitioned to the enhanced payroll processing software, are
expected to put pressure on Employer Services' margins in future periods.
- 11 -
<PAGE>
CERIDIAN CORPORATION AND SUBSIDIARIES
FORM 10-Q
June 30, 1995
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations (cont.)
The increase in Computing Devices' gross margin in the quarterly and
year-to-date comparisons was primarily due to improved gross margins in
Computing Devices' U.S. operations in both comparative periods and an
increase in the gross margin on the Iris contract in the second quarter
1995. The margin improvement in the U.S. operations reflected the
completion of certain contracts, the movement of other contracts from the
development phase into the production phase, and the benefits of reduced
employment levels. The margin increase in connection with the Iris
contract reflected the achievement of certain contract milestones and the
corresponding release of certain holdbacks. Partially offsetting these
improvements were increased costs in the United Kingdom operations in the
second quarter 1995 reflecting provisions for additional costs to complete
the development contract for the Eurofighter 2000 aircraft and for
consolidating facilities.
Operating Expenses. The Company's operating expenses (selling,
general and administrative ("SG&A") expenses, technical expense and other
expense) increased in both the three and six month comparisons at a faster
rate than its revenue increase. This was true in both industry segments,
with the greatest increase as a percentage of revenue occurring in
technical expense. Information Services' technical expense as a percentage
of revenue increased from 4.9% and 4.7% of revenue in the second quarter
and first half of 1994, respectively, to 6.1% and 6.6% of revenue in the
comparable 1995 periods. Virtually all of this segment's increase in
technical expense, both in dollars and as a percentage of revenue, was in
Employer Services, reflecting the June 1994 acquisition of Tesseract and
spending in connection with the enhancement of its payroll processing
software. An increase in research and development expenses in Computing
Devices was the primary factor in causing its technical expense to increase
from 5.8% and 5.5% of revenue in the second quarter and first half of 1994,
respectively, to 6.6% and 6.1% of revenue in the comparable 1995 periods.
SG&A expenses for the Company as a whole decreased somewhat as a
percentage of revenue in the three and six month comparisons, even though
such expenses increased somewhat as a percentage of revenue for each
industry segment in the quarterly comparison (from 33.6% to 33.9% for
Information Services and from 7.2% to 7.8% for Defense Electronics) and
were little changed as a percentage of revenue in the six month comparison
(Information Services decreased from 33.5% to 33.4% and Defense Electronics
increased from 7.6% to 7.8%). This primarily reflects certain expenses,
such as the compensation expense associated with the Company's performance
restricted stock plan, that were not allocated to either industry segment
in the first half of 1994 but were so allocated in the first half of 1995.
Apart from this factor, Information Services' selling expense decreased as
a percentage of revenue, primarily reflecting the portion of Employer
Services' increased revenue with which there is associated a lesser
percentage of selling expense, such as revenue attributable to increased
interest rates on tax filing deposits and from acquisitions made during
- 12 -
<PAGE>
CERIDIAN CORPORATION AND SUBSIDIARIES
FORM 10-Q
June 30, 1995
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations (cont.)
1994. General and administrative expenses increased as a percentage of
revenue in Information Services, largely due to amortization of goodwill
and other intangible assets associated with acquisitions made during 1994.
Other expense in the second quarter 1995 primarily consisted of the
other partner's share of SRP's income, and in the first half 1995 primarily
consisted of the Company's share of the loss incurred by an entity in which
it has a minority investment. Other expense during the 1994 periods
primarily consisted of the Company's share of CMR's loss.
Earnings Before Interest and Taxes. The Company's earnings before
interest and taxes ("EBIT") increased $6.7 million, or 44%, in the
quarterly comparison and $12.8 million, or 34%, in the year-to-date
comparison. The cumulative EBIT increases for the Company's two industry
segments are not as large as for the Company as a whole because of the
previously mentioned operating expenses that were not allocated to the
industry segments in the 1994 periods. Information Services' EBIT
increased $2.0 million, or 14.8%, in the quarterly comparison, and $6.6
million, or 20.6%, in the year-to-date comparison. As a percentage of
revenue, however, Information Services' EBIT decreased from 13.7% to 12.2%
in the quarterly comparison, and from 15.5% to 15.3% in the year-to-date
comparison. Computing Devices' EBIT increased $0.7 million, or 9.0%, in
the quarterly comparison, and $1.4 million, or 9.3%, in the year-to-date
comparison. As a percentage of revenue, Computing Devices' EBIT increased
from 6.7% to 6.9% in the three month comparison, but declined from 6.4% to
6.3% in the six month comparison.
Interest Income and Expense and Taxes. The increase in interest
income in the six month comparison reflected higher interest rates in the
first half of 1995, although a decrease in the balances of cash and short-
term investments through most of the second quarter 1995 caused a decrease
in interest income in the quarterly comparison. The provisions for income
taxes for the first half of 1994 and 1995 primarily represent tax charges
related to the Company's international operations.
Financial Condition
The Company's cash and short-term investments increased from $171.4
million at December 31, 1994 to $198.5 million at June 30, 1995. Although
none of the December 31 balance was subject to any restrictions, $1.1
million of the June 30, 1995 balance was subject to restriction in
connection with standby letters of credit issued on behalf of Computing
Devices' Canadian operations to serve as performance guarantees. In
addition, approximately $80 million of the Company's cash and short-term
investments at June 30, 1995 were the U.S. dollar equivalent of unhedged
- 13 -
<PAGE>
CERIDIAN CORPORATION AND SUBSIDIARIES
FORM 10-Q
June 30, 1995
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Financial Condition (cont.)
Canadian dollar cash and short-term investments held by the Company's
Canadian subsidiary. The Company does not expect that this balance in
Canada will decrease appreciably during the remainder of 1995.
During the first six months of 1995, operating cash flows provided
$82.2 million of cash, after having provided $8.9 million of cash in the
first half of 1994. Net earnings adjusted to a cash basis provided cash of
$73.8 million in the first half of 1995 and $53.0 million in the first half
of 1994. A decrease in working capital provided $24.0 million of cash in
the first half of 1995, while an increase in working capital utilized $9.4
million of cash in the 1994 period. Reflected in the first half 1995 cash
provided in connection with working capital items was a $49.8 million
increase in customer advances and deferred income, primarily reflecting the
June 1995 receipt of a customer advance as a result of Computing Devices
achieving a significant milestone under the Iris contract. Reflected in
cash utilized in the first half of 1994 in connection with working capital
items was a $12.2 million reduction in customer advances and deferred
income, primarily reflecting the utilization of the last in a series of
semiannual customer advances in connection with the Iris contract.
Although the Company no longer receives regular, semiannual customer
advances under that contract, additional customer advances tied to the
achievement of significant contractual milestones may be received from time
to time in the future. Partially offsetting the 1995 cash provided by
working capital items was a $16.0 million increase in trade and other
receivables, primarily reflecting increases in Computing Devices' unbilled
receivables, principally related to the Iris contract. Payments of
restructure liabilities were $15.6 million and $34.7 million in the first
half of 1995 and 1994, respectively. The following table summarizes
estimated restructure payments during 1995, first half 1995 restructure
payments, and restructure payments expected during the remainder of 1995:
Expected
Estimated Payments Payments
Payments First Second
Category 1995 Half 1995 Half 1995
Severance and Related Costs $ 4.3 $ 3.7 $0.6
Equipment Lease Termination 1.7 0.5 1.2
Vacant Space 9.1 4.9 4.2
Costs to Dispose of Businesses 0.5 0.2 0.3
Legal Costs 1.2 0.7 0.5
Environmental Costs 1.3 0.7 0.6
Duplicate Processing/Support 5.5 4.9 0.6
Total $23.6 $15.6 $8.0
At June 30, 1995, the Company reported accrued restructure liabilities of
$73.0 million, which is expected to decline to $65.0 million by the end of
- 14 -
<PAGE>
CERIDIAN CORPORATION AND SUBSIDIARIES
FORM 10-Q
June 30, 1995
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Financial Condition (cont.)
1995. The 1995 estimated payments shown in the table represent a $4.8
million increase over the comparable estimate at year end 1994, with about
a third of the increase in each of vacant space and duplicate processing,
and most of the balance in environmental and severance and related costs.
The increase represents accelerated usage of such reserves rather than
adjustments to the amount of existing reserves. Restructure payments
during 1995 generally involve obligations (most significantly for vacant
space) related to past restructuring actions not involving the Company's
ongoing businesses, and to actions in Employer Services to centralize
customer service capabilities and consolidate payroll processing.
Investing activities utilized $77.8 million of cash during the first
half of 1995 and utilized $3.2 million of cash during the first half of
1994. The net use of cash during the first half of 1995 included an
increase of $29.9 million in short-term investments, as the Company's
independent investment manager increased average maturities in that period,
and expenditures of $38.4 million for capital assets and software and $9.8
million paid to acquire businesses, primarily as a result of transactions
that occurred near the end of 1994. Cash utilized for investing activities
during the first half of 1994 included $56.3 million expended for business
acquisitions, principally the acquisition of Tesseract during June 1994,
and $20.3 million expended for capital assets and software. Offsetting
most of these expenditures was $39.7 million of cash received from the
liquidation of short-term investments in the first six months of 1994, as
the Company's independent investment manager reduced average maturities
during the period, and $33.5 million of cash received from the sale of
businesses and investments, primarily the sale of TeleMoney and the final
settlement of obligations under a tax matters agreement relating to the
1986 sale of Commercial Credit Company. The largest portion of the
increase in expenditures for capital assets and software in the six month
comparison involved Employer Services, and reflected equipment to expand
and improve communications and service delivery capabilities, the
acquisition of Tesseract, and ongoing projects to introduce enhanced
payroll processing software and human resource software applications.
Financing activities utilized $7.4 million of cash during the first
half of 1995, reflecting the $3.2 million prepayment of a mortgage and $6.5
million in preferred stock dividends. During the first half of 1994,
financing activities provided $11.0 million of cash, primarily reflecting
the receipt of an additional $15.5 million in net cash proceeds from the
sale by the Company of additional shares of preferred stock as a result of
the underwriters' exercise of their over-allotment option.
During May 1995, the Company concluded a one year extension (to May
29, 1996) of its unsecured $35 million domestic revolving credit facility.
Under the terms of the extension, the Company will be able to obtain
revolving loans or standby letters of credit which may not have a final
expiration date later than May 29, 1997. At June 30, 1995, there were $1.6
- 15 -
<PAGE>
CERIDIAN CORPORATION AND SUBSIDIARIES
FORM 10-Q
June 30, 1995
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Financial Condition (cont.)
million in letters of credit and no revolving loans outstanding under the
facility. Under the terms of the extended facility, the Company must
maintain a minimum consolidated net worth which is subject to increase
based on the Company's net earnings after December 31, 1993 and certain
equity contributions to the Company after the same date. As of June 30,
1995, the Company was in compliance with this covenant by $41.6 million.
The Company is also subject to additional covenants which prescribe a fixed
charge coverage ratio of 2.25 to 1 on a rolling four quarters basis, and
which limit debt, liens, contingent obligations, operating leases and
divestitures. The Company continues to be in compliance with all covenants
associated with this credit facility.
The Company expects to meet its operating cash needs (including
accrued restructure liabilities), expenditures for capital assets and
software, dividend obligations with respect to its 5 1/2% preferred stock
and expenditures to repurchase common stock from its existing cash
balances, cash flow from operations and proceeds from the exercise of stock
options. The Company has also utilized and may in the future utilize cash
from these sources to make acquisitions. The Company expects to remain
active in this regard and to concentrate its acquisitions in areas related
to or which complement the Company's current businesses, with a primary
emphasis on its Information Services segment. In structuring any such
acquisitions, the Company would seek to emphasize the use of its common
stock as acquisition consideration in order to make pooling of interests
accounting treatment available.
- 16 -
<PAGE>
CERIDIAN CORPORATION AND SUBSIDIARIES
FORM 10-Q
June 30, 1995
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
The Company's annual meeting of stockholders was held on May 10, 1995.
Of the 45,585,022 shares of the Company's common stock entitled to vote at
the meeting, 38,572,989 shares were present at the meeting in person or by
proxy.
The ten people designated by the Company's Board of Directors as
nominees for director were elected, with voting as follows:
Total Votes Total Votes
Nominee For Withheld
Ruth M. Davis 38,475,009 97,980
Allen W. Dawson 38,478,544 94,445
Ronald James 38,477,347 95,642
Richard G. Lareau 38,221,555 351,434
George R. Lewis 38,483,571 89,418
Charles Marshall 38,478,088 94,901
Lawrence Perlman 38,479,213 93,776
Carole J. Uhrich 38,485,198 87,791
Richard W. Vieser 38,477,479 95,510
Paul S. Walsh 38,483,984 89,005
Stockholders voted to approve the Ceridian Amended and Restated 1993
Long-Term Incentive Plan. There were 26,670,807 votes cast for the Plan,
9,203,186 votes against the Plan, 484,378 shares specifically abstained
from voting on the matter. In addition, 2,214,618 shares present at the
meeting were the subject of broker non-votes on this matter.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Exhibit Description
10.01 Second Amended and Restated Credit
Agreement, dated as of May 23, 1995, among
the Registrant, Bank of America N.T. & S.A.,
as Agent and the Other Financial
Institutions Parties Thereto (the "Credit
Agreement")
11 Statement re computation of per share
earnings
- 17 -
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Quarterly Report on Form 10-Q for the
period ended June 30, 1995, to be signed on its behalf by the undersigned
thereunto duly authorized.
CERIDIAN CORPORATION
Registrant
Date: August 11, 1995 /s/L. D. Gross
L. D. Gross
Vice President and
Corporate Controller
(Principal Accounting Officer)
- 18 -
<PAGE>
EXHIBIT INDEX
Exhibit Description Code
10.01 Second Amended and Restated Credit
Agreement, dated as of May 23, 1995, among
the Registrant, Bank of America N.T. & S.A.,
as Agent and the Other Financial
Institutions Parties Thereto (the "Credit
Agreement") E
11 Statement re computation of per share
earnings E
Legend: (E) Electronic Filing
(IBR) Incorporated by reference from previous filing
(P) Printed material
<PAGE>
<PAGE>
<PAGE>
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of May 23, 1995,
Amending and Restating the Amended and
Restated Credit Agreement Dated as of
May 13, 1994 and the Credit Agreement
Dated as of June 30, 1993, as amended,
among
CERIDIAN CORPORATION,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
as Agent
and
THE OTHER FINANCIAL INSTITUTIONS PARTIES HERETO
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
1.01 Defined Terms ......................................... 1
1.02 Other Interpretive Provisions ......................... 18
(a) Defined Terms .................................. 18
(b) The Agreement .................................. 18
1.03 Accounting Principles ................................. 18
ARTICLE II
THE CREDITS
2.01 Amount and Terms of Commitments ....................... 18
(a) The Loans ...................................... 18
(b) The Letters of Credit .......................... 19
(c) Participation; Old Letters of Credit ........... 19
2.02 Notes ................................................. 19
2.03 Procedure for Borrowing ............................... 20
2.04 Letter of Credit Requests ............................. 21
2.05 Extension Letters of Credit ........................... 21
2.06 Conversion and Continuation Elections ................. 22
2.07 Voluntary Termination or Reduction of Commitments ..... 23
2.08 Optional Prepayments .................................. 24
2.09 [Reserved] ............................................ 24
2.10 Repayment ............................................. 24
2.11 Repayment of Letter of Credit Drawings ................ 24
2.12 Default in Reimbursement of Issuing Bank .............. 26
2.13 Interest .............................................. 27
2.14 Fees .................................................. 27
(a) Fees Payable to BofA and the Agent ............. 27
(b) Commitment Fees ................................ 27
(c) Letter of Credit Fees .......................... 28
(d) Fees under the Existing Credit Agreement ....... 29
2.15 Computation of Fees and Interest ...................... 29
2.16 Payments by the Company ............................... 29
2.17 Payments by the Banks to the Agent .................... 30
2.18 Sharing of Payments, Etc .............................. 31
2.19 Pro Rata Treatmentc ................................... 31
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes ................................................. 32
Document 00010273.10
Section Page
3.02 Illegality ............................................ 34
3.03 Increased Costs and Reduction of Return ............... 35
3.04 Funding Losses ........................................ 35
3.05 Inability to Determine Rates .......................... 36
3.06 Substitution of Banks ................................. 36
3.07 Survival .............................................. 37
ARTICLE IV
CONDITIONS PRECEDENT
4.01 Conditions of Initial Loans ........................... 37
(a) Second Amended and Restated Credit Agreement ... 37
(b) Notes .......................................... 37
(c) Resolutions; Incumbency ........................ 37
(d) Articles of Incorporation; By-laws ............. 37
(e) Opinion of Counsel to the Company .............. 38
(f) Payment of Fees and Expenses ................... 38
(g) Other Documents ................................ 38
(h) Cancelled Notes ................................ 38
4.02 Conditions to All Credit Extensions ................... 38
(a) Notice of Borrowing or Continuation/Conversion . 38
(b) Letter of Credit Request ....................... 38
(c) Continuation of Representations and Warranties . 38
(d) No Existing Default ............................ 38
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Corporate Existence and Power ......................... 39
5.02 Corporate Authorization; No Contravention ............. 40
5.03 Governmental Authorization ............................ 40
5.04 Binding Effect ........................................ 40
5.05 Litigation ............................................ 40
5.06 No Default ............................................ 41
5.07 ERISA Compliance ...................................... 41
5.08 Title to Properties ................................... 42
5.09 Taxes ................................................. 42
5.10 Financial Condition ................................... 42
5.11 Environmental Matters ................................. 43
5.12 Regulated Entities .................................... 43
5.13 No Burdensome Restrictions ............................ 43
5.14 Solvency .............................................. 43
5.15 Labor Relations ....................................... 43
5.16 Copyrights, Patents, Trademarks and Licenses, etc. .... 44
5.17 Material Subsidiaries and Equity Investments .......... 44
5.18 Insurance ............................................. 44
5.19 Full Disclosure ....................................... 44
Document 00010273.10
Section Page
ARTICLE VI
AFFIRMATIVE COVENANTS
6.01 Financial Statements .................................. 45
6.02 Certificates; Other Information ....................... 45
6.03 Notices ............................................... 46
6.04 Preservation of Corporate Existence, Etc. ............. 47
6.05 Maintenance of Property ............................... 47
6.06 Insurance ............................................. 48
6.07 Payment of Obligations ................................ 48
6.08 Compliance with Laws .................................. 48
6.09 Inspection of Property and Books and Records .......... 48
6.10 Environmental Laws .................................... 49
6.11 Use of Proceeds ....................................... 49
6.12 Further Assurances .................................... 49
ARTICLE VII
NEGATIVE COVENANTS
7.01 Limitation on Liens ................................... 50
7.02 Mergers, Consolidations and Dispositions of Assets .... 51
7.03 Cash Investments ...................................... 53
7.04 Indebtedness .......................................... 53
7.05 Contingent Obligations ................................ 53
7.06 Use of Proceeds ....................................... 53
7.07 [Reserved] ............................................ 54
7.08 Lease Obligations ..................................... 54
7.09 [Reserved] ............................................ 54
7.10 Consolidated Net Worth ................................ 54
7.11 [Reserved] ............................................ 54
7.12 Fixed Charge Coverage Ratio ........................... 54
7.13 Change in Business .................................... 54
7.14 [Reserved] ............................................ 54
7.15 Accounting Changes .................................... 54
7.16 Contracts of Subsidiaries ............................. 54
ARTICLE VIII
EVENTS OF DEFAULT
8.01 Event of Default ...................................... 55
(a) Non-Payment .................................... 55
(b) Representation or Warranty ..................... 55
(c) Specific Defaults .............................. 55
(d) Other Defaults ................................. 55
(e) Cross-Default .................................. 55
(f) Insolvency; Voluntary Proceedings .............. 56
Document 00010273.10
Section Page
(g) Involuntary Proceedings ........................ 56
(h) ERISA .......................................... 56
(i) Monetary Judgments ............................. 57
(j) Ownership ...................................... 57
8.02 Remedies .............................................. 57
8.03 Rights Not Exclusive .................................. 58
ARTICLE IX
THE AGENT
9.01 Appointment and Authorization ......................... 58
9.02 Delegation of Duties .................................. 58
9.03 Liability of Agent .................................... 58
9.04 Reliance by Agent ..................................... 59
9.05 Notice of Default .....................................59
9.06 Credit Decision ....................................... 60
9.07 Indemnification ....................................... 60
9.08 Agent in Individual Capacity .......................... 61
9.09 Successor Agent ....................................... 61
ARTICLE X
MISCELLANEOUS
10.01 Amendments and Waivers ................................ 62
10.02 Notices ............................................... 63
10.03 No Waiver; Cumulative Remedies ........................ 63
10.04 Costs and Expenses .................................... 64
10.05 Indemnity ............................................. 64
(a) General Indemnity .............................. 64
(b) Survival; Defense ............................... 65
10.06 Marshalling; Payments Set Aside ....................... 65
10.07 Successors and Assigns................................. 65
10.08 Assignments, Participations, etc ...................... 65
10.09 Set-off ............................................... 68
10.10 Automatic Debits of Fees .............................. 68
10.11 Notification of Addresses, Lending Offices, Etc ....... 68
10.12 Counterparts .......................................... 69
10.13 Severability .......................................... 69
10.14 No Third Parties Benefited ............................ 69
10.15 Time .................................................. 69
10.16 Governing Law and Jurisdiction ........................ 69
10.17 Waiver of Jury Trial................................... 69
10.18 Entire Agreement....................................... 70
10.19 Interpretation ........................................ 70
10.20 Term of Agreement ..................................... 70
10.21 Foreign Currency Conversion ........................... 70
Document 00010273.10
SCHEDULES
Schedule 1.01 Old Letters of Credit
Schedule 2.01 Bank Commitments and Percentages
Schedule 5.05 Litigation
Schedule 5.07 ERISA Disclosures
Schedule 5.10 Contingent Obligations and Partnerships
Schedule 5.11 Environmental Matters
Schedule 7.02 Assets Permitted to be Disposed of as of the
Closing Date
EXHIBITS
Exhibit A Compliance Certificate
Exhibit B Letter of Credit Application
Exhibit C Note
Exhibit D Notice of Borrowing
Exhibit E Notice of Conversion/Continuation
Exhibit F Opinion of Counsel to Company
Document 00010273.10
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
This SECOND AMENDED AND RESTATED CREDIT AGREEMENT is entered
into as of May 23, 1995, among Ceridian Corporation, a Delaware
corporation (the "Company"), the several financial institutions
party to this Agreement (collectively, the "Banks"; individually, a
"Bank"), and Bank of America National Trust and Savings
Association, as agent for the Banks.
