<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
----------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period from __________ to __________
Commission file number 0-24787
AFFILIATED COMPUTER SERVICES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 51-0310342
------------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2828 North Haskell, Dallas, Texas 75204
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (214) 841-6111
-------------------------
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Number of Shares Outstanding as of
Title of each class May 6, 1996
------------------------------------ ----------------------------------
<S> <C>
Class A Common Stock, $.01 par value 12,479,300
Class B Common Stock, $.01 par value 3,202,843
---------
15,682,143
</TABLE>
<PAGE> 2
AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
PART I. FINANCIAL INFORMATION NUMBER
<S> <C>
Item 1. Consolidated Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets at March 31, 1996 and June 30,
1995 1
Condensed Consolidated Statements of Income for the three months and
the nine months ended March 31, 1996 and 1995 2
Condensed Consolidated Statements of Cash Flows for the nine months
ended March 31, 1996 and 1995 3
Notes to Condensed Consolidated Financial Statements 4-5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations 6-9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
</TABLE>
<PAGE> 3
AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
March 31, June 30,
1996 1995
--------- ---------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 35,401 $ 41,476
ATM cash 8,950 8,250
Accounts receivable, net 58,370 42,325
Inventory 10,892 6,294
Prepaid expenses and other current assets 10,167 7,389
Deferred taxes 8,162 8,645
--------- ---------
Total current assets 131,942 114,379
Property and equipment, net 57,303 23,463
Purchased computer software, net 4,583 3,219
Goodwill, net 87,877 69,293
Other intangible assets, net 8,501 6,078
Deferred taxes 8,522 4,183
Long-term investments and other assets 6,932 5,116
--------- ---------
Total assets $ 305,660 $ 225,731
========= =========
LIABILITIES
Current liabilities:
Accounts payable $ 14,721 $ 4,360
Accrued compensation and benefits 11,525 9,856
Other accrued liabilities 33,904 32,124
ATM cash note payable 8,950 -
Income taxes payable 1,564 234
Current portion of long-term debt 5,570 5,763
Current portion of unearned revenue 11,034 10,440
--------- ---------
Total current liabilities 87,268 62,777
Long-term debt 7,315 37,940
Unearned revenue 3,435 2,713
Other long-term liabilities 12,544 14,577
--------- ---------
Total liabilities 110,562 118,007
--------- ---------
Cumulative redeemable preferred stock 1,100 1,100
--------- ---------
STOCKHOLDERS' EQUITY
Class A common stock 122 85
Class B common stock 32 48
Additional paid-in capital 150,199 79,312
Retained earnings 43,645 27,179
--------- ---------
Total stockholders' equity 193,998 106,624
--------- ---------
Total liabilities and stockholders' equity $ 305,660 $ 225,731
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
1
<PAGE> 4
AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(in thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
----------------------- -----------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $ 99,062 $ 80,700 $ 279,708 $ 223,638
---------- ---------- ---------- ----------
Expenses:
Wages and benefits 42,045 29,257 110,772 76,561
Services and supplies 24,677 19,851 71,313 55,260
Rent, lease and maintenance 17,893 20,512 55,262 58,955
Depreciation and amortization 3,434 3,377 10,745 8,069
Other operating expenses 1,065 560 3,343 2,391
---------- ---------- ---------- ----------
Total operating expenses 89,114 73,557 251,435 201,236
---------- ---------- ---------- ----------
Operating income 9,948 7,143 28,273 22,402
Interest and other expenses (income), net 370 (396) 614 1,186
---------- ---------- ---------- ----------
Income before income taxes 9,578 7,539 27,659 21,216
Income tax expense 3,843 3,080 11,191 8,688
---------- ---------- ---------- ----------
Net income $ 5,735 $ 4,459 $ 16,468 $ 12,528
========== ========== ========== ==========
Earnings per common share $ .41 $ .34 $ 1.19 $ .99
========== ========== ========== ==========
Weighted average shares outstanding 14,000 13,296 13,849 12,598
========== ========== ========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE> 5
AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
---------------------
1996 1995
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 16,468 $ 12,528
--------- ---------
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 10,745 8,069
Recognition of stock option compensation 45 681
Other 24 73
Changes in assets and liabilities, net of effects from acquisitions:
(Increase) decrease in ATM cash (700) 4,850
Increase in accounts receivable (7,158) (7,379)
Increase in inventory (4,783) (1,070)
Increase in prepaid expenses and other current assets (2,440) (1,597)
(Increase) decrease in deferred taxes 1,794 (4,972)
(Increase) decrease in other long term assets 85 (362)
Increase (decrease) in accounts payable 6,357 (73)
Decrease in accrued compensation and benefits (429) (63)
Increase (decrease) in other accrued liabilities (2,797) 8,402
Increase (decrease) in income taxes payable 1,958 (1,297)
Increase (decrease) in other long-term liabilities (3,957) 307
Increase (decrease) in unearned revenue (4,198) 834
--------- ---------
Total adjustments (5,454) 6,403
--------- ---------
Net cash provided by operating activities 11,014 18,931
--------- ---------
Cash flows from investing activities:
Sales of marketable securities - 10,038
Purchases of property, equipment and computer software (36,283) (8,966)
Payments for acquisitions, net of cash acquired (22,350) (7,761)
Additions to other intangible assets and goodwill (2,590) (150)
Other, net (855) -
--------- ---------
Net cash used for investing activities (62,078) (6,839)
--------- ---------
Cash flows from financing activities:
Net proceeds from stock offerings 68,333 33,310
Proceeds from issuance of long-term debt 51,100 -
Repayments of long-term debt (77,711) (33,447)
Net borrowings (repayments) of ATM debt 700 (4,850)
Proceeds from stock options exercised and related tax benfits 3,144 1,719
Other, net (577) -
--------- ---------
Net cash provided by (used for) financing activities 44,989 (3,268)
--------- ---------
Net increase (decrease) in cash and cash equivalents (6,075) 8,824
Cash and cash equivalents at beginning of period 41,476 20,409
--------- ---------
Cash and cash equivalents at end of period $ 35,401 $ 29,233
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 6
AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The condensed consolidated financial statements include the accounts
of Affiliated Computer Services, Inc. and its majority-owned
subsidiaries (the "Company"). All material intercompany profits,
transactions and balances have been eliminated. The Company is
primarily engaged in providing information technology services and
electronic funds transfer transaction processing services. The
Company's information technology services include data processing
outsourcing, image management and professional services.
The financial information presented should be read in conjunction with
the Company's annual consolidated financial statements for the year
ended June 30, 1995. The foregoing unaudited condensed consolidated
financial statements reflect all adjustments (all of which are of a
normal recurring nature) which are, in the opinion of management,
necessary for a fair presentation of the results of the interim
periods. The results for interim periods are not necessarily
indicative of results to be expected for the year.
In October 1995, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-based Compensation" ("SFAS 123"), was issued.
This statement requires the fair value of stock options and other
stock-based compensation issued to employees to either be included as
compensation expense in the income statement, or the pro forma effect
on net income and earnings per share of such compensation expense to
be disclosed in the footnotes to the Company's financial statements
commencing with the Company's 1997 fiscal year. The Company expects
to adopt SFAS 123 on a disclosure basis only. As such, implementation
of SFAS 123 is not expected to impact the Company's consolidated
balance sheet or income statement.
2. NON-RENEWAL OF LARGEST CUSTOMER CONTRACT
On August 31, 1995, the Company's contract with its largest customer,
Bank of America Texas, N.A. ("B of A Texas") expired pursuant to its
terms. Revenues earned from B of A Texas for the three months and
nine months ended March 31, 1996 were approximately zero and $4.6
million, respectively, compared to revenues for the three months and
nine months ended March 31, 1995 of $9.1 million and $27.6 million,
respectively. In anticipation of the expiration of the contract,
management of the Company completed a cost savings plan implemented to
reduce direct expenses associated with this contract and other
indirect infrastructure costs of the Company.
In conjunction with the contract expiration, the Company expected to
incur various non-recurring expenses primarily associated with the
termination or renegotiation of a computer lease. Such costs were
estimated to aggregate $16.1 million, of which $13.3 million had been
accrued through June 30, 1995. Due to the signing of a service
contract with another customer in May 1995, the Company determined
that the computer lease would not need to be terminated or
renegotiated, as the new customer would replace computer capacity
previously utilized for the B of A Texas contract. Accordingly, the
Company determined that continuing the accrual for the computer lease
was no longer necessary and in September 1995 began to amortize the
accrual over the remaining term of the computer lease, which expires
February 1999, at a rate of approximately $1.0 million per quarter
(resulting in a $1.0 million and a $2.2 million reduction in rent,
lease and maintenance expense for the three months and the nine months
ended March 31, 1996, respectively, as compared to an accrual (or
increase in expense) of $2.4 million and $7.2 million for the three
months and the nine months ended March 31, 1995, respectively.)
4
<PAGE> 7
AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
3. ACQUISITIONS
During the first nine months of fiscal 1996, the Company closed six
acquisitions, none of which were individually significant. A
summarization of the acquisitions is as follows (in millions):
<TABLE>
<S> <C>
Fair value of assets acquired $39.3
Less: Liabilities assumed 11.6
Notes issued and other liabilities to sellers 5.3
------
Cash paid for acquisitions, net $22.4
======
</TABLE>
4. SECONDARY OFFERING
On March 29, 1996, the Company completed a secondary offering of 1.8
million shares of Class A common stock. Proceeds received from the
offering during the quarter were $68.3 million, net of underwriters'
discounts and other offering expenses paid of $3.7 million. An
additional 0.3 million shares from the exercise of the over-allotment
option of the offering were issued in April 1996 and resulted in net
proceeds of approximately $10 million, which will be recorded in the
fourth quarter of this fiscal year. Proceeds of the offering were
used for the repayment of company indebtedness and for general
corporate purposes.
5
<PAGE> 8
AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following presentation of management's discussion and analysis of the
Company's financial condition and results of operations should be read in
conjunction with the Company's Condensed Consolidated Financial Statements,
accompanying Notes thereto and other financial information appearing elsewhere
in this document and in conjunction with its fiscal 1995 annual Consolidated
Financial Statements not included in this document.
RESULTS OF OPERATIONS
The following table sets forth certain items from the Company's condensed
consolidated statements of income as a percentage of revenues:
<TABLE>
<CAPTION>
Percentage of Revenues Percentage of Revenues
Three Months Ended Nine Months Ended
March 31, March 31,
----------------------- ----------------------
1996 1995 1996 1995
------- -------- -------- -------
<S> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0%
Expenses:
Wages and benefits 42.4 36.3 39.6 34.2
Services and supplies 24.9 24.6 25.5 24.7
Rent, lease and maintenance 18.1 25.4 19.8 26.4
Depreciation and amortization 3.5 4.2 3.8 3.6
Other operating expenses 1.1 0.6 1.2 1.1
------ ------- ------- -------
Total operating expenses 90.0 91.1 89.9 90.0
------ ------- ------- -------
Operating income 10.0 8.9 10.1 10.0
Interest and other expenses (income), net 0.4 (0.4) 0.2 0.5
------ ------- ------- -------
Income before income taxes 9.6 9.3 9.9 9.5
Income tax expense 3.9 3.8 4.0 3.9
------ ------- ------- -------
Net income 5.7% 5.5% 5.9% 5.6%
====== ======= ======= =======
</TABLE>
COMPARISON OF THE QUARTER ENDED MARCH 31, 1996 TO THE QUARTER ENDED MARCH 31,
1995
Revenues increased $18.3 million, or 23%, to $99.1 million in the quarter ended
March 31, 1996 (the third quarter of the Company's 1996 fiscal year) from $80.7
million in the third quarter of fiscal 1995 due to acquisitions and internal
growth. Excluding revenues from the B of A Texas contract, which expired
August 31, 1995, the increase in revenues quarter over quarter was 38%, of
which 15% was internal growth and the remaining 23% from acquisitions made
since the third quarter of fiscal 1995. Revenues related to the B of A Texas
contract were zero and $9.1 million for the quarters ended March 31, 1996 and
March 31, 1995, respectively.
Total operating expenses were $89.1 million in the third quarter of fiscal
1996, an increase of 21% from $73.6 million in the third quarter of fiscal
1995. Operating expenses as a percentage of revenues decreased from 91.1% in
the third quarter of fiscal 1995 to 90.0% in the third quarter of fiscal 1996.
6
<PAGE> 9
AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Wages and benefits increased as a percentage of revenues due to the
acquisitions consummated in the Company's professional services and image
management lines of business. These businesses are generally more labor
intensive than the Company's traditional business lines, resulting in a higher
percentage of wages and benefits compared to revenues. Rent, lease and
maintenance decreased to 18.1% of revenues in the third quarter of fiscal 1996,
compared to 25.4% of revenues in fiscal 1995. This decrease is attributable
primarily to the acquisition in fiscal 1996 of several labor intensive
businesses, economies of scale related to the growth in new outsourcing
business and that the third quarter of fiscal 1996 included $1.0 million
related to the amortization of the B of A Texas accrual compared to $2.4
million accrued in the third quarter of fiscal 1995. As discussed in Note 2 to
the condensed consolidated financial statements the Company ceased recording
the B of A Texas accrual in May 1995 and has begun to amortize the accrual over
the remaining term of the related computer lease.
Operating income increased $2.8 million, or 39%, to $9.9 million in the third
quarter of fiscal 1996, compared to $7.1 million in the third quarter of fiscal
1995. The increase was due to internal growth and acquisitions since the third
quarter of fiscal 1995. The increase in the operating income margin to 10.0%
in the third quarter of fiscal 1996 from 8.9% in fiscal 1995 was due primarily
to internal growth and the resulting economies of scale.
Interest and other expenses increased from a net benefit of $0.4 million in the
third quarter of fiscal 1995 to $0.4 million of net interest expense in the
third quarter of fiscal 1996. The increase is primarily attributable to
increased interest expense on debt used to finance acquisitions and capital
expenditures and the absence of a $0.5 million gain recorded in the third
quarter of fiscal 1995 associated with marketable securities sold by the
Company at that time.
The Company's effective tax rate of approximately 40.1% exceeded the federal
statutory rate of 35%, due primarily to the amortization of certain
acquisition-related costs that are non-deductible for tax purposes, plus the
net effect of state income taxes.
COMPARISON OF THE NINE MONTHS ENDED MARCH 31, 1996 TO THE NINE MONTHS ENDED
MARCH 31, 1995
Revenues increased $56.1 million, or 25%, to $279.7 million in the nine months
ended March 31, 1996 from $223.6 million for the same period in fiscal 1995 due
to acquisitions and internal growth. Excluding revenues from the B of A Texas
contract, the increase in revenues was 40%, of which 18% was internal growth
and the remaining 22% from acquisitions. Revenues related to the B of A Texas
contract were $4.6 million and $27.6 million for the nine months ended March
31, 1996 and 1995, respectively.
Total operating expenses were $251.4 million in the nine months ended March 31,
1996, an increase of 25% from $201.2 million for the same period in fiscal
1995. Operating expenses as a percentage of revenues remained virtually
unchanged in fiscal 1996 compared to fiscal 1995 at approximately 90%.
Wages and benefits increased as a percentage of revenues due to the
acquisitions consummated in the Company's professional services and image
management lines of business. Without these acquisitions, wages and benefits
as a percentage of revenues for the first nine months of fiscal 1996 would have
remained approximately the same compared to fiscal 1995. Rent, lease and
maintenance decreased to 19.8% of revenues in the first nine months of fiscal
1996, compared to 26.4% of revenues in fiscal 1995. This decrease is
attributable primarily to the acquisitions in fiscal 1996 of several labor
intensive businesses, economies of scale and that the first nine months of
fiscal 1996 included $2.2 million of amortization related to the B of A Texas
accrual compared to $7.2 million accrued in the first nine months of fiscal
1995. See Note 2 to the condensed consolidated financial statements.
7
<PAGE> 10
AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Operating income increased $5.9 million, or 26%, to $28.3 million for the first
nine months of fiscal 1996, compared to $22.4 million in fiscal 1995. The
increase was due to internal growth and acquisitions since the third quarter of
fiscal 1995. The operating income margin in the first nine months of fiscal
1996 remained approximately the same as the fiscal 1995 margin.
The Company's effective tax rate of approximately 40.5% exceeded the federal
statutory rate of 35%, due primarily to the amortization of certain
acquisition-related costs that are non-deductible for tax purposes, plus the
net effect of state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1996, the Company's liquid assets, consisting of cash and cash
equivalents, totaled $44.3 million compared to $49.7 million at June 30, 1995.
These liquid assets included $9.0 million ($8.3 million at June 30, 1995)
borrowed under a revolving credit facility ("ATM Cash Facility") for use in the
Company's automated teller machines ("ATMs"). Working capital was $44.7
million at March 31, 1996 and reflected the net proceeds of $68.3 million
received from the Company's secondary offering of 1.8 million shares of Class A
common stock, less $43.1 million of the net proceeds used for the repayment of
debt. Working capital at March 31, 1996 decreased by $6.9 million from the
June 30, 1995 balance of $51.6 million primarily due to the reclassification of
the $9.0 million ATM Cash Facility to a current liability during this quarter
as a result of the refinancing discussed below.
Net cash provided by operating activities was $11.0 million for the first nine
months of fiscal 1996, compared with $18.9 million provided by operating
activities in fiscal 1995. The decrease is primarily due to the elimination of
the prepayment of services from B of A Texas, which was approximately $2.2
million at June 30, 1995, in connection with the expiration of the B of A Texas
contract, and a decrease of $5.6 million in the periods related to changes in
ATM cash balances. Net cash used for investing activities increased by $55.2
million over the prior nine month period. The current period included $22.4
million for six acquisitions, compared to five smaller acquisitions of $7.8
million in fiscal 1995, and an increase of $27.3 million in cash used for the
purchase of property, equipment and software. Property and equipment purchases
increased with the purchase of the Company's headquarters and the purchase and
renovation of an adjacent building, growth associated with outsourcing services
customers and an increase in the number of ATMs owned and operated by the
Company. Net cash provided by financing activities increased $48.3 million due
primarily to proceeds from the Company's secondary stock offering.