WHEREAS, the Company, the Banks (other than BAI) and the Agent
are parties to that certain Amended and Restated Credit Agreement
dated as of May 13, 1994, which amended and restated that certain
Credit Agreement dated as of June 30, 1993, as amended (the
"Existing Credit Agreement"); and
WHEREAS, the parties to the Existing Credit Agreement desire
to amend certain terms of the Existing Credit Agreement;
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained herein, the Company, the Banks
and the Agent hereby agree that the Existing Credit Agreement
shall, effective as of the Closing Date, be amended and restated in
its entirety as follows:
ARTICLE I
DEFINITIONS
1.01 Defined Terms. In addition to the terms defined
elsewhere in this Agreement, the following terms have the following
meanings:
"Affected Bank" has the meaning specified in
Section 3.06.
"Affiliate" means, as to any Person, any other
Person which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person. A
Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and
policies of the other Person, whether through the ownership of
voting securities, by contract or otherwise. Without
limitation, any director, executive officer or beneficial
owner of 15% or more of the voting equity of a Person shall
for the purposes of this Agreement, be deemed to control the
other Person.
"Agent" means BofA in its capacity as agent for the
Banks hereunder, and any successor agent.
"Agent-Related Persons" means BofA and any successor
agent arising under Section 9.09, together with their
respective Affiliates, and the officers, directors, employees,
agents and attorneys-in-fact of such Persons and Affiliates.
"Agent's Payment Office" means the address for
payments set forth on the signature page hereto in relation to
the Agent or such other address as the Agent may from time to
time specify in accordance with Section 10.02.
"Aggregate Commitment" means the combined
Commitments of the Banks, in the initial amount of Thirty-Five
Million Dollars ($35,000,000), as such amount may be reduced
from time to time pursuant to this Agreement.
"Agreement" means this Second Amended and Restated
Credit Agreement, as amended from time to time in accordance
with the terms hereof.
"Applicable Margin" means
(i) with respect to Base Rate Loans, 0%; and
(ii) with respect to Offshore Rate Loans, 0.75%.
"Arranger" means BA Securities, Inc.
"Assignee" has the meaning specified in subsection
10.08(a).
"Attorney Costs" means and includes all fees and
disbursements of any law firm or other external counsel, the
allocated cost of internal legal services and all
disbursements of internal counsel.
"BAI" means Bank of America Illinois, an Illinois
chartered bank.
"Bank" (i) has the meaning specified in the
introductory clause hereto and (ii) also includes any
financial institution becoming a party hereto by execution of
an assignment and acceptance agreement in accordance with
Section 10.08.
"Bank Affiliate" means a Person engaged primarily in
the business of commercial banking and that is a Subsidiary of
a Bank or of a Person of which a Bank is a Subsidiary.
"Bankruptcy Code" means the Federal Bankruptcy
Reform Act of 1978 (12 U.S.C. S 101, et seq.).
"Base Rate" means the higher of:
(a) the rate of interest publicly announced from
time to time by BofA in San Francisco, California, as its
2
"reference rate." It is a rate set by BofA based upon
various factors including BofA's costs and desired
return, general economic conditions and other factors,
and is used as a reference point for pricing some loans,
which may be priced at, above, or below such announced
rate; and
(b) 0.50% per annum above the latest Federal Funds
Rate.
Any change in the reference rate announced by BofA
shall take effect at the opening of business on the day
specified in the public announcement of such change.
"Base Rate Loan" means a Loan that bears interest
based on the Base Rate.
"BofA" means Bank of America National Trust and
Savings Association, a national banking association.
"Borrowing" means a borrowing hereunder consisting
of Loans made to the Company on the same day by the Banks
pursuant to Article II.
"Business Day" means any day other than a Saturday,
Sunday or other day on which commercial banks in New York City
or San Francisco are authorized or required by law to close
and, if the applicable Business Day relates to any Offshore
Rate Loan, means such a day on which dealings are carried on
in the applicable offshore dollar interbank market.
"Capital Adequacy Regulation" means any guideline,
request or directive of any central bank or other Governmental
Authority, or any other law, rule or regulation, whether or
not having the force of law, in each case, regarding capital
adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditures" means, for any period, the
aggregate of all expenditures by the Company and its
Subsidiaries for the acquisition of fixed or capital assets or
additions to equipment (including replacements, capitalized
repairs and improvements during such period) as shown in the
Company's consolidated statements of cash flow for such period
in accordance with GAAP.
"Capital Lease" has the meaning specified in the
definition of Capital Lease Obligations.
"Capital Lease Obligations" means all monetary
obligations of the Company or any of its Subsidiaries under
any leasing or similar arrangement which, in accordance with
GAAP, is classified as a capital lease ("Capital Lease").
3
"Cash Equivalents" means:
(a) securities issued or fully guaranteed or
insured by the United States Government or any
agency thereof having maturities of not more than
six months from the date of acquisition;
(b) certificates of deposit, time deposits,
Eurodollar time deposits, repurchase agreements,
reverse repurchase agreements, or bankers'
acceptances, having in each case a tenor of not more
than six months, issued by any Bank, or by any U.S.
commercial or investment bank or broker having
combined capital and surplus of not less than
$100,000,000 whose short term securities are rated
at least A-1 by Standard & Poor's Corporation and
P-1 by Moody's Investors Service, Inc.;
commercial paper or promissory note of an
(c)
issuer rated at least A-1 by Standard & Poor's
Corporation or P-1 by Moody's Investors Service Inc.
and in either case having a tenor of not more than
three months.
"Closing Date" means the date on which all
conditions precedent set forth in Section 4.01 are satisfied
or waived by all Banks.
"Co-Applicant" means, with respect to any Letter of
Credit, a Subsidiary of the Company which together with the
Company signs a Letter of Credit Application.
"Code" means the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder
as from time to time in effect.
"Commitment" means, (a) as to each Bank executing
this Agreement on the Closing Date, its commitment to extend
credit to the Company in the amount set opposite its name on
Schedule 2.01 (as such amount may be reduced from time to time
in accordance with Section 2.07 or Section 10.08) and (b) as
to each financial institution becoming a Bank hereunder
pursuant to Section 10.08, its commitment to extend credit in
the amount agreed upon in the assignment and acceptance
agreement entered into by it in accordance with Section 10.08.
"Commitment Percentage" means, as to any Bank, the
percentage derived by dividing such Bank's Commitment by the
Aggregate Commitment.
"Compliance Certificate" means a certificate
delivered to the Agent by the Company pursuant to Section
6.02(a), substantially in the form of Exhibit A.
4
"Consolidated Fixed Charges" means, at any time, (a)
Consolidated Interest Expense for the four fiscal quarters
ending on or before the date of determination plus (b) Current
Maturities of Long Term Debt measured as of the last day of
the fiscal quarter ending on or before the date of
determination (but excluding principal payable under the Loan
Documents), as determined in accordance with GAAP.
"Consolidated Indebtedness" means, at any time, all
amounts which would be included as Indebtedness on a
consolidated balance sheet of the Company and its Subsidiaries
as of such time.
"Consolidated Interest Expense" means, for any
period, gross consolidated interest expense for such period
(including all commissions, discounts, fees and other charges
in connection with Letters of Credit) for the Company and its
Subsidiaries.
"Consolidated Net Income (Loss)" means, for any
period, all amounts which would, in accordance with GAAP, be
included in net income (loss) on the consolidated income
statement of the Company and its Subsidiaries for such period
minus dividends payable by the Company with respect to the
Preferred Stock for such period.
"Consolidated Net Worth" means, at any time, with respect
to the Company and its Subsidiaries shareholders' equity on the
date of determination as determined in accordance with GAAP (except
that the effects of direct charges or credits to shareholders'
equity related to accounting for pensions ("FAS 87") and foreign
currency translation ("FAS 52") are to be disregarded), including,
without duplication, 100% of the net proceeds from the issuance of
the Preferred Stock.
"Consolidated Total Assets" means, at any time, the
total consolidated assets of the Company and its Subsidiaries
measured as of the last day of the fiscal quarter ending on or
before the date of determination, as determined in accordance
with GAAP.
"Contingent Obligation" means, as to the Company or
any of its Subsidiaries, (a) any Guaranty Obligation of that
Person; (b) any reimbursement obligation of that Person with
respect to a standby letter of credit, surety bond, banker's
acceptance or similar instrument; (c) any obligation of that
Person to purchase any materials, supplies or other property
from, or to obtain the services of, another Person (other than
the Company or one of its Subsidiaries) if the relevant
contract or other related document or obligation requires that
payment for such materials, supplies or other property, or for
such services, shall be made regardless of whether delivery of
such materials, supplies or other property is ever made or
tendered, or such services are ever performed or tendered; and
5
(d) all Indebtedness (other than that of the Company or any of
its Subsidiaries) 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 (including accounts and
contract rights) owned by the Company or any such Subsidiary;
but in all events excluding obligations of the type described
in clauses (a) through (d) above to the extent that reserves or
liabilities have been established therefor in the Company's
consolidated financial statements.
"Contractual Obligations" means, as to any Person,
any provision of any security issued by such Person or of any
agreement, undertaking, contract, indenture, mortgage, deed of
trust or other instrument, document or agreement to which such
Person is a party or by which it or any of its property is
bound.
"Conversion Date" means any date on which the
Company elects to convert a Base Rate Loan to an Offshore Rate
Loan or to convert an Offshore Rate Loan to a Base Rate Loan.
"Credit Extension" means a Borrowing, a continuance
or conversion of Loans or the issuance of or purchase of a
participation under Section 2.01(c) in a Letter of Credit.
"Credit Extension Date" means the date on which a
Credit Extension is made.
"Current Maturities of Long Term Debt" means the
principal portion of any Indebtedness with a maturity date in
excess of one year that is due within the next 12 months.
"Default" means any event or circumstance which,
with the giving of notice, the lapse of time, or both, would
(if not cured or otherwise remedied during such time)
constitute an Event of Default.
"Disposition" means (i) the sale, lease, conveyance
or other disposition of property, other than sales or other
dispositions expressly permitted under Section 7.02 and
(ii) the sale or transfer by the Company or any Subsidiary of
the Company of any equity securities issued by any Subsidiary
of the Company and held by such transferor Person.
"Dollars", "dollars" and "$" each mean lawful money
of the United States.
"Domestic Lending Office" means, with respect to
each Bank, the office of that Bank designated as such in the
signature pages hereto or such other office of the Bank as it
may from time to time specify to the Company and the Agent.
"EBIT" means, for any period, for the Company and
its Subsidiaries determined in accordance with GAAP, the sum
6
of (a) Consolidated Net Income (Loss), plus (b) Consolidated
Interest Expense, plus (c) provision for income taxes to the
extent included in the determination of Consolidated Net
Income (Loss), plus (d) Restructure Loss, minus (e) interest
income, and minus (f) Restructure Gain, all determined on a
consolidated basis for the Company and its Subsidiaries;
provided, however, that Consolidated Net Income (Loss) shall
be computed for these purposes without giving effect to
extraordinary losses or gains or losses or gains from
discontinued operations.
"EBITDA" means, for any period, for the Company and
its Subsidiaries on a consolidated basis, determined in
accordance with GAAP, the sum of (a) EBIT and (b) depreciation
and amortization expenses.
"Eligible Assignee" means (i) a commercial bank
organized under the laws of the United States, or any state
thereof, and having a combined capital and surplus of at least
$100,000,000; (ii) a commercial bank organized under the laws
of any other country which is a member of the Organization for
Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having a
combined capital and surplus of at least $100,000,000,
provided that such bank is acting through a branch or agency
located in the United States; and (iii) any Bank Affiliate.
"Environmental Claims" means all claims, however
asserted, by any Governmental Authority or other Person
alleging potential liability or responsibility for violation
of any Environmental Law or for release or injury to the
environment or threat to public health, personal injury
(including sickness, disease or death), property damage,
natural resources damage, or otherwise alleging liability or
responsibility for damages (punitive or otherwise), cleanup,
removal, remedial or response costs, restitution, civil or
criminal penalties, injunctive relief, or other type of
relief, resulting from or based upon (a) the alleged or actual
presence, placement, migration, spillage, leakage, disposal,
discharge, emission or release of any Hazardous Material at,
in, or from property, whether or not owned by the Company, or
(b) any other circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law.
"Environmental Laws" means all federal, state or
local laws, statutes, common law duties, rules, regulations,
ordinances and codes, together with all administrative orders,
directed duties, requests, licenses, authorizations,
registration requirements and permits of, and agreements with,
any Governmental Authorities, in each case relating to
environmental and land use matters or health and safety
matters involving Hazardous Materials.
7
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, and the rules and
regulations promulgated thereunder as from time to time in
effect.
"ERISA Affiliate" means any trade or business
(whether or not incorporated) under common control with the
Company within the meaning of Section 414(b) or (c) of the
Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with
respect to a Pension Plan; (b) a withdrawal by the Company or
any ERISA Affiliate from a Pension Plan subject to Section
4063 of ERISA during a plan year in which it was a substantial
employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal
under Section 4062(e) of ERISA; (c) a complete or partial
withdrawal by the Company or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan
is in reorganization; (d) the filing of a notice of intent to
terminate, the treatment of a Plan amendment as a termination
under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan; (e) an event or condition which would
reasonably be expected to constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan;
or (f) the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon the Company or any ERISA
Affiliate.
"Eurodollar Reserve Percentage" has the meaning
specified in the definition of "Offshore Rate".
"Event of Default" means any of the events or
circumstances specified in Section 8.01.
"Exchange Act" means the Securities Exchange Act of 1934,
and regulations promulgated thereunder.
"Existing Credit Agreement" has the meaning specified in
the introduction of this Agreement.
"Extension" has the meaning specified in Section 2.05.
"Extension Refusal Date" has the meaning specified in
Section 2.05.
"Federal Funds Rate" means, for any period, the rate set
forth in the weekly statistical release designated as
H.15(519), or any successor publication, published by the
Federal Reserve Board (including any such successor,
"H.15(519)") for such day opposite the caption "Federal Funds
8
(Effective)". If on any relevant day such rate is not yet
published in H.15(519), the rate for such day will be the rate
set forth in the daily statistical release designated as the
Composite 3:30 p.m. Quotations for U.S. Government Securities,
or any successor publication, published by the Federal Reserve
Bank of New York (including any such successor, the "Composite
3:30 p.m. Quotation") for such day under the caption "Federal
Funds Effective Rate". If on any relevant day the appropriate
rate for such previous day is not yet published in either
H.15(519) or the Composite 3:30 p.m. Quotations, the rate for
such day will be the arithmetic mean of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00
a.m. (New York time) on that day by each of three leading
brokers of Federal funds transactions in New York City
selected by the Agent.
"Federal Reserve Board" means the Board of Governors of
the Federal Reserve System, or any successor thereto.
"Financial L/C" means, with respect to any Letter of
Credit, a "financial standby letter of credit" as such term is
defined in the Adequacy Guidelines For Bank Holding Companies:
Risk-Based Measure, 12 C.F.R. Part 225, Appendix A, III.D
(1993) and as the definition of such term may be amended from
time to time prior to issuance of any such Letter of Credit.
Such term is described in the 1993 Code of Federal Regulations
as "irrevocable obligations of the banking organization to pay
a third-party beneficiary when a customer (account party)
fails to repay an outstanding loan or debt instrument (direct
credit substitute)."
"GAAP" means generally accepted accounting principles set
forth from time to time in the opinions and pronouncements of
the Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and
authority within the accounting profession), or in such other
statements by such other entity as may be in general use by
significant segments of the U.S. accounting profession, which
are applicable to the circumstances as of the date of
determination.
"Governmental Authority" means any nation or government,
any state or other political subdivision thereof, any central
bank (or similar monetary or regulatory authority) thereof,
any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise,
by any of the foregoing.
"Guaranty Obligation" means, as applied to the
Company or any of its Subsidiaries, any agreement of the
9
Company or any such Subsidiary to guarantee the Indebtedness
of a Person other than the Company or any of its Subsidiaries
(the "primary obligor"), or any obligation or undertaking of
the Company or any such Subsidiary which, in economic effect,
is substantially equivalent to a guarantee of the primary
obligor's Indebtedness ("primary obligations"), including any
obligation of the Company or any such Subsidiary, whether or
not contingent, (a) to purchase, repurchase or otherwise
acquire such primary obligations or any property constituting
direct or indirect security therefor, or (b) to advance or
provide funds (i) for the payment or discharge of any such
primary obligation, or (ii) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain
the net worth or solvency or any balance sheet item, level of
income or financial condition of the primary obligor, or
to purchase property, securities or services primarily for
(c)
the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make
payment of such primary obligation, or (d) otherwise to assure
or hold harmless the holder of any such primary obligation
against loss in respect thereof.
"Hazardous Materials" means all those substances which
are regulated by, or which may form the basis of liability
under, any Environmental Law, including all substances
identified under any Environmental Law as a pollutant,
contaminant, hazardous waste, hazardous constituent, hazardous
chemicals, special waste, hazardous substance, hazardous
material, regulated substance, or toxic substance, or
petroleum or petroleum derived substance or waste.
"Indebtedness" of any Person means, without duplication,
(a) all indebtedness for borrowed money; (b) all
obligations issued, undertaken or assumed as the deferred
purchase price of property or services (other than trade
payables entered into in the Ordinary Course of Business
pursuant to ordinary terms); (c) all obligations evidenced by
notes, bonds, debentures or similar instruments, including
obligations so evidenced incurred in connection with the
acquisition of property, assets or businesses; (d) all
indebtedness created or arising under any conditional sale or
other title retention agreement, or incurred as financing, in
either case with respect to property acquired by the Person
(even though the rights and remedies of the seller or bank
under such agreement in the event of default are limited to
repossession or sale of such property); and (e) all Capital
Lease Obligations. Indebtedness owed to the Company by its
Subsidiaries, by one Subsidiary to another or by the Company
to a Subsidiary shall not count as Indebtedness.
"Indemnified Person" has the meaning specified in
subsection 10.05(a).
10
"Indemnified Liabilities" has the meaning specified in
subsection 10.05(a).
"Insolvency Proceeding" means (a) any case, action or
proceeding before any court or other Governmental Authority
relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up or relief
of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors or
other, similar arrangement in respect of its creditors
generally or any substantial portion of its creditors; in each
case (a) and (b) undertaken under U.S. Federal, State or
foreign law, including the Bankruptcy Code.
"Interest Payment Date" means, with respect to any
Offshore Rate Loan, the last day of each Interest Period
applicable to such Loan and, with respect to Base Rate Loans,
(a) the first Business Day of January, April, July and October
for Base Rate Loans outstanding during the preceding quarter,
(b) the Termination Date and (c) each date a Base Rate Loan is
converted into an Offshore Rate Loan, provided, however, that
if any Interest Period for an Offshore Rate Loan exceeds three
months, interest shall also be paid on the date which falls
three months after the beginning of such Interest Period.
"Interest Period" means, with respect to any Offshore
Rate Loan, the period commencing on the Business Day the Loan
is disbursed or continued or on the Conversion Date on which
the Loan is converted to the Offshore Rate Loan and ending on
the date one, two, three or six months thereafter, as selected
by the Company in its Notice of Borrowing or Notice of
Conversion/Continuation; provided that:
(a) if any Interest Period pertaining to an
Offshore Rate Loan would otherwise end on a day which is
not a Business Day, that Interest Period shall be
extended to the next succeeding Business Day unless the
result of such extension would be to carry such Interest
Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding
Business Day;
(b) any Interest Period pertaining to an Offshore
Rate Loan that begins on the last Business Day of a
calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such
Interest Period; and
(c) no Interest Period shall extend beyond the
Termination Date.
11
"Issuing Bank" means, with respect to each Letter of
Credit, BAI (or any of its Affiliates including BofA) or such
other Bank which may issue a Letter of Credit.
"IRS" means the Internal Revenue Service or any entity
succeeding to any of its principal functions under the Code.
"Lending Office" means, with respect to any Bank, the
office or offices of the Bank specified as its "Lending
Office" or "Domestic Lending Office" or "Offshore Lending
Office", as the case may be, opposite its name on the
applicable signature page hereto, or such other office or
offices of the Bank as it may from time to time notify the
Company and the Agent.
"Letter of Credit" means (i) a standby letter of credit
issued under this Agreement by the Issuing Bank for the
account of the Company and (ii) any Old Letter of Credit
outstanding on the Closing Date, including an Extension of any
letter of credit.
"Letter of Credit Application" means a letter of credit
application and agreement in form and substance satisfactory
to the Issuing Bank. Attached hereto as Exhibit B is the
initial form of Letter of Credit Application.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement,
encumbrance, lien (statutory or other) or other security
interest (including those created by, arising under or
evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under a Capital Lease
Obligation, any financing lease having substantially the same
economic effect as any of the foregoing, or the filing of any
financing statement naming the owner of the asset to which
such lien relates as debtor, under the UCC or any comparable
law) and any contingent or other agreement to provide any of
the foregoing, but not including the interest of a lessor
under an Operating Lease.
"Loan" means an extension of credit by a Bank to the
Company pursuant to Article II, and may be a Base Rate Loan or
an Offshore Rate Loan.
"Loan Documents" means this Agreement, the Notes, the
Letter of Credit Applications, and all documents delivered to
the Agent in connection therewith, as such instruments,
agreements and documents may be amended, supplemented,
restated, modified or renewed from time to time.
"Majority Banks" means at any time Banks then holding 51%
or more of the then aggregate unpaid principal amount of the
Credit Extensions, or, if no Credit Extensions are then
outstanding, Banks then having 51% or more of the Commitments.
12
"Margin Stock" means "margin stock" as such term is
defined in Regulation G, T, U or X of the Federal Reserve
Board.
"Material Adverse Effect" means a material adverse change
in, or a material adverse effect upon, the operations,
business, properties, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries taken as a
whole.
"Material Subsidiary" means at any time any Subsidiary of
the Company the assets of which are 10% or more of
Consolidated Total Assets (or the equivalent thereof in
another currency).
"Multiemployer Plan" means a "multiemployer plan", within
the meaning of Section 4001(a)(3) of ERISA, to which the
Company or any ERISA Affiliate makes, is making, or is
obligated to make contributions or, during the preceding three
calendar years, has made, or been obligated to make,
contributions.
"Note" means a promissory note of the Company payable to
the order of a Bank, substantially in the form of Exhibit C,
evidencing the aggregate indebtedness of the Company to such
Bank resulting from Loans made by such Bank.
"Notice of Borrowing" means a notice given by the Company
to the Agent pursuant to Section 2.03, in substantially the
form of Exhibit D.
"Notice of Conversion/Continuation" means a notice given
by the Company to the Agent pursuant to Section 2.06, in
substantially the form of Exhibit E.
"Notice of Lien" means any "notice of lien" or similar
document intended to be filed or recorded with any court,
registry, recorder's office, central filing office or other
Governmental Authority for the purpose of evidencing,
creating, perfecting or preserving the priority of a Lien
securing obligations owing to a Governmental Authority.
"Obligations" means all Loans, and other Indebtedness,
advances, debts, liabilities, obligations, covenants and
duties owing by the Company to any Bank, the Agent, or any
other Person required to be indemnified under any Loan
Document, of any kind or nature, present or future, whether or
not evidenced by any note, guaranty or other instrument,
arising under this Agreement or under any other Loan Document,
whether or not for the payment of money, whether arising by
reason of an extension of credit, the issuance of a Letter of
Credit, loan, guaranty, indemnification or in any other
manner, whether direct or indirect (including those acquired
13
by assignment), absolute or contingent, due or to become due,
now existing or hereafter arising and however acquired.
"Offshore Lending Office" means with respect to each
Bank, the office of such Bank designated as such in the
signature pages hereto or such other office of such Bank as
such Bank may from time to time specify to the Company and the
Agent.
"Offshore Rate" means, for each Interest Period in
respect of Offshore Rate Loans comprising part of the same
Borrowing, an interest rate per annum (rounded upward to the
nearest 1/16th of 1%) determined pursuant to the following
formula:
Offshore Rate = IBOR
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means the maximum reserve
percentage (expressed as a decimal, rounded upward to the
nearest 1/100th of 1%) in effect on the date IBOR for such
Interest Period is determined (whether or not applicable to
any Bank) under regulations issued from time to time by the
Federal Reserve Board for determining the maximum reserve
requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency
funding (currently referred to as "Eurocurrency liabilities")
having a term comparable to such Interest Period; and
"IBOR" means the rate of interest per annum determined by
the Agent as the rate at which dollar deposits in the
approximate amount of BofA's Offshore Rate Loan and having a
maturity comparable to such Interest Period would be offered
by BofA's Grand Cayman Branch, Grand Cayman B.W.I., to major
banks in the offshore dollar interbank market upon request of
such banks at approximately 11:00 a.m. (New York City time)
two Business Days prior to the commencement of such Interest
Period.
The Offshore Rate shall be adjusted automatically as of
the effective date of any change in the Eurodollar Reserve
Percentage.
"Offshore Rate Loan" means a Loan that bears interest
based on the Offshore Rate.
"Old Agreement" means that certain Third Amended and
Restated Credit Agreement, dated as of June 1, 1991, among the
Company (under the name of Control Data Corporation), the
Agent, as agent thereunder, and the other banks party thereto,
as such agreement was amended from time to time.
14
"Old Letters of Credit" means letters of credit issued by
BofA or BankAmerica International under the Old Agreement or
the Existing Credit Agreement and outstanding on the Closing
Date, which are listed on Schedule 1.01 attached hereto.
"Operating Lease" means, as applied to any Person, any
lease of property which is not a Capital Lease.
"Ordinary Course of Business" means, in respect of any
transaction involving the Company or any Subsidiary of the
Company, the ordinary course of such Person's business, as
conducted by any such Person in accordance with past practice
and undertaken by such Person in good faith and not for
purposes of evading any covenant or restriction in any Loan
Document.
"Organization Documents" means, for any corporation, the
certificate or articles of incorporation, the bylaws, any
certificate of determination or instrument relating to the
rights of preferred shareholders of such corporation, and all
applicable resolutions of the board of directors (or any
committee thereof) of such corporation.
"Other Taxes" has the meaning specified in subsection
3.01(b).
"PBGC" means the Pension Benefit Guaranty Corporation or
any entity succeeding to any of its principal functions under
ERISA.
"Participant" has the meaning specified in subsection
10.08(d).
"Pension Plan" means a pension plan, as defined in
Section 3(2) of ERISA, subject to Title IV of ERISA, which the
Company or any ERISA Affiliate sponsors or maintains, or to
which the Company or any ERISA Affiliate makes, is making, or
is obligated to make contributions, or in the case of a
multiple employer plan, as described in Section 4064(a) of
ERISA, has made contributions at any time during the
immediately preceding five plan years; but excluding in all
cases any Multiemployer Plan.
"Performance L/C" means, with respect to any Letter of
Credit, a "performance standby letter of credit" as such term
is defined in the Adequacy Guidelines For Bank Holding
Companies: Risk-Based Measure, 12 C.F.R. Part 225, Appendix
A, III.D (1993) as the definition of such term may be amended
from time to time prior to issuance of any such Letter of
Credit. Such term is described in the 1993 Code of Federal
Regulations as "irrevocable obligations of the banking
organization to pay a third-party beneficiary when a customer
15
(account party) fails to perform some other contractual
non-financial obligation."
"Permitted Liens" has the meaning specified in Section
7.01.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated
association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan, as defined in
Section 3(3) of ERISA, which the Company or any ERISA
Affiliate sponsors or maintains, or to which the Company or
any ERISA Affiliate makes, is making, or is obligated to make
contributions; and includes any Pension Plan or Multiemployer
Plan.
"Preferred Stock" means the Company's 5 1/2% Cumulative
Convertible Exchangeable Preferred Stock, par value $100 per
share.
"Rate Contracts" means interest rate and currency swap
agreements, cap, floor and collar agreements, interest rate
insurance, currency spot and forward contracts and other
agreements or arrangements designed to provide protection
against fluctuations in interest or currency exchange rates.
"Replacement Bank" has the meaning specified in
Section 3.06.
"Reportable Event" means any of the events set forth in
Section 4043(b) of ERISA or the regulations promulgated
thereunder, other than any such event for which the 30-day
notice requirement under ERISA has been waived in regulations
issued by the PBGC.
"Responsible Officer" means the chief executive officer,
the chief financial officer, the president, any executive vice
president, the controller or the treasurer of the Company.
"Restructure Loss (Gain)" means restructure loss or
restructure gain as such terms are used in the Company's 1993
annual report to shareholders, computed in a manner consistent
with the treatment in such annual report.
"SEC" means the Securities and Exchange Commission, or
any successor thereto.
"Solvent" means, as to any Person at any time, that
the fair value of the property of such Person is greater
(a)
than the fair value of such Person's liabilities (including
disputed, contingent and unliquidated liabilities) as such
value is established and liabilities evaluated for purposes of
Section 101(31) of the Bankruptcy Code and, in the
16
alternative, for purposes of the Uniform Fraudulent
Conveyances Act (as enacted in the State of New York); (b) the
present fair saleable value of the property of such Person is
not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become
absolute and matured; (c) such Person is able to realize upon
its property and pay its debts and other liabilities
(including disputed, contingent and unliquidated liabilities)
as they mature in the normal course of business; (d) such
Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay
as such debts and liabilities mature; and (e) such Person is
not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.
"Stated Amount" means, with respect to any Letter of
Credit, at any date of determination thereof, the maximum
aggregate amount available for drawing thereunder plus the
aggregate amount of all unreimbursed payments and
disbursements under such Letter of Credit.
"Subsidiary" of a Person means any corporation,
association, partnership, joint venture or other business
entity of which more than 50% of the voting stock or other
equity interests (in the case of Persons other than
corporations), is owned or controlled directly or indirectly
by the Person, or one or more of the Subsidiaries of the
Person, or a combination thereof.
"Taxes" has the meaning specified in subsection 3.01(a).
"Termination Date" means the earlier to occur of:
(a) May 28, 1996; and
(b) the date on which the Aggregate Commitment
terminates in accordance with Section 2.07 or Section 8.02.
"Transferee" has the meaning specified in subsection
10.08(e).
"UCC" means the Uniform Commercial Code as in effect in
the State of New York.
"United States" and "U.S." each means the United States
of America.
"Wholly-Owned Subsidiary" means any corporation in which
(other than directors' qualifying shares required by law) 100%
of the capital stock of each class having ordinary voting
power, and 100% of the capital stock of every other class, in
each case, at the time as of which any determination is being
17
made, is owned, beneficially and of record, by the Company, or
by one or more of the other Wholly-Owned Subsidiaries, or
both.
1.02 Other Interpretive Provisions.
(a) Defined Terms. Unless otherwise specified herein or
therein, all terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or
delivered pursuant hereto. The meaning of defined terms shall be
equally applicable to the singular and plural forms of the defined
terms. Terms (including uncapitalized terms) not otherwise defined
herein and that are defined in the UCC shall have the meanings
therein described.
The Agreement. The words "hereof", "herein",
(b)
"hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular
provision of this Agreement; and subsection, section, schedule and
exhibit references are to this Agreement unless otherwise
specified.
1.03 Accounting Principles.
Unless the context otherwise clearly requires, all
(a)
accounting terms not expressly defined herein shall be construed in
accordance with GAAP as in effect from time to time, but all
financial computations required under this Agreement shall be made
in accordance with GAAP as in effect and applied by the Company on
March 31, 1995, consistently applied, except to the extent
otherwise agreed upon by the parties hereto.
References herein to "fiscal year" and "fiscal
(b)
quarter" refer to such fiscal periods of the Company.
ARTICLE II
THE CREDITS
2.01 Amount and Terms of Commitments. Within the limits of
each Bank's Commitment, and subject to the other terms and
conditions hereof, the Company may borrow, repay and reborrow Loans
and obtain the issuance of Letters of Credit.
(a) The Loans. During the period from the Closing Date
to the Termination Date, each Bank severally agrees, on the terms
and conditions hereinafter set forth, to make Loans to the Company
in an amount not in excess at any time of such Bank's Commitment
Percentage of the difference between: (i) the Aggregate
Commitment, and (ii) the sum of (a) all outstanding Loans, (b) the
undrawn face amount of all outstanding Letters of Credit and (c)
that portion of drawings made under Letters of Credit for which the
Issuing Bank has not yet been reimbursed.
18
(b) The Letters of Credit. The Issuing Bank agrees, on
the terms and conditions hereinafter set forth, on or prior to the
Termination Date, to issue Letters of Credit for the account of the
Company and, if applicable, a Co-Applicant, in an amount not in
excess at any time of the Aggregate Commitment, minus the sum of
(a) all outstanding Loans, (b) the undrawn face amount of all
outstanding Letters of Credit and (c) that portion of drawings made
under Letters of Credit for which the Issuing Bank has not yet been
reimbursed; provided, however, that in no event may the Stated
Amount of Letters of Credit issued to support workmen's
compensation obligations of the Company and its Subsidiaries exceed
$10,000,000 at any one time.
BAI may, at its option, fulfill its Commitment to issue
Letters of Credit by arranging for the issuance of Letters of
Credit by BankAmerica International. Any Letter of Credit issued
by BankAmerica International shall be deemed to be issued by BAI
for the purpose of BAI's fulfilling its Commitment and retaining a
proportionate interest in Letters of Credit pursuant to subsection
(c) of this Section 2.01.
(c) Participation; Old Letters of Credit. Each Bank
(other than the Issuing Bank) agrees to purchase a participation
(i) in each Letter of Credit on the date of issuance of such Letter
of Credit and (ii) in each amendment increasing the face amount of
a Letter of Credit after the issuance thereof, on the date of such
amendment, in an amount equal to its Commitment Percentage. The
Issuing Bank retains a proportionate interest in the amount of its
Commitment Percentage in each Letter of Credit after such purchase
of participations. With respect to Old Letters of Credit, each
Bank (other than the Issuing Bank) is deemed to have purchased a
participation in the amount of its Commitment Percentage in such
Old Letters of Credit.
2.02 Notes.
(a) The Loans made by each Bank shall be evidenced by a
Note payable to the order of that Bank in an amount equal to its
Commitment.
(b) Each Bank shall endorse on the schedules annexed to
its Note the date, amount and maturity of each Loan made by it and
the amount of each payment of principal made by the Company with
respect thereto. Each Bank is irrevocably authorized by the
Company to make such endorsements, and its Note and each Bank's
record shall be conclusive, absent manifest error; provided,
however, that the failure of a Bank to make, or an error in making,
a notation thereon with respect to any Loan shall not limit or
otherwise affect the obligations of the Company hereunder or under
any such Note to such Bank.
19
2.03 Procedure for Borrowing.
(a) Each Borrowing shall be made upon the Company's
irrevocable written notice (or telephonic notice, promptly
confirmed by a writing) delivered to the Agent in the form of a
Notice of Borrowing (which notice must be received by the Agent
prior to Noon (New York time) (i) three Business Days prior to the
requested Borrowing date, in the case of Offshore Rate Loans and
one Business Day prior to the requested Borrowing date,
(ii) in the
case of Base Rate Loans, specifying:
(A) the amount of the Borrowing, which shall
be in an aggregate minimum principal amount of Three
Million Dollars ($3,000,000) or any multiple of One
Million Dollars ($1,000,000) in excess thereof;
(B) the requested Borrowing date, which shall
be a Business Day;
(C) whether the Borrowing is to be comprised
of Offshore Rate Loans or Base Rate Loans; and
(D) the duration of the Interest Period
applicable to such Loans included in such notice. If the
Notice of Borrowing fails to specify the duration of the
Interest Period for any Borrowing, such Borrowing shall
consist of Base Rate Loans, regardless of the type of
Loans requested by the Company.
(b) Upon receipt of the Notice of Borrowing, the Agent
will promptly notify each Bank thereof and of the amount of such
Bank's Commitment Percentage of the Borrowing.
(c) Each Bank will make the amount of its Commitment
Percentage of the Borrowing available to the Agent for the account
of the Company at the Agent's Payment Office by 11:00 a.m. (New
York time) on the Borrowing date requested by the Company in funds
immediately available to the Agent. The proceeds of all such Loans
will then be made available to the Company by the Agent at such
office by crediting the account of the Company on the books of BofA
with the aggregate of the amounts made available to the Agent by
the Banks and in like funds as received by the Agent.
(d) Unless the Majority Banks shall otherwise agree,
during the existence of a Default or Event of Default, the Company
may not elect to have a Loan be made as, converted into or
continued as an Offshore Rate Loan.
(e) After giving effect to any Borrowing, conversion or
continuation, there shall not be more than ten different Interest
Periods in effect.
20
2.04 Letter of Credit Requests.
(a) Whenever the Company wishes to have the Issuing Bank
issue a Letter of Credit, the Company shall deliver to the Issuing
Bank a Letter of Credit Application with appropriate insertions,
signed by the Company, and, if such Letter of Credit is also to be
issued for the account of a Co-Applicant, signed by the
Co-Applicant. Such Letter of Credit Application shall be delivered
at least two and not more than fifteen Business Days prior to the
requested date of issuance, except as provided in clause (iv) in
the proviso to Section 2.05. Requests for amendments to Letters of
Credit shall be submitted in writing at least two and not more than
fifteen Business Days prior to the requested amendment date. If at
any time the Issuing Bank is not the Agent, a copy of such Letter
of Credit Application shall be delivered to the Agent as well. The
Agent shall deliver notice of the request for the issuance of a
Letter of Credit to all other Banks and copies thereof to all such
Banks which have requested such copies.
In each Letter of Credit Application, the Company shall
designate whether the Letter of Credit is a Financial L/C or a
Performance L/C and whether, if it is a Financial L/C, it is being
issued to support workmen's compensation obligations of the Company
and its Subsidiaries. The determination of the Issuing Bank and
the Agent as to such designation shall be made at or prior to the
time such Letter of Credit is issued, shall be conclusive in the
event of any disagreement with the Company with respect thereto and
shall govern during the term of this Agreement, notwithstanding any
subsequent change in the definition of any such term in the
applicable regulations.
(b) Letters of Credit may be Financial L/Cs or
Performance L/Cs, and all Letters of Credit shall be denominated in
Dollars. No Letter of Credit shall have a final expiration date
later than May 28, 1997.
(c) The Agent shall deliver to the Company a copy of
each Letter of Credit issued and each amendment thereto and shall
also promptly deliver a copy thereof to each other Bank which has
requested such a copy. Each Letter of Credit shall provide that
payment thereunder shall not be made earlier than three Business
Days after receipt of any documents demanding payment thereunder.
2.05 Extension Letters of Credit. If (a) any Letter of
Credit provides that the term thereof will be automatically
extended or renewed (by issuance of a substitute Letter of Credit
or otherwise) unless notice is given by the Issuing Bank on or
before a specified date (hereinafter called the "Extension Refusal
Date") that such Issuing Bank will not permit such extension or
renewal or (b) the Company requests the extension or renewal of any
other Letter of Credit, then for purposes of Sections 2.01, 2.04,
and 4.02 of this Agreement, any such renewal or extension granted
by the Issuing Bank (hereinafter called an "Extension") shall be
deemed to be the issuance of a new Letter of Credit and such
21
issuance shall be deemed to occur on the Extension Refusal Date in
the case of a Letter of Credit described in clause (a) above, or
the date of such request in the case of a Letter of Credit
described in clause (b) above; provided, however, that (i) such
extension shall not cause the respective Letter of Credit to expire
after May 28, 1997; (ii) no Extension may take place after the
Termination Date, notwithstanding the provisions of Section
2.04(b); (iii) the Extension shall not be deemed to cause any
duplication of the amount of such Letter of Credit for purposes of
determining compliance with Section 2.01(b); (iv) the Issuing Bank
shall receive at least ten but not more than thirty Business Days'
written notice of such Extension, and the accompanying Letter of
Credit Application shall state that it relates to such Extension
and shall specify the related Extension Refusal Date, if any; and
(v) no document need be delivered by the Issuing Bank pursuant to
Section 2.04(c) with respect to any Letter of Credit described in
clause (a) above unless the terms of such Letter of Credit so
require.
2.06 Conversion and Continuation Elections.
(a) Prior to the Termination Date, the Company may upon
irrevocable written notice (or telephonic notice, promptly
confirmed by a writing) to the Agent in accordance with subsection
2.06(b):
(i) elect to convert on any Business Day, any Base
Rate Loans (or any part thereof in an amount not less than
$3,000,000, or that is in an integral multiple of $1,000,000 in
excess thereof) into Offshore Rate Loans; or
(ii) elect to convert on any Interest Payment Date
any Offshore Rate Loans maturing on such Interest Payment Date (or
any part thereof in an amount not less than $3,000,000, or that is
in an integral multiple of $1,000,000 in excess thereof) into Base
Rate Loans; or
(iii) elect to renew on any Interest Payment Date any
Offshore Rate Loans maturing on such Interest Payment Date (or any
part thereof in an amount not less than $3,000,000, or that is in
an integral multiple of $1,000,000 in excess thereof);
provided, that if the aggregate amount of Offshore Rate Loans has
been reduced, by payment, prepayment, or conversion of part thereof
to be less than $3,000,000, such Offshore Rate Loans shall
automatically convert into Base Rate Loans, and on and after such
date the right of the Company to continue such Loans as, and
convert such Loans into, Offshore Rate Loans shall terminate.