In December 1995, the Company refinanced its revolving line of credit facility
("Credit Facility") and ATM Cash Facility. The new borrowing arrangements
provide up to $90 million of funds under the three year unsecured Credit
Facility and $11 million under the one year ATM Cash Facility. At the end of
the three year Credit Facility, the Company has an option to convert any
principal outstanding to a two year term loan due in eight quarterly
installments. In connection with the secondary stock offering completed this
quarter, the Company paid down its balance outstanding under the Credit
Facility, leaving approximately $79 million available for use, net of
outstanding letters of credit. Borrowings of $9.0 million were outstanding at
March 31, 1996 under the ATM Cash Facility. In August 1995, the Company
amended its vault cash custody agreement with First Interstate Bank ("FIB")
which replaced a similar facility that expired August 31, 1995 provided under
the B of A Texas contract. This amendment with FIB increased the amount of
funds available to $50 million and extended the term to July 1997. The amount
of cash outstanding under the FIB facility was approximately $35.4 million as
of March 31, 1996. This cash is neither an asset nor a liability of the
Company and therefore is not recorded on the accompanying balance sheet.
The Company's management believes that available cash and cash equivalents,
together with cash generated from operations and available borrowings under its
credit facilities, will provide adequate funds for the Company's anticipated
needs, including working capital, capital expenditures and ATM vault cash
8
<PAGE> 11
AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
requirements. Management also believes that cash provided from operations will
be sufficient to satisfy all existing debt obligations as they come due. The
Company intends to continue its growth through acquisitions and from time to
time to engage in discussions with potential acquisition candidates. As the
size and financial resources of the Company increase, however, additional
acquisition opportunities requiring significant commitments of capital may
arise. In order to pursue such opportunities, the Company may be required to
incur debt or to issue additional potentially dilutive securities in the
future. No assurance can be given as to the Company's future acquisition and
expansion opportunities and how such opportunities would be financed. In
addition, the Company is a party to pending litigation as previously described
in the Company's prior filings on Form 10-Q for the quarter ended December 31,
1995 and Form 10- K for the year ended June 30, 1995. Although the Company
cannot predict the ultimate outcome of this litigation, the Company's
management does not believe the litigation will have a material adverse effect
on the Company's results of operations or working capital.
9
<PAGE> 12
AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10.1 Credit Agreement dated as of December 15, 1995, between
Affiliated Computer Services, Inc., a Delaware corporation,
certain Lenders, Bank One, Texas, N.A., as Documentation Agent
and Co-Agent and First Interstate Bank of Texas N.A., as
Administrative Agent and Co-Agent.
11.1 Computation of Earnings per Common and Common Equivalent
Share.
(b) Reports on Form 8-K
The Company did not file any current report on Form 8-K during the
quarter ended March 31, 1996.
10
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on the 10th of May, 1996.
AFFILIATED COMPUTER SERVICES, INC.
By: /s/ Mark A. King
---------------------------------
Mark A. King
Executive Vice President and
Chief Financial Officer
11
<PAGE> 14
INDEX TO EXHIBITS
Exhibit
Number Description
------- -----------
10.1 Credit Agreement dated as of December 15, 1995, between
Affiliated Computer Services, Inc., a Delaware corporation,
certain Lenders, Bank One, Texas, N.A., as Documentation Agent
and Co-Agent and First Interstate Bank of Texas N.A., as
Administrative Agent and Co-Agent.
11.1 Computation of Earnings per Common and Common Equivalent
Share.
27 Financial Data Schedule
<PAGE> 1
Exhibit 10.1
CREDIT AGREEMENT
between
AFFILIATED COMPUTER SERVICES, INC.
Borrower
BANK ONE, TEXAS, N.A.
Co-Agent and Documentation Agent
and
FIRST INTERSTATE BANK OF TEXAS, N.A.
Co-Agent and Administrative Agent
and
CERTAIN LENDERS
$90,000,000 REVOLVING FACILITY
DECEMBER 15, 1995
__________________________________
CONFORMED TO SHOW SIGNATURES
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
SECTION 1 DEFINITIONS AND TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Time References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.3 Other References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.4 Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2 COMMITMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.1 General Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.2 Specific Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.3 Borrowing Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.4 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.5 Borrowing Notices and LC Requests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.6 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3 TERMS OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.1 Notes and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.2 Interest and Principal Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.3 Interest Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.4 Quotation of Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.5 Default Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.6 Interest Recapture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.7 Interest Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.8 Maximum Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.9 Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.10 Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.11 Order of Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.12 Sharing of Payments, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.13 Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.14 Booking Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.15 Basis Unavailable or Inadequate for LIBOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.16 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.17 Change in Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.18 Funding Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.19 Foreign Lenders, Participants, and Assignees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4 FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.1 Treatment of Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.2 Co-Agents' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.3 LC Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5 SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.1 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.2 Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.3 Additional Security and Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.4 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.5 Release of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 6 CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 7 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.1 Purpose and Regulations G and U . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.2 Corporate Existence, Good Standing, and Authority . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.3 Subsidiaries and Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.4 Authorization and Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.5 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.6 Financials and Existing Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.7 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.10 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.11 Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.12 Properties; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.13 Government Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.14 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.15 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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7.16 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.17 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.18 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.19 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.20 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 8 AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.1 Certain Items Furnished . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.2 Use of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.3 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.4 Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.6 Payment of Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.7 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.8 Maintenance of Existence, Assets, and Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.9 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.10 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.11 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.12 Chief Executive Office; Material Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.13 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.14 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 9 NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.1 Payroll Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.2 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.3 Loans, Advances, Acquisitions and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.4 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.5 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.6 Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.7 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.8 Compliance with Laws and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.9 Issuance of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.10 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.11 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.12 Mergers, Consolidations, and Dissolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.13 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.14 Fiscal Year and Accounting Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.15 New Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.16 Government Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.17 Strict Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.18 Deposit of Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 10 FINANCIAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.1 Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.2 Current Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.3 Funded Debt/Cash Flow Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.4 Fixed-Charge Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 11 DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.1 Payment of Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.3 Debtor Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.4 Attachment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.5 Payment of Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.6 Government Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.7 Misrepresentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.8 Ownership of Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.9 Change of Control of Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.10 Other Funded Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.11 SEC Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.12 Validity and Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.13 LCs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.14 Material Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.15 Impairment of Collateral or Ability to Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 12 RIGHTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.1 Remedies Upon Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.2 Company Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
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12.3 Performance by Co-Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.4 Not in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.5 Course of Dealing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.6 Cumulative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.7 Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.8 Certain Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.9 Expenditures by Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.10 Diminution in Value of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 13 CO-AGENTS AND LENDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.1 Co-Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
13.3 Proportionate Absorption of Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
13.4 Delegation of Duties; Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
13.5 Limitation of Co-Agents' Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.6 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.7 Collateral Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
13.8 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
13.9 Relationship of Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
13.10 Benefits of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 14 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.1 Nonbusiness Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.2 Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.3 Form and Number of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.4 Exceptions to Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.5 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.7 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.8 Amendments, Consents, Conflicts, and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.9 Multiple Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
14.10 Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
14.11 Venue, Service of Process, and Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
14.12 Confidentiality Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
14.13 Entirety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
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SCHEDULES AND EXHIBITS
<TABLE>
<S> <C> <C>
Schedule 1 - Lenders and Commitments
Schedule 6 - Closing Documents
Schedule 7.3 - Companies and Names
Schedule 7.7 - Company Solvency Schedule
Schedule 7.8 - Litigation
Schedule 7.10 - Environmental Matters
Schedule 7.11 - Employee-Plan Matters
Schedule 7.14 - Affiliate Transactions
Schedule 9.2 - Permitted Debt
Schedule 9.5 - Permitted Liens
Schedule 12.1(c) - MoneyMaker Network ATM Settlement Aggregation Accounts
Exhibit A - Note
Exhibit B - Guaranty
Exhibit C-1 - Borrowing Request
Exhibit C-2 - Conversion Notice
Exhibit C-3 - LC Request
Exhibit C-4 - Compliance Certificate
Exhibit D - Opinion of General Counsel to Companies
Exhibit E - Assignment and Assumption Agreement
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CREDIT AGREEMENT
THIS AGREEMENT is entered into as of December 15, 1995, between
AFFILIATED COMPUTER SERVICES, INC., a Delaware corporation ("BORROWER"),
Lenders (defined below), BANK ONE, TEXAS, N.A., as Co-Agent and Documentation
Agent for Lenders, and FIRST INTERSTATE BANK OF TEXAS, N.A., as Co-Agent and
Administrative Agent for Lenders.
Borrower has requested that Lenders extend a revolving-credit facility
to Borrower not to exceed a total outstanding principal amount of $90,000,000
to be used by Borrower as provided in SECTION 7.1 (the "REVOLVING FACILITY").
Lenders are willing to extend the requested credit facility on the terms and
conditions of this agreement.
ACCORDINGLY, for adequate and sufficient consideration, Borrower,
Lenders, and Co-Agents agree as follows:
SECTION 1 DEFINITIONS AND TERMS.
1.1 Definitions. As used in the Loan Documents:
AFFILIATE of a Person means any other individual or entity who
directly or indirectly controls, is controlled by, or is under common control
with that Person. For purposes of this definition (a) "control," "controlled
by," and "under common control with" mean possession, directly or indirectly,
of power to direct or cause the direction of management or policies (whether
through ownership of voting securities or other interests, by contract, or
otherwise), and (b) any individual or entity who beneficially owns, directly or
indirectly, 10% or more (in number of votes) of the securities having ordinary
voting power for the election of directors (or individuals performing similar
functions) of another Person and any individual who is an officer or director
of another Person is conclusively presumed to control that Person.
ADMINISTRATIVE AGENT means, at any time, First Interstate Bank of
Texas, N.A. -- or its successor or assigns appointed under SECTION 13 -- acting
as Administrative Agent for Lenders under the Loan Documents.
APPLICABLE MARGIN means, for any day, the margin of interest over
LIBOR that is applicable when LIBOR is determined under this agreement. The
Applicable Margin is subject to adjustment (upwards or downwards, as
appropriate) based on the Funded Debt/Cash Flow Ratio as stated in the table
below:
<TABLE>
<CAPTION>
================================================================================
Funded Debt/ Applicable Margin for
Cash Flow Ratio LIBOR Borrowings
================================================================================
<S> <C>
Greater than 2.75 to 1.00 1.25
- --------------------------------------------------------------------------------
Less than or equal to 2.75 to 1.00, but
greater than 2.25 to 1.00 1.00%
- --------------------------------------------------------------------------------
Less than or equal to 2.25 to 1.00, but
greater than 1.50 to 1.00 0.75%
- --------------------------------------------------------------------------------
Less than or equal to 1.50 to 1.00 0.50%
================================================================================
</TABLE>
The Funded Debt/Cash Flow Ratio shall be calculated semi-annually on a
consolidated basis for the Companies on the last day of each March and
September, commencing March 31, 1996, based upon the most recently furnished
Financials under SECTION 8.1 and any related Compliance Certificate, and shall
apply to all Interest Periods commencing after the delivery of such Financials,
until recalculated in accordance with this paragraph. If Borrower fails to
furnish to Administrative Agent any such Financials and any related Compliance
Certificate when required to pursuant to SECTION 8.1, then the maximum
Applicable Margin shall apply to all Interest Periods commencing after the date
upon which such Financials were due until Borrower furnishes the required
Financials and any related Compliance Certificate to Administrative Agent and
shall apply from and as of each date of calculation until the following date of
calculation. From the Closing Date until March 31, 1996, the Applicable Margin
is 0.50%.
APPLICABLE PERCENTAGE means, for any day, a commitment-fee percentage
applicable under SECTION 4.4, subject to adjustment (upwards or downwards, as
appropriate), based on the Funded Debt/ Cash Flow Ratio, as follows:
<TABLE>
<CAPTION>
================================================================================
Funded Debt/ Applicable
Cash Flow Ratio Percentage
================================================================================
<S> <C>
Greater than 2.75 to 1.00 0.325%
- --------------------------------------------------------------------------------
</TABLE>
<PAGE> 7
<TABLE>
<S> <C>
Less than or equal to 2.75 to 1.00,
but greater than 1.50 to 1.00 0.250%
- --------------------------------------------------------------------------------
Less than or equal to 1.50 to 1.00 0.200%
================================================================================
</TABLE>
The Funded Debt/Cash Flow Ratio is determined as described in the definition of
APPLICABLE MARGIN and shall apply from and as of the date of calculation until
the following date of calculation. From the Closing Date until March 31, 1996,
the Applicable Percentage is 0.200%.
ASSIGNEE is defined in SECTION 14.10(C).
ASSIGNMENT is defined in SECTION 14.10(C).
ATM means any automated teller machine which Borrower (a) operates for
its own account or (b) owns, either directly or beneficially.
ATM CREDIT AGREEMENT means that certain letter agreement dated as of
December 15, 1995, executed between Borrower and Bank One, Texas, N.A.
ATM FACILITY means the $11,000,000 credit facility extended to
Borrower by Bank One, Texas, N.A. under the terms of the ATM Credit Agreement.
BASE RATE means, for any day, the greater of either (a) the annual
interest rate most recently established by First Interstate Bank of Texas,
N.A., as its general reference rate (which may not necessarily represent the
lowest or best rate actually charged to any customer) in effect at its
principal office in Dallas, Texas, automatically fluctuating upward and
downward without special notice to Borrower or any other Person, or (b) the sum
of the Federal- Funds Rate plus 0.5%.
BASE-RATE BORROWING means a Borrowing bearing interest at the Base
Rate.
BORROWER is defined in the preamble to this agreement.
BORROWING means any amount disbursed under the Loan Documents by one
or more Lenders to or on behalf of Borrower under the Loan Documents, either as
an original disbursement of funds, a renewal, extension, or continuation of an
amount outstanding, or a payment under an LC.
BORROWING DATE means the date on which funds are requested by Borrower
in a Borrowing Request.
BORROWING REQUEST means a request, subject to SECTION 2.3(A),
substantially in the form of EXHIBIT C-1.
BUSINESS DAY means (a) for purposes of any LIBOR Borrowing, a day when
commercial banks are open for international business in London, England, and
(b) for all other purposes, any day other than Saturday, Sunday, and any other
day that commercial banks are authorized by Law to be closed in Texas.
CAPITAL EXPENDITURES means expenditures for the acquisition,
construction, improvement or replacement of land, buildings, equipment or other
fixed or capital assets or leaseholds (including, without limitation,
investments in customer's securities or purchases of software or other customer
assets under outsourcing contracts entered into after the Closing Date and
payments under Capital Leases, but excluding expenditures properly chargeable
to repairs or maintenance).
CAPITAL LEASE means any capital lease or sublease that is required by
GAAP to be capitalized on a balance sheet.
CASH FLOW means -- for any period, on a consolidated basis, and
without duplication -- the sum of: (a) the amount of "Operating Income from
Continuing Operations" (calculated in the same manner as such line item in
Borrower's income statement contained in Borrower's 1995 Annual Report for the
fiscal year ended June 30, 1995) for that period (whether positive or
negative), plus (b) all non-cash charges associated with expenses recorded
within lease and maintenance expense and charged by Borrower in connection with
the termination of certain contracts between Borrower and Bank of America
Texas, N.A., plus (without duplication) (c) amortization expense deducted in
calculating the amount of such Operating Income from Continuing Operations.
CERCLA means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. Sections 9601 et seq.
CO-AGENTS means, collectively, Administrative Agent and Documentation
Agent and a reference to CO-AGENT shall mean either of such parties.
2
<PAGE> 8
CLOSING DATE means the date agreed to by Borrower and Co-Agents for
the initial Borrowing, which must be a Business Day occurring no later than
December 28, 1995.
CODE means the Internal Revenue Code of 1986.
COMMITMENT means, at any time and for any Lender, the amounts stated
beside that Lender's name (which amounts are subject to reduction and
cancellation as provided in this agreement) on the most-recently amended
SCHEDULE 1.
COMMITMENT PERCENTAGE means, for any Lender, the proportion (stated as
a percentage) that its Commitment bears to the total Commitments of all
Lenders.
COMMITMENT USAGE means, at any time, the sum of (a) the Principal Debt
plus (b) the LC Exposure.
COMPANIES means, at any time, Borrower and each of its Subsidiaries.
COMPLIANCE CERTIFICATE means a certificate substantially in the form
of EXHIBIT C-4 as signed by a Responsible Officer.
CONVERSION NOTICE means a request, subject to SECTION 3.10,
substantially in the form of EXHIBIT C-2.
CURRENT DATE means any date within 30 days prior to the Closing Date.
CURRENT FINANCIALS, unless otherwise specified: means either (a) the
Companies' consolidated Financials for the fiscal year ended June 30, 1995, or
(b) at any time after annual Financials are first delivered under SECTION 8.1,
the Companies' annual Financials then most recently delivered to Lenders under
SECTION 8.1(A), together with the Companies' quarterly Financials then most
recently delivered to Lenders under SECTION 8.1(B).
CURRENT MATURITIES OF LONG-TERM DEBT means, as of any date, the
aggregate amount of all regularly scheduled principal payments and capitalized
lease payments on all long-term Debt of the Companies that are due and payable
within 12 months of such date.
DEBT means -- of any Person, at any time, and without duplication --
all obligations, contingent or otherwise, which in accordance with GAAP should
be classified upon such Person's balance sheet as liabilities, but in any event
including the sum of the following: (a) all obligations for borrowed money;
(b) all obligations evidenced by bonds, debentures, notes, or similar
instruments; (c) all obligations to pay the deferred purchase price of property
or services except trade accounts payable arising in the ordinary course of
business; (d) all direct or contingent obligations in respect of letters of
credit; (e) liabilities secured (or for which the holder of the Debt has an
existing Right, contingent or otherwise to be so secured) by any Lien existing
on property owned or acquired by that Person; (f) lease obligations that have
been (or under GAAP should be) capitalized for financial reporting purposes;
plus (g) all guaranties, endorsements, and other contingent obligations for
Debt of others.
DEBTOR LAWS means the Bankruptcy Code of the United States of America
and all other applicable liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency, reorganization, suspension of
payments, or similar Laws affecting creditors' Rights.
DEFAULT is defined in SECTION 11.
DEFAULT RATE means, for any day, an annual interest rate equal from
day to day to the lesser of either (a) the then-existing Base Rate plus 3% or
(b) the Maximum Rate.
DETERMINING LENDERS means, at any time, any combination of Lenders
holding (directly or indirectly) at least either (a) 66-2/3% of the total
Commitments while there is no Commitment Usage or (b) 66-2/3% of the Principal
Debt plus the LC Exposure while there is any Commitment Usage.
DISTRIBUTION means, with respect to any shares of any capital stock or
other equity securities issued by a Person (a) the retirement, redemption,
purchase, or other acquisition for value of those securities, (b) the
declaration or payment of any dividend on or with respect to those securities,
(c) any loan or advance by that Person to, or other investment by that Person
in, the holder of any of those securities, and (d) any other payment by that
Person with respect to those securities.