22
(b) The Company shall deliver a Notice of
Conversion/Continuation in accordance with Section 10.02 to be
received by the Agent not later than Noon (New York time) at least
(i) three Business Days in advance of the Conversion Date or
continuation date, if the Loans are to be converted into or
continued as Offshore Rate Loans; and (ii) one Business Day in
advance of the Conversion Date, if the Loans are to be converted
into Base Rate Loans; specifying:
(A) the proposed Conversion Date or
continuation date;
(B) the aggregate amount of Loans to be
converted or renewed;
(C) the nature of the proposed conversion or
continuation; and
(D) the duration of the requested Interest
Period.
(c) If upon the expiration of any Interest Period
applicable to Offshore Rate Loans, the Company has failed to select
a new Interest Period to be applicable to such Offshore Rate Loans
or if any Default or Event of Default shall then exist, the Company
shall be deemed to have elected to convert such Offshore Rate Loans
into Base Rate Loans effective as of the expiration date of such
current Interest Period.
(d) Upon receipt of a Notice of Conversion/
Continuation, the Agent will promptly notify each Bank thereof, or,
if no timely notice is provided by the Company, the Agent will
promptly notify each Bank of the details of any automatic
conversion. All conversions and continuations shall be made pro
rata according to the respective outstanding principal amounts of
the Loans with respect to which the notice was given held by each
Bank.
(e) Unless the Majority Banks shall otherwise agree,
during the existence of a Default or Event of Default, the Company
may not elect to have a Loan converted into or continued as an
Offshore Rate Loan.
2.07 Voluntary Termination or Reduction of Commitments. The
Company may, upon not less than five Business Days' prior written
or telephonic (promptly confirmed with a writing) notice to the
Agent, terminate or permanently reduce the Aggregate Commitment by
an aggregate minimum amount of $3,000,000; provided that no such
reduction or termination shall be permitted if, after giving effect
thereto and to any prepayments of the Loans made on the effective
date thereof, the sum of the then outstanding principal amount of
the Loans and the Stated Amount of the Letters of Credit would
exceed the Aggregate Commitment then in effect and, provided,
further, that once reduced in accordance with this Section 2.07,
23
the Aggregate Commitment may not be increased. Any reduction of
the Aggregate Commitment shall be applied to each Bank's Commitment
in accordance with such Bank's Commitment Percentage. All accrued
commitment fees to, but not including the effective date of any
reduction or termination of Commitments, shall be paid on the
effective date of such reduction or termination.
2.08 Optional Prepayments Subject to Section 3.04, the
Company may, at any time or from time to time, upon at least one
Business Day's notice to the Agent with respect to Base Rate Loans
and at least three Business Days' notice to the Agent with respect
to Offshore Rate Loans, ratably prepay Loans in whole or in part,
in an aggregate amount of $3,000,000 or any multiple of $1,000,000
in excess thereof. Each such notice shall be delivered no later
than Noon (New York time). Such notice of prepayment shall specify
the date and amount of such prepayment and the type of Loans being
prepaid. Such notice shall not thereafter be revocable by the
Company and the Agent will promptly notify each Bank thereof and of
such Bank's Commitment Percentage of such prepayment. Such notice
may be given by telephone, promptly confirmed by a writing. If
such notice is given by the Company, the Company shall make such
prepayment and the payment amount specified in such notice shall be
due and payable on the date specified therein, together with
accrued interest to each such date on the amount prepaid and any
amounts required pursuant to Section 3.04.
2.09 [Reserved].
2.10 Repayment. The Company shall repay to the Banks in full
on the Termination Date the aggregate principal amount of the Loans
outstanding on the Termination Date.
2.11 Repayment of Letter of Credit Drawings.
With respect to each Letter of Credit,
(a)
i) when a draft or other demand for payment is
received by the Issuing Bank, it shall
promptly give notice thereof by telecopy or
telephone to the Agent and the Company;
(ii) when a payment is made by the Issuing Bank,
it shall promptly give notice thereof to the
Company and the Agent by telephone or
telecopy; and
(iii) the Company agrees, and shall cause each Co-
Applicant through its execution of a Letter
of Credit Application to agree, to promptly
reimburse the Issuing Bank (by making payment
to the Agent for the account of such Issuing
Bank) on the date of any payment or
disbursement made by such Issuing Bank under
such Letter of Credit for such payment or
24
disbursement; provided, however, that the
Company shall not be deemed to be in default
of this Section 2.11(a) or Section 8.01(a)
with respect to any such reimbursement
obligation prior to the second Business Day
after it has been notified that the related
payment or disbursement has been made by the
Issuing Bank. Any amount not reimbursed (by
making payment to the Issuing Bank) on the
date of such payment or distribution by the
Issuing Bank shall bear interest from and
including the date of such payment or
disbursement to but not including the date
the Issuing Bank is reimbursed by the Company
therefor, payable on demand, at a rate per
annum equal to (x) the Base Rate from time to
time in effect for each day through the third
Business Day after the Company's receipt of
the notice provided for in subsection (a)(i)
above, and (y) the Base Rate plus 2% per
annum for each day thereafter.
(b) Subject to the terms and conditions of this
Agreement, the Company may use the proceeds of a Loan hereunder to
so reimburse the Issuing Bank. If on or before the first Business
Day after receipt of the notice required pursuant to
Section 2.11(a)(i), the Company requests a Loan to which it is
entitled under the terms of this Agreement for the purpose of
paying the related reimbursement obligation and in an amount
sufficient to fully pay such reimbursement obligation, then the
Company shall not be deemed to be in default of its reimbursement
obligations under this section or Section 8.01(a) even though such
Loan is not made until a subsequent Business Day (pursuant to the
notice provisions of Section 2.03).
(c) The Company's obligation to reimburse the Issuing
Bank for payments and disbursements made by the Issuing Bank under
any Letter of Credit shall be absolute and unconditional under any
and all circumstances and irrespective of any setoff, counterclaim
or defense to payment which the Company or a Co-Applicant may have
or have had against the Issuing Bank (or the Agent or any other
Bank), including, without limitation, failure of the Issuing Bank
to comply with subsections (a)(i) and (ii) of this section, any
defense based on the failure of the demand for payment under such
Letter of Credit to conform to the terms of such Letter of Credit
or the legality, validity, regularity or enforceability of such
Letter of Credit or any defense based on the identity of the
transferee of such Letter of Credit or the sufficiency of the
transfer if such Letter of Credit is transferable; provided,
however, that the Company shall not be obligated to reimburse such
Issuing Bank for any wrongful payment or disbursement made under
any Letter of Credit as a result of acts or omissions constituting
gross negligence or willful misconduct on the part of the Issuing
Bank or any of its officers, employees or agents.
25
(d) The Company agrees that it will promptly examine the
copy of each Letter of Credit (and any amendments thereto) sent to
it by the Issuing Bank, as well as any and all instruments and
documents delivered to the Company from time to time, and in the
event the Company has any claim of non-compliance with the
Company's instructions or of discrepancies or other irregularity,
the Company will promptly notify the Issuing Bank and the Agent
thereof in writing, and the Company and any Co-Applicant shall be
deemed by their execution and delivery of the related Letter of
Credit Application to have waived any such claim against the
Issuing Bank unless such prompt notice is given.
(e) Unless specified to the contrary in the relevant
Letter of Credit Application, or any amendment to a Letter of
Credit, the Company and each Co-Applicant agree by their execution
of such application that the Issuing Bank and its correspondents
may receive and accept (i) any item drawn or presented under such
Letter of Credit or other document otherwise in order, issued or
purportedly issued by an agent, executor, trustee in bankruptcy,
receiver or other representative of the party who is authorized
under such Letter of Credit to issue such item or other document,
as complying with the terms of such Letter of Credit and
(ii) documents which on their face appear to comply with the
Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500 or
by later Uniform Customs and Practice fixed by later Congresses of
the International Chamber of Commerce as in effect on the date the
related Letter of Credit is issued.
2.12 Default in Reimbursement of Issuing Bank.
(a) If the Issuing Bank is not reimbursed by the
Company for any payment or disbursement under a Letter of Credit,
the Agent shall promptly notify each of the other Banks of such
unreimbursed payment or disbursement, and upon such notice the
other Banks shall promptly on the same day (or the next Business
Day if such notice is received after 11:00 a.m., New York time)
provide the Agent with immediately available funds in Dollars for
the account of such Issuing Bank, covering such Bank's Commitment
Percentage of such payment or disbursement. If the Agent
subsequently receives from the Company or any Co-Applicant any
reimbursement of such payment or disbursement, the Agent shall
promptly remit to each Bank its Commitment Percentage of such
reimbursement. All interest payments received by the Issuing Bank
or the Agent on account of reimbursements under this Agreement
shall be promptly distributed by the Agent to the Issuing Bank and
the other Banks pro rata according to their respective Commitment
Percentages (except to the extent that the Issuing Bank was not
promptly reimbursed by any such Bank).
(b) The obligation of each Bank to provide the Agent
with such Bank's pro rata share of the amount of any payment or
disbursement made by the Issuing Bank under any outstanding Letter
of Credit shall be absolute and unconditional under any and all
26
circumstances and irrespective of any setoff, counterclaim or
defense to payment which such Bank may have or have had against the
Issuing Bank (or the Agent or any other Bank), including, without
limitation, any defense based on the failure of the demand for
payment under such Letter of Credit to conform to the terms of such
Letter of Credit or the legality, validity, regularity or
enforceability of such Letter of Credit or any defense based on the
identity of the transferee of such Letter of Credit or the
sufficiency of the transfer if such Letter of Credit is
transferable; provided, however, that the Banks shall not be
obligated to reimburse such Issuing Bank for any wrongful payment
or disbursement made under any Letter of Credit as a result of acts
or omissions constituting gross negligence or willful misconduct on
the part of such Issuing Bank or any of its officers, employees or
agents.
2.13 Interest.
(a) Subject to subsection 2.13(c), each Loan shall bear
interest on the outstanding principal amount thereof from the date
when made until it becomes due at a rate per annum equal to the
Offshore Rate or the Base Rate, as the case may be, plus the
Applicable Margin.
(b) Interest on each Loan shall be paid in arrears on
each Interest Payment Date. Interest shall also be paid on the
date of any prepayment of Loans pursuant to Section 2.08 for the
portion of the Loans so prepaid and upon payment (including
prepayment) in full thereof and, during the existence of any Event
of Default, interest shall be paid on demand.
(c) While any Event of Default exists or after
acceleration, the Company shall pay interest (after as well as
before entry of judgment thereon to the extent permitted by law) on
the principal amount of all Obligations due and unpaid at a rate
per annum equal to the Base Rate plus 2%.
2.14 Fees.
(a) Fees Payable to BofA and the Agent. The Company
shall pay to the Agent for the Arranger's and the Agent's own
account fees in the amounts and at the times set forth in a letter
agreement between the Company, BofA and the Arranger dated April
19, 1995.
(b) Commitment Fees. The Company shall pay to the Agent
for the account of each Bank a commitment fee of 0.20 percent per
annum on the average daily unused portion of such Bank's
Commitment, computed as of the end of each calendar quarter in
arrears based upon the daily utilization for that quarter as
calculated by the Agent. Such commitment fee shall accrue from the
Closing Date to the Termination Date and shall be due and payable
quarterly in arrears on the fifteenth day after the end of each
calendar quarter through the Termination Date, with the first
27
payment due on July 15, 1995 and the final payment to be made on
the Termination Date; provided that, (i) in connection with any
reduction of Commitments pursuant to Section 2.07, the accrued
commitment fee calculated for the period ending on such date shall
also be paid on the date of such reduction, with the next
succeeding quarterly payment being calculated on the basis of the
period from the reduction date to the end of the quarter in which
such reduction occurs and (ii) in connection with any termination
of the Commitments pursuant to Section 2.07 or Article VIII, the
accrued commitment fee shall be paid on the date on which the
termination takes place. The commitment fees provided in this
subsection shall accrue at all times after the Closing Date,
including at any time during which one or more conditions in
Article IV are not met.
(c) Letter of Credit Fees.
(i) The Company shall pay to the Agent
for the account of the Banks, pro rata, a
fee, according to their respective Commitment
Percentages, with respect to all Letters of
Credit issued for the account of the Company.
Such fee shall be computed as of the end of
each calendar quarter as follows:
(x) With respect to all Financial
L/Cs, 0.75 percent per annum of
the daily average Stated Amount
of each such Letter of Credit;
and
(y) With respect to Performance
L/Cs, 0.375 percent per annum
of the daily average Stated
Amount of such Performance
L/Cs.
Such Letter of Credit fees shall be payable in arrears on the
fifteenth day after the end of each calendar quarter for Letters of
Credit outstanding during such quarter, with the first such payment
due on July 15, 1995, and on the expiration of the last Letter of
Credit outstanding under this Agreement.
(ii) The Company shall pay to the Issuing Bank for
its sole account:
(x) In arrears on the fifteenth day after the
end of each calendar quarter, with the
first such payment due on July 15, 1995,
and on the expiration of the last Letter
of Credit issued by the Issuing Bank and
outstanding under this Agreement, an
issuance fee of 0.10 percent per annum of
the daily average Stated Amount of all
28
Letters of Credit issued by the Issuing
Bank and outstanding during the preceding
calendar quarter; and
(y) From time to time, upon the amendment of
any Letter of Credit, such fees as the
Issuing Bank customarily charges in
connection therewith at the times
customarily charged by the Issuing Bank.
(d) Fees under the Existing Credit Agreement. On the
Closing Date, the Company shall pay to the Agent the fees owed
under the Existing Credit Agreement which have not heretofore been
paid.
2.15 Computation of Fees and Interest.
(a) All computations of interest payable in respect of
Base Rate Loans at all times as the Base Rate is determined by
BofA's "reference rate" shall be made on the basis of a year of 365
or 366 days, as the case may be, and actual days elapsed. All
other computations of fees and interest under this Agreement shall
be made on the basis of a 360-day year and actual days elapsed.
(b) The Agent will, with reasonable promptness, notify
the Company and the Banks of each determination of an Offshore
Rate; provided that any failure to do so shall not relieve the
Company of any liability hereunder or provide the basis for any
claim against the Agent. Any change in the interest rate on a Loan
resulting from a change in the Eurodollar Reserve Percentage shall
become effective as of the opening of business on the day on which
such change in the Eurodollar Reserve Percentage becomes effective.
The Agent will with reasonable promptness notify the Company and
the Banks of the effective date and the amount of each such change,
provided that any failure to do so shall not relieve the Company of
any liability hereunder or provide the basis for any claim against
the Agent.
(c) Each determination of an interest rate by the Agent
pursuant hereto shall be conclusive and binding on the Company and
the Banks in the absence of manifest error.
2.16 Payments by the Company.
(a) All payments (including prepayments) to be made by
the Company on account of principal, interest, fees and other
amounts required hereunder, including reimbursement of drawings
under Letters of Credit, shall be made without set-off, recoupment
or counterclaim and shall, except as otherwise expressly provided
herein, be made to the Agent for the ratable account of the Banks
at the Agent's Payment Office, in dollars and in immediately
available funds, no later than 1:00 p.m. (New York time) on the
dates specified herein. The Agent will promptly distribute to each
Bank its Commitment Percentage (or other applicable share as
29
expressly provided herein) of such principal, interest, fees or
other amounts, in like funds as received. Any payment which is
received by the Agent later than 1:00 p.m. (New York time) shall be
deemed to have been received on the immediately succeeding Business
Day and any applicable interest or fee shall continue to accrue.
(b) Whenever any payment hereunder shall be stated to be
due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time
shall in such case be included in the computation of interest or
fees, as the case may be; subject to the provisions set forth in
the definition of "Interest Period" herein.
(c) Unless the Agent shall have received notice from the
Company prior to the date on which any payment is due to the Banks
hereunder that the Company will not make such payment in full as
and when required hereunder, the Agent may assume that the Company
has made such payment in full to the Agent on such date in
immediately available funds and the Agent may (but shall not be so
required), in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to the
amount then due such Bank. If and to the extent the Company shall
not have made such payment in full to the Agent, each Bank shall
repay to the Agent on demand such amount distributed to such Bank,
together with interest thereon for each day from the date such
amount is distributed to such Bank until the date such Bank repays
such amount to the Agent, at the Federal Funds Rate as in effect
for each such day.
2.17 Payments by the Banks to the Agent.
(a) Unless the Agent shall have received notice from a
Bank on the Closing Date or, with respect to each Borrowing after
the Closing Date, at least one Business Day prior to the date of
any proposed Borrowing, that such Bank will not make available to
the Agent as and when required hereunder for the account of the
Company the amount of that Bank's Commitment Percentage of the
Borrowing, the Agent may assume that each Bank has made such amount
available to the Agent in immediately available funds on the
Borrowing date and the Agent may (but shall not be so required), in
reliance upon such assumption, make available to the Company on
such date a corresponding amount. If and to the extent any Bank
shall not have made its full amount available to the Agent in
immediately available funds and the Agent in such circumstances has
made available to the Company such amount, that Bank shall on the
next Business Day following the date of such Borrowing make such
amount available to the Agent, together with interest at the
Federal Funds Rate for and determined as of each day during such
period. A notice of the Agent submitted to any Bank with respect
to amounts owing under this subsection 2.17(a) shall be conclusive,
absent manifest error. If such amount is so made available, such
payment to the Agent shall constitute such Bank's Loan on the date
of borrowing for all purposes of this Agreement. If such amount is
not made available to the Agent on the next Business Day following
30
the date of such Borrowing, the Agent shall notify the Company of
such failure to fund and, upon demand by the Agent, the Company
shall pay such amount to the Agent for the Agent's account,
together with interest thereon for each day elapsed since the date
of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Loans comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any date
of borrowing shall not relieve any other Bank of any obligation
hereunder to make a Loan on the date of such borrowing, but no Bank
shall be responsible for the failure of any other Bank to make the
Loan to be made by such other Bank on the date of any borrowing.
2.18 Sharing of Payments, Etc. If, other than as expressly
provided elsewhere herein, any Bank shall obtain on account of any
Credit Extension made by it any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or
otherwise) in excess of its Commitment Percentage of payments on
account of the Credit Extensions obtained by all the Banks, such
Bank shall forthwith (a) notify the Agent of such fact, and (b)
purchase from the other Banks such participations in the Credit
Extensions made by them as shall be necessary to cause such
purchasing Bank to share the excess payment ratably with each of
them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from the purchasing Bank, such
purchase shall to that extent be rescinded and each other Bank
shall repay to the purchasing Bank the purchase price paid
therefor, together with an amount equal to such paying Bank's
Commitment Percentage (according to the proportion of (i) the
amount of such paying Bank's required repayment to (ii) the total
amount so recovered from the purchasing Bank) of any interest or
other amount paid or payable by the purchasing Bank in respect of
the total amount so recovered. The Company agrees that any Bank so
purchasing a participation from another Bank pursuant to this
Section 2.18 may, to the fullest extent permitted by law, exercise
all its rights of payment (including the right of set-off, but
subject to Section 10.09) with respect to such participation as
fully as if such Bank were the direct creditor of the Company in
the amount of such participation. The Agent will keep records
(which shall be conclusive and binding in the absence of manifest
error) of participations purchased pursuant to this Section 2.18
and will in each case notify the Banks following any such purchases
or repayments.
2.19 Pro Rata Treatment. All Borrowings and repayments shall
be effected so that after giving effect thereto all Loans shall be
pro rata among the Banks according to their Commitment Percentages.
All participations and Letters of Credit shall be effected so that
after giving effect thereto all participations in each Letter of
Credit shall be pro rata among the Banks according to their
Commitment Percentages.
31
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes.
(a) Subject to subsection 3.01(g), any and all payments
by the Company to each Bank or the Agent under this Agreement shall
be made free and clear of, and without deduction or withholding
for, any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Bank and the Agent,
such taxes (including income taxes or franchise taxes) imposed on
or measured by each Bank's net income (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities
being hereinafter referred to as "Taxes").
(b) In addition, the Company shall pay any present or
future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from any payment made
hereunder or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any other Loan
Documents (hereinafter referred to as "Other Taxes").
(c) Subject to subsection 3.01(g), the Company shall
indemnify and hold harmless each Bank and the Agent for the full
amount of Taxes or Other Taxes (including any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section
3.01) paid by the Bank or the Agent and any liability (including
penalties, interest, additions to tax and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or
Other Taxes were correctly or legally asserted. Payment under this
indemnification shall be made within 30 days from the date the Bank
or the Agent makes written demand therefor, except that the Company
shall not be required to make such payment within 30 days if (i) no
Default or Event of Default has occurred and is continuing and (ii)
the Company is diligently contesting such Taxes or Other Taxes and
has agreed in writing to the satisfaction of each Bank, the Issuing
Bank and the Agent to pay to each such Bank, the Issuing Bank and
the Agent all such penalties, fines and interest incurred by such
Bank, the Issuing Bank and the Agent as a result of the Company's
actions and the resulting delay in payment. Notwithstanding the
foregoing, if at any time a Default or Event of Default occurs and
is continuing, each Bank may request the Company, and the Company
shall, make payment under this indemnification within 10 days from
the date the Bank, the Issuing Bank or the Agent makes written
demand therefor. In any event, the obligations owed by the Company
under this subsection (c) shall be paid not later than the
Termination Date, unless otherwise agreed by the affected Bank and
the Company.
(d) If the Company shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum
32
payable hereunder to any Bank or the Agent, then, subject to
subsection 3.01(g):
(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
3.01) such Bank or the Agent, as the case may
be, receives an amount equal to the sum it
would have received had no such deductions
been made;
(ii) the Company shall make such deductions, and
(iii) the Company shall pay the full amount
deducted to the relevant taxation authority
or other authority in accordance with
applicable law.
(e) Within 30 days after the date of any payment by the
Company of Taxes or Other Taxes, the Company shall furnish to the
Agent the original or a certified copy of a receipt evidencing
payment thereof, or other evidence of payment satisfactory to the
Agent.
(f) Each Bank which is a foreign person (i.e., a person
other than a United States person for United States Federal income
tax purposes) agrees no later than the Closing Date (or, in the
case of a Bank which becomes a party hereto pursuant to Section
10.08 after the Closing Date, the date upon which the Bank becomes
a party hereto) to deliver to the Company through the Agent two
accurate and complete signed originals of Internal Revenue Service
Form 1001, 4224 or any successor thereto, as appropriate, in each
case indicating that the Bank is on the date of delivery thereof
entitled to receive payments under this Agreement free from
withholding of United States Federal income tax.
(g) The Company will not be required to pay any
additional amounts in respect of United States Federal income tax
pursuant to subsection 3.01(d) to any Bank for the account of any
Lending Office of such Bank:
(i) if the obligation to pay such additional
amounts would not have arisen but for a
failure by such Bank to comply with its
obligations under subsection 3.01(f) in
respect of such Lending Office; or
(ii) if such Bank shall have delivered to the
Company the forms referred to in subsection
3.01(f), and such Bank shall not at any time
be entitled to exemption from deduction or
withholding of United States Federal income
tax in respect of payments by the Company
hereunder for the account of such Lending
33
Office for any reason other than a change in
United States law or regulations or in the
official interpretation of such law or
regulations by any governmental authority
charged with the interpretation or
administration thereof (whether or not having
the force of law) after the date of delivery
of such forms.
(h) If the Company is required to pay additional amounts
to any Bank or the Agent pursuant to subsection 3.01(d), then such
Bank shall use its reasonable best efforts (consistent with legal
and regulatory restrictions) to change the jurisdiction of its
Lending Office so as to eliminate any such additional payment by
the Company which may thereafter accrue if such change in the
judgment of such Bank is not otherwise disadvantageous to the tax
planning of such Bank.
3.02 Illegality.
(a) If any Bank determines that the introduction of any
law or regulation, or any change in any law or regulation or in the
interpretation or administration thereof, has made it unlawful, or
that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Bank or its Lending Office to make
Offshore Rate Loans, then, on notice thereof by the Bank to the
Company through the Agent, the obligation of that Bank to make
Offshore Rate Loans shall be suspended until the Bank shall have
notified the Agent and the Company that the circumstances giving
rise to such determination no longer exists.
(b) If a Bank determines that it is unlawful to maintain
any Offshore Rate Loan, the Company shall prepay in full all
Offshore Rate Loans of that Bank then outstanding, together with
interest accrued thereon, either on the last day of the Interest
Period thereof if the Bank may lawfully continue to maintain such
Offshore Rate Loans to such day, or immediately, if the Bank may
not lawfully continue to maintain such Offshore Rate Loans,
together with any amounts required to be paid in connection
therewith pursuant to Section 3.04.
(c) If the Company is required to prepay any Offshore
Rate Loan immediately as provided in subsection 3.02(b), then
concurrently with such prepayment, the Company shall borrow from
the affected Bank, in the amount of such repayment, a Base Rate
Loan.
(d) Before giving any notice to the Agent pursuant to
this Section 3.02, the affected Bank shall designate a different
Lending Office with respect to its Offshore Rate Loans if such
designation will avoid the need for giving such notice or making
such demand and will not, in the judgment of the Bank, be illegal
or otherwise disadvantageous to the Bank.
34
3.03 Increased Costs and Reduction of Return
(a) If any Bank determines that, due to either (i) the
introduction of or any change (other than any change by way of
imposition of or increase in reserve requirements included in the
calculation of the Offshore Rate) in or in the interpretation of
any law or regulation or (ii) the compliance with any guideline or
request from any central bank or other Governmental Authority
(whether or not having the force of law), there is any increase in
the cost to such Bank of agreeing to make or making, funding or
maintaining any Offshore Rate Loans or issuing or participating in
any Letter of Credit, then the Company shall be liable for, and
shall from time to time, upon demand therefor by such Bank (with a
copy of such demand to the Agent), pay to the Agent for the account
of such Bank, upon receipt of a certificate from such Bank,
additional amounts as are sufficient to compensate such Bank for
such increased costs. Such certificate shall set forth the amount
owed to such Bank by the Company under this subsection (a), shall
explain the reason the payment is required and shall be conclusive
absent manifest error.
(b) If any Bank shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in
any Capital Adequacy Regulation, (iii) any change in the
interpretation or administration of any Capital Adequacy Regulation
by any central bank or other Governmental Authority charged with
the interpretation or administration thereof, or (iv) compliance by
the Bank (or its Lending Office) or any corporation controlling the
Bank, with any Capital Adequacy Regulation; reduces or would reduce
the rate of return on such Bank's capital as a consequence of its
Commitment, the Loans, the Letters of Credit or its participation
therein to a level below that which such Bank could have achieved
but for such introduction, change or compliance (taking into
consideration such Bank's or such corporation's policies with
respect to capital adequacy) then, upon demand of such Bank (with a
copy to the Agent), the Company shall pay to the Bank, from time to
time as specified by the Bank, upon receipt of a certificate from
such Bank, additional amounts sufficient to compensate the Bank for
such reduction. Such certificate shall set forth the amount owed
to such Bank by the Company under this subsection (b), shall
explain the reason the payment is required and shall be conclusive
absent manifest error.
3.04 Funding Losses. The Company agrees to reimburse each
Bank and to hold each Bank harmless from any loss or expense which
the Bank may sustain or incur as a consequence of:
(a) the failure of the Company to make any payment or
required prepayment of principal of any Offshore Rate Loan
(including payments made after any acceleration thereof);
(b) the failure of the Company to borrow, continue or
convert a Loan after the Company has given a Notice of Borrowing or
a Notice of Conversion/Continuation;
35
(c) the failure of the Company to make any prepayment
after the Company has given a notice in accordance with Section
2.08;
(d) the prepayment of an Offshore Rate Loan on a day
which is not the last day of the Interest Period with respect
thereto; or
(e) the conversion pursuant to Section 2.06 of any
Offshore Rate Loan to a Base Rate Loan on a day that is not the
last day of the respective Interest Period;
including any such loss or expense arising from the liquidation or
reemployment of funds obtained by it to maintain its Offshore Rate
Loans hereunder or from fees payable to terminate the deposits from
which such funds were obtained. Solely for purposes of calculating
amounts payable by the Company to the Banks under this Section
3.04, each Offshore Rate Loan made by a Bank (and each related
reserve, special deposit or similar requirement) shall be
conclusively deemed to have been funded at the IBOR rate used in
determining the Offshore Rate for such Offshore Rate Loan by a
matching deposit or other borrowing in the interbank eurodollar
market for a comparable amount and for a comparable period, whether
or not such Offshore Rate Loan is in fact so funded.
3.05 Inability to Determine Rates. If the Agent determines
that for any reason adequate and reasonable means do not exist for
ascertaining the Offshore Rate for any requested Interest Period
with respect to a proposed Offshore Rate Loan or that the Offshore
Rate applicable pursuant to subsection 2.13(a) for any requested
Interest Period with respect to a proposed Offshore Rate Loan does
not adequately and fairly reflect the cost to the Banks of funding
such Loan, the Agent will forthwith give notice of such
determination to the Company and each Bank. Thereafter, the
obligation of the Banks to make or maintain Offshore Rate Loans
hereunder shall be suspended until the Agent revokes such notice in
writing. Upon receipt of such notice, the Company may revoke any
Notice of Borrowing or Notice of Conversion/Continuation. If the
Company does not revoke such notice, the Banks shall make, convert
or continue the Loans, as proposed by the Company, in the amount
specified in the applicable notice submitted by the Company, but
such Loans shall be made, converted or continued as Base Rate Loans
instead of Offshore Rate Loans.
3.06 Substitution of Banks. Upon the receipt by the Company
from any Bank (an "Affected Bank") of a claim for compensation
pursuant to Sections 3.01, 3.02 or 3.03, the Company may:
(i) request one or more of the other Banks to acquire and assume
all or part of such Affected Bank's Loans and Commitments but no
Bank shall be required to do so; or (ii) designate a replacement
bank or financial institution satisfactory to the Company to
acquire and assume all or part of such Affected Bank's Loans and
Commitments (a "Replacement Bank"). Any such designation of a
Replacement Bank under clause (ii) shall be subject to the prior
36
written consent of the Agent, and such Replacement Bank shall
comply with Section 10.08 as if it were an Assignee.
3.07 Survival.
The agreements and obligations of the Company in this Article III
shall survive the payment of all other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
4.01 Conditions of Initial Loans. This Agreement shall not be
effective until (i) the Agent shall have received on or before the
Closing Date the items set forth in subsections (a) through (g) in
form and substance satisfactory to the Agent and each Bank in
sufficient copies for each Bank and (ii) the condition that the
events set forth in subsection (h) shall have been completed to the
satisfaction of the Company:
(a) Second Amended and Restated Credit Agreement. This
Agreement, executed by the Company, the Agent and each of the Banks
(provided that the Agent may accept a facsimile transmitted
signature page from any Bank which shall bind such Bank with the
same force and effect as an originally executed signature page from
such Bank);
(b) Notes. The Notes, executed by the Company;
(c) Resolutions; Incumbency.
(i) Copies of the resolutions of the board of
directors of the Company or any duly
authorized committee thereof approving and
authorizing the execution, delivery and
performance by the Company of this Agreement
and the other Loan Documents to be delivered
by the Company hereunder, and authorizing the
Credit Extensions, certified as of the
Closing Date by the Secretary or an Assistant
Secretary of the Company; and
(ii) A certificate of the Secretary or Assistant
Secretary of the Company, certifying the names
and true signatures of the officers of the
Company authorized to execute, deliver and
perform, as applicable, this Agreement and all
other Loan Documents to be delivered by each
such Person hereunder;
(d) Articles of Incorporation; By-laws. The articles or
certificate of incorporation and bylaws of the Company as in effect
on the Closing Date, certified by the Secretary or Assistant
Secretary of the Company as of the Closing Date;
37
(e) Opinion of Counsel to the Company. An opinion of
John A. Haveman, counsel to the Company, addressed to the Agent and
the Banks, substantially in the form of Exhibit F;
(f) Payment of Fees and Expenses. The Company shall
have paid all fees due on the Closing Date, together with the
Agent's Attorney Costs incurred up to and including the Closing
Date;
(g) Other Documents. Such other approvals, opinions or
documents as the Agent or any Bank may request; and
(h) Cancelled Notes. Receipt by the Company of
cancelled Notes that were executed by the Company pursuant to the
Existing Credit Agreement (provided that the Agent may deliver such
cancelled Notes to the Company promptly after the Closing Date).
4.02 Conditions to All Credit Extensions. The obligation of
each Bank to make any Credit Extension to be made by it hereunder
is subject to the satisfaction of the following conditions
precedent on the date of the relevant Credit Extension:
(a) Notice of Borrowing or Continuation/Conversion. With
respect to each Borrowing, the Agent shall have received a Notice
of Borrowing or a Notice of Continuation/Conversion, as applicable;
(b) Letter of Credit Request. With respect to each
request for the issuance or amendment of a Letter of Credit, the
Issuing Bank shall have received (and in the event the Issuing Bank
is not the Agent, the Agent shall have received) (i) a Letter of
Credit Application, with all blanks completed, signed by the
Company and any Subsidiary of the Company also requesting the
issuance of such Letter of Credit and (ii) a written certificate
signed by a Responsible Officer, designating the Letter of Credit
as a Financial L/C or a Performance L/C and indicating whether such
Letter of Credit supports workmen's compensation obligations;
(c) Continuation of Representations and Warranties. The
representations and warranties made by the Company contained in
Article V shall be true and correct on and as of such Credit
Extension Date with the same effect as if made on and as of such
date (except to the extent such representations and warranties
expressly refer to an earlier date, in which case they shall be
true and correct as of such earlier date); and
(d) No Existing Default. No Default or Event of Default
shall exist or shall result from such Credit Extension.
Each Notice of Borrowing, Notice of Continuation/Conversion or
Letter of Credit Application submitted by the Company hereunder
shall constitute a representation and warranty by the Company
hereunder, as of the date of each such notice or application and as
38
of the date of each Credit Extension that the conditions in Section
4.02 are satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Agent and each Bank
that:
5.01 Corporate Existence and Power.
(a) Each of the Company and its Material Subsidiaries:
(i) is a corporation duly organized, validly
existing and in good standing under the laws
of the jurisdiction of its incorporation;
(ii) has the power and authority and all material
governmental licenses, authorizations,
consents and approvals to own its assets and
carry on its business;
(iii) is duly qualified as a foreign corporation,
licensed and in good standing under the laws
of each jurisdiction where its ownership,
lease or operation of property or the conduct
of its business requires such qualification,
except where the failure to be so qualified,
licensed or in good standing would not
adversely affect the business or operations
of the Company or such Subsidiary in any
significant manner; and
(iv) is in compliance with all material
requirements of laws and regulations
applicable to it.
(b) Each of the Company's other Subsidiaries:
(i) is a corporation duly organized, validly
existing and in good standing under the laws
of the jurisdiction of its incorporation;
(ii) has the power and authority and all
governmental licenses, authorizations,
consents and approvals to own its assets,
carry on its business;
(iii) is duly qualified as a foreign corporation,
licensed and in good standing under the laws
of each jurisdiction where its ownership,
lease or operation of property or the
39
conduct of its business requires such
qualification; and
(iv) is in compliance with all material
requirements of laws and regulations
applicable to it;
except where any failure to comply with the requirements of this
subsection (b) would not, individually or in the aggregate, result
in a Material Adverse Effect.
5.02 Corporate Authorization; No Contravention. The Company
has the power and authority to execute, deliver and perform its
obligations under the Loan Documents. The execution, delivery and
performance by the Company of this Agreement and any other Loan
Document have been duly authorized by all necessary corporate
action, and do not and will not:
(a) contravene the terms of any of the Company's
Organization Documents;
(b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, any document
evidencing any Contractual Obligation to which the Company is a
party or any order, injunction, writ or decree of any Governmental
Authority to which the Company or its property is subject; or
(c) violate any law or regulation applicable to the
Company.
5.03 Governmental Authorization. No approval, consent,
exemption, authorization, or other action by, or notice to, or
filing with, any Governmental Authority is necessary or required in
connection with the execution, delivery or performance by, or
enforcement against, the Company of the Agreement or any other Loan
Document.
5.04 Binding Effect. This Agreement and each other Loan
Document to which the Company is a party, when executed and
delivered, will constitute the legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with
their respective terms, except (a) as enforceability may be limited
by applicable bankruptcy, insolvency, or similar laws affecting the
enforcement of creditors' rights generally or by equitable
principles relating to enforceability and (b) for any limitations
on the enforceability of the Obligations to a Bank which has not
complied with the requirements of the Minnesota Business Activity
Law, Section 290.371 of the Minnesota Revised Statutes, for the
relevant period.
5.05 Litigation. Attached hereto as Schedule 5.05 is a list
of all material litigation in which the Company or any Subsidiary
is a plaintiff or a defendant as of the Closing Date. As of the
Closing Date and except as provided in Schedule 5.05, there are no
40
actions, suits, proceedings, claims or disputes pending, or to the
best knowledge of the Company, threatened or contemplated, at law,
in equity, in arbitration or before any Governmental Authority,
against the Company, or its Subsidiaries or any of their respective
Properties which:
(a) purport to affect or pertain to this Agreement, or
any other Loan Document, or any of the transactions contemplated
hereby or thereby; or
(b) if determined adversely to the Company, or its
Subsidiaries, would reasonably be expected to have a Material
Adverse Effect. No injunction, writ, temporary restraining order or
any order of any nature has been issued by any court or other
Governmental Authority purporting to enjoin or restrain the
execution, delivery and performance of this Agreement or any other
Loan Document, or directing that the transactions provided for
herein or therein not be consummated as herein or therein provided.
5.06 No Default. No Default or Event of Default exists or
would result from the incurring of any Obligations by the Company.
Neither the Company nor any of its Subsidiaries is in default under
or with respect to any Contractual Obligation in any respect which,
individually or together with all such defaults, could reasonably
be expected to have a Material Adverse Effect.
5.07 ERISA Compliance. Except as referenced or provided for
in either Schedule 5.05 or 5.07:
(a) To the best knowledge of the Company, no facts or
circumstances exist which would reasonably be expected to have a
Material Adverse Effect in connection with the failure of any Plan,
or the failure of the Company, an ERISA Affiliate or any Person
with regard to the Plan, to comply with the applicable provisions
of ERISA, the Code and other Federal or state law.
The Company and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the Code, and
no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been
made with respect to any Plan.
(b) There are no pending or, to the best knowledge of
Company, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan which has resulted
or would, if determined adversely to the Company or any Plan,
reasonably be expected to result in a Material Adverse Effect.
There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan which has
resulted or would reasonably be expected to result in a Material
Adverse Effect.
(c) To the best knowledge of the Company (i) no ERISA
Event has occurred or is reasonably expected to occur; (ii) neither
the Company nor any ERISA Affiliate has incurred, nor reasonably
41
expects to incur, any liability under Title IV of ERISA with
respect to any Pension Plan (other than premiums due and not
delinquent under Section 4007 of ERISA); (iii) neither the Company
nor any ERISA Affiliate has incurred, nor reasonably expects to
incur, any liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such
liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (iv) neither the Company nor any ERISA
Affiliate has engaged in a transaction that could be subject to
Section 4069 or 4212(c) of ERISA.
5.08 Title to Properties. As of the Closing Date, the
property of the Company and its Subsidiaries is subject to no
Liens, other than Permitted Liens.
5.09 Taxes. The Company and its Subsidiaries have filed all
Federal and other material tax returns and reports required to be
filed, and have paid all Federal and other material taxes,
assessments, fees and other governmental charges levied or imposed
upon them or their Properties, income or assets otherwise due and
payable, except those which are being contested in good faith by
appropriate proceedings and for which adequate reserves have been
provided in accordance with GAAP and no Notice of Lien has been
filed or recorded. There is no proposed tax assessment against the
Company or any of its Subsidiaries which would, if the assessment
were made, have a Material Adverse Effect.
5.10 Financial Condition.
(a) The audited consolidated financial statements of the
Company and its Subsidiaries dated December 31, 1994 and the
unaudited consolidated financial statements of the Company and its
Subsidiaries dated March 31, 1995:
(i) were prepared in accordance with GAAP
consistently applied throughout the period
covered thereby, except as otherwise expressly
noted therein; and
(ii) are complete, accurate and fairly present the
financial condition of the Company and its
Subsidiaries as of the date thereof and
results of operations for the period covered
thereby.
(b) Since March 31, 1995, there has been no Material
Adverse Effect.
(c) Attached hereto as Schedule 5.10 is a list of
(i) Contingent Obligations of the Company and its consolidated
Subsidiaries as of the Closing Date and (ii) general partnership
interests owned by the Company and its consolidated Subsidiaries as
of the Closing Date, showing the aggregate liabilities of such
partnerships and Contingent Obligations as of March 31, 1995.
42
5.11 Environmental Matters.
(a) As of the Closing Date, except as specifically
disclosed in Schedule 5.11, the on-going operations of the Company
and each of its Subsidiaries comply in all respects with all
Environmental Laws, except such non-compliance which would not (if
enforced in accordance with applicable law) result in liability
that would reasonably be expected to have a Material Adverse
Effect.
(b) As of the Closing Date, except as specifically
disclosed in Schedule 5.11, none of the Company, any of its
Subsidiaries or any of their respective present property or
operations is subject to any outstanding written order from or
agreement with any Governmental Authority nor subject to any
judicial or docketed administrative proceeding, respecting any
Environmental Law, Environmental Claim or Hazardous Material.
(c) Except as specifically disclosed in Schedule 5.11,
there are no Hazardous Materials or other conditions or
circumstances existing with respect to any property, or arising
from operations prior to the Closing Date, of the Company or any of
its Subsidiaries that would reasonably be expected to give rise to
Environmental Claims with a potential liability of the Company and
its Subsidiaries that in the aggregate for any such condition,
circumstance or property would reasonably be expected to have a
Material Adverse Effect.
5.12 Regulated Entities. None of the Company, any Person
controlling the Company, or any Subsidiary of the Company, is
(a) an "investment company" within the meaning of the Investment
Company Act of 1940; or (b) subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any
other Federal or state statute or regulation limiting its ability
to incur Indebtedness, except that certain Persons who may be
deemed to control the Company are registered investment companies
within the meaning of the Investment Company Act of 1940.
5.13 No Burdensome Restrictions. Neither the Company nor any
of its Subsidiaries is a party to or bound by any Contractual
Obligation, or subject to any charter or corporate restriction, or
any requirement of law, which could reasonably be expected to have
a Material Adverse Effect.
5.14 Solvency. The Company and each of its Material
Subsidiaries are Solvent.
5.15 Labor Relations. As of the Closing Date, there are no
strikes, lockouts or other labor disputes against the Company or
any of its Subsidiaries, or, to the best of the Company's
knowledge, threatened against or affecting the Company or any of
its Subsidiaries, and no significant unfair labor practice
complaint is pending against the Company or any of its Subsidiaries
43
or, to the best knowledge of the Company, threatened against any of
them before any Governmental Authority.