DOCUMENTATION AGENT means, at any time, Bank One, Texas, N.A. -- or
its successors or assigns appointed under SECTION 13 -- acting as Documentation
Agent for Lenders under the Loan Documents.
EFT LIABILITIES means liabilities related to "electronic funds
transfer" funds owed to MoneyMaker Network members that have been collected by
Borrower, but not paid.
3
<PAGE> 9
EMPLOYEE PLAN means any employee-pension-benefit plan (a) covered by
Title IV of ERISA and established or maintained by Borrower or any ERISA
Affiliate (other than a Multiemployer Plan) and (b) established or maintained
by Borrower or any ERISA Affiliate, or to which Borrower or any ERISA Affiliate
contributes, under the Laws of any foreign country.
ENVIRONMENTAL INVESTIGATION means any environmental site assessment,
investigation, audit, compliance audit, or compliance review conducted at any
time or from time to time -- whether at the request of Administrative Agent or
any Lender, upon the order or request of any Tribunal, or at the voluntary
instigation of any Company -- concerning any Real Property or the business
operations or activities of any Company, including, without limitation (a) air,
soil, groundwater, or surface-water sampling and monitoring, and (b)
preparation and implementation of any closure or remedial plans.
ENVIRONMENTAL LAW means any applicable Law that relates to protection
of the environment or to the regulation of any Hazardous Substances, including,
without limitation, CERCLA, the Hazardous Materials Transportation Act (49
U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. Section 6901 et seq.), the Clean Water Act (33 U.S.C. Section 1251 et
seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic
Substances Control Act (15 U.S.C. Section 2601 et seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et seq.), the
Emergency Planning and Community Right-to-Know Act (42 U.S.C. Section 11001 et
seq.), the Safe Drinking Water Act (42 U.S.C. Section 201 and Section 300 et
seq.), the Rivers and Harbors Act (33 U.S.C. Section 401 et seq.), the Oil
Pollution Act (33 U.S.C. Section 2701 et seq.), analogous state and local
Laws, and any analogous future enacted or adopted Law.
ENVIRONMENTAL LIABILITY means any liability, loss, fine, penalty,
charge, lien, damage, cost, or expense of any kind to the extent that it
results (a) from the violation of any Environmental Law, (b) from the Release
or threatened Release of any Hazardous Substance, or (c) from actual or
threatened damages to natural resources.
ENVIRONMENTAL PERMIT means any permit, or license, from any Person
defined in CLAUSE (A) of the definition of Tribunal that is required under any
Environmental Law for the lawful conduct of any business, process, or other
activity.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended, and rules and regulations promulgated thereunder.
ERISA AFFILIATE means any Person that, for purposes of Title IV of
ERISA, is a member of Borrower's controlled group or is under common control
with Borrower within the meaning of Section 414 of the Code (which provisions
are deemed by this agreement to apply to Foreign Persons).
FEDERAL-FUNDS RATE means, for any day, the annual rate (rounded
upwards, if necessary, to the nearest 0.01%) determined (which determination is
conclusive and binding, absent manifest error) by Administrative Agent to be
equal to (a) the weighted average of the rates on overnight federal-funds
transactions with member banks of the Federal Reserve System arranged by
federal-funds brokers on that day, as published by the Federal Reserve Bank of
New York on the next Business Day, or (b) if those rates are not published for
any day, the average of the quotations at approximately 10:00 a.m. received by
Administrative Agent from three federal-funds brokers of recognized standing
selected by Administrative Agent in its sole discretion.
FINAL MATURITY DATE means the earlier of either (a) the date on which
the Obligation is accelerated under SECTION 12.1 or (b) the date on which the
eighth quarterly installment is due under SECTION 3.2(B).
FINANCIALS of a Person means balance sheets, profit and loss
statements, reconciliations of capital and surplus, and statements of cash flow
prepared (a) according to GAAP (subject to year end audit adjustments with
respect to interim Financials) and (b) except as stated in SECTION 1.4, in
comparative form to prior year-end figures or corresponding periods of the
preceding fiscal year or other relevant period, as applicable.
FIXED CHARGES means -- for any period, on a consolidated basis, and
without duplication -- the sum of the following: (a) Taxes actually paid in
cash, plus (b) Interest Expense, plus (c) Current Maturities of Long-Term Debt.
FOREIGN means, in respect of any Person, organized under the Laws of a
jurisdiction other than -- or domiciled outside of -- the United States of
America or one of its states.
FUNDED DEBT means -- at any time, on a consolidated basis, and without
duplication -- the sum of: (a) all obligations for borrowed money (whether as a
direct obligor on a promissory note, bond, debenture or other similar
instrument, as a contingent obligation for undrawn and uncancelled letters of
credit or similar instruments, as a reimbursement obligor for a drawing under a
letter of credit or similar instrument, or as any other type of obligor), plus
(b) all Capital Lease obligations (other than the interest component of such
obligations) of any Company minus (c) the total-principal amount outstanding
under the ATM Facility.
FUNDED DEBT/CASH FLOW RATIO means -- for any date of determination --
the ratio of Funded Debt at the end of the most recently completed fiscal
quarter to Cash Flow for the most recently completed four fiscal quarters.
4
<PAGE> 10
FUNDING LOSS means any loss, expense, or reduction in yield (but not
any Applicable Margin) that any Lender reasonably incurs because (a) Borrower
fails or refuses (for any reason whatsoever other than a default by
Administrative Agent or that Lender claiming that loss, expense, or reduction
in yield) to take any Borrowing that it has requested under this agreement, or
(b) Borrower prepays or pays any Borrowing or converts any Borrowing to a
Borrowing of another Type, in each case, other than on the last day of the
applicable Interest Period.
GAAP means generally accepted accounting principles of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
the Financial Accounting Standards Board that are applicable from time to time.
GUARANTY means a guaranty substantially in the form of the attached
EXHIBIT B.
HAZARDOUS SUBSTANCE means any substance that is designated, defined,
classified, or regulated as a hazardous waste, hazardous material, pollutant,
contaminant, explosive, corrosive, flammable, infectious, carcinogenic,
mutagenic, radioactive, or toxic or hazardous substance under any Environmental
Law, including, without limitation, any hazardous substance within the meaning
of Section 101(14) of CERCLA.
INTEREST EXPENSE means, for any period, the aggregate total interest
expense of the Companies paid on a consolidated basis for such period,
including, without limitation, to the extent included in interest expense, the
interest component of capital leases, all commissions, discounts and other fees
and charges owed with respect to letters of credit, commitment fees and net
costs under interest rate protection agreements, all as determined in
conformity with GAAP.
INTEREST PERIOD is determined under SECTION 3.9.
ISSUING LENDER means First Interstate Bank of Texas, N.A. or any of
its Affiliates, that issues an LC under this agreement.
LAWS means all applicable statutes, laws, treaties, ordinances, rules,
regulations, orders, writs, injunctions, decrees, judgments, opinions, and
interpretations of any Tribunal.
LC means a standby letter of credit issued for the account of Borrower
by Issuing Lender under this agreement and under an LC Agreement.
LC AGREEMENT means a letter of credit application and agreement (in
form and substance satisfactory to Administrative Agent) submitted and executed
by a Company to Issuing Lender for an LC for the account of Borrower.
LC EXPOSURE means, without duplication, the sum of (a) the total face
amount of all undrawn and uncancelled LCs plus (b) the total unpaid
reimbursement obligations of Borrower under drawings under any LC.
LC REQUEST means a request substantially in the form of EXHIBIT C-3.
LC SUBFACILITY means a subfacility of the Revolving Facility for the
issuance of LCs, as described in SECTION 2.4, under which the LC Exposure may
never (a) collectively exceed $15,000,000 and (b) together with Principal Debt
may never exceed the total Commitments.
LENDER LIEN means any present or future Lien (subject only to any
applicable Permitted Lien) securing the Obligation and assigned, conveyed, or
granted to or created in favor of Administrative Agent for the benefit of
Lenders.
LENDERS means the financial institutions -- including, without
limitation, Co-Agents (possibly acting through one or more of its Affiliates
for LCs) in respect of their respective shares of Borrowings and LCs -- named
on SCHEDULE 1 or on the most-recently-amended SCHEDULE 1, if any, delivered by
Administrative Agent under this agreement, and, subject to this agreement,
their respective successors and permitted assigns (but not any Participant who
is not otherwise a party to this agreement).
LIBOR means, for a LIBOR Borrowing and for the relevant Interest
Period, the annual interest rate (rounded upward, if necessary, to the nearest
0.01%) equal to the quotient obtained by dividing (a) the rate that deposits in
United States dollars are offered to Administrative Agent in the London
interbank market at approximately 11:00 a.m. London time two Business Days
before the first day of that Interest Period in an amount comparable to that
LIBOR Borrowing and having a maturity approximately equal to that Interest
Period, by (b) one minus the Reserve Requirement (expressed as a decimal)
applicable to the relevant Interest Period.
LIBOR BORROWING means a Borrowing bearing interest at the sum of LIBOR
plus the Applicable Margin.
LIEN means any lien, mortgage, security interest, pledge, assignment,
charge, title retention agreement, or encumbrance of any kind and any other
arrangement for a creditor's claim to be satisfied from assets or proceeds
prior to the claims of other creditors or the owners (other than title of the
lessor under an operating lease).
5
<PAGE> 11
LITIGATION means any action by or before any Tribunal.
LOAN DOCUMENTS means (a) this agreement, certificates and reports
delivered under this agreement, and exhibits and schedules to this agreement,
(b) all agreements, documents, and instruments in favor of Administrative Agent
or Lenders (or Administrative Agent on behalf of Lenders) ever delivered under
this agreement or otherwise delivered in connection with all or any part of the
Obligation (other than Assignments), (c) all LCs and LC Agreements, (d) the
letter agreement described in SECTION 4.2, and (e) all renewals, extensions,
and restatements of, and amendments and supplements to, any of the foregoing.
MATERIAL ADVERSE EVENT means any circumstance or event that,
individually or collectively, is reasonably expected to result (at any time
before the Commitments are fully canceled or terminated and the Obligation is
fully paid and performed) in any (a) material impairment of (i) the ability of
Borrower to perform any of its payment or other material obligations under any
Loan Document, (ii) the ability of Administrative Agent or any Lender to
enforce any of those obligations or any of their respective Rights under the
Loan Documents, (b) material and adverse effect on the financial condition of
the Borrower individually, or the Companies as a whole, as represented to
Lenders in the Current Financials most recently delivered before the date of
this agreement, (c) impairment in the ability of any Company to fulfill its
obligations under the terms and conditions of Loan Documents, or (d) Default or
Potential Default.
MATERIAL AGREEMENT means any written or oral agreement, contract,
commitment or understanding under which any Company is obligated to make
payments in excess of $2,000,000 in any fiscal year or is entitled to receive
revenues in any fiscal year in excess of 5% of Borrower's consolidated annual
revenues for such year.
MATURITY DATE means the earlier of December 15, 1998 or the third
anniversary of the Closing Date.
MAXIMUM AMOUNT and MAXIMUM RATE respectively mean, for a Lender, the
maximum non-usurious amount and the maximum non-usurious rate of interest that,
under applicable Law, that Lender is permitted to contract for, charge, take,
reserve, or receive on the Obligation.
MEMBER BANKS means banks, financial institutions, or other entities
that are members of the MoneyMaker Network, which include the banks, financial
institutions and other entities listed on SCHEDULE 2.2 to the ATM Credit
Agreement, as such schedule is amended, modified, or replaced from time to
time.
MONEYMAKER NETWORK means a proprietary electronic funds transfer
network owned and operated by Borrower that (a) provides authorization for
cardholders of Member Banks to access ATMs, automated teller machines owned or
operated by Member Banks, and automated teller machines owned or operated by
regional, national and international electronic funds transfer networks, and
(b) obtains authorization from regional, national and international electronic
funds transfer networks for their cardholders to access ATMs and automated
teller machines owned or operated by Member Banks.
MOODY'S is defined in section 9.3(B).
MULTIEMPLOYER PLAN means a multiemployer plan as defined in Sections
3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code (or any similar type
of plan established or regulated under the Laws of any foreign country) to
which Borrower or any ERISA Affiliate is making, or has made, or is accruing,
or has accrued, an obligation to make contributions.
NATIONSBANK LC means an LC issued in the principal amount of
$10,258,366.15 to NationsBank of Texas, N.A.
NET INCOME of any Person means that Person's profit or loss after
deducting its Tax expense.
NET WORTH means -- at any time and for any Person -- its stockholders'
equity under GAAP.
1933 ACT means the Securities Act of 1933, as amended.
1934 ACT means the Securities and Exchange Act of 1934, as amended.
NOTE means a promissory note substantially in the form of EXHIBIT A.
OBLIGATION means all present and future (a) Debts, liabilities, and
obligations of any Company to any Co-Agent, any Lender, Issuing Lender and
related to any Loan Document, whether principal, interest, fees, costs,
attorneys' fees, or otherwise, and (b) renewals, extensions, and modifications
of any of the foregoing.
OSHA means the Occupational Safety and Health Act of 1970, 29 U.S.C.
Section 651 et seq.
PARTICIPANT is defined in SECTION 14.10(B).
6
<PAGE> 12
PBGC means the Pension Benefit Guaranty Corporation.
PERMITTED DEBT means Debt described on SCHEDULE 9.2.
PERMITTED LIENS means the Liens described on SCHEDULE 9.5.
PERSON means any individual, entity, or Tribunal.
POTENTIAL DEFAULT means any event's occurrence or any circumstance's
existence that would -- upon any required notice, time lapse, or both -- become
a Default.
PRINCIPAL DEBT means, at any time, the unpaid principal balance of all
Borrowings.
PRO RATA and PRO RATA PART mean, at any time when determined for any
Lender, (a) if there is no Commitment Usage, the proportion (stated as a
percentage) that its Commitment bears to the total Commitment, or (b) if there
is any Commitment Usage, the proportion that the total Commitment Usage owed to
that Lender bears to the total Commitment Usage owed to all Lenders.
REAL PROPERTY means any land, buildings, fixtures, and other
improvements to land now or in the future directly or indirectly owned by any
Company, leased to or otherwise operated by any Company, or subleased by any
Company to any other Person.
REFINANCED DEBT means Debt evidenced by or arising in connection with
the Credit Agreement (as amended) dated as of May 12, 1994, between Borrower,
certain lenders named in that agreement, and NationsBank of Texas, N.A., as
Agent for those lenders.
RELEASE means any "release" as defined under any Environmental Law.
REPRESENTATIVES means representatives, officers, directors, employees,
accountants, attorneys, and agents.
RESERVE REQUIREMENT means, for any LIBOR Borrowing and for the
relevant Interest Period, the total reserve requirements (including all basic,
supplemental, emergency, special, marginal, and other reserves required by
applicable Law) actually applicable to Administrative Agent's eurocurrency
fundings or liabilities as of the first day of that Interest Period.
RESPONSIBLE OFFICER means Borrower's chairman, president, chief
executive officer, chief financial officer, or treasurer.
REVOLVING FACILITY is defined in the recitals to this agreement and
includes the LC Subfacility.
RIGHTS means rights, remedies, powers, privileges, and benefits.
S&P is defined in SECTION 9.3(B).
SEC means the Securities and Exchange Commission.
SECURITY DOCUMENTS means, collectively, any security agreement, pledge
agreement, mortgage, deed of trust or other agreement or document, together
with all related financing statements and stock powers, in form and substance
satisfactory to Documentation Agent and its legal counsel, executed and
delivered by any Person in connection with this agreement to create a Lender
Lien on any of its real or personal property, as amended, supplemented or
restated.
SETTLEMENT AGGREGATION ACCOUNTS means any automated teller machine
network ("ATM NETWORK") transaction settlement deposit accounts maintained by
Borrower for the sole purpose of aggregating settlement transactions received
from ATM Networks, including without limitation the ATM Network transaction
settlement deposit accounts described on SCHEDULE 12.1(C).
SOLVENT means, as to any Person, that (a) the aggregate fair market
value of its assets exceeds its liabilities, (b) it has sufficient cash flow to
enable it to pay its Debts as they mature, and (c) it does not have
unreasonably small capital to conduct its businesses.
SUBSIDIARY of any Person means any entity of which more than 50% (in
number of votes) of the stock (or equivalent interests) is owned of record or
beneficially, directly or indirectly, by that Person. Unless otherwise
specified or the context otherwise requires, "Subsidiary" refers to a
Subsidiary of Borrower.
7
<PAGE> 13
TAXES means, for any Person, taxes, assessments, or other governmental
charges or levies imposed upon it, its income, or any of its properties,
franchises, or assets.
TERM LOAN is defined in SECTION 3.2(B)(1).
TERMINATION DATE means the earlier of either (a) the Maturity Date or
(b) the effective date that Lenders' Commitments are fully canceled or
terminated.
TRIBUNAL means any (a) local, state, territorial, federal, or foreign
judicial, executive, regulatory, administrative, legislative, or governmental
agency, board, bureau, commission, department, or other instrumentality, (b)
private arbitration board or panel, or (c) central bank.
TYPE means any type of Borrowing determined with respect to the
applicable interest option.
UCC means the Uniform Commercial Code in effect in any jurisdiction,
the Law of which affects the Collateral or any Lender Lien.
WHOLLY-OWNED SUBSIDIARY means any Company, other than Borrower, with
respect to which 100% of the issued and outstanding shares of capital stock
(excluding shares of capital stock held under employee stock option plans) of
such Company is owned by another Company. Wholly-Owned Subsidiary shall not
include, however, the Companies listed on SCHEDULE 7.7 or LAN Acquisition
Corporation.
1.2 Time References. Unless otherwise specified, in the Loan
Documents (a) time references (e.g., 10:00 a.m.) are to time in Dallas, Texas,
and (b) in calculating a period from one date to another, the word "from" means
"from and including" and the word "to" or "until" means "to but excluding."
1.3 Other References. Unless otherwise specified, in the Loan
Documents (a) where appropriate, the singular includes the plural and vice
versa, and words of any gender include each other gender, (b) heading and
caption references may not be construed in interpreting provisions, (c)
monetary references are to currency of the United States of America, (d)
section, paragraph, annex, schedule, exhibit, and similar references are to the
particular Loan Document in which they are used, (e) references to "telecopy,"
"facsimile," "fax," or similar terms are to facsimile or telecopy
transmissions, (f) references to "including" mean including without limiting
the generality of any description preceding that word, (g) the rule of
construction that references to general items that follow references to
specific items are limited to the same type or character of those specific
items is not applicable in the Loan Documents, (h) references to any Person
include that Person's heirs, personal representatives, successors, trustees,
receivers, and permitted assigns, (i) references to any Law include every
amendment or supplement to it, rule and regulation adopted under it, and
successor or replacement for it, and (j) references to any Loan Document or
other document include every renewal and extension of it, amendment and
supplement to it, and replacement or substitution for it.
1.4 Accounting Principles. Unless otherwise specified, in the
Loan Documents (a) GAAP determines all accounting and financial terms and
compliance with financial covenants, (b) GAAP in effect on the date of this
agreement determines compliance with financial covenants, (c) otherwise, all
accounting principles applied in a current period must be comparable in all
material respects to those applied during the preceding comparable period, and
(d) while Borrower has any consolidated Subsidiaries (i) all accounting and
financial terms and compliance with reporting covenants must be on a
consolidated basis, as applicable, and (ii) compliance with financial covenants
must be on a consolidated basis.
SECTION 2 COMMITMENT. Subject to the provisions in the Loan Documents,
each Lender severally but not jointly agrees to lend to Borrower that Lender's
Commitment Percentage of requested or required Borrowings under the Revolving
Facility which Borrower may borrow, repay, and reborrow under this agreement,
subject to the following conditions:
2.1 General Conditions. The Commitment Usage (whether direct or
participated) owed to any Lender may never exceed that Lender's total
Commitments.
2.2 Specific Conditions.
(a) Each Borrowing may only be $100,000 or a greater
integral multiple of $100,000 if a Base-Rate Borrowing or $1,000,000
or a greater integral multiple of $100,000 if a LIBOR Borrowing;
(b) Each Borrowing may only occur on a Business Day on or
after the Closing Date and before the Termination Date; and
(c) Borrower may advance all or part of the proceeds of
any Borrowing to only those Subsidiaries that have executed a
Guaranty.
2.3 Borrowing Procedure. The following procedures apply to
Borrowings:
(a) Borrowing Request. Borrower may request a Borrowing
by making or delivering a Borrowing Request (that may be telephonic if
confirmed in writing within two Business Days) to Administrative
Agent, which is irrevocable and binding on Borrower. Each Borrowing
Request shall state the Type,
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amount, and Interest Period for each Borrowing and which must be
received by Administrative Agent no later than (i) (if
applicable)12:00 p.m. noon on the third Business Day before the
Borrowing Date for any LIBOR Borrowing, or (ii) 12:00 p.m. noon on the
Borrowing Date for any Base-Rate Borrowing.
(b) Funding. Each Lender shall remit its Commitment
Percentage of each requested Borrowing to Administrative Agent's
principal office in Dallas, Texas, in funds that are available for
immediate use by Administrative Agent by 2:00 p.m. on the applicable
Borrowing Date. Subject to receipt of those funds, Administrative
Agent shall (unless to its actual knowledge any of the applicable
conditions precedent have not been satisfied by Borrower or waived by
the requisite Lenders under SECTION 14.8) make those funds available
to Borrower by (at Borrower's option) (i) wiring the funds to or for
the account of Borrower at the direction of Borrower or (ii)
depositing the funds in Borrower's account (other than a Settlement
Aggregation Account) with Administrative Agent.
(c) Funding Assumed. Absent contrary written notice from
a Lender, Administrative Agent may assume that each Lender has made
its Commitment Percentage of the requested Borrowing available to
Administrative Agent on the applicable Borrowing Date, and
Administrative Agent may, in reliance upon such assumption (but shall
not be required to), make available to Borrower a corresponding
amount. If a Lender fails to make its Commitment Percentage of any
requested Borrowing available to Administrative Agent on the
applicable Borrowing Date, Administrative Agent may recover the
applicable amount on demand, (i) from that Lender together with
interest, commencing on the Borrowing Date and ending on (but
excluding) the date Administrative Agent recovers the amount from that
Lender, at an annual interest rate equal to the Federal-Funds Rate, or
(ii) if that Lender fails to pay its amount upon demand, then from
Borrower. No Lender is responsible for the failure of any other
Lender to make its Commitment Percentage of any Borrowing available as
required by SECTION 2.3(B); however, failure of any Lender to make its
Commitment Percentage of any Borrowing so available does not excuse
any other Lender from making its Commitment Percentage of any
Borrowing so available.
2.4 Letters of Credit.
(a) Conditions. Issuing Lender agrees to issue LCs for
the account of any Company upon Borrower's making or delivering an LC
Request and delivering an LC Agreement, both of which must be received
by Administrative Agent and Issuing Lender no later than the second
Business Day before the Business Day on which the requested LC is to
be issued, so long as (i) each LC shall expire within 12 months of its
date of issue (provided, however, that the NationsBank LC shall expire
on or before January 30, 1997, and provided further that an LC
(excluding the NationsBank LC) may, at Borrower's request, provide
that it is self-extending upon expiration for a period up to 12 months
unless Administrative Agent has given the beneficiary thereunder at
least 30 days' but no more than 120 days' prior written notice to the
contrary), (ii) no LC may expire after a date three Business Days
before the Termination Date, (iii) the LC Exposure does not exceed the
limitations in the definition of LC Subfacility, and (iv) the
limitations in SECTION 2.1 are not exceeded. The amount of any
payment by Administrative Agent of a draft drawn under an LC shall be
included as part of the Obligation.
(b) Participation. Immediately upon Issuing Lender's
issuance of any LC, Issuing Lender shall be deemed to have sold and
transferred to each other Lender, and each other Lender shall be
deemed irrevocably and unconditionally to have purchased and received
from Issuing Lender, without recourse or warranty, an undivided
interest and participation to the extent of such Lender's Commitment
Percentage in the LC and all applicable Rights of Issuing Lender in
the LC -- other than Rights to receive certain fees provided in
SECTION 4.3 to be for Issuing Lender's sole account.
(c) Reimbursement Obligation of the Companies. To induce
Issuing Lender to issue and maintain LCs, and to induce Lenders to
participate in issued LCs, Borrower agrees to pay or reimburse Issuing
Lender (or cause another Company to pay or reimburse Issuing Lender)
(i) on the first Business Day after Issuing Lender notifies
Administrative Agent and Borrower that it has made payment under a LC,
the amount paid by Issuing Lender and (ii) on demand, the amount of
any additional fees Issuing Lender customarily charges for amending LC
Agreements, for honoring drafts under LCs, and for taking similar
action in connection with letters of credit. If Borrower or another
Company has not reimbursed Issuing Lender for any drafts paid by the
date on which reimbursement is required under this section, then
Administrative Agent is irrevocably authorized to fund Borrower's
reimbursement obligations as a Base-Rate Borrowing if proceeds are
available under the Revolving Facility and if the conditions in this
agreement for such a Borrowing (other than any notice requirements or
minimum funding amounts) have, to Administrative Agent's knowledge,
been satisfied. The proceeds of that Borrowing shall be advanced
directly to Issuing Lender to pay Borrower's unpaid reimbursement
obligations. If funds cannot be advanced under the Revolving
Facility, then Borrower's reimbursement obligation shall constitute a
demand obligation. Borrower's obligations under this section are
absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim, or defense to payment that
Borrower may have at any time against Issuing Lender or any other
Person. From the date that Issuing Lender pays a draft under a LC
until Borrower or another Company either reimburses or is obligated to
reimburse Issuing Lender for that draft under this section, the amount
of that draft bears interest payable to Issuing Lender at the rate
then applicable to Base-Rate Borrowings. From the due date of the
respective amounts due under this section, to the date paid (including
any payment from proceeds of a Base-Rate Borrowing), unpaid
reimbursement amounts accrue interest that is payable on demand at the
Default Rate.
(d) General. Issuing Lender shall promptly notify
Administrative Agent and Borrower of the date and amount of any draft
presented for honor under any LC (but failure to give notice will not
affect Borrower's obligations under this agreement). Issuing Lender
shall pay the requested amount upon presentment of a draft unless
presentment on its face does not comply with the terms of the
applicable LC. When making payment, Issuing Lender may disregard (i)
any default or potential default that exists under any other agreement
and (ii) obligations under any other agreement that have or have not
been performed by the
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beneficiary or any other Person (and Issuing Lender is not liable for
any of those obligations). The Companies' reimbursement obligations
to Issuing Lender and Lenders, and each Lender's obligations to
Issuing Lender, under this section are absolute and unconditional
irrespective of, and Issuing Lender is not responsible for, (i) the
validity, enforceability, sufficiency, accuracy, or genuineness of
documents or endorsements (even if they are in any respect invalid,
unenforceable, insufficient, inaccurate, fraudulent, or forged), (ii)
any dispute by any Company with or any Company's claims, setoffs,
defenses, counterclaims, or other Rights against Issuing Lender, any
Lender, or any other Person, or (iii) the occurrence of any Potential
Default or Default. However, nothing in this agreement constitutes a
waiver of Borrower's Rights to assert any claim or defense based upon
the gross negligence or willful misconduct of Lender. Issuing Lender
shall promptly pay to Administrative Agent for Administrative Agent to
promptly distribute reimbursement payments received from Borrower to
all Lenders according to their Pro Rata Part of the Revolving
Facility.
(e) Obligation of Lenders. If a Company fails to
reimburse Issuing Lender as provided in SECTION 2.4(C) by the date on
which reimbursement is due under that section, and funds cannot be
advanced under the Revolving Facility to satisfy the reimbursement
obligations, then Administrative Agent shall promptly notify each
Lender of such Company's failure, of the date and amount paid, and of
each Lender's Commitment Percentage of the unreimbursed amount. Each
Lender shall promptly and unconditionally make available to
Administrative Agent in immediately available funds its Commitment
Percentage of the unpaid reimbursement obligation, subject to the
limitations of SECTION 2.1. Funds are due and payable to
Administrative Agent before the close of business on the Business Day
when Administrative Agent gives notice to each Lender of such
Company's reimbursement failure (if notice is given before 1:00 p.m.)
or on the next succeeding Business Day (if notice is given after 1:00
p.m.). All amounts payable by any Lender accrue interest after the
due date at the Federal-Funds Rate from the day the applicable draft
or draw is paid by Administrative Agent to (but not including) the
date the amount is paid by the Lender to Administrative Agent. Upon
receipt of those funds, Administrative Agent shall make them available
to Issuing Lender.
(f) Duties of Issuing Lender. Issuing Lender agrees with
each Lender that it will exercise and give the same care and attention
to each LC as it gives to its other letters of credit. Each Lender
and Borrower agree that, in paying any draft under any LC, Issuing
Lender has no responsibility to obtain any document (other than any
documents expressly required by the respective LC) or to ascertain or
inquire as to any document's validity, enforceability, sufficiency,
accuracy, or genuineness or the authority of any Person delivering it.
Neither Issuing Lender nor its Representatives will be liable to any
Lender or any Company for any LC's use or for any beneficiary's acts
or omissions. Any action, inaction, error, delay, or omission taken
or suffered by Issuing Lender or any of its Representatives in
connection with any LC, applicable drafts or documents, or the
transmission, dispatch, or delivery of any related message or advice,
if in good faith and in conformity with applicable Laws and in
accordance with the standards of care specified in the Uniform Customs
and Practices for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500 (as amended or modified), is
binding upon the Companies and Lenders and, except as provided in
SECTION 2.4(E), does not place Issuing Lender or any of its
Representatives under any resulting liability to any Company or any
Lender. Administrative Agent is not liable to any Company or any
Lender for any action taken or omitted, in the absence of gross
negligence or willful misconduct, by Issuing Lender or its
Representative in connection with any LC.
(g) Cash Collateral. On the Termination Date and if
requested by Determining Lenders while a Default exists, Borrower
shall provide Administrative Agent, for the benefit of Lenders, cash
collateral in an amount to equal the then-existing LC Exposure.
(h) INDEMNIFICATION. BORROWER SHALL PROTECT, INDEMNIFY,
PAY, AND SAVE ADMINISTRATIVE AGENT, ISSUING LENDER, AND EACH OTHER
LENDER, AND THEIR RESPECTIVE REPRESENTATIVES HARMLESS FROM AND AGAINST
ANY AND ALL CLAIMS, DEMANDS, LIABILITIES, DAMAGES, COSTS, CHARGES, AND
EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) WHICH ANY OF THEM MAY
INCUR OR BE SUBJECT TO AS A CONSEQUENCE OF THE ISSUANCE OF ANY LC, ANY
DISPUTE ABOUT IT, OR THE FAILURE OF ISSUING LENDER TO HONOR A DRAW
REQUEST UNDER ANY LC AS A RESULT OF ANY ACT OR OMISSION (WHETHER RIGHT
OR WRONG) OF ANY PRESENT OR FUTURE TRIBUNAL. HOWEVER, NO PERSON IS
ENTITLED TO INDEMNITY UNDER THE FOREGOING FOR ITS OWN GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT.
(i) LC Agreements. Although referenced in any LC, terms
of any particular agreement or other obligation to the beneficiary are
not incorporated into this agreement in any manner. The fees and
other amounts payable with respect to each LC are as provided in this
agreement, drafts under each LC are part of the Obligation, only the
events specified in this agreement as a Default shall constitute a
default under any LC, and the terms of this agreement control any
conflict between the terms of this agreement and any LC Agreement.
(j) Delivery of Letters of Credit. Borrower acknowledges
that each LC will be deemed issued upon delivery to its beneficiary or
Borrower. In the event that Borrower requests any LC be delivered to
Borrower rather than the beneficiary, and Borrower or any other
Company subsequently cancels such LC, Borrower agrees to return it (or
cause it to be returned by another Company) to Administrative Agent
together with Borrower's written certification that it has never been
delivered to such beneficiary. In the event any LC is delivered to
its beneficiary pursuant to Borrower's instructions, no cancellation
thereof by Borrower or any other Company shall be effective without
written consent of such beneficiary to Administrative Agent and return
of such LC to Administrative Agent.
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2.5 Borrowing Notices and LC Requests. Each Borrowing Request
(whether telephonic or written) and LC Request constitutes a representation and
warranty by Borrower that as of the Borrowing Date or the date of issuance of
the requested LC, as the case may be, all of the conditions precedent in
SECTION 6 have been satisfied.
2.6 Termination. Borrower may -- upon giving at least two
Business Days prior written and irrevocable notice to Administrative Agent --
terminate all or part of the Revolving Facility as follows:
(a) Each partial termination of the Revolving Facility
must be in an amount of not less than $5,000,000 or a greater integral
multiple of $1,000,000.
(b) Each partial termination of the Revolving Facility
must be ratable in accordance with each Lender's Commitment
Percentage. At the time of any such termination, Borrower shall pay
to Administrative Agent, for the account of each Lender, as
applicable, all accrued and unpaid fees under this agreement, the
interest attributable to the amount of that termination, and any
related Funding Loss. Any part of the Commitments that are terminated
may not be reinstated.
SECTION 3 TERMS OF PAYMENT.
3.1 Notes and Payments.
(a) Notes. Principal Debt under the Revolving Facility
is evidenced by the Notes, one payable to each Lender in the stated
amount of its Commitment.
(b) Payment. Borrower must make each payment and
prepayment on the Obligation to Administrative Agent's principal
office in Dallas, Texas in immediately available funds by 1:00 p.m. on
the day due; otherwise, but subject to SECTION 3.8, those funds
continue to accrue interest as if they were received on the next
Business Day. Administrative Agent shall promptly pay to each Lender
the part of any payment or prepayment to which that Lender is entitled
under this agreement on the same day Administrative Agent receives the
funds from Borrower.
(c) Payment Assumed. Unless Administrative Agent has
received notice from Borrower prior to the date on which any payment
is due under this agreement that Borrower will not make that payment
in full, Administrative Agent may assume that Borrower has made the
full payment due and Administrative Agent may, in reliance upon that
assumption, cause to be distributed to each Lender on that date the
amount then due to each Lender. If and to the extent Borrower does
not make the full payment due to Administrative Agent, each Lender
shall repay to Administrative Agent on demand the amount distributed
to that Lender by Administrative Agent together with interest for each
day from the date that Lender received payment from Administrative
Agent until the date that Lender repays Administrative Agent (unless
such repayment is made on the same day as such distribution), at an
interest rate equal to the Federal-Funds Rate.
3.2 Interest and Principal Payments.
(a) Interest. Accrued interest on each LIBOR Borrowing
is due and payable on the last day of its respective Interest Period.
If any Interest Period for a LIBOR Borrowing is greater than three
months, then accrued interest is also due and payable on the date
three months after the commencement of the Interest Period. Accrued
interest on each Base-Rate Borrowing is due and payable on the last
day of each March, June, September, and December -- commencing on the
first of those dates that follows the Closing Date -- on the
Termination Date and, the Final Maturity Date (if Borrower has elected
to convert the Principal Debt under the Revolving Facility as provided
in SECTION 3.2(B)(1)).
(b) Principal.
(1) Revolving Facility. The Principal Debt is
due and payable on the Termination Date. On the Termination
Date, Borrower shall have the option, upon 90 days prior
written notice to Administrative Agent, to convert the
Principal Debt to a Term Loan (all such loans by Lenders being
herein collectively called the "TERM LOAN") to be repaid as
follows: in eight equal quarterly installments on the last day
of each March, June, September and December (commencing on the
first of those dates occurring at least 90 days after the
Termination Date), with all unpaid principal, and accrued
unpaid interest becoming finally due and payable on the Final
Maturity Date.
(2) Voluntary Prepayments. Before the occurrence
of the Termination Date or the Final Maturity Date, Borrower
may -- upon giving at least two Business Days prior written
and irrevocable notice to Administrative Agent -- prepay,
without penalty and in whole or in part, the Principal Debt
under the Revolving Facility or Term Loan so long as (i) each
voluntary partial prepayment must be in a principal amount not
less than $1,000,000 or a greater integral multiple of
$100,000, and (ii) Borrower shall pay any related Funding Loss
upon demand. Conversions under SECTION 3.10 are not
prepayments.
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3.3 Interest Options. Borrowings under the Revolving Facility or
Term Loan, as the case may be, shall bear interest as follows:
(a) Revolving Facility and Term Loan. Borrowings under
the Revolving Facility and the Term Loan shall bear interest at an
annual rate equal to the lesser of either (i) the Base Rate or LIBOR
plus the Applicable Margin (in each case as designated or deemed
designated by Borrower), as the case may be, or (ii) the Maximum Rate.
(b) Floating Rate Changes. Each change in the Base Rate
and Maximum Rate is effective, without notice to Borrower or any other
Person, upon the effective date of change.