5.16 Copyrights, Patents, Trademarks and Licenses, etc. The
Company or its Subsidiaries own or are licensed or otherwise have
the right to use all of the patents, trademarks, service marks,
trade names, copyrights, franchises, authorizations and other
rights that are reasonably necessary for the operation of their
respective businesses, without conflict with the rights of any
other Person. To the best knowledge of the Company, no slogan or
other advertising device, product, process, method, substance, part
or other material now employed, or now contemplated to be employed
by the Company or any of its Subsidiaries infringes upon any rights
held by any other Person; except as specifically disclosed in
Schedule 5.05, no claim or litigation regarding any of the
foregoing is pending or threatened, and no patent, invention,
device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the knowledge of the
Company, proposed, which, in either case, could reasonably be
expected to have a Material Adverse Effect.
5.17 Material Subsidiaries and Equity Investments. As of the
Closing Date, the Company has no Material Subsidiaries other than
Computing Devices Canada Ltd. and has no equity investment in any
other corporation or entity which exceeds 10% of Consolidated Total
Assets.
5.18 Insurance. As of the Closing Date, the properties of the
Company and its Subsidiaries are insured with financially sound and
reputable insurance companies, in such amounts, with such
deductibles and covering such risks as are customarily carried by
companies engaged in similar businesses and owning similar
properties in localities where the Company or such Subsidiary
operates.
5.19 Full Disclosure. None of the representations or
warranties made by the Company or any of its Subsidiaries in the
Loan Documents as of the date such representations and warranties
are made or deemed made, and none of the statements contained in
each exhibit, report, statement or certificate furnished by or on
behalf of the Company in connection with the Loan Documents as of
the date such statements are made or deemed made, contains any
untrue statement of a material fact or omits any material fact
required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they are
made, not misleading.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Company covenants and agrees that, so long as any Bank
shall have any Commitment hereunder, or any Loan or other
44
Obligation shall remain unpaid or unsatisfied, unless the Majority
Banks waive compliance in writing:
6.01 Financial Statements. The Company shall deliver to the
Agent in form and detail satisfactory to the Agent and the Majority
Banks, with sufficient copies for each Bank:
(a) as soon as available, but not later than 120 days
after the end of each fiscal year, a copy of the audited
consolidated financial statements of the Company as of the end of
such fiscal year, setting forth in each case in comparative form
the figures for the previous year, and accompanied by the opinion
of KPMG Peat Marwick LLP or another nationally-recognized
independent public accounting firm which report shall state that
such consolidated financial statements present fairly in all
material respects the financial position of the Company and its
Subsidiaries as of the dates indicated and the results of their
operations and their cash flows for the periods indicated in
conformity with GAAP. Such opinion shall not be qualified or
limited for any reason, including, without limitation, because of a
restricted or limited examination by such accountant of any
material portion of the Company's or any Subsidiary's records; and
(b) as soon as available, but not later than 60 days
after the end of each calendar quarter, a copy of the Company's
quarterly report on Form 10-Q filed with the SEC with respect to
such fiscal quarter and an operating report similar to that
provided by the Company under the Existing Credit Agreement showing
the relevant data by business unit of the Company.
6.02 Certificates; Other Information. The Company shall
furnish to the Agent, with sufficient copies for each Bank:
(a) concurrently with the delivery of the financial
statements referred to in subsections 6.01(a) and (b) above, a
Compliance Certificate, signed by a Responsible Officer;
(b) copies of each registration statement of the Company
other than with respect to employee benefit plans, each periodic
report regarding the Company required pursuant to Section 13 of the
Exchange Act, each annual report, each proxy statement and any
amendments to any of the above filed or reported by the Company
with or to any securities exchange or the Securities and Exchange
Commission, of each communication from the Company or any
Subsidiary to the Company's shareholders generally, promptly upon
the filing or making thereof and copies of such other filings,
reports and communications with the Company's shareholders as the
Agent may from time to time request;
(c) upon release, copies of all financially material
press releases;
(d) promptly after the creation or Acquisition of any
Material Subsidiary, the name of such Subsidiary, a description of
45
its business, the price paid for the stock or assets of such
Subsidiary, its net worth and the value of its assets; and
(e) promptly, such additional business, financial,
corporate affairs and other information as the Agent, at the
request of any Bank, may from time to time reasonably request.
6.03 Notices. The Company shall promptly notify the Agent and
each Bank upon a Responsible Officer of the Company obtaining
knowledge:
(a) of the occurrence of any Default or Event of
Default;
(b) of (i) any breach or non-performance of, or any
default under, any Contractual Obligation of the Company or any of
its Subsidiaries which would reasonably be expected to result in a
Material Adverse Effect; and (ii) any dispute, litigation,
investigation, proceeding or suspension which may exist at any time
between the Company or any of its Subsidiaries and any Governmental
Authority which would reasonably be expected to result in a
Material Adverse Effect;
(c) of the commencement of, or any material development
in, any litigation or proceeding affecting the Company or any
Subsidiary (i) which, if adversely determined, would reasonably be
expected to have a Material Adverse Effect, or (ii) in which the
relief sought is an injunction or other stay of the performance of
this Agreement or any Loan Document;
(d) of (i) any and all enforcement, cleanup, removal or
other governmental or regulatory actions instituted or threatened
against the Company or any of its Subsidiaries or any of their
respective Properties pursuant to any applicable Environmental
Laws, (ii) all other Environmental Claims, and (iii) any
environmental or similar condition on any real property adjoining
or in the vicinity of the property of the Company or any Subsidiary
that could reasonably be anticipated to cause the property of the
Company or any of its Subsidiaries or any part thereof to be
subject to any restrictions on the ownership, occupancy,
transferability or use of such property under any Environmental
Laws, if, individually or in the aggregate, the events or
conditions described or the amount claimed in clauses (i), (ii) and
(iii) would reasonably be expected to result in a Material Adverse
Effect;
(e) of the occurrence of any ERISA Event affecting the
Company or any ERISA Affiliate, and deliver to the Agent and each
Bank a copy of any notice with respect to such event that is filed
with a Governmental Authority and any notice delivered by a
Governmental Authority to the Company or any ERISA Affiliate with
respect to such event;
46
(f) any Material Adverse Effect subsequent to the date
of the most recent audited financial statements of the Company
delivered to the Banks pursuant to subsection 6.01(a); and
(g) of any labor controversy resulting in or threatening
to result in any strike, work stoppage, boycott, shutdown or other
labor disruption against or involving the Company or any of its
Subsidiaries.
Each notice pursuant to this Section shall be accompanied
by a written statement by a Responsible Officer of the Company
setting forth details of the occurrence referred to therein, and
stating what action the Company proposes to take with respect
thereto and at what time. Each notice under subsection 6.03(a)
shall describe with particularity any and all clauses or provisions
of this Agreement or other Loan Document that have been breached or
violated.
6.04 Preservation of Corporate Existence, Etc. The Company
shall, and shall cause each of its Subsidiaries to:
(a) except as permitted in Section 7.02, preserve and
maintain in full force and effect its corporate existence and good
standing under the laws of its state or jurisdiction of
incorporation;
(b) preserve and maintain in full force and effect all
material rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its
business except in connection with transactions permitted by
Section 7.02;
(c) use its reasonable efforts, in the Ordinary Course
of Business, to preserve its business organization and preserve the
goodwill and business of the customers, suppliers and others having
material business relations with it; and
(d) preserve or renew all of its registered trademarks,
trade names and service marks, the non-preservation of which would
reasonably be expected to have a Material Adverse Effect, provided,
however, that the Company shall not be deemed to be in default
under this Section 6.04 if a Subsidiary (other than a Material
Subsidiary) fails to comply herewith so long as such failure is not
material.
6.05 Maintenance of Property. The Company shall maintain, and
shall cause each of its Subsidiaries to maintain, and preserve all
its property which is used or useful in its business in good
working order and condition, ordinary wear and tear excepted, make
all necessary repairs thereto and renewals and replacements
thereof, and to keep such property free of any Hazardous Materials,
except where the failure to do so would not reasonably be expected
to result in a Material Adverse Effect, except as permitted by
47
Section 7.02. The Company shall use at least the standard of care
typical in the industry in the operation of its facilities.
6.06 Insurance. The Company shall maintain, and shall cause
each of its Subsidiaries to maintain, with financially sound and
reputable independent insurers, insurance with respect to its
Properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or
similar business, of such types and in such amounts as are
customarily carried under similar circumstances by such other
Persons; including workers' compensation insurance, public
liability and property and casualty insurance. Upon request of the
Agent or any Bank, the Company shall furnish the Agent, with
sufficient copies for each Bank, at reasonable intervals (but not
more than once per calendar year) a certificate of a Responsible
Officer of the Company (and, if requested by the Agent, any
insurance broker of the Company) setting forth the nature and
extent of all insurance maintained by the Company and its
Subsidiaries in accordance with this Section 6.06 or any Collateral
Documents (and which, in the case of a certificate of a broker,
were placed through such broker).
6.07 Payment of Obligations. The Company shall, and shall
cause its Subsidiaries to, pay and discharge as the same shall
become due and payable, all their respective obligations and
liabilities, including:
(a) all tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the
same are being contested in good faith by appropriate proceedings
and adequate reserves in accordance with GAAP are being maintained
by the Company or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law
become a Lien upon its property; and
(c) all Indebtedness, as and when due and payable, but
subject to any subordination provisions contained in any instrument
or agreement evidencing such Indebtedness;
provided, however, that the Company and its Subsidiaries shall not
be deemed to be in default under this Section 6.07 if failure to
comply herewith would not result in a Material Adverse Effect.
6.08 Compliance with Laws. The Company shall comply, and
shall cause each of its Subsidiaries to comply, in all material
respects with all material regulations and requirements of any
Governmental Authority having jurisdiction over it or its business
(including the Federal Fair Labor Standards Act), except such as
may be contested in good faith or as to which a bona fide dispute
may exist.
6.09 Inspection of Property and Books and Records. The
Company shall maintain and shall cause each of its Subsidiaries to
48
maintain proper books of record and account, in which full, true
and correct entries in conformity with GAAP consistently applied
shall be made of all financial transactions and matters involving
the assets and business of the Company and such Subsidiaries. The
Company shall permit, and shall cause each of its Subsidiaries to
permit, representatives and independent contractors of the Agent or
any Bank to visit and inspect any of their respective properties,
to examine their respective corporate, financial and operating
records, and make copies thereof or abstracts therefrom, and to
discuss their respective affairs, finances and accounts with their
respective officers and independent public accountants at such
reasonable times during normal business hours and as often as may
be reasonably desired, upon reasonable advance notice to the
Company; provided, however, when a Default exists, (i) the Agent or
any Bank may do any of the foregoing at any time during normal
business hours and without advance notice and (ii) such inspection,
examination and meetings shall be at the Company's expense.
6.10 Environmental Laws.
(a) The Company shall, and shall cause each of its
Subsidiaries to, conduct its operations and keep and maintain its
property in compliance in all material respects with all
Environmental Laws.
(b) Upon the written request of the Agent or any Bank,
the Company shall submit to the Agent with sufficient copies for
each Bank, at the Company's sole cost and expense, a report
providing an update of the status of any environmental, health or
safety compliance, hazard or liability issue identified in any
notice or report required pursuant to subsection 6.03(d).
6.11 Use of Proceeds. The Company shall use the proceeds of
the Loans and the Letters of Credit solely for working capital and
other general lawful corporate purposes.
6.12 Further Assurances.
(a) The Company shall ensure that all written
information, exhibits and reports furnished to the Agent or the
Banks do not and will not contain any untrue statement of a
material fact and do not and will not omit to state any material
fact necessary to make the statements contained therein not
misleading in light of the circumstances in which made, and will
promptly disclose to the Agent and the Banks and correct any defect
or error that may be discovered therein or in any Loan Document or
in the execution, acknowledgement or recordation thereof.
(b) Promptly upon request by the Agent or the Majority
Banks, the Company shall (and shall cause any of its Subsidiaries
to) do, execute, acknowledge and deliver any and all such further
acts, certificates, assurances and other instruments as the Agent
or such Banks, as the case may be, may reasonably require from time
to time in order (i) to carry out more effectively the purposes of
49
this Agreement or any other Loan Document, and (ii) to better
assure, convey, grant, assign, transfer, preserve, protect and
confirm to the Agent and Banks the rights granted or now or
hereafter intended to be granted to the Banks under any Loan
Document or under any other document executed in connection
therewith.
ARTICLE VII
NEGATIVE COVENANTS
The Company hereby covenants and agrees that, so long as any
Bank shall have any Commitment hereunder, or any Loan or other
Obligation shall remain unpaid or unsatisfied, unless the Majority
Banks waive compliance in writing:
7.01 Limitation on Liens. The Company shall not, and shall
not suffer or permit any of its Subsidiaries to, directly or
indirectly, make, create, incur, assume or suffer to exist any Lien
upon or with respect to any part of its property, whether now owned
or hereafter acquired, other than the following ("Permitted
Liens"):
(a) any Lien created under any Loan Document;
(b) Liens for taxes, fees, assessments or other
governmental charges or statutory obligations which are not
delinquent or remain payable without penalty, or to the extent that
non-payment thereof is permitted by Section 6.07, provided that no
notice of Lien has been filed or recorded under the Code;
(c) Liens arising in the Ordinary Course of Business in
connection with obligations that are not overdue or which are being
contested in good faith and by appropriate proceedings, including,
but not limited to Liens under bid, performance and other surety
bonds, supersedeas and appeal bonds, Liens on advance or progress
payments received from customers under contracts for the sale,
lease or license of goods, software or services and upon the
products being sold or licensed, in each case securing performance
of the underlying contract or the repayment of such advances in the
event final acceptance of performance under such contracts does not
occur; and Liens upon funds collected temporarily from others
pending payment or remittance on their behalf;
(d) Liens (other than any Lien imposed by ERISA)
required in the Ordinary Course of Business in connection with
workers' compensation, unemployment insurance and other social
security legislation;
(e) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the Ordinary Course of Business
which, in the aggregate, are not substantial in amount, and which
do not in any case materially detract from the value of the
50
property subject thereto or interfere with the ordinary conduct of
the businesses of the Company and its Subsidiaries;
(f) purchase money security interests on any property
acquired or held by the Company or its Subsidiaries in the Ordinary
Course of Business securing Indebtedness incurred or assumed for
the purpose of financing all or any part of the cost of acquiring
such property to the extent permitted under Section 7.04; provided
that (i) any such Lien attaches to such property concurrently with
or within 20 days after the acquisition thereof, (ii) such Lien
attaches solely to the property so acquired in such transaction,
and (iii) the principal amount of the debt secured thereby does not
exceed 100% of the cost of such property;
(g) Liens arising solely by virtue of any statutory or
common law provision relating to banker's liens, rights of set-off
or similar rights and remedies as to deposit accounts or other
funds maintained with a creditor depository institution; provided
that (i) such deposit account is not a dedicated cash collateral
account and is not subject to restrictions against access by the
Company in excess of those set forth by regulations promulgated by
the Federal Reserve Board, and (ii) such deposit account is not
intended by the Company or any of its Subsidiaries to provide
collateral to the depository institution;
(h) any Lien on any asset existing at the time such
asset is acquired by the Company or one of its Subsidiaries or is
merged into or consolidated with the Company or one of its
Subsidiaries and not created in contemplation of such event and any
replacement Lien arising out of the extension, renewal or
replacement of the related obligation secured by such Lien, so long
as any such replacement Lien does not extend to property not
covered by the Lien replaced or renewed; and
(i) any Lien (not otherwise permitted by this Section
7.01) securing an obligation of the Company or any Subsidiary if
the aggregate amount of all such obligations secured by all such
Liens does not exceed 15% of Consolidated Total Assets.
7.02 Mergers, Consolidations and Dispositions of Assets.
(a) Except as provided in Section 7.02(b), the Company
shall not, and shall not permit any of its Subsidiaries to: (i)
sell, assign, lease, convey, transfer or otherwise dispose of
(whether in one or a series of related transactions) any property
or assets (including accounts and notes receivable, with or without
recourse) (collectively, "transfer") to any Person except in the
Ordinary Course of Business; (ii) transfer to any Person other than
the Company or a Subsidiary any outstanding capital stock that has
been issued by any Subsidiary; or (iii) consolidate with or merge
into any other Person.
(b) Section 7.02(a) shall not apply to or restrict:
51
(i) the merger or consolidation of any Subsidiary
into the Company, or with or into any other
Subsidiaries, provided that if any such
transaction is between a Subsidiary and a
Wholly-Owned Subsidiary, the Wholly-Owned
Subsidiary is the continuing or surviving
corporation;
(ii) the transfer by any Subsidiary of the
Company of any assets (upon voluntary
liquidation or otherwise) to the Company or
a Wholly-Owned Subsidiary of the Company;
(iii) transfers of real estate not used or useful
in the business of the Company and its
Subsidiaries, any bulk sale of inventory not
representing a then current product line of
the Company or its Subsidiaries, or any sale
of property or assets used in connection with
discontinued or abandoned product lines of
the Company or its Subsidiaries;
(iv) the sale of equipment to the extent that such
equipment is exchanged for credit against the
purchase price of similar replacement
equipment, or the proceeds of such sale are
reasonably promptly applied to the purchase
price of such replacement equipment;
(v) (i) the transfer of assets by the Company to
any of its Subsidiaries in the Ordinary
Course of Business or to any of its
Subsidiaries incorporated in a jurisdiction
outside of the United States, if such
transfer is a sale for fair market value and
the consideration received by the Company is
cash and (ii) the transfer of the business
and assets of the Company's Computing Devices
International division to a Subsidiary of the
Company;
(vi) the transfer, merger or consolidation of the
assets listed on Schedule 7.02;
(vii) any transfer of assets by the Company or any
of its Subsidiaries to any Person in
connection with the extension of
Indebtedness or making an investment or
acquisition transaction or business
combination otherwise permitted under this
Agreement; and
52
(viii)transfers of assets not otherwise permitted
hereunder (whether by merger, consolidation
or otherwise) occurring after the Closing
Date which are made for fair market value;
provided, that (i) at the time of any
transfer, no Event of Default exists or would
result from such transfer and (ii) the
aggregate net book value of all assets so
transferred by the Company and its
Subsidiaries together shall not exceed 10% of
Consolidated Total Assets.
7.03 Cash Investments. The Company shall not, and shall not
permit any of its Subsidiaries to, invest any assets classified in
accordance with GAAP on the Company's consolidated balance sheet as
"cash and equivalents" or "short-term investments" in investments
other than Cash Equivalents and investment grade marketable
securities.
7.04 Indebtedness. The Company shall not permit the ratio of
(a) Consolidated Indebtedness, to (b) EBITDA, minus Capital
Expenditures to exceed 3.0 to 1, all calculated for the preceding
four fiscal quarters of the Company.
7.05 Contingent Obligations. The Company shall not, and shall
not suffer or permit any of its Subsidiaries to, create, incur,
assume or suffer to exist any Contingent Obligations except:
(a) Contingent Obligations incurred pursuant to this
Agreement;
(b) endorsements for collection or deposit in the
Ordinary Course of Business;
(c) any Contingent Obligations relating to letters of
credit, bank guarantees or similar instruments incurred by
Computing Devices Canada Ltd. in connection with the IRIS system
contract dated April 18, 1991 and in connection with a contract
dated as of January 3, 1994 with the Diesel Division of General
Motors Canada Limited; and
(d) Contingent Obligations of the Company and its
Subsidiaries in an aggregate amount not in excess of $40,000,000.
7.06 Use of Proceeds. The Company shall not and shall not
suffer or permit any of its Subsidiaries to use any portion of the
Loan proceeds, directly or indirectly, (i) to purchase or carry
Margin Stock, (ii) to repay or otherwise refinance indebtedness of
the Company or others incurred to purchase or carry Margin Stock,
(iii) to extend credit for the purpose of purchasing or carrying
any Margin Stock, or (iv) to acquire any security in any
transaction that is subject to Section 13 or 14 of the Exchange
Act.
53
7.07 [Reserved].
7.08 Lease Obligations. The Company shall not permit the
aggregate minimum non-cancelable payment commitments in respect of
Operating Leases for the Company and its Subsidiaries on a
consolidated basis determined in accordance with GAAP at the end of
any fiscal year to exceed, for any subsequent fiscal year,
$60,000,000 (exclusive of $16,000,000, or such lesser amount as may
be reserved in the Company's consolidated financial statements to
pay such commitments).
7.09 [Reserved].
7.10 Consolidated Net Worth. The Company shall not permit its
Consolidated Net Worth at any time to be less than $105,000,000
plus (a) 75% of Consolidated Net Income (not to be reduced by
Consolidated Net Losses) subsequent to December 31, 1993, plus
(b) 100% of the net proceeds from the issuance of any capital stock
by the Company after December 31, 1993 except stock issued to or in
connection with employee and director benefit plans.
7.11 [Reserved].
7.12 Fixed Charge Coverage Ratio. On and after the Closing
Date, the Company shall not permit its ratio of (a) EBITDA, plus
interest income, minus Capital Expenditures, plus dividends payable
on the Preferred Stock to (b) Consolidated Fixed Charges, plus
dividends payable on the Preferred Stock to be less than 2.25 to 1,
all calculated for the immediately preceding four fiscal quarters
of the Company.