3.4 Quotation of Rates. Borrower may call Administrative Agent
before delivering a Borrowing Request to receive an indication of the interest
rates then in effect, but the indicated rates do not bind Administrative Agent
or Lenders or affect the interest rate that is actually in effect when Borrower
makes a Borrowing Request or on the Borrowing Date.
3.5 Default Rate. If permitted by Law, all past-due Principal
Debt, Borrower's past-due payment and reimbursement obligations in connection
with LCs, and past-due interest accruing on any of the foregoing bears interest
from the date due (stated or by acceleration) at the Default Rate until paid,
regardless whether payment is made before or after entry of a judgment.
3.6 Interest Recapture. If the designated interest rate
applicable to any Borrowing exceeds the Maximum Rate, the interest rate on that
Borrowing is limited to the Maximum Rate, but any subsequent reductions in the
designated rate shall not reduce the interest rate thereon below the Maximum
Rate until the total amount of accrued interest equals the amount of interest
that would have accrued if that designated rate had always been in effect. If
at maturity (stated or by acceleration), or at final payment of the Notes, the
total interest paid or accrued is less than the interest that would have
accrued if the designated rates had always been in effect, then, at that time
and to the extent permitted by Law, Borrower shall pay an amount equal to the
difference between (a) the lesser of the amount of interest that would have
accrued if the designated rates had always been in effect and the amount of
interest that would have accrued if the Maximum Rate had always been in effect,
and (b) the amount of interest actually paid or accrued on the Notes.
3.7 Interest Calculations. Interest will be calculated on the
basis of actual number of days (including the first day but excluding the last
day) elapsed but computed as if each calendar year consisted of 360 days
(unless the calculation would result in an interest rate greater than the
Maximum Rate, or in the case of interest on Base-Rate Borrowings in which event
interest will be calculated on the basis of a year of 365 or 366 days, as the
case may be). All interest rate determinations and calculations by
Administrative Agent are conclusive and binding absent manifest error.
3.8 Maximum Rate. Regardless of any provision contained in any
Loan Document, no Lender is entitled to contract for, charge, take, reserve,
receive, or apply, as interest on all or any part of the Obligation, any amount
in excess of the Maximum Rate, and, if Lenders ever do so, then any excess
shall be treated as a partial prepayment of principal and any remaining excess
shall be refunded to Borrower. In determining if the interest paid or payable
exceeds the Maximum Rate, Borrower and Lenders shall, to the maximum extent
permitted under applicable Law, (a) treat all Borrowings as but a single
extension of credit (and Lenders and Borrower agree that is the case and that
provision in this agreement for multiple Borrowings is for convenience only),
(b) characterize any nonprincipal payment as an expense, fee, or premium rather
than as interest, (c) exclude voluntary prepayments and their effects, and (d)
amortize, prorate, allocate, and spread the total amount of interest throughout
the entire contemplated term of the Obligation. However, if the Obligation is
paid in full before the end of its full contemplated term, and if the interest
received for its actual period of existence exceeds the Maximum Amount, Lenders
shall refund any excess (and Lenders may not, to the extent permitted by Law,
be subject to any penalties provided by any Laws for contracting for, charging,
taking, reserving, or receiving interest in excess of the Maximum Amount). If
the Laws of the State of Texas are applicable for purposes of determining the
"Maximum Rate" or the "Maximum Amount," then those terms mean the "indicated
rate ceiling" from time to time in effect under Article 5069-1.04, Title 79,
Revised Civil Statutes of Texas, as amended. Borrower agrees that Chapter 15,
Subtitle 79, Revised Civil Statutes of Texas, 1925, as amended (which regulates
certain revolving credit loan accounts and revolving triparty accounts), does
not apply to the Obligation.
3.9 Interest Periods. When Borrower requests any LIBOR Borrowing,
Borrower may elect the applicable interest period (each an "INTEREST PERIOD"),
which may be, at Borrower's option, one, two, three, or six months for LIBOR
Borrowings, subject to SECTION 14.1 and the following conditions: (a) the
initial Interest Period for a LIBOR Borrowing commences on the applicable
Borrowing Date or conversion date, and each subsequent Interest Period
applicable to any Borrowing commences on the day when the next preceding
applicable Interest Period expires; (b) if any Interest Period for a LIBOR
Borrowing begins on a day for which no numerically corresponding Business Day
in the calendar month at the end of the Interest Period exists, then the
Interest Period ends on the last Business Day of that calendar month; (c) if
Borrower is required to pay any portion of a LIBOR Borrowing before the end of
its Interest Period in order to comply with the payment provisions of the Loan
Documents, Borrower shall also pay any related Funding Loss; and (d) no more
than ten Interest Periods may be in effect at one time.
3.10 Conversions. Subject to the dollar limits of SECTION 2.2 and
provided that Borrower may not convert to or select a new Interest Period for a
LIBOR Borrowing at any time when a Default or Potential Default exists,
Borrower may (a) convert a LIBOR Borrowing on the last day of the applicable
Interest Period to a Base-Rate Borrowing, (b) convert a Base-Rate Borrowing at
any time to a LIBOR Borrowing, and (c) elect a new Interest Period for a LIBOR
Borrowing. That election may be made by telephonic request to Administrative
Agent no later than 12:00 p.m. noon on the third Business Day before the
conversion date or the last day of the Interest Period,
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as the case may be (for conversion to a LIBOR Borrowing or election of a new
Interest Period), and no later than 12:00 p.m. noon on the last day of the
Interest Period (for conversion to a Base-Rate Borrowing). Borrower shall
provide a Conversion Notice to Administrative Agent no later than two days
after the date of the conversion or election. Absent Borrower's telephonic
request for conversion or election of a new Interest Period or if a Default or
Potential Default exists, then, a LIBOR Borrowing shall be deemed converted to
a Base-Rate Borrowing effective when the applicable Interest Period expires.
3.11 Order of Application.
(a) No Default. If no Default or Potential Default
exists, any payment shall be applied to the Obligation -- except as
otherwise specifically provided in the Loan Documents -- in the order
and manner as Borrower directs.
(b) Default. If a Default or Potential Default exists or
if Borrower fails to give direction, any payment (including proceeds
from the exercise of any Rights) shall be applied in the following
order: (i) to all fees and expenses for which Administrative Agent or
Lenders have not been paid or reimbursed in accordance with the Loan
Documents (and if such payment is less than all unpaid or unreimbursed
fees and expenses, then the payment shall be paid against unpaid and
unreimbursed fees and expenses in the order of incurrence or due
date); (ii) to accrued interest on the Principal Debt; (iii) to any LC
reimbursement obligations that are due and payable and that remain
unfunded by any Borrowing; (iv) to the remaining Principal Debt in the
order as Determining Lenders may elect (but Determining Lenders agree
to apply proceeds in an order that will minimize any Funding Loss);
(v) to the remaining Obligation in the order and manner Determining
Lenders deem appropriate; and (vi) as a deposit with Administrative
Agent, for the benefit of Lenders, as security for and payment of any
subsequent LC reimbursement obligations.
(c) Pro Rata. Each payment or prepayment shall be
distributed to each Lender in accordance with its Pro Rata Part of
that payment or prepayment.
3.12 Sharing of Payments, Etc.. If any Lender obtains any payment
or prepayment with respect to the Obligation (whether voluntary, involuntary,
or otherwise, including, without limitation, as a result of exercising its
Rights under SECTION 3.13) that exceeds the part of that payment or prepayment
that it is then entitled to receive under the Loan Documents, then that Lender
shall purchase from the other Lenders participations that will cause the
purchasing Lender to share the excess payment or prepayment ratably with each
other Lender. If all or any portion of any excess payment or prepayment is
subsequently recovered from the purchasing Lender, then the purchase shall be
rescinded and the purchase price restored to the extent of the recovery.
Borrower agrees that any Lender purchasing a participation from another Lender
under this section may, to the fullest extent permitted by Law, exercise all of
its Rights of payment (including the Right of offset) with respect to that
participation as fully as if that Lender were the direct creditor of Borrower
in the amount of that participation.
3.13 Offset. If a Default exists, each Lender is entitled to
exercise (for the benefit of all Lenders in accordance with SECTION 3.12) the
Rights of offset and banker's lien against each and every account (excluding
Settlement Aggregation Accounts) and other property, or any interest therein,
that any Company may now or hereafter have with, or which is now or hereafter
in the possession of, that Lender to the extent of the full amount of the
Obligation owed (directly or participated) to it.
3.14 Booking Borrowings. To the extent permitted by Law, any
Lender may make, carry, or transfer its Borrowings at, to, or for the account
of any of its branch offices or the office or branch of any of its Affiliates.
However, no Affiliate or branch is entitled to receive any greater payment
under SECTION 3.16 than the transferor Lender would have been entitled to
receive with respect to those Borrowings, and a transfer may not be made if, as
a direct result of it, SECTION 3.15 or 3.17 would apply to any of the
Obligation. If any of the conditions of SECTIONS 3.16 or 3.17 ever apply to a
Lender, that Lender shall, to the extent possible, carry or transfer its
Borrowings at, to, or for the account of any of its branch offices or the
office or branch of any of its Affiliates so long as the transfer is consistent
with the other provisions of this section, does not create any burden or
adverse circumstance for that Lender that would not otherwise exist, and
eliminates or ameliorates the conditions of SECTIONS 3.16 or 3.17 as
applicable.
3.15 Basis Unavailable or Inadequate for LIBOR. If, on or before
any date when LIBOR is to be determined for a Borrowing, Administrative Agent
reasonably determines that the basis for determining the applicable rate is not
available or any Lender reasonably determines that the resulting rate does not
accurately reflect the cost to that Lender of making or converting Borrowings
at that rate for the applicable Interest Period, then Administrative Agent
shall promptly notify Borrower and Lenders of that determination (which is
conclusive and binding on Borrower absent manifest error) and the applicable
Borrowing shall bear interest at the Base Rate. Until Administrative Agent
notifies Borrower that those circumstances no longer exist, Lenders'
commitments under this agreement to make, or to convert to, LIBOR Borrowings,
as the case may be, are suspended.
3.16 Additional Costs. Each Lender severally and not jointly
agrees to notify Administrative Agent, the other Lenders, and Borrower within
180 days after it has actual knowledge that any circumstances exist that would
give rise to any payment obligation by Borrower under CLAUSES (A) through (C)
below. Although no Lender shall have any liability to Administrative Agent,
any other Lender, or any Company for its failure to give that notice, Borrower
is not obligated to pay any amounts under those clauses that arise, accrue, or
are imposed more than 180 days before that notice to the extent it is
applicable to those amounts. Any Lender demanding payment of any additional
costs under this section must generally be making similar demand for similar
additional costs under credit agreements to which it is party that contain
similar provisions to this section.
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(a) Reserves. With respect to any LIBOR Borrowing (i) if
any change in any present Law, any change in the interpretation or
application of any present Law, or any future Law imposes, modifies,
or deems applicable (or if compliance by any Lender with any
requirement of any Tribunal results in) any requirement that any
reserves (including, without limitation, any marginal, emergency,
supplemental, or special reserves) be maintained (other than any
reserve included in the Reserve Requirement), and if (ii) those
reserves reduce any sums receivable by that Lender under this
agreement or increase the costs incurred by that Lender in advancing
or maintaining any portion of any LIBOR Borrowing, then (iii) that
Lender (through Administrative Agent) shall deliver to Borrower a
certificate setting forth in reasonable detail the calculation of the
amount necessary to compensate it for its reduction or increase (which
certificate is conclusive and binding absent manifest error), and (iv)
Borrower shall pay that amount to that Lender within five Business
Days after demand. The provisions of and undertakings and
indemnification in this CLAUSE (A) survive the satisfaction and
payment of the Obligation and termination of this agreement.
(b) Capital Adequacy. With respect to any Borrowing or
LC, if any change in any present Law, any change in the interpretation
or application of any present Law, or any future Law regarding capital
adequacy, or if compliance by Issuing Lender or any Lender with any
request, directive, or requirement imposed in the future by any
Tribunal regarding capital adequacy, or if any change in its written
policies or in the risk category of this transaction, in any of the
foregoing events or circumstances, reduces the rate of return on its
capital as a consequence of its obligations under this agreement to a
level below that which it otherwise could have achieved (taking into
consideration its policies with respect to capital adequacy) by an
amount deemed by it to be material (and it may, in determining the
amount, utilize reasonable assumptions and allocations of costs and
expenses and use any reasonable averaging or attribution method), then
(unless the effect is already reflected in the rate of interest then
applicable under this agreement) Administrative Agent or that Lender
(through Administrative Agent) shall notify Borrower and deliver to
Borrower a certificate setting forth in reasonable detail the
calculation of the amount necessary to compensate it (which
certificate is conclusive and binding absent manifest error), and
Borrower shall pay that amount to Administrative Agent or that Lender
within five Business Days after demand. Notwithstanding the foregoing
sentence, Borrower shall not be obligated to pay such amount unless
notice thereof is given within 90 Business Days after any such Lender
actually incurs such reduction in its return. Lenders are not aware
of any event which would so reduce their rate of return as of the date
hereof. If any such event giving rights to a demand by any Lender for
compensation under this SECTION 3.16(B) occurs specifically with
respect to such Lender, and generally with respect to national banks
similarly situated for loans of the same classification, Borrower may
elect to prepay the Obligation in full within 120 days after receipt
of the above-described certificate from Administrative Agent by giving
written notice to Administrative Agent or that Lender through
Administrative Agent) of such election not more than five Business
Days after receipt of such certificate from Administrative Agent;
provided, however, that if Borrower does not prepay the Obligation
within such 120-day period despite having given such notice, this
agreement shall remain in full force and effect as if such notice was
never given. The provisions of and undertakings and indemnification
in this CLAUSE (B) shall survive the satisfaction and payment of the
Obligation and termination of this agreement.
(c) HLT. Neither Borrower nor any Lender is aware of any
circumstances which would result in classifying this transaction as a
"highly leveraged transaction" as of the Closing Date under "HLT"
guidelines promulgated by any Tribunal (including, without limitation,
the Office of the Comptroller of the Currency). If any Tribunal or
any Lender (as it interprets "HLT guidelines" promulgated by any
Tribunal) classifies this transaction as a "highly leveraged
transaction," such Lender (through Administrative Agent) shall
promptly notify Borrower of such classification and the applicable
interest rate margin in all contexts shall be increased by 1% as of
the date of such notice.
(d) Taxes. Subject to SECTION 3.19, any Taxes payable by
Administrative Agent or any Lender or ruled (by a Tribunal) payable by
Administrative Agent or any Lender in respect of this agreement or any
other Loan Document shall, if permitted by Law, be paid by Borrower,
together with interest and penalties, if any, except for Taxes payable
on or measured by the overall net income of Administrative Agent or
that Lender (or Administrative Agent or that Lender, as the case may
be, together with any other Person with whom Administrative Agent or
that Lender files a consolidated, combined, unitary, or similar Tax
return) and except for interest and penalties incurred as a result of
the gross negligence or willful misconduct of Administrative Agent or
any Lender. Administrative Agent or that Lender (through
Administrative Agent) shall notify Borrower and deliver to Borrower a
certificate setting forth in reasonable detail the calculation of the
amount of payable Taxes, which certificate is conclusive and binding
(absent manifest error), and Borrower shall pay that amount to
Administrative Agent for its account or the account of that Lender, as
the case may be within five Business Days after demand. If
Administrative Agent or that Lender subsequently receives a refund of
the Taxes paid to it by Borrower, then the recipient shall promptly
pay the refund to Borrower.
3.17 Change in Laws. If any Law makes it unlawful for any Lender
to make or maintain LIBOR Borrowings, then that Lender shall promptly notify
Borrower and Administrative Agent, and (a) as to undisbursed funds, that
requested Borrowing shall be made as a Base-Rate Borrowing, and (b) as to any
outstanding Borrowing (i) if maintaining the Borrowing until the last day of
the applicable Interest Period is unlawful, the Borrowing shall be converted to
a Base- Rate Borrowing as of the date of notice, in which event Borrower will
be required to pay any related Funding Loss, or (ii) if not prohibited by Law,
the Borrowing shall be converted to a Base-Rate Borrowing as of the last day of
the applicable Interest Period, or (iii) if any conversion will not resolve the
unlawfulness, Borrower shall promptly prepay the Borrowing, without penalty but
with related Funding Loss.
3.18 FUNDING LOSS. BORROWER SHALL INDEMNIFY EACH LENDER AGAINST,
AND PAY TO IT UPON DEMAND, ANY FUNDING LOSS OF THAT LENDER. WHEN ANY LENDER
DEMANDS THAT BORROWER PAY ANY FUNDING LOSS, THAT LENDER SHALL DELIVER TO
BORROWER AND ADMINISTRATIVE AGENT A CERTIFICATE SETTING FORTH IN REASONABLE
DETAIL THE BASIS FOR IMPOSING FUNDING LOSS AND THE CALCULATION OF THE AMOUNT,
WHICH CALCULATION IS
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CONCLUSIVE AND BINDING ABSENT MANIFEST ERROR. THE PROVISIONS OF AND
UNDERTAKINGS AND INDEMNIFICATION IN THIS SECTION SURVIVE THE SATISFACTION AND
PAYMENT OF THE OBLIGATION AND TERMINATION OF THIS AGREEMENT.
3.19 Foreign Lenders, Participants, and Assignees. Each Lender,
Participant (by accepting a participation interest under this agreement), and
Assignee (by executing an Assignment) that is not organized under the Laws of
the United States of America or one of its states (a) represents to
Administrative Agent and Borrower that (i) no Taxes are required to be withheld
by Administrative Agent or Borrower with respect to any payments to be made to
it in respect of the Obligation and (ii) it has furnished to Administrative
Agent and Borrower two duly completed copies of either U.S. Internal Revenue
Service Form 4224, Form 1001, Form W-8, or any other form acceptable to
Administrative Agent and Borrower that entitles it to a complete exemption from
U.S. federal withholding Tax on all interest or fee payments under the Loan
Documents, and (b) covenants to (i) provide Administrative Agent and Borrower a
new Form 4224, Form 1001, Form W-8, or other form acceptable to Administrative
Agent and Borrower upon the expiration or obsolescence according to Law of any
previously delivered form, duly executed and completed by it, entitling it to a
complete exemption from U.S. federal withholding Tax on all interest and fee
payments under the Loan Documents, and (ii) comply from time to time with all
Laws with regard to the withholding Tax exemption. If any of the foregoing is
not true at any time or the applicable forms are not provided, then Borrower
and Administrative Agent (without duplication) may deduct and withhold from
interest and fee payments under the Loan Documents any Tax at the maximum rate
under the Code or other applicable Law, and amounts so deducted and withheld
shall be treated as paid to that Lender, Participant, or assignee, as the case
may be, for all purposes under the Loan Documents.
SECTION 4 FEES.
4.1 Treatment of Fees. The fees described in this SECTION 4
represent compensation for services rendered and to be rendered separate and
apart from the lending of money or the provision of credit, and (a) are not
compensation for the use, detention, or forbearance of money, (b) are in
addition to, and not in lieu of, interest and expenses otherwise described in
this agreement, (c) are payable in accordance with SECTION 3.1, (d) are
non-refundable, (e) to the fullest extent permitted by Law, bear interest, if
not paid when due, at the Default Rate and (f) are calculated on the basis of a
year of 360 days.
4.2 Co-Agents' Fees. Borrower shall pay to Co-Agents the
arrangement fee described in the letter agreement (as it may be renewed,
extended, or modified) dated as of December 15, 1995, between Borrower and
Co-Agents. Those fees are solely for the account of Co-Agents.
4.3 LC Fees. As an inducement for the issuance (including,
without limitation, the extension) of each LC, Borrower agrees to pay to
Administrative Agent:
(a) For the account of each Lender, according to each
Lender's Commitment Percentage on the day the fee is payable, an
issuance fee, payable quarterly in arrears, equal to a percentage of
the average-face amount of that LC during each applicable quarterly
period, which percentage is equal to 100% of the Applicable Margin in
effect for LIBOR Borrowings on the first day of the quarterly period
for which a payment is payable; and
(b) For the account of Issuing Lender, payable on the
date of issuance, a fronting fee of $300.00.
4.4 Commitment Fee. From and after the Closing Date, Borrower
shall pay to Administrative Agent a commitment fee for Lenders according to
each Lender's Commitment Percentage. The fee is payable as it accrues on the
last day of each March, June, September, and December -- commencing on the
first of those dates at least 90 days following the date of this agreement --
and on the Termination Date. Each payment of the fee is equal to the
following, determined for the calendar quarter (or portion of a calendar
quarter commencing on the date of this agreement or ending on such later
Termination Date) preceding and including the date it is due: From the Closing
Date until the Termination Date, the product of (i) the Applicable Percentage,
times (ii) the amount by which the average-daily total Commitments exceed the
sum of the average-daily Commitment Usage, times (iii) a fraction with the
number of days in the applicable quarter or portion of it as the numerator and
360 as the denominator.
SECTION 5 SECURITY.
5.1 Guaranty. In consideration of the LCs which may be issued by
Issuing Lender under this agreement on behalf of each Company, and in
consideration of the intercompany advances which may be made by Borrower to its
Subsidiaries, and by Borrower's direct Subsidiaries to Borrower's indirect
Subsidiaries, in accordance with SECTION 2.2(C), Borrower shall cause all of
its present and future direct Subsidiaries, and each indirect Subsidiary --
whether now existing or in the future formed or acquired as permitted by the
Loan Documents -- to unconditionally guarantee the full payment and performance
of the Obligation by execution of a Guaranty.
5.2 Collateral. If the Funded Debt/Cash Flow Ratio is ever
greater than 2.75 to 1.00, upon 10 days earlier notice, Borrower shall cause
the full payment and performance of the Obligation to be secured by Lender
Liens on such items and types of property then owned or thereafter acquired by
any Company, or any of their present or future Subsidiaries, as may be
requested by either of the Co-Agents or Determining Lenders, in their sole
discretion.
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5.3 Additional Security and Guaranties. Lender may, without
notice or demand and without affecting any Company's (or any other Person's)
obligations under the Loan Documents, from time to time (a) receive from any
Person and hold collateral for the payment of all or any part of the Obligation
and exchange, enforce, or release such collateral or any part thereof and (b)
accept and hold any endorsement or guaranty of payment of all or any part of the
Obligation and release such endorser or guarantor, or any Person who has given
any other security for the payment of all or any part of the Obligation, or any
other Person in any way obligated to pay all or any part of the Obligation.
5.4 Further Assurances. Borrower covenants and agrees that the
Lender Liens, when required as described in SECTION 5.2, must be created and
perfected as a condition to funding any Borrowings or issuance of any LC.
Furthermore, Borrower shall -- and shall cause each other appropriate Company
to -- perform the acts, duly authorize, execute, acknowledge, deliver, file,
and record any additional writings, and pay all filings fees and costs as
Administrative Agent or Determining Lenders may reasonably deem appropriate or
necessary to perfect and maintain the Lender Liens and preserve and protect the
Rights of Administrative Agent and Lenders under any Loan Document.
5.5 Release of Collateral. Administrative Agent shall, upon
Borrower's written request and at Borrower's cost and expense, cause the Lender
Liens on all Collateral to be released:
(a) If the conditions described in SECTION 5.2 have occurred, and
after such occurrence Borrower has maintained the Funded Debt/Cash
Flow Ratio to be less than 2.25 to 1.00 for two consecutive fiscal
quarters, provided that no Potential Default or Default has occurred;
or
(b) Whenever no Lender has any commitment to extend credit under
any Loan Document, the Obligation has been fully paid and performed,
and all uncancelled and undrawn LCs have been either fully cash
secured or backed by letters of credit acceptable in the sole
discretion of Issuing Lender.
SECTION 6 CONDITIONS PRECEDENT. No Lender is obligated to fund the
initial Borrowing or issue any LC unless Documentation Agent has received all
of the items described in PART A on SCHEDULE 6. In addition, no Lender is
obligated to fund (as opposed to continue or convert) any Borrowing or issue
any LC unless on the applicable Borrowing Date or issue date (and after giving
effect to the requested Borrowing or LC), as the case may be: (a)
Administrative Agent (and Issuing Lender, if applicable) timely receives a
Borrowing Request or LC Request (together with the applicable LC Agreement), as
the case may be; (b) Issuing Lender receives any applicable LC fee then due and
payable; (c) all of the representations and warranties of the Companies in the
Loan Documents are true and correct in all material respects (unless they speak
to a specific date or are based on facts which have changed by transactions
contemplated or expressly permitted by this agreement); (d) no Material Adverse
Event, Default, or Potential Default exists; (e) none of the matters disclosed
in any amendments to SCHEDULES 7.8 or 7.10 are objected to by Determining
Lenders; and (f) no limitation in SECTION 2.1, 2.2 or 2.4 is exceeded. Each
Borrowing Request and LC Request, however delivered, constitutes Borrower's
representation and warranty that the conditions in CLAUSES (C) through (F)
above are satisfied. Upon either Co-Agent's or any Lender's reasonable
request, Borrower shall deliver to that Co-Agent or that Lender evidence
substantiating any of the matters in the Loan Documents that are necessary to
enable Borrower to qualify for the Borrowing or LC, as the case may be. Each
condition precedent in this agreement (including, without limitation, those on
SCHEDULE 6) is material to the transactions contemplated by this agreement, and
time is of the essence with respect to each condition precedent.
SECTION 7 REPRESENTATIONS AND WARRANTIES. Borrower represents and
warrants to Co-Agents and Lenders as follows:
7.1 Purpose and Regulations G and U.
(a) Borrower will use the proceeds of the Revolving
Facility (including the LC Subfacility) for (i) refinancing the
Refinanced Debt, (ii) the working capital and general corporate
purposes of itself and any Company that has executed a Guaranty, and
(iii) acquisitions that are permitted under SECTION 9.
(b) No Company is engaged principally, or as one of its
important activities, in the business of extending credit for the
purpose of purchasing or carrying any "margin stock" within the
meaning of Regulations G or U of the Board of Governors of the Federal
Reserve System, as amended. No part of the proceeds of any LC draft
or drawing or Borrowing will be used, directly or indirectly, for a
purpose that violates any Law, including, without limitation,
Regulations G or U.
7.2 Corporate Existence, Good Standing, and Authority. Each
Company is duly organized, validly existing, and in good standing under the
Laws of its jurisdiction of incorporation. Except where not a Material Adverse
Event, each Company is duly qualified to transact business and is in good
standing as a foreign corporation in each jurisdiction where the nature and
extent of its business and properties require due qualification and good
standing (each of which jurisdictions is identified on SCHEDULE 7.3, as
supplemented from time to time by an amendment to that schedule that is dated,
executed, and delivered by Borrower to Administrative Agent and Lenders to
reflect changes in that schedule as a result of transactions permitted by the
Loan Documents). Each Company possesses all requisite authority and power to
conduct its business as is now being conducted and as proposed under the Loan
Documents to be conducted and to own and operate its assets as now owned and
operated and as proposed to be owned and operated under the Loan Documents.
7.3 Subsidiaries and Names. SCHEDULE 7.3 -- as supplemented from
time to time by an amendment to that schedule that is dated, executed, and
delivered by Borrower to Administrative Agent and Lenders to reflect changes in
that schedule as a result of transactions permitted by the Loan Documents --
describes (a) all of Borrower's
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direct and indirect Subsidiaries, (b) all Companies, (c) every name or trade
name used by each Company during the five- year period before the date of this
agreement, (d) every change of each Company's name during the four-month period
before the date of this agreement, (e) the chief executive office of each
Company, (f) the percentage of shares of outstanding capital stock of each
Subsidiary held by Company, and (g) the Company holding such stock. All of the
outstanding shares of capital stock (or similar voting interests) of Borrower's
Subsidiaries are (a) duly authorized, validly issued, fully paid, and
nonassessable, (b) owned of record and beneficially as described in that
schedule or those writings, free and clear of any Liens, except Permitted
Liens, and (c) not subject to any warrant, option, or other acquisition Right
of any Person or subject to any transfer restriction except restrictions
imposed by securities Laws and general corporate Laws.
7.4 Authorization and Contravention. The execution and delivery
by each Company of each Loan Document to which it is a party and the
performance by it of its obligations under those Loan Documents (a) are within
its corporate power, (b) have been duly authorized by all necessary corporate
action, (c) require no action by or filing with any Tribunal (except any action
or filing that has been taken or made on or before the Closing Date), (d) do
not violate any provision of its charter or bylaws, and (e) do not violate any
provision of Law applicable to it or any material agreement to which it is a
party except violations that individually or collectively are not a Material
Adverse Event.
7.5 Binding Effect. Upon execution and delivery by all parties to
it, each Loan Document will constitute a legal and binding obligation of each
Company party to it, enforceable against it in accordance with that Loan
Document's terms except as that enforceability may be limited by Debtor Laws
and general principles of equity.
7.6 Financials and Existing Debt. The Current Financials were
prepared in accordance with GAAP and present fairly, in all material respects,
the Companies' consolidated financial condition, results of operations, and
cash flows as of, and for the portion of the fiscal year ending on their dates
(subject only to normal year-end adjustments for interim statements). Except
for transactions directly related to, specifically contemplated by, or
expressly permitted by the Loan Documents or as disclosed in the reports filed
by Borrower pursuant to the Securities and Exchange Act of 1934 and delivered
to Administrative Agent and Lenders after the date of the Current Financials,
no material adverse changes have occurred in the Companies' consolidated
financial condition from that shown in the Current Financials.
7.7 Solvency. Except as disclosed on SCHEDULE 7.7, on each
Borrowing Date and the date any LC is issued, each Company, is -- and after
giving effect to the requested Borrowing or LC will be --Solvent. As of the
Closing Date, the Companies disclosed on Schedule 7.7 are immaterial to
Borrower's consolidated balance sheet.
7.8 Litigation. Except as disclosed on SCHEDULE 7.8 -- as
supplemented from time to time, subject to SECTION 6(E), by an amendment to
that schedule that is dated, executed, and delivered by Borrower to
Administrative Agent and Lenders to reflect changes in that schedule -- and
matters covered (subject to reasonable and customary deductible and retention)
by insurance or indemnification agreements (a) no Company is subject to, or
aware of the threat of, any Litigation that is reasonably likely to be
determined adversely to any Company and, if so adversely determined, is a
Material Adverse Event, and (b) no outstanding and unpaid judgments against any
Company exist that would be a Material Adverse Event.
7.9 Taxes. Except as disclosed on SCHEDULE 7.8, (a) all Tax
returns of each Company required to be filed have been filed (or extensions
have been granted) before delinquency, and (b) all Taxes imposed upon each
Company that are due and payable have been paid before delinquency except as
being contested as permitted by SECTION 8.5.
7.10 Environmental Matters. Except as disclosed on SCHEDULE 7.10
- -- as supplemented from time to time, subject to SECTION 6(E), by an amendment
to that schedule that is dated, executed, and delivered by Borrower to
Administrative Agent and Lenders to reflect changes in that schedule:
(a) No Company's ownership of its assets violates any
applicable Environmental Law, other than such violations which would
not constitute a Material Adverse Event.
(b) No Company has received notice from any Tribunal that
it has actual or potential Environmental Liability and no Company has
knowledge that it has any Environmental Liability, which actual or
potential Environmental Liability in either case constitutes a
Material Adverse Event.
(c) No Company has received notice from any Tribunal that
any Real Property is affected by, and no Company has knowledge that
any Real Property is affected by, any Release of any Hazardous
Substance which constitutes a Material Adverse Event.
7.11 Employee Plans. Except as disclosed on SCHEDULE 7.11, (a) no
Employee Plan subject to ERISA has incurred an "accumulated funding deficiency"
(as defined in Section 302 of ERISA or Section 512 of the Code), (b) neither
Borrower nor any ERISA Affiliate has incurred liability -- except for
liabilities for premiums that have been paid or that are not past due -- under
ERISA to the PBGC in connection with any Employee Plan, (c) neither Borrower
nor any ERISA Affiliate has withdrawn in whole or in part from participation in
a Multiemployer Plan in a manner that has given rise to a withdrawal liability
under Title IV of ERISA, (d) neither Borrower nor any ERISA Affiliate has
engaged in any "prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975 of the Code), (e) no "reportable event" (as defined in Section
4043 of ERISA) has occurred excluding events for which the notice requirement
is waived under applicable PBGC regulations, (f) neither Borrower nor any ERISA
Affiliate has any liability, or is subject to any Lien, under ERISA or the Code
to or on account of any Employee Plan, (g) each Employee Plan subject
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to ERISA and the Code complies in all material respects, both in form and
operation, with ERISA and the Code, and (h) no Multiemployer Plan subject to the
Code is in reorganization within the meaning of Section 418 of the Code.
7.12 Properties; Liens. Each Company has good and marketable title
to all its property reflected on the Current Financials as being owned by it
except for property that is obsolete or that has been disposed of in the
ordinary course of business between the date of the Current Financials and the
date of this agreement or, after the date of this agreement, as permitted by
SECTION 9.11 or SECTION 9.12. No Lien exists on any property of any Company
except Permitted Liens. No Company is party or subject to any agreement,
instrument, or order which in any way restricts any Company's ability to allow
Liens to exist upon any of its assets except relating to Permitted Liens.
7.13 Government Regulations. No Company is subject to regulation
under (a) the Public Utility Holding Company Act 1935, the Federal Power Act,
the Investment Company Act of 1940, the Interstate Commerce Act (as any of the
preceding acts have been amended), or any other Law (other than Regulation X of
the Board Governors of the Federal Reserve System) which regulates the
incurrence of Debt, or (b) a "utility" as defined in Chapter 35 of the Texas
Business and Commerce Code, as amended.
7.14 Transactions with Affiliates. Except for transactions with
other Companies and as otherwise disclosed on SCHEDULE 7.14 or permitted by
SECTION 9.7, no Company is a party to a material transaction with any of its
Affiliates. For purposes of this SECTION 7.14, such transactions are
"material" if they, individually or in the aggregate, require any Company to
pay more than $1,000,000.00 over the course of such transactions.
7.15 Debt. No Company has any Debt except Permitted Debt.
7.16 Leases. Except as disclosed on SCHEDULE 7.8, (a) each Company
enjoys peaceful and undisturbed possession under all leases necessary for the
operation of its properties and assets, and (b) all material leases under which
any Company is a lessee are in full force and effect.
7.17 Labor Matters. (a) No actual or threatened strikes, labor
disputes, slow downs, walkouts, work stoppages, or other concerted
interruptions of operations that involve employees of any Company as of the
date hereof (and, with respect to each repetition of this representation under
SECTION 6, there are no such interruptions which could constitute a Material
Adverse Event), (b) hours worked by and payment made to the employees of any
Company or any predecessor of such Company have not been in violation of the
Fair Labor Standards Act or any other applicable Laws pertaining to labor
matters, (c) all payments due from any Company for employee health and welfare
insurance, including, without limitation, workers compensation insurance, have
been paid or accrued as a liability on its books, (d) the business activities
and operations of each Company are in compliance with OSHA and other applicable
health and safety Laws.
7.18 Intellectual Property. (a) Each Company owns or has the right
to use all material licenses, patents, patent applications, copyrights, service
marks, trademarks, trademark applications and trade names necessary to continue
to conduct its businesses as presently conducted by it and proposed to be
conducted by it immediately after the date of this agreement, (b) each Company
is conducting its business without infringement or claim of infringement of any
license, patent, copyright, service mark, trademark, trade name, trade secret
or other intellectual property right of others, and (c) no infringement or
claim of infringement by others of any material license, patent, copyright,
service mark, trademark, trade name, trade secret or other intellectual
property of any Company exists.
7.19 Insurance. Each Company maintains with financially sound,
responsible, and reputable insurance companies or associations (or, as to
workers' compensation or similar insurance, with an insurance fund or by self-
insurance authorized by the jurisdictions in which it operates) insurance
concerning its properties and businesses against such casualties and
contingencies and in such types and in such amounts (and with co-insurance and
deductibles) as is customary in the case of same or similar businesses.
7.20 Full Disclosure. Each material fact or condition relating to
the Loan Documents or the financial condition or prospects, business, or
property of the Companies that is a Material Adverse Event has been disclosed
in writing to Co-Agents and Lenders. All information previously furnished to
Co-Agents or any Lender in connection with the Loan Documents was -- and all
information furnished in the future by any Company to either Co-Agent or any
Lender will be -- true and accurate in all material respects or based on
reasonable estimates on the date the information is stated or certified.