7.13 Change in Business. The Company shall not, and shall not
permit any of its Subsidiaries to, (i) engage in any material line
of business substantially different from those lines of business
carried on by the Company and its Subsidiaries on the Closing Date;
or (ii) extend any material amount of Indebtedness to or make any
material equity investment in any Person which engages in one or
more lines of business all of which are substantially different
from those lines of business carried on by the Company and its
Subsidiaries on the Closing Date; or (iii) enter into any joint
venture which engages in a material line of business substantially
different from those lines of business carried on by the Company
and its Subsidiaries on the Closing Date.
7.14 [Reserved].
7.15 Accounting Changes. The Company shall not, and shall not
suffer or permit any of its Subsidiaries to, make any significant
change in accounting treatment or reporting practices, except as
required or permitted by GAAP, or change the fiscal year of the
Company or of any of its consolidated Subsidiaries.
7.16 Contracts of Subsidiaries. The Company shall not permit
any of its Subsidiaries (other than Computing Devices Canada Ltd.
54
and Computing Devices Company Ltd. and its Subsidiaries) to enter
into any contract restricting the ability of such Subsidiary to pay
dividends to the Company.
ARTICLE VIII
EVENTS OF DEFAULT
8.01 Event of Default. Any of the following shall constitute
an "Event of Default":
(a) Non-Payment. The Company fails to pay, (i) when and
as required to be paid herein, any amount of principal of any Loan,
or any reimbursement obligation in respect of a Letter of Credit,
or (ii) within 5 days after the same shall become due, any
interest, fee or any other amount payable hereunder or pursuant to
any other Loan Document; or
(b) Representation or Warranty. Any representation or
warranty by the Company or any of its Subsidiaries made or deemed
made herein, in any Loan Document, or which is contained in any
certificate, document or financial or other statement by the
Company, any of its Subsidiaries, or their respective Responsible
Officers, furnished at any time under this Agreement, or in or
under any Loan Document, shall prove to have been incorrect in any
material respect on or as of the date made or deemed made; or
(c) Specific Defaults. The Company fails to perform or
observe any term, covenant or agreement contained in Section 6.03
or 6.09 or in Article VII; or the Company fails to perform or
observe any term, covenant or agreement contained in Section 6.01
or 6.02, and such default continues unremedied for a period of 10
days; or
(d) Other Defaults. The Company fails to perform or
observe any other term or covenant contained in this Agreement or
any Loan Document, and such default continues unremedied for a
period of 20 days; or
(e) Cross-Default. The Company or any of its
Subsidiaries (i) fails to make any required payment when due in
respect of any Indebtedness or Contingent Obligation having a
principal or face amount of $7,500,000 or more when due or any Rate
Contract having a notional amount of $7,500,000 or more when due
(whether at scheduled maturity or required prepayment or by
acceleration, demand, or otherwise); or (ii) fails to perform or
observe any other condition or covenant, or any other event shall
occur or condition exist, under any agreement or instrument
relating to any such Indebtedness or Contingent Obligation, and
such failure continues after the applicable grace or notice period,
if any, specified in the document relating thereto on the date of
such failure if the effect of such failure, event or condition is
to cause, or to permit the holder or holders of such Indebtedness
55
or beneficiary or beneficiaries of such Indebtedness (or a trustee
or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause such Indebtedness to be declared to be due
and payable prior to its stated maturity, or such Contingent
Obligation to become payable or cash collateral in respect thereof
to be demanded; or
(f) Insolvency; Voluntary Proceedings. The Company or
any other Subsidiary of the Company (i) ceases or fails to be
Solvent, or generally fails to pay, or admits in writing its
inability to pay, its debts as they become due, subject to
applicable grace periods, if any, whether at stated maturity or
otherwise; (ii) voluntarily ceases to conduct its business in the
ordinary course; (iii) commences any Insolvency Proceeding with
respect to itself; or (iv) takes any action to effectuate or
authorize any of the foregoing; provided, however, that it shall
not be an Event of Default under this subsection (f) if any
Subsidiary of the Company to which this subsection applies does not
have annual revenues in excess of 1% of the consolidated revenues
of the Company or net worth which constitutes more than 5% of the
Consolidated Net Worth of the Company in the fiscal year
immediately preceding the date this subsection first becomes
applicable to such Subsidiary; or
(g) Involuntary Proceedings. (i) Any involuntary
Insolvency Proceeding is commenced or filed against the Company or
any other Subsidiary of the Company, or any writ, judgment, warrant
of attachment, execution or similar process, is issued or levied
against a substantial part of the Company's or any of its
Subsidiaries' Properties, and any such proceeding or petition shall
not be dismissed, or such writ, judgment, warrant of attachment,
execution or similar process shall not be released, vacated or
fully bonded within 60 days after commencement, filing or levy;
(ii) the Company or any of its Subsidiaries admits the material
allegations of a petition against it in any Insolvency Proceeding,
or an order for relief (or similar order under non-U.S. law) is
ordered in any Insolvency Proceeding; or (iii) the Company or any
of its Subsidiaries acquiesces in the appointment of a receiver,
trustee, custodian, conservator, liquidator, mortgagee in
possession (or agent therefor), or other similar Person for itself
or a substantial portion of its property or business; provided,
however, that it shall not be an Event of Default under this
subsection (g) if any Subsidiary of the Company to which this
subsection applies does not have annual revenues in excess of 1% of
the consolidated revenues of the Company or net worth which
constitutes more than 5% of the Consolidated Net Worth of the
Company in the fiscal year immediately preceding the date this
subsection first becomes applicable to such Subsidiary; or
(h) ERISA. (i) An ERISA Event shall occur with respect
to a Pension Plan or Multiemployer Plan which has resulted or would
reasonably be expected to result in liability of the Company under
Title IV of ERISA to the Pension Plan, Multiemployer Plan or the
PBGC in an aggregate amount which would reasonably be expected to
56
result in a Material Adverse Effect; or (ii) the Company or any
ERISA Affiliate shall fail to pay when due, after the expiration of
any applicable grace period, any installment payment with respect
to its withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan in an aggregate amount which would reasonably be
expected to result in a Material Adverse Effect; or
(i) Monetary Judgments. One or more final
(non-interlocutory) judgments, orders or decrees shall be entered
against the Company or any of its Subsidiaries involving in the
aggregate a liability (not fully covered by independent third-party
insurance) as to any single or related series of transactions,
incidents or conditions, of $10,000,000 or more, and the same shall
remain unvacated and unstayed pending appeal for a period of 10
days after the entry thereof; or
(j) Ownership. Any Person or group of Persons is the
beneficial owner of 30 percent or more of the voting power of the
Company for a period of 30 days or more. For purposes of this
subsection (j), the terms "group" and "beneficial owner" shall have
the meanings given to those terms in Section 13 of the Securities
Exchange Act of 1934, as amended.
8.02 Remedies. If any Event of Default occurs, the Agent
shall, at the request of, or may, with the consent of, the Majority
Banks,
(a) declare the Commitment of each Bank to make Loans
and purchase participations in Letters of Credit and of the Issuing
Bank to issue Letters of Credit to be terminated, whereupon such
Commitments shall forthwith be terminated;
(b) declare the unpaid principal amount of all
outstanding Loans, all interest accrued and unpaid thereon, and all
other amounts owing or payable hereunder or under any other Loan
Document to be immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Company; and
(c) exercise on behalf of itself and the Banks all
rights and remedies available to it and the Banks under the Loan
Documents or applicable law;
provided, however, that upon the occurrence of any event specified
in paragraph (f) or (g) of Section 8.01 above (in the case of
clause (i) of paragraph (g) upon the expiration of the 60-day
period mentioned therein), the obligation of each Bank to make
Loans and purchase participations in Letters of Credit and of the
Issuing Bank to issue Letters of Credit shall automatically
terminate without notice to the Company and the unpaid principal
amount of all outstanding Loans and all interest and other amounts
as aforesaid shall automatically become due and payable without
further act of the Agent or any Bank and without notice to the
Company. If at the time an Event of Default occurs, Letters of
57
Credit are issued and unexpired, the Company shall deposit with the
Agent cash in an amount equal to the Stated Amount of all Letters
of Credit.
8.03 Rights Not Exclusive. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not
exclusive of any other rights, powers, privileges or remedies
provided by law or in equity, or under any other instrument,
document or agreement now existing or hereafter arising.
ARTICLE IX
THE AGENT
9.01 Appointment and Authorization. Each Bank hereby
irrevocably appoints, designates and authorizes the Agent to take
such action on its behalf under the provisions of this Agreement
and each other Loan Document and to exercise such powers and
perform such duties as are expressly delegated to it by the terms
of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary contained elsewhere in this Agreement or
in any other Loan Document, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor
shall the Agent have or be deemed to have any fiduciary
relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist
against the Agent.
9.02 Delegation of Duties. The Agent may execute any of its
duties under this Agreement or any other Loan Document by or
through agents, employees or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to
such duties. The Agent shall not be responsible for the negligence
or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
9.03 Liability of Agent. None of the Agent-Related Persons
shall (i) be liable for any action taken or omitted to be taken by
any of them under or in connection with this Agreement or any other
Loan Document (except for its own gross negligence or willful
misconduct), or (ii) be responsible in any manner to any of the
Banks for any recital, statement, representation or warranty made
by the Company or any Subsidiary or Affiliate of the Company, or
any officer thereof, contained in this Agreement or in any other
Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent
under or in connection with, this Agreement or any other Loan
Document, or for the value of any collateral or the validity,
effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of the
Company or any other party to any Loan Document to perform its
58
obligations hereunder or thereunder. No Agent-Related Person shall
be under any obligation to any Bank to ascertain or to inquire as
to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other Loan Document, or
to inspect the Properties, books or records of the Company or any
of the Company's Subsidiaries or Affiliates.
9.04 Reliance by Agent.
(a) The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex
or telephone message, statement or other document or conversation
believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to the Company),
independent accountants and other experts selected by the Agent.
The Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Loan Document unless
it shall first receive such advice or concurrence of the Majority
Banks as it deems appropriate and, if it so requests, it shall
first be indemnified to its satisfaction by the Banks against any
and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall
in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Majority Banks and such
request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the
conditions specified in Sections 4.01 and 4.02, each Bank that has
executed this Agreement shall be deemed to have consented to,
approved or accepted or to be satisfied with each document or other
matter either sent by the Agent to such Bank for consent, approval,
acceptance or satisfaction, or required thereunder to be consented
to or approved by or acceptable or satisfactory to the Bank, unless
an officer of the Agent responsible for the transactions
contemplated by the Loan Documents shall have received notice from
the Bank prior to the initial Borrowing specifying its objection
thereto and either such objection shall not have been withdrawn by
notice to the Agent to that effect or the Bank shall not have made
available to the Agent the Bank's ratable portion of such
Borrowing.
9.05 Notice of Default. The Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event
of Default, except with respect to defaults in the payment of
principal, interest and fees required to be paid to the Agent for
the account of the Banks, unless the Agent shall have received
written notice from a Bank or the Company referring to this
Agreement, describing such Default or Event of Default and stating
that such notice is a "notice of default". In the event that the
Agent receives such a notice, the Agent shall give notice thereof
59
to the Banks. The Agent shall take such action with respect to
such Default or Event of Default as shall be requested by the
Majority Banks in accordance with Article VIII; provided, however,
that unless and until the Agent shall have received any such
request, the Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable or in the
best interest of the Banks.
9.06 Credit Decision. Each Bank expressly acknowledges that
none of the Agent-Related Persons has made any representation or
warranty to it and that no act by the Agent hereinafter taken,
including any review of the affairs of the Company and its
Subsidiaries shall be deemed to constitute any representation or
warranty by the Agent to any Bank. Each Bank represents to the
Agent that it has, independently and without reliance upon the
Agent and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other
condition and creditworthiness of the Company and its Subsidiaries,
and all applicable bank regulatory laws relating to the
transactions contemplated thereby, and made its own decision to
enter into this Agreement and extend credit to the Company
hereunder. Each Bank also represents that it will, independently
and without reliance upon the Agent and based on such documents and
information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan
Documents, and to make such investigations as it deems necessary to
inform itself as to the business, prospects, operations, property,
financial and other condition and creditworthiness of the Company.
Except for notices, reports and other documents expressly herein
required to be furnished to the Banks by the Agent, the Agent shall
not have any duty or responsibility to provide any Bank with any
credit or other information concerning the business, prospects,
operations, property, financial and other condition or
creditworthiness of the Company which may come into the possession
of any of the Agent-Related Persons.
9.07 Indemnification. Whether or not the transactions
contemplated hereby shall be consummated, the Banks shall indemnify
upon demand the Agent-Related Persons (to the extent not reimbursed
by or on behalf of the Company and without limiting the obligation
of the Company to do so), ratably from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses and disbursements of any kind
whatsoever which may at any time (including at any time following
the repayment of the Loans and the termination or resignation of
the related Agent) be imposed on, incurred by or asserted against
any such Person any way relating to or arising out of this
Agreement or any document contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any
action taken or omitted by any such Person under or in connection
with any of the foregoing; provided, however, that no Bank shall be
60
liable for the payment to the Agent-Related Persons of any portion
of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements
resulting solely from such Person's gross negligence or willful
misconduct. Without limitation of the foregoing, each Bank shall
reimburse the Agent upon demand for its ratable share of any costs
or out-of-pocket expenses (including Attorney Costs) incurred by
the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this
Agreement, any other Loan Document, or any document contemplated by
or referred to herein to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Company.
Without limiting the generality of the foregoing, if the Internal
Revenue Service or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Agent did not
properly withhold tax from amounts paid to or for the account of
any Bank (because the appropriate form was not delivered, was not
properly executed, or because such Bank failed to notify the Agent
of a change in circumstances which rendered the exemption from, or
reduction of, withholding tax ineffective, or for any other reason)
such Bank shall indemnify the Agent fully for all amounts paid,
directly or indirectly, by the Agent as tax or otherwise, including
penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to the Agent under this
Section, together with all costs and expenses (including Attorney
Costs). The obligation of the Banks in this Section shall survive
the payment of all Obligations hereunder.
9.08 Agent in Individual Capacity. BofA and its Affiliates
may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory,
underwriting or other business with the Company and its
Subsidiaries and Affiliates as though BofA were not the Agent
hereunder and without notice to or consent of the Banks. The Banks
acknowledge that, pursuant to such activities, BofA or its
Affiliates may receive information regarding the Company or its
Affiliates (including information that may be subject to
confidentiality obligations in favor of the Company or such
Affiliates) and acknowledge that the Agent shall be under no
obligation to provide such information to them. With respect to
its Loans, BofA shall have the same rights and powers under this
Agreement as any other Bank and may exercise the same as though it
were not the Agent, and the terms "Bank" and "Banks" shall include
BofA in its individual capacity.
9.09 Successor Agent. The Agent may, and at the request of
the Majority Banks shall, resign as Agent upon 30 days' notice to
the Banks. If the Agent shall resign as Agent under this
Agreement, the Majority Banks shall appoint from among the Banks a
successor agent for the Banks which successor agent shall be
approved by the Company. If no successor agent is appointed prior
61
to the effective date of the resignation of the Agent, the Agent
may appoint, after consulting with the Banks and the Company, a
successor agent from among the Banks. Upon the acceptance of its
appointment as successor agent hereunder, such successor agent
shall succeed to all the rights, powers and duties of the retiring
Agent and the term "Agent" shall mean such successor agent and the
retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article IX and Sections 10.04 and
10.05 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement. If no
successor agent has accepted appointment as Agent by the date which
is 30 days following a retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon become
effective and the Banks shall perform all of the duties of the
Agent hereunder until such time, if any, as the Majority Banks
appoint a successor agent as provided for above.
ARTICLE X
MISCELLANEOUS
10.01 Amendments and Waivers. No amendment or waiver of
any provision of this Agreement or any other Loan Document, and no
consent with respect to any departure by the Company therefrom,
shall be effective unless the same shall be in writing and signed
by the Majority Banks, the Company and acknowledged by the Agent,
and then such waiver shall be effective only in the specific
instance and for the specific purpose for which given; provided,
however, that no such waiver, amendment, or consent shall, unless
in writing and signed by all the Banks, the Company and
acknowledged by the Agent, do any of the following:
(a) increase or extend the Commitment of any Bank (or
reinstate any Commitment terminated pursuant to subsection 8.02(a))
or subject any Bank to any additional obligations;
(b) postpone or delay any date fixed for any payment of
principal, interest, fees or other amounts due to the Banks (or any
of them) hereunder or under any Loan Document;
(c) reduce the principal of, or the rate of interest
specified herein on any Loan, or of any fees or other amounts
payable hereunder or under any Loan Document;
(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which shall be
required for the Banks or any of them to take any action hereunder;
or
(e) amend this Section 10.01 or Section 2.18;
62
and, provided further, that no amendment, waiver or consent shall,
unless in writing and signed by the Agent in addition to the
Majority Banks or all the Banks, as the case may be, affect the
rights or duties of the Agent under this Agreement or any other
Loan Document.
10.02 Notices.
(a) All notices, requests and other communications
provided for hereunder shall be in writing (including, unless the
context expressly otherwise provides, by facsimile transmission,
provided that any matter transmitted by the Company by facsimile
(i) shall be immediately confirmed by a telephone call to the
recipient at the number specified on the applicable signature page
hereof, and (ii) shall be followed promptly by a hard copy original
thereof) and mailed, faxed or delivered, to the address or
facsimile number specified for notices on the applicable signature
page hereof; or, as directed to the Company or the Agent, to such
other address as shall be designated by such party in a written
notice to the other parties, and as directed to each other party,
at such other address as shall be designated by such party in a
written notice to the Company and the Agent.
(b) All such notices, requests and communications shall,
when transmitted by overnight delivery, or faxed, be effective when
delivered for overnight (next day) delivery, or transmitted by
facsimile machine, respectively, or if delivered, upon delivery,
except that notices pursuant to Article II or IX shall not be
effective until actually received by the Agent.
(c) The Company acknowledges and agrees that any
agreement of the Agent and the Banks in Article II herein to
receive certain notices by telephone and facsimile is solely for
the convenience and at the request of the Company. The Agent and
the Banks shall be entitled to rely on the authority of any Person
purporting to be a Person authorized by the Company to give such
notice and the Agent and the Banks shall not have any liability to
the Company or other Person on account of any action taken or not
taken by the Agent or the Banks in reliance upon such telephonic or
facsimile notice. The obligation of the Company to repay the Loans
shall not be affected in any way or to any extent by any failure by
the Agent and the Banks to receive written confirmation of any
telephonic or facsimile notice or the receipt by the Agent and the
Banks of a confirmation which is at variance with the terms
understood by the Agent and the Banks to be contained in the
telephonic or facsimile notice.
10.03 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Agent or
any Bank, any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of
any other right, remedy, power or privilege.
63
10.04 Costs and Expenses. The Company shall, whether or
not the transactions contemplated hereby shall be consummated:
(a) pay or reimburse BofA (including in its capacity as
Agent) within twenty Business Days after demand (subject to
subsection 4.01(i)) for all costs and expenses incurred by BofA
(including in its capacity as Agent) in connection with the
development, preparation, delivery, administration and execution
of, and any amendment, supplement, waiver or modification to (in
each case, whether or not consummated), this Agreement, any Loan
Document and any other documents prepared in connection herewith or
therewith, and the consummation of the transactions contemplated
hereby and thereby, including the reasonable Attorney Costs
incurred by BofA (including in its capacity as Agent) with respect
thereto;
(b) pay or reimburse each Bank and the Agent within
twenty Business Days after demand (subject to subsection 4.01(f))
for all costs and expenses incurred by them in connection with the
enforcement, attempted enforcement, or preservation of any rights
or remedies (including in connection with any "workout" or
restructuring regarding the Loans, and including in any Insolvency
Proceeding or appellate proceeding) under this Agreement, any other
Loan Document, and any such other documents, including Attorney
Costs incurred by the Agent and any Bank; and
(c) pay or reimburse BofA (including in its capacity as
Agent) within twenty Business Days after demand (subject to
subsection 4.01(i)) for all audit, environmental inspection and
review (including the allocated cost of such internal services),
search and filing costs, fees and expenses, incurred or sustained
by BofA (including in its capacity as Agent) in connection with the
matters referred to under subsections (a) and (b) of this Section.
10.05 Indemnity. Whether or not the transactions
contemplated hereby shall be consummated:
(a) General Indemnity. The Company shall pay, defend,
indemnify, and hold each Bank, the Agent, the Arranger and each of
their respective officers, directors, employees, counsel, agents
and attorneys-in-fact (each, an "Indemnified Person") harmless from
and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses or
disbursements (including cleanup costs and engineering consulting
costs in respect of Environmental Claims and Attorney Costs) of any
kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement and
any other Loan Documents, or the transactions contemplated hereby
and thereby, and with respect to any investigation, litigation or
proceeding (including any Insolvency Proceeding, Environmental
Claim proceedings or appellate proceeding) related to this
Agreement or the Loans or the use of the proceeds thereof, whether
or not any Indemnified Person is a party thereto (all the
foregoing, collectively, the "Indemnified Liabilities"); provided,
64
that the Company shall have no obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities arising
from the gross negligence or willful misconduct of such Indemnified
Person.