SECTION 8 AFFIRMATIVE COVENANTS. For so long as any Lender is committed
to lend or issue LCs under this agreement and until the Obligation has been
fully paid and performed, Borrower covenants and agrees with Co-Agents and
Lenders that, without first obtaining Administrative Agent's written notice of
Determining Lenders' consent to the contrary:
8.1 Certain Items Furnished. Borrower shall furnish the following
to each Lender:
(a) Annual Financials, Etc. Promptly after preparation
but no later than 90 days after the last day of each fiscal year of
Borrower, Financials showing the Companies' consolidated financial
condition and results of operations as of, and for the year ended on,
that last day, accompanied by (i) the opinion, without material
qualification, of Price Waterhouse LLP or other firm of
nationally-recognized independent certified public accountants
reasonably acceptable
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to Determining Lenders, based on an audit using generally accepted
auditing standards, that the consolidated portion of those Financials
were prepared in accordance with GAAP and present fairly, in all
material respects, the Companies' consolidated financial condition and
results of operations, and (ii) a Compliance Certificate.
(b) Quarterly Financials, Etc. Promptly after
preparation but no later than 60 days after the last day of each of
the first three fiscal quarters of Borrower each year, Financials
showing the Companies' consolidated financial condition and results of
operations for that fiscal quarter and for the period from the
beginning of the current fiscal year to the last day of that fiscal
quarter, accompanied by a Compliance Certificate.
(c) Other Reports. Promptly after preparation thereof,
true copies of all reports, statements, documents, plans and other
written communications furnished by or on behalf of Borrower to its
stockholders, the Securities and Exchange Commission, or the PBGC,
and, if requested by Administrative Agent, any other Tribunal.
(d) Employee Plans. As soon as possible and within 30
days after Borrower knows that any event which would constitute a
reportable event under Section 4043(b) of Title IV of ERISA with
respect to any Employee Plan subject to ERISA has occurred, or that
the PBGC has instituted or will institute proceedings under ERISA to
terminate that plan, deliver a certificate of a Responsible Officer of
Borrower setting forth details as to that reportable event and the
action which Borrower or an ERISA Affiliate, as the case may be,
proposes to take with respect to it, together with a copy of any
notice of that reportable event which may be required to be filed with
the PBGC, or any notice delivered by the PBGC evidencing its intent to
institute those proceedings or any notice to the PBGC that the plan is
to be terminated, as the case may be. For all purposes of this
section, Borrower is deemed to have all knowledge of all facts
attributable to the plan administrator under ERISA.
(e) Other Notices. Notice -- promptly after Borrower
knows -- of (i) the existence and, if requested by Administrative
Agent, status of any Litigation that, if determined adversely to any
Company, would be a Material Adverse Event, (ii) any change in any
material fact or circumstance represented or warranted by any Company
in any Loan Document, or (iii) a Default or Potential Default,
specifying the nature thereof and what action the Companies have
taken, are taking, or propose to take.
(f) PART B on SCHEDULE 6. Promptly as they become
available (subject to the other requirements of this agreement), the
items, if any, described in PART B on SCHEDULE 6.
(g) Other Information. Promptly when reasonably
requested by Administrative Agent or any Lender, such information (not
otherwise required to be furnished under this agreement) about any
Company's business affairs, assets, and liabilities, and any opinions,
certifications, and documents, in addition to those mentioned herein.
8.2 Use of Credit. Borrower shall -- and shall cause the
Companies to -- use LCs and the proceeds of Borrowings only for the purposes
represented in this agreement.
8.3 Books and Records. Each Company shall maintain books,
records, and accounts necessary to prepare Financials in accordance with GAAP.
8.4 Inspections. Each Company shall allow Administrative Agent or
any Lender (or their respective Representatives) to inspect any of its
properties, to review reports, files, and other records and to make and take
away copies, to conduct tests or investigations, and to discuss any of its
affairs, conditions, and finances with its other creditors, directors,
officers, employees, or representatives from time to time, during reasonable
business hours, or, after notice to Borrower, with any creditor of any Company.
8.5 Taxes. Each Company shall promptly pay when due any and all
Taxes except Taxes that are being contested in good faith by lawful proceedings
diligently conducted, against which reserve or other provision required by GAAP
has been made, and in respect of which levy and execution of any Lien
sufficient to be enforced has been and continues to be stayed.
8.6 Payment of Obligation. Each Company shall promptly pay (or
renew and extend) all of its Debt as it becomes due (other than Debt owed to
any Person other than Lenders, the validity or amount of which is being
contested in good faith by appropriate proceedings diligently conducted and a
reserve or other provision required by GAAP has been made).
8.7 Expenses. Promptly after demand accompanied by an invoice
describing the costs, fees, and expenses in reasonable detail, Borrower shall
pay (a) all costs, fees, and expenses paid or incurred by Co-Agents incident to
any Loan Document (including, without limitation, the reasonable fees and
expenses of Co-Agents' counsel in connection with the negotiation, preparation,
delivery, and execution of the Loan Documents and any related amendment,
waiver, or consent) and (b) all reasonable costs and expenses incurred by
Co-Agents or any Lender in connection with the enforcement of the obligations
of any Company under the Loan Documents or the exercise of any Rights under the
Loan Documents (including, without limitation, reasonable allocated costs of
in-house counsel, other reasonable attorneys' fees, and court costs), all of
which are part of the
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Obligation, bearing interest, (if not paid within ten Business Days after demand
accompanied by an invoice describing the costs, fees, and expenses in reasonable
detail) at the Default Rate until paid.
8.8 Maintenance of Existence, Assets, and Business. Each Company
shall (a) maintain its corporate existence and good standing in its state of
incorporation, (b) except where not a Material Adverse Event (i) maintain its
authority to transact business and good standing in all other states, (ii)
maintain all licenses, permits, and franchises (including, without limitation,
Environmental Permits) necessary for its business, (iii) keep all of its
material assets that are useful in and necessary to its business in good
working order and condition (ordinary wear and tear excepted) and make all
necessary repairs and replacements.
8.9 Insurance. Each Company shall, at its cost and expense,
maintain with financially sound, responsible, and reputable insurance companies
or associations -- or, as to workers' compensation or similar insurance, with
an insurance fund or by self-insurance authorized by the jurisdictions in which
it operates -- insurance concerning its properties and businesses against
casualties and contingencies and of types and in amounts (and with co-insurance
and deductibles) as shall be reasonably satisfactory to Co-Agents, with loss
payable to Administrative Agent as its interest may appear, and provide
Administrative Agent with evidence of such insurance within 30 days after the
Closing Date.
8.10 Environmental Matters. Each Company shall (a) operate and
manage its businesses and otherwise conduct its affairs in compliance with all
Environmental Laws and Environmental Permits except to the extent noncompliance
does not constitute a Material Adverse Event, (b) promptly deliver to
Administrative Agent a copy of any notice received from any Tribunal alleging
that any Company is not in compliance with any Environmental Law or
Environmental Permit if the allegation constitutes a Material Adverse Event,
and (c) promptly deliver to Administrative Agent a copy of any notice received
from any Tribunal alleging that any Company has any potential Environmental
Liability if the allegation constitutes a Material Adverse Event.
8.11 INDEMNIFICATION.
(a) AS USED IN THIS SECTION: (I) "INDEMNITOR" MEANS
BORROWER AND (PURSUANT TO ITS GUARANTY) EACH OTHER COMPANY; (II)
"INDEMNITEE" MEANS EACH CO-AGENT, EACH LENDER, EACH PRESENT AND FUTURE
AFFILIATE OF A CO-AGENT OR ANY LENDER, EACH PRESENT AND FUTURE
REPRESENTATIVE OF A CO-AGENT, ANY LENDER, OR ANY OF THOSE AFFILIATES,
AND EACH PRESENT AND FUTURE SUCCESSOR AND ASSIGN OF A CO-AGENT, ANY
LENDER, OR ANY OF THOSE AFFILIATES OR REPRESENTATIVES; AND (III)
"INDEMNIFIED LIABILITIES" MEANS ALL PRESENT AND FUTURE, KNOWN AND
UNKNOWN, FIXED AND CONTINGENT, ADMINISTRATIVE, INVESTIGATIVE,
JUDICIAL, AND OTHER CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION,
INVESTIGATIONS, SUITS, PROCEEDINGS, AMOUNTS PAID IN SETTLEMENT,
DAMAGES, JUDGMENTS, PENALTIES, COURT COSTS, LIABILITIES, AND
OBLIGATIONS -- AND ALL PRESENT AND FUTURE COSTS, EXPENSES, AND
DISBURSEMENTS (INCLUDING, WITHOUT LIMITATION, ALL REASONABLE
ATTORNEYS' FEES AND EXPENSES WHETHER OR NOT SUIT OR OTHER PROCEEDING
EXISTS OR ANY INDEMNITEE IS PARTY TO ANY SUIT OR OTHER PROCEEDING) IN
ANY WAY RELATED TO ANY OF THE FOREGOING -- THAT MAY AT ANY TIME BE
IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST ANY INDEMNITEE AND IN ANY
WAY RELATING TO OR ARISING OUT OF ANY (A) LOAN DOCUMENT, TRANSACTION
CONTEMPLATED BY ANY LOAN DOCUMENT, COLLATERAL, OR REAL PROPERTY, (B)
ENVIRONMENTAL LIABILITY IN ANY WAY RELATED TO ANY COMPANY,
PREDECESSOR, COLLATERAL, REAL PROPERTY, OR ACT, OMISSION, STATUS,
OWNERSHIP, OR OTHER RELATIONSHIP, CONDITION, OR CIRCUMSTANCE
CONTEMPLATED BY, CREATED UNDER, OR ARISING PURSUANT TO OR IN
CONNECTION WITH ANY LOAN DOCUMENT, OR (C) INDEMNITEE'S SOLE OR
CONCURRENT ORDINARY NEGLIGENCE.
(b) EACH INDEMNITOR SHALL JOINTLY AND SEVERALLY INDEMNIFY
EACH INDEMNITEE FROM AND AGAINST, PROTECT AND DEFEND EACH INDEMNITEE
FROM AND AGAINST, HOLD EACH INDEMNITEE HARMLESS FROM AND AGAINST, AND
ON DEMAND PAY OR REIMBURSE EACH INDEMNITEE FOR, ALL INDEMNIFIED
LIABILITIES.
(c) THE FOREGOING PROVISIONS (I) ARE NOT LIMITED IN
AMOUNT EVEN IF THAT AMOUNT EXCEEDS THE OBLIGATION,(II) INCLUDE,
WITHOUT LIMITATION, REASONABLE FEES AND EXPENSES OF ATTORNEYS AND
OTHER COSTS AND EXPENSES OF LITIGATION OR PREPARING FOR LITIGATION AND
DAMAGES OR INJURY TO PERSONS, PROPERTY, OR NATURAL RESOURCES ARISING
UNDER ANY STATUTORY OR COMMON LAW, PUNITIVE DAMAGES, FINES, AND OTHER
PENALTIES, AND (III) ARE NOT AFFECTED BY THE SOURCE OR ORIGIN OF ANY
HAZARDOUS SUBSTANCE, AND(IV) ARE NOT AFFECTED BY ANY INDEMNITEE'S
INVESTIGATION, ACTUAL OR CONSTRUCTIVE KNOWLEDGE, COURSE OF DEALING, OR
WAIVER.
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(i) EACH INDEMNITEE IS ENTITLED TO BE INDEMNIFIED UNDER
THE LOAN DOCUMENTS FOR ITS OWN NEGLIGENCE. HOWEVER, NO INDEMNITEE IS
ENTITLED TO BE INDEMNIFIED UNDER THE LOAN DOCUMENTS FOR ITS OWN FRAUD,
GROSS NEGLIGENCE, OR WILFUL MISCONDUCT.
(d) THE PROVISIONS OF AND INDEMNIFICATION AND OTHER
UNDERTAKINGS UNDER THIS SECTION SURVIVE THE FORECLOSURE OF ANY LENDER
LIEN OR ANY TRANSFER IN LIEU OF THAT FORECLOSURE, THE SALE OR OTHER
TRANSFER OF ANY COLLATERAL OR REAL PROPERTY TO ANY PERSON, THE
SATISFACTION OF THE OBLIGATION, THE TERMINATION OF THE LOAN DOCUMENTS,
AND THE RELEASE OF ANY OR ALL LENDER LIENS.
8.12 Chief Executive Office; Material Agreements. Each Company
shall (a) not relocate its chief executive office or place where its books and
records are kept unless prior thereto it gives Administrative Agent 30 days
prior written notice of such proposed location (including, without limitation,
the name of the county or parish and state), (b) do or cause to be done all
things necessary or appropriate to keep each Material Agreement in full force
and effect during its stated term (unless the other party thereto has defaulted
thereunder) and keep the Rights of the Companies and Administrative Agent and
Lenders thereunder unimpaired, (c) notify Administrative Agent of the
occurrence of any default under any Material Agreement, and (d) exercise each
and every option, if any, to renew and extend the term of each Material
Agreement prior to the termination thereof (unless the other party thereto has
defaulted thereunder or such Company determines in good faith that the renewal
or extension of such agreement is economically unsound). In addition, no
Company will amend, modify, surrender, impair, forfeit, cancel, or terminate,
or permit the amendment, modification, surrender, impairment, forfeiture,
cancellation, or termination of, any Material Agreement (other than amendments
or modifications which could not, individually or collectively, have a Material
Adverse Effect, and cancellations or terminations of contracts when the other
party thereto has defaulted thereunder).
8.13 Environmental Laws. Each Company shall conduct its business
so as to comply with all applicable Environmental Laws and shall promptly take
corrective action to remedy any non-compliance with any Environmental Law,
except where failure to so comply or take such action would not reasonably be
expected to have a Material Adverse Effect. Each Company shall maintain a
system which, in its reasonable business judgment, will assure its continued
compliance with Environmental Laws.
8.14 Subsidiaries. Borrower shall cause any new Subsidiary to
execute and deliver a Guaranty to Administrative Agent for the benefit of
Lenders.
SECTION 9 NEGATIVE COVENANTS. For so long as any Lender is committed to
lend or issue LCs under this agreement and until the Obligation has been fully
paid and performed, Borrower covenants and agrees with Co-Agents and Lenders
that, without first obtaining Administrative Agent's written notice of
Determining Lenders' consent to the contrary:
9.1 Payroll Taxes. No Company may use any proceeds of any
Borrowing to pay the wages of employees unless a timely payment to or deposit
with the United States of America of all amounts of Tax required to be deducted
and withheld with respect to such wages is also made.
9.2 Debt. No Company may have any Debt except Permitted Debt.
9.3 Loans, Advances, Acquisitions and Investments.
(a) Loans and Advances. No Company may, directly or
indirectly, make any loan, advance or extension of credit to, or
purchase or commit to purchase any evidences of Debt of, any other
Person, other than (i) advances by Borrower to a Subsidiary who has
executed a Guaranty; (ii) advances by Borrower to a Subsidiary from
its own funds, provided that such funds are not proceeds of
Borrowings, (iii) advances by a direct Subsidiary of Borrower to its
Subsidiaries from its own funds, provided that such funds are not
proceeds of Borrowings, (iv) advances to Borrower by a Subsidiary who
has executed a Guaranty, and (v) current trade and customer accounts
receivable which are for goods furnished or services rendered in the
ordinary course of business and are payable in accordance with
customary trade terms.
(b) Acquisitions and Investments. No Company may,
directly or indirectly, make any investment in, or purchase or commit
to purchase any stock or other securities of, or interests in, or
assets of any other Person (including, but not limited to, any new
Subsidiary of any of the Companies), or merge or consolidate with any
Person, other than (i) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued
by an agency thereof and backed by the full faith and credit of the
United States of America; (ii) marketable direct obligations issued by
any state of the United States of America or any political subdivision
of any such state or any public instrumentality thereof and, at the
time of acquisition, having an investment grade rating obtainable from
either Standard & Poor's Corporation ("S&P") or Moody's Investors
Service, Inc. ("MOODY'S"), and not listed in Credit Watch published by
S&P; (iii) commercial paper, other than commercial paper issued by a
Company, maturing no more than 90 days after the date of creation
thereof and, at the time of acquisition, having an investment grade
rating from either S&P or Moody's; (iv) investment grade domestic and
eurodollar certificates of deposit or time deposits or bankers'
acceptances maturing within one year after the date of acquisition
thereof issued by any commercial bank organized under the laws of the
United States of America or any state thereof or the District of
Columbia having combined capital and surplus of not less than
$250,000,000; (v) common stock, preferred stock, partnership
interests, or
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any Debt instrument acquired in conjunction with outsourcing contracts
for consideration which does not exceed an amount equal to 7.5% of the
book value of the consolidated assets of the Companies immediately
prior thereto; (vi) common stock for which there is a public market;
(vii) variable rate preferred stock, auction market preferred stock,
remarketed preferred stock, and preferred stock funds having an
investment grade rating from either Moody's or S&P; (viii) variable
rate demand notes or variable rate demand bonds having an investment
grade rating from either Moody's or S&P; (ix) repurchase agreements
collateralized with instruments or securities described in clauses (i)
through (viii) of this SECTION 9.3(B); (x) other instruments having an
investment grade rating from either Moody's or S&P; (xi) money market
funds, mutual funds or other funds that invest in instruments or
securities described in clauses (i) through (x) of this SECTION
9.3(B); and (xii) any other acquisition (or creation of a new
Subsidiary) in which the consideration paid (or capital contributed)
by the Companies for such stock, other interests and/or assets does
not exceed an amount equal to 7.5% of the book value of the
consolidated assets of the Companies immediately prior thereto.
9.4 Capital Expenditures. No Company may make Capital
Expenditures, except (a) Capital Expenditures made with respect to Borrower's
headquarters located at 2828 N. Haskell Ave., 2702 N. Haskell Ave., 3960 N.
Central Expressway, and 3988 N. Central Expressway, Dallas, Texas 75204, and
(b) other Capital Expenditures which are for or related to assets or leaseholds
used or useful in the normal business operations of such Company and which do
not exceed $20,000,000 in the aggregate for all of the Companies in any fiscal
year or $10,000,000 per transaction.
9.5 Liens. No Company may (a) create, incur, or suffer or permit
to be created or incurred or to exist any Lien upon any of its assets except
Permitted Liens or (b) enter into or permit to exist any arrangement or
agreement that directly or indirectly prohibits any Company from creating or
incurring any Lien on any of its assets (i) except the Loan Documents, (ii) any
lease that places a Lien prohibition on only the property subject to that
lease, and (iii) arrangements and agreements that apply only to property
subject to Permitted Liens.
9.6 Employee Plans. Except as disclosed on SCHEDULE 7.11 or where
not a Material Adverse Event, no Company may permit any of the events or
circumstances described in SECTION 7.11 to exist or occur.