(b) Survival; Defense. The obligations in this Section
10.05 shall survive payment and cancellation of all other
Obligations. At the election of any Indemnified Person, the
Company shall defend such Indemnified Person using legal counsel
satisfactory to such Indemnified Person in such Person's sole
discretion, at the sole cost and expense of the Company; provided,
however, that the Company shall only be obligated to hire one
counsel to represent all of the Banks unless any Bank advises the
Company that its legal counsel has advised it that its interest is
materially different from that of the other Banks and it would not
be adequately represented without its own separate counsel, in
which case the Company shall hire separate counsel for such Bank,
satisfactory to such Bank. All amounts owing under this Section
10.05 shall be paid within 30 days after demand.
10.06 Marshalling; Payments Set Aside. Neither the Agent
nor the Banks shall be under any obligation to marshall any assets
in favor of the Company or any other Person or against or in
payment of any or all of the Obligations. To the extent that the
Company makes a payment or payments to the Agent or the Banks, or
the Agent or the Banks enforce their Liens or exercise their rights
of set-off, and such payment or payments or the proceeds of such
enforcement or set-off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party
in connection with any Insolvency Proceeding, or otherwise, then to
the extent of such recovery the obligation or part thereof
originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or
such enforcement or set-off had not occurred.
10.07 Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except
that the Company may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent
of the Agent and each Bank.
10.08 Assignments, Participations, etc.
(a) Any Bank may, with the written consent of the
Company at all times other than during the existence of an Event of
Default and of the Agent and the Issuing Bank, at any time assign
and delegate to one or more Eligible Assignees (provided that no
written consent of the Company, the Agent or the Issuing Bank shall
be required in connection with any assignment and delegation by a
Bank to a Bank Affiliate of such Bank) (each an "Assignee") all, or
any ratable part of all, of the Loans, the Commitments and the
other rights and obligations of such Bank hereunder, in a minimum
65
amount of $5,000,000; provided, however, that (i) the Company and
the Agent may continue to deal solely and directly with such Bank
in connection with the interest so assigned to an Assignee until
(A) written notice of such assignment, together with payment
instructions, addresses and related information with respect to the
Assignee, shall have been given to the Company and the Agent by
such Bank and the Assignee; (B) such Bank and its Assignee shall
have delivered to the Company and the Agent an assignment and
acceptance agreement in form and substance satisfactory to the
Agent, together with any Notes subject to such assignment and (C)
the assignor Bank or Assignee has paid to the Agent a processing
fee in the amount of $2,500. The consent of the Company to any
such assignment shall not be unreasonably withheld.
(b) From and after the date that the Agent notifies the
assignor Bank that it has received an executed assignment and
acceptance and payment of the above-referenced processing fee,
(i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to
it pursuant to such assignment and acceptance agreement, shall have
the rights and obligations of a Bank under the Loan Documents, and
(ii) the assignor Bank shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been
assigned by it pursuant to such assignment and acceptance
agreement, relinquish its rights and be released from its
obligations under the Loan Documents.
(c) Within five Business Days after its receipt of
notice by the Agent that it has received an executed assignment and
acceptance agreement and payment of the processing fee, the Company
shall execute and deliver to the Agent upon receipt of the old
Notes owned by the Bank assigning all or a portion of its
Commitment, new Notes evidencing such Assignee's assigned Loans and
Commitment and, if the assignor Bank has retained a portion of its
Loans and its Commitment, replacement Notes in the principal amount
of the Revolving Loans retained by the assignor Bank (such Notes to
be in exchange for, but not in payment of, the Notes held by such
Bank). Immediately upon each Assignee's making its processing fee
payment under the assignment and acceptance agreement, this
Agreement, shall be deemed to be amended to the extent, but only to
the extent, necessary to reflect the addition of the Assignee and
the resulting adjustment of the Commitments arising therefrom. The
Commitment allocated to each Assignee shall reduce such Commitments
of the assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more
commercial banks or other Persons not Affiliates of the Company (a
"Participant") participating interests in any Loans, the Commitment
of that Bank and the other interests of that Bank (the "originating
Bank") hereunder and under the other Loan Documents; provided,
however, that (i) the originating Bank's obligations under this
Agreement shall remain unchanged, (ii) the originating Bank shall
remain solely responsible for the performance of such obligations,
(iii) the Company and the Agent shall continue to deal solely and
66
directly with the originating Bank in connection with the
originating Bank's rights and obligations under this Agreement and
the other Loan Documents, and (iv) no Bank shall transfer or grant
any participating interest under which the Participant shall have
rights to approve any amendment to, or any consent or waiver with
respect to, this Agreement or any other Loan Document, except to
the extent such amendment, consent or waiver would require
unanimous consent of the Banks as described in clauses (a), (b) and
(c) in the first proviso to Section 10.01. In the case of any such
participation, the Participant shall be entitled to the benefit of
Sections 3.01, 3.03 and 10.05 as though it were also a Bank
hereunder, and if amounts outstanding under this Agreement are due
and unpaid, or shall have been declared or shall have become due
and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set-off in respect
of its participating interest in amounts owing under this Agreement
to the same extent as if the amount of its participating interest
were owing directly to it as a Bank under this Agreement.
(e) Each Bank agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality
of all information identified as "confidential" by the Company and
provided to it by the Company or any Subsidiary of the Company, or
by the Agent on such Company's or Subsidiary's behalf, in
connection with this Agreement or any other Loan Document, and
neither it nor any of its Affiliates shall use any such information
for any purpose or in any manner other than pursuant to the terms
contemplated by this Agreement; except to the extent such
information (i) was or becomes generally available to the public
other than as a result of a disclosure by the Bank, or (ii) was or
becomes available on a non-confidential basis from a source other
than the Company, provided that such source is not bound by a
confidentiality agreement with the Company known to the Bank;
provided further, however, that any Bank may disclose such
information (A) at the request or pursuant to any requirement of
any Governmental Authority to which the Bank is subject or in
connection with an examination of such Bank by any such authority;
(B) pursuant to subpoena or other court process; (C) when required
to do so in accordance with the provisions of any applicable
requirement of law; and (D) to such Bank's independent auditors and
other professional advisors. Notwithstanding the foregoing, the
Company authorizes each Bank to disclose to any Participant or
Assignee (each, a "Transferee") and to any prospective Transferee,
such financial and other information in such Bank's possession
concerning the Company or its Subsidiaries which has been delivered
to Agent or the Banks pursuant to this Agreement or which has been
delivered to the Agent or the Banks by the Company in connection
with the Banks' credit evaluation of the Company prior to entering
into this Agreement; provided that, unless otherwise agreed by the
Company, such Transferee agrees in writing to such Bank to keep
such information confidential to the same extent required of the
Banks hereunder.
67
(f) Notwithstanding any other provision contained in
this Agreement or any other Loan Document to the contrary, any Bank
may assign all or any portion of the Loans or Notes held by it to
any Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any Operating Circular
issued by such Federal Reserve Bank, provided that any payment in
respect of such assigned Loans or Notes made by the Company to or
for the account of the assigning or pledging Bank in accordance
with the terms of this Agreement shall satisfy the Company's
obligations hereunder in respect to such assigned Loans or Notes to
the extent of such payment. No such assignment shall release the
assigning Bank from its obligations hereunder.
10.09 Set-off. In addition to any rights and remedies of
the Banks provided by law, if an Event of Default exists, each Bank
is authorized at any time and from time to time, without prior
notice to the Company, any such notice being waived by the Company
to the fullest extent permitted by law, to set off and apply any
and all Company deposits (general or special, time or demand,
provisional or final) at any time held by, and other indebtedness
at any time owing to, such Bank to or for the credit or the account
of the Company against any and all Obligations owing to such Bank,
now or hereafter existing, irrespective of whether or not the Agent
or such Bank shall have made demand under this Agreement or any
Loan Document and although such Obligations may be contingent or
unmatured. Each Bank agrees promptly to notify the Company and the
Agent after any such set-off and application made by such Bank;
provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of
each Bank under this Section 10.09 are in addition to the other
rights and remedies (including other rights of set-off) which the
Bank may have.
10.10 Automatic Debits of Fees. With respect to any fee,
or any other cost or expense (including Attorney Costs) due and
payable to the Agent or BofA under the Credit Documents, the
Company hereby irrevocably authorizes BofA to debit any deposit
account of the Company with BofA in an amount such that the
aggregate amount debited from all such deposit accounts does not
exceed such fee or other cost or expense. If there are
insufficient funds in such deposit accounts to cover the amount of
the fee or other cost or expense then due, such debits will be
reversed (in whole or in part, in BofA's sole discretion) and such
amount not debited shall be deemed to be unpaid. No such debit
under this Section 10.10 shall be deemed a setoff.
10.11 Notification of Addresses, Lending Offices, Etc.
Each Bank shall notify the Agent in writing of any changes in the
address to which notices to the Bank should be directed, of
addresses of its Offshore Lending Office, of payment instructions
in respect of all payments to be made to it hereunder and of such
other administrative information as the Agent shall reasonably
request.
68
10.12 Counterparts. This Agreement may be executed by one
or more of the parties to this Agreement in any number of separate
counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be
deemed to constitute but one and the same instrument. A set of the
copies of this Agreement signed by all the parties shall be lodged
with the Company and the Agent.
10.13 Severability. The illegality or unenforceability of
any provision of this Agreement or any instrument or agreement
required hereunder shall not in any way affect or impair the
legality or enforceability of the remaining provisions of this
Agreement or any instrument or agreement required hereunder.
10.14 No Third Parties Benefited. This Agreement is made
and entered into for the sole protection and legal benefit of the
Company, the Banks and the Agent, and their permitted successors
and assigns, and no other Person shall be a direct or indirect
legal beneficiary of, or have any direct or indirect cause of
action or claim in connection with, this Agreement or any of the
other Loan Documents. Neither the Agent nor any Bank shall have
any obligation to any Person not a party to this Agreement or other
Loan Documents.
10.15 Time. Time is of the essence as to each term or
provision of this Agreement and each of the other Loan Documents.
10.16 Governing Law and Jurisdiction.
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK;
PROVIDED THAT THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT AND ANY OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS
OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE COMPANY, THE AGENT AND THE BANKS CONSENTS,
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY, THE AGENT AND
THE BANKS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF
ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE COMPANY, THE AGENT
AND THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT
OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
NEW YORK LAW.
10.17 Waiver of Jury Trial. THE COMPANY, THE BANKS AND THE
AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO
THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS
69
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY
OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS,
TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE BANKS AND THE AGENT
EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY
A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY
IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART,
TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
10.18 Entire Agreement. This Agreement, together with the
other Loan Documents, embodies the entire agreement and
understanding among the Company, the Banks and the Agent, and
supersedes all prior or contemporaneous Agreements and
understandings of such Persons, verbal or written, relating to the
subject matter hereof and thereof, except for the letter agreement
between the Agent, the Arranger and the Company described in
subsection 2.14(a).
10.19 Interpretation. This Agreement is the result of
negotiations between and has been reviewed by counsel to the Agent,
the Company and other parties, and is the product of all parties
hereto. Accordingly, this Agreement and the other Loan Documents
shall not be construed against the Banks or the Agent merely
because of the Agent's or Banks' involvement in the preparation of
such documents and agreements.
10.20 Term of Agreement. This Agreement shall not
terminate until all Obligations (other than inchoate obligations
under Article III and Section 10.05 which survive the termination
of this Agreement) have been paid to the Agent and the Banks, even
though the Termination Date may have occurred.
10.21 Foreign Currency Conversion. If for the purpose of
(a) determining the amount owed to an Issuing Bank in respect of
payments made under a Letter of Credit or (b) obtaining judgment in
any court, it is necessary to convert a sum due hereunder in
another currency into U.S. Dollars, the Company agrees, to the
fullest extent that it may effectively do so, that the rate of
exchange used shall be that at which in accordance with normal
banking procedures the Agent could purchase such other currency
with U.S. Dollars at San Francisco, California on the Business Day
preceding that on which the reimbursement amount in respect of the
Letter of Credit is due or final judgment is given.
70
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and
duly authorized officers as of the day and year first above
written.
CERIDIAN CORPORATION
/s/John Grierson
By: John Grierson
Title: Vice President and Treasurer
Address for notices:
8100 34th Avenue South
Minneapolis, Minnesota 55425
Attention: Treasury Department
Facsimile: (612) 853-3932
Telephone: (612) 853-5265
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
/s/Matthew A. Gabel
By: Matthew A. Gabel
Title: Vice President
Address for notices:
1455 Market Street, 12th Floor
San Francisco, California 94103
Attn: Agency Management
Services #5596
Re: Ceridian
Facsimile: (415) 622-4894
Telephone: (415) 953-4370
Address for payment:
Bank of America NT&SA
ABA No. 121-000-358
Attn: Agency Management Services
No. 5596
Credit to Account No. 12339-15086
Ref: Ceridian Corporation
71
BANK OF AMERICA ILLINOIS,
as an Issuing Bank and as a Bank
/s/Margaret Detrick
By: Margaret Detrick
Title: Vice President
LENDING OFFICES
For Base Rate Loans:
Bank of America-Account
Administration
1850 Gateway Boulevard
Concord, CA 94520
Attention: Peggy Sanders
Facsimile: (510) 675-7531
Telephone: (510) 675-7732
For Offshore Rate Loans:
Bank of America-Account
Administration
1850 Gateway Boulevard
Concord, CA 94520
Attention: Peggy Sanders
Facsimile: (510) 675-7531
Telephone: (510) 675-7732
Address for notices:
Bank of America-Account
Administration
1850 Gateway Boulevard
Concord, CA 94520
Attention: Peggy Sanders
Facsimile: (510) 675-7531
Telephone: (510) 675-7732
With a copy to:
Bank of America Illinois
231 South LaSalle Street (9Q)
Chicago, IL 60697
Attention: Margaret Detrick
Facsimile: (312) 987-1276
Telephone: (312) 828-5201
72
THE BANK OF NEW YORK
/s/Richard A. Raffetto
By: Richard A. Raffetto
Title: Assistant Vice President
LENDING OFFICES
For Base Rate Loans and Non-Letter
of Credit Fees:
101 Barclay Street
New York, New York 10007
Attention: Commercial Loan
Servicing Department
Facsimile: (212) 635-1208
Telephone: (212) 635-6691
For Offshore Rate Loans:
101 Barclay Street
New York, New York 10007
Attention: Eurodollar/Cayman
Funding Area
Facsimile: (212) 635-1208
Telephone: (212) 635-6691
For Letters of Credit:
101 Barclay Street
New York, New York 10007
Attention: Trade Services Dept.
Facsimile: (212) 635-1208
Telephone: (212) 635-6691
Address for notices:
One Wall Street
19th Floor
New York, New York 10286
Attention: Yvonne Forbes
Facsimile: (212) 635-1208
Telephone: (212) 635-6691
73
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
/s/Kit C. Wong
By: Kit C. Wong
Title: Vice President
LENDING OFFICES
For Base Rate Loans:
Morgan Christiana
500 Stanton Christiana Road
Newark, Delaware 19713
Attention: Lou Morano/Antoniette
Wilson
Facsimile: (302) 634-1094
Telephone: (302) 634-1800
For Offshore Rate Loans:
Morgan Christiana
500 Stanton Christiana Road
Newark, Delaware 19713
Attention: Lou Morano/Antoniette
Wilson
Facsimile: (302) 634-1094
Telephone: (302) 634-1800
Addresses for notices:
60 Wall Street
New York, New York 10260-0060
Attention: Kit Wong
Facsimile: (212) 648-5336
Telephone: (212) 648-7340
74
CHEMICAL BANK
/s/John J. Huber
By: John J. Huber
Title: Managing Director
LENDING OFFICES
For Base Rate Loans:
270 Park Avenue
New York, New York 10017
Attention: Miranda Chin/Loan
Products
Facsimile: (212) 818-1456
Telephone: (212) 270-4994
For Offshore Rate Loans:
270 Park Avenue
New York, New York 10017
Attention: Miranda Chin/Loan
Products
Facsimile: (212) 818-1456
Telephone: (212) 270-4994
Address for notices:
270 Park Avenue
New York, New York 10017
Attention: Miranda Chin/Loan
Products
Facsimile: (212) 818-1456
Telephone: (212) 270-4994
75
FIRST BANK NATIONAL ASSOCIATION
/s/Todd W. Nelson
By: Todd W. Nelson
Title: Vice President
LENDING OFFICES
For Base Rate Loans:
601 2nd Avenue South
Minneapolis, Minnesota 55402-4302
Attention: Karen Johnson
Facsimile: (612) 973-0824
Telephone: (612) 973-0546
For Offshore Rate Loans:
601 2nd Avenue South
Minneapolis, Minnesota 55402-4302
Attention: Karen Johnson
Facsimile: (612) 973-0824
Telephone: (612) 973-0546
Address for notices:
First Bank Place
601 2nd Avenue, South
Minneapolis, Minnesota 55402-4302
Attention: Todd W. Nelson
Facsimile: (612) 973-0824
Telephone: (612) 973-0550
76
BankAmerica International and BofA are parties to this Agreement solely as
an Issuing Bank with respect to Letters of Credit. BankAmerica
International and BofA shall have no commitment to make Loans, to hold or
purchase a participation in any Letter of Credit, or to issue any additional
Letters of Credit hereunder. Notwithstanding the foregoing, BankAmerica
International and BofA shall be a "Bank", under the provisions of this
Agreement, with a Commitment Percentage of zero percent (0%).
BANKAMERICA INTERNATIONAL
/s/Dennis Dubois
By: Dennis Dubois
Title: Vice President
Address for payment:
c/o Bank of America Illinois
200 West Jackson Boulevard,
17th Floor
Chicago, IL 60697
Attention: Dennis Dubois
Facsimile: (312) 987-3362
Telephone: (312) 828-3180
Address for notices:
c/o Bank of America Illinois
200 West Jackson Boulevard,
17th Floor
Chicago, IL 60697
Attention: Dennis Dubois
Facsimile: (312) 987-3362
Telephone: (312) 828-3180
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
/s/Margaret Detrick
By: Margaret Detrick
Title: Vice President
Address for payment:
Bank of America-Account
Administration
1850 Gateway Boulevard
Concord, CA 94520
Attention: Peggy Sanders
Facsimile: (510) 675-7531
Telephone: (510) 675-7732
Address for notices:
Bank of America-Account
Administration
1850 Gateway Boulevard
Concord, CA 94520
Attention: Peggy Sanders
Facsimile: (510) 675-7531
Telephone: (510) 675-7732
2Amcrag
77
<PAGE>
Exhibit 11
CERIDIAN CORPORATION AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(Amounts in millions, except per share data) Three Months
For the periods ended June 30, 1995 1994
Net earnings available to common
stockholders - primary $ 18.8 $ 13.2
Restore dividends on convertible
preferred stock 3.2 3.2
Net earnings for fully diluted earnings
per share $ 22.0 $ 16.4
Weighted average common shares
outstanding 44.8 44.5
Common share equivalents from stock
options and restricted stock awards 2.3 1.3
Weighted average common shares and
equivalents outstanding - primary 47.1 45.8
Shares issuable assuming conversion of
preferred stock 10.4 10.4
Weighted average common shares and
equivalents outstanding - adjusted for
full dilution 57.5 56.2
Net earnings available to common
stockholders - primary $ 18.8 $ 13.2
Weighted average common shares and
equivalents outstanding - primary 47.1 45.8
Primary earnings per share $ 0.40 $ 0.29
Net earnings for fully diluted earnings
per share $ 22.0 $ 16.4
Weighted average common shares and
equivalents outstanding - adjusted for
full dilution 57.5 56.2
Fully diluted earnings per share $ 0.38 $ 0.29
<PAGE>
Exhibit 11 cont.
CERIDIAN CORPORATION AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(Amounts in millions, except per share data) Six Months
For the periods ended June 30, 1995 1994
Net earnings available to common
stockholders - primary $ 43.9 $ 32.1
Restore dividends on convertible
preferred stock 6.5 6.5
Net earnings for fully diluted earnings
per share $ 50.4 $ 38.6
Weighted average common shares
outstanding 44.7 44.4
Common share equivalents from stock
options and restricted stock awards 2.2 1.3
Weighted average common shares and
equivalents outstanding - primary 46.9 45.7
Shares issuable assuming conversion of
preferred stock 10.4 10.4
Weighted average common shares and
equivalents outstanding - adjusted for
full dilution 57.3 56.1
Net earnings available to common
stockholders - primary $ 43.9 $ 32.1
Weighted average common shares and
equivalents outstanding - primary 46.9 45.7
Primary earnings per share $ 0.94 $ 0.70
Net earnings for fully diluted earnings
per share $ 50.4 $ 38.6
Weighted average common shares and
equivalents outstanding - adjusted for
full dilution 57.3 56.1
Fully diluted earnings per share $ 0.88 $ 0.69
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-END> Jun-30-1995
<CASH> 114,000
<SECURITIES> 84,500
<RECEIVABLES> 163,400
<ALLOWANCES> 6,100
<INVENTORY> 28,300
<CURRENT-ASSETS> 407,900
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 764,200
<CURRENT-LIABILITIES> 346,700
<BONDS> 12,900
<COMMON> 22,900
0
4,700
<OTHER-SE> 209,500
<TOTAL-LIABILITY-AND-EQUITY> 764,200
<SALES> 273,300
<TOTAL-REVENUES> 511,300
<CGS> 208,100
<TOTAL-COSTS> 318,200
<OTHER-EXPENSES> 200
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 700
<INCOME-PRETAX> 55,200
<INCOME-TAX> 4,800
<NET-INCOME> 50,400
<EPS-PRIMARY> 0.94
<EPS-DILUTED> 0.88
</TABLE>