9.7 Transactions with Affiliates. Except as disclosed on SCHEDULE
9.7, no Company may, directly or indirectly, enter into any material
transaction (including, without limitation, the sale or exchange of property or
the rendering of service) with any of its Affiliates, other than transactions
in the ordinary course of business and upon fair and reasonable terms no less
favorable than could be obtained in an arm's-length transaction with a Person
that was not its Affiliate. For purposes of this SECTION 9.7, such
transactions are "material" if they, individually or in the aggregate, require
any Company to pay more than $1,000,000 over the course of such transactions.
9.8 Compliance with Laws and Documents. No Company may (a)
violate the provisions of any Laws (including, without limitation, OSHA and
Environmental Laws) applicable to it or of any material agreement to which it
is a party if that violation alone, or when aggregated with all other
violations, would be a Material Adverse Event, (b) violate in any material
respect any provision of its charter or bylaws, or (c) repeal, replace, or
amend any provision of its charter or bylaws if that action would be a Material
Adverse Event.
9.9 Issuance of Securities. Borrower may not permit any
Subsidiary to, directly or indirectly, issue, sell, or otherwise dispose of (a)
any of its shares of capital stock or other investment securities of any class,
(b) any securities convertible into or exchangeable for any such shares, or (c)
any carrying Rights, warrants, options or other Rights to subscribe for or
purchase any such shares (other than Rights under existing employee stock
option plans of any Subsidiary or such Subsidiary employee stock option plans
which are hereafter created in the ordinary course of business).
9.10 Distributions. No Company may declare, make, or pay any
Distribution except that (a) Borrower may declare or pay any dividend on or
with respect to any of its capital stock or equity securities during any fiscal
year, (i) if no Default has occurred prior to such declaration or payment, and
(ii) if such payment or dividend when aggregated with all other payments and
dividends made during such fiscal year would not exceed an amount equal to 50%
of Borrower's net income for the preceding fiscal year; and (b) Borrower shall
insure that each of its Subsidiaries declares dividends (subject to applicable
Law), or makes cash advances to Borrower from time to time in aggregate amounts
sufficient to permit Borrower to pay the Obligation as it becomes due and
payable.
9.11 Disposition of Assets. No Company may, directly or
indirectly, sell, lease, or otherwise dispose of all or any substantial part of
its assets, other than (a) sales of inventory in the ordinary course of
business, (b) sales of equipment for a fair and adequate consideration,
provided that if any such equipment is sold, and a replacement is necessary for
the proper operation of the business of such Company, such Company will replace
such equipment, and (c) other dispositions of assets which do not in the
aggregate exceed $5,000,000 during any fiscal year of Borrower.
9.12 Mergers, Consolidations, and Dissolutions. Except as may be
permitted under SECTION 9.3, no Company may merge or consolidate with any other
Person.
9.13 Assignment. No Company may assign or transfer any of its
Rights, duties, or obligations under any of the Loan Documents.
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9.14 Fiscal Year and Accounting Methods. No Company may change its
fiscal year more than once during the term of this agreement, and then only
after giving written notice of its intent to make such change to
Administrative Agent. No Company shall change its method of accounting (other
than changes with which the Company's auditors have concurred, or immaterial
changes in methods).
9.15 New Businesses. No Company may, directly or indirectly,
engage in any business other than the businesses in which it is presently
engaged, and each Company shall continue to conduct the businesses in which it
is presently engaged in substantially the same fashion (including, without
limitation, its contracts for compute cycles), other than the engagement of a
Company in a new business (through an acquisition of an existing business
otherwise permitted under the terms of this agreement or the formation of a de
novo business otherwise permitted under the terms of this agreement) which
does not require an expenditure or investment by the Companies in excess of an
amount equal to 7.5% of the value of the consolidated assets of the Companies
immediately prior thereto and which does not involve a business which in the
immediately preceding 12 calendar months had gross revenues in excess of an
amount equal to 20% of the consolidated gross revenues of the Companies during
such period.
9.16 Government Regulations. No Company may conduct its business
in such a way that it will become (a) subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Investment
Company Act of 1940, the Interstate Commerce Act (as any of the preceding acts
have been amended), or any other Law (other than Regulation X of the Board of
Governors of the Federal Reserve System) which regulates the incurrence of
Debt, or (b) a "utility" as defined in Chapter 35 of the Texas Business and
Commerce Code, as amended.
9.17 Strict Compliance. No Company may indirectly do anything that
it may not directly do under any covenant in any Loan Document.
9.18 Deposit of Borrowings. Borrower may not deposit proceeds of
Borrowings in any Settlement Aggregation Account.
SECTION 10 FINANCIAL COVENANTS. For so long as any Lender is committed
to lend or issue LCs under this agreement and until the Obligation has been
fully paid and performed, Borrower covenants and agrees with Co-Agents and
Lenders that, without first obtaining Administrative Agent's written notice of
Determining Lenders' consent to the contrary, it may not directly or indirectly
permit:
10.1 Net Worth. The Companies' Net Worth -- determined as of the
last day of each fiscal quarter of Borrower -- to be less than the sum of (a)
$105,000,000, plus (b) 50% of the Companies' cumulative net income (without
deduction for losses) after June 30, 1995 (commencing with the quarter ending
December 31, 1995).
10.2 Current Ratio. Excluding current assets in the form of cash
borrowed, and the Principal Debt, under the ATM Facility, the ratio of the
Companies' consolidated current assets (excluding assets related to EFT
Liabilities) to consolidated current liabilities (excluding EFT Liabilities) to
ever be less than 1.10 to 1.00.
10.3 Funded Debt/Cash Flow Ratio. The Funded Debt/Cash Flow Ratio
to ever be more than 3.50 to 1.00.
10.4 Fixed-Charge Coverage. The ratio for the most recently
completed four fiscal quarters of Borrower as of any date of determination of
Cash Flow to Fixed Charges to ever be less than 1.25 to 1.00.
SECTION 11 DEFAULT. The term "DEFAULT" means the occurrence of any one
or more of the following:
11.1 Payment of Obligation. The failure or refusal of Borrower to
pay any portion of the Obligation, as the same becomes due in accordance with
the terms of the Loan Documents.
11.2 Covenants.
(a) The failure or refusal of Borrower (and, if
applicable, any other Company) to punctually and properly perform,
observe, and comply with any covenant, agreement, or condition
contained in SECTIONS 8.9 through 8.14, and SECTIONS 9 and 10 (in
their entirety).
(b) The failure or refusal of Borrower (and, if
applicable, any other Company) to punctually and properly perform,
observe, and comply with any covenant, agreement, or condition
contained in any of the Loan Documents to which such Company is a
party, other than covenants to pay the Obligation and the covenants
listed in CLAUSE (A) preceding, and such failure or refusal continues
for a period of ten days after any Company has knowledge thereof (or
for a period of ten days after knowledge of such failure or refusal
would normally have come to the attention of the chief financial
officer of such Company in the ordinary course of business).
11.3 Debtor Relief. Borrower or any other Company (other than
those Companies disclosed on SCHEDULE 7.7) shall not be Solvent, or any Company
(a) fails to pay its Debts generally as they become due, (b) voluntarily seeks,
consents to, or acquiesces in the benefit of any Debtor Relief Law, or (c)
becomes a party to or is made
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the subject of any proceeding provided for by any Debtor Relief Law, other than
as a creditor or claimant, that could suspend or otherwise adversely affect the
Rights of Administrative Agent or any Lender granted in the Loan Documents
(unless, in the event such proceeding is involuntary, the petition instituting
same is dismissed within 60 days after its filing).
11.4 Attachment. The failure of any Company to have discharged
within 30 days after commencement any attachment, sequestration, or similar
proceeding against any material asset of any Company.
11.5 Payment of Judgments. Any Company fails to pay any judgment
or order for the payment of money in excess of $1,000,000 rendered against it
or any of its assets and enforcement proceedings shall have been commenced by
any creditor upon any such judgment or order and remain unstayed.
Notwithstanding the foregoing sentence, it shall not be a Default if the
validity or amount of such judgment or order is being contested in good faith
by lawful proceedings diligently conducted and a reserve or other provision
required by GAAP has been made.
11.6 Government Action. Where it is a Material Adverse Event --
from and after the Closing Date and individually or collectively for all of the
Companies -- (a) a final non-appealable order is issued by any Tribunal
(including, but not limited to, the United States Justice Department) seeking
to cause any Company to divest a significant portion of its assets under any
antitrust, restraint of trade, unfair competition, industry regulation, or
similar Laws, or (b) any Tribunal condemning, seizing, or otherwise
appropriating, or taking custody or control of all or any substantial portion
of any Company's assets.
11.7 Misrepresentation. Any material representation or warranty
made by any Company in any Loan Document at any time proves to have been
materially incorrect when made.
11.8 Ownership of Companies.
(a) One or more Companies fail to own, beneficially and
of record, with power to vote, 100% of the issued and outstanding
shares of capital stock of the Wholly-Owned Subsidiaries.
(b) For Borrower's Subsidiaries that are not Wholly-Owned
Subsidiaries, (i) one or more Companies fail to own, beneficially and
of record, with power to vote, more than 50% (or at least the
percentage reflected on SCHEDULE 7.3) of the issued and outstanding
shares of capital stock of such Subsidiaries sufficient to constitute
control of such Subsidiary, or (ii) such Subsidiaries incur Debt to
any Person other than Permitted Debt.
11.9 Change of Control of Borrower. The individuals who, as of the
date of this agreement, constitute the members of Borrower's board of directors
(for purposes of this SECTION 11.9, the "INCUMBENT BOARD") do not constitute or
cease for any reason to constitute at least 66 2/3% of:
(a) Borrower's board of directors; or
(b) The surviving corporation's board of directors in the
event of any merger or consolidation (if permitted by SECTION 9.3(B))
involving Borrower; or
(c) The controlling entity's board of directors, the
comparable body if there is no board of directors, or voting control
if there is no comparable body, in the event that the surviving
corporation under CLAUSE (B) above is directly or indirectly
controlled by that entity.
For purposes of this SECTION 11.9, any individual who becomes a member of the
board of directors or comparable body or who obtains a voting interest, as
applicable under CLAUSES (A), (B), or (C) above, after the date of this
agreement and whose appointment to the board, or nomination for election, was
approved or ratified by a vote of the individuals comprising at least 50% of
the then incumbent board shall thereafter be deemed to be a member of the
incumbent board.
11.10 Other Funded Debt. In respect of any Debt (other than the
Obligation) individually or collectively of at least $500,000 (a) any default
or other event or condition occurs or exists (other than a mandatory prepayment
as a result of disposition of assets if permitted by the Loan Documents) beyond
the applicable grace or cure period, the effect of which is to cause or to
permit any holder of that Funded Debt to cause -- whether or not it elects to
cause --
any of that Funded Debt to become due before its stated maturity or regularly
scheduled payment dates, or (b) any of that Debt is declared to be due and
payable or required to be prepaid by any Company before its stated maturity.
Notwithstanding the foregoing sentence, it shall not be a Default if the
validity or amount of such accelerated Debt is being contested in good faith by
lawful proceedings diligently conducted and a reserve or other provision
required by GAAP has been made.
11.11 SEC Reporting Requirements. Borrower fails to comply with any
applicable reporting requirements of the Securities Exchange Act of 1934, for
which the failure to report would constitute a Material Adverse Event.
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11.12 Validity and Enforceability. Once executed, this agreement,
any Note, any LC Agreement, any Guaranty, or any Security Document ceases to be
in full force and effect in any material respect or is declared to be null and
void or its validity or enforceability is contested in writing by any Company
party to it or any Company party to it denies in writing that it has any
further liability or obligations under it except in accordance with that
document's express provisions or as the appropriate parties under SECTION 14.8
below may otherwise agree in writing.
11.13 LCs. The validity or enforceability of any LC or any
provision of this agreement relating to the LC or the LC Exposure shall be
contested by any Company, or a proceeding shall be commenced by any Tribunal
seeking to establish the invalidity or unenforceability thereof, or Borrower
shall deny that it or any other Company has any or further liability or
obligation under this agreement relating to any Letters of Credit and any LC
Exposure, or Administrative Agent is served with or otherwise subject to a
court order, injunction, or other process or decree restraining or seeking to
restrain it from paying any amount under any LC and either (a) a drawing has
occurred under the LC, and Borrower has refused to reimburse Issuing Lender for
payment, or (b) the expiration date of the LC has occurred, but the Right of
the beneficiary to draw under the LC has been extended past the Revolving
Maturity Date in connection with the pendency of the related court action or
proceeding, and Borrower has failed to deposit with Administrative Agent cash
collateral in an amount equal to Issuing Lender's maximum exposure under the
LC.
11.14 Material Agreements.
(a) The occurrence of a default under the ATM Credit
Agreement.
(b) The occurrence of a default under any other Material
Agreement which results in the acceleration of payment of any amounts
payable by any Company in excess of $500,000. Notwithstanding the
foregoing sentence, it shall not be a default if the validity or
amount of such accelerated payment is being contested in good faith by
appropriate proceedings diligently conducted and a reserve or other
provision required by GAAP has been made.
11.15 Impairment of Collateral or Ability to Pay. The discovery by
any Lender of information that the prospect of payment or performance of the
Obligation is materially impaired, or that the value of the Collateral has or
will be materially decreased, and the situation giving rise thereto is not
corrected to the satisfaction of Administrative Agent and Lenders within 20
days after notice thereof from Administrative Agent to Borrower.
SECTION 12 RIGHTS AND REMEDIES.
12.1 Remedies Upon Default.
(a) Debtor Relief. If a Default exists under SECTION 11.3,
the commitment to extend credit under this agreement automatically
terminates, and the entire unpaid balance of the Obligation
automatically becomes due and payable without any action of any kind
whatsoever.
(b) Other Defaults. If any Default exists, subject to the
terms of SECTION 13.5(B), Administrative Agent may (with the consent
of, and must, upon the request of, Determining Lenders), do any one or
more of the following: (i) if the maturity of the Obligation has not
already been accelerated under SECTION 12.1(A), declare the entire
unpaid balance of all or any part of the Obligation immediately due
and payable, whereupon it is due and payable; (ii) terminate the
commitments of Lenders to extend credit under this agreement; (iii)
reduce any claim to judgment; (iv) demand payment of an amount equal
to the LC Exposure then existing and retain as collateral for the LC
Exposure any amounts received from any Company, from any property of
any Company, through offset, or otherwise; and (v) exercise any and
all other legal or equitable Rights afforded by the Loan Documents, by
applicable Laws, or in equity.
(c) Offset. If a Default exists, to the extent permitted by
applicable Law, each Lender may exercise the Rights of offset and
banker's lien against each and every account (excluding Settlement
Aggregation Accounts) and other property, or any interest therein,
which any Company may now or hereafter have with, or which is now or
hereafter in the possession of, that Lender to the extent of the full
amount of the Obligation owed to that Lender.
12.2 Company Waivers. To the extent permitted by Law, Borrower and
(pursuant to its Guaranty) each other Company waives presentment and demand for
payment, protest, notice of intention to accelerate, notice of acceleration,
and notice of protest and nonpayment, and agrees that its liability with
respect to all or any part of the Obligation is not affected by any renewal or
extension in the time of payment of all or any part of the Obligation, by any
indulgence, or by any release or change in any security for the payment of all
or any part of the Obligation.
12.3 Performance by Co-Agents. If any Company's covenant, duty, or
agreement is not performed in accordance with the terms of the Loan Documents,
Co-Agents may, while a Default exists, at their option (but subject to the
approval of Determining Lenders), perform or attempt to perform that covenant,
duty, or agreement on behalf of that Company (and any amount expended by
Co-Agents in their performance or attempted performance is payable by the
Companies, jointly and severally, to Co-Agents on demand, becomes part of the
Obligation, and bears interest at the Default Rate from the date of Co-Agents'
expenditure until paid). However, neither of the Co-Agents assumes and shall
never have, except by their express written consent, any liability or
responsibility for the performance of any Company's covenants, duties, or
agreements.
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12.4 Not in Control. Nothing in any Loan Documents gives or may be
deemed to give to Co-Agents or any Lender the Right to exercise control over
any Company's Real Property, other assets, affairs, or management or to
preclude or interfere with any Company's compliance with any Law or require any
act or omission by any Company that may be harmful to Persons or property. Any
"Material Adverse Event" or other materiality or substantiality qualifier of
any representation, warranty, covenant, agreement, or other provision of any
Loan Document is included for credit documentation purposes only and does not
imply or be deemed to mean that Co-Agents or any Lender acquiesces in any non-
compliance by any Company with any Law, document, or otherwise or does not
expect the Companies to promptly, diligently, and continuously carry out all
appropriate removal, remediation, compliance, closure, or other activities
required or appropriate in accordance with all Environmental Laws. Co-Agents'
and Lenders' power is limited to the Rights provided in the Loan Documents.
All of those Rights exist solely -- and may be exercised in any manner
calculated by Administrative Agent or Lenders in their respective good faith
business judgment -- to preserve and protect the Collateral and to assure
payment and performance of the Obligation.
12.5 Course of Dealing. The acceptance by Administrative Agent or
Lenders of any partial payment on the Obligation is not a waiver of any Default
then existing. No waiver by Co-Agents, Determining Lenders, or Lenders of any
Default is a waiver of any other then-existing or subsequent Default. No delay
or omission by Co-Agents, Determining Lenders, or Lenders in exercising any
Right under the Loan Documents impairs that Right or is a waiver thereof or any
acquiescence therein, nor will any single or partial exercise of any Right
preclude other or further exercise thereof or the exercise of any other Right
under the Loan Documents or otherwise.
12.6 Cumulative Rights. All Rights available to Co-Agents,
Determining Lenders, and Lenders under the Loan Documents are cumulative of and
in addition to all other Rights granted to Co-Agents, Determining Lenders, and
Lenders at law or in equity, whether or not the Obligation is due and payable
and whether or not Co-Agents, Determining Lenders, or Lenders have instituted
any suit for collection, foreclosure, or other action in connection with the
Loan Documents.
12.7 Application of Proceeds. Any and all proceeds ever received
by Co-Agents or Lenders from the exercise of any Rights pertaining to the
Obligation shall be applied to the Obligation according to SECTION 3.
12.8 Certain Proceedings. Borrower shall promptly execute and
deliver, or cause the execution and delivery of, all applications,
certificates, instruments, registration statements, and all other documents and
papers Administrative Agent or Determining Lenders reasonably request in
connection with the obtaining of any consent, approval, registration (other
than securities Law registrations), qualification, permit, license, or
authorization of any Tribunal or other Person necessary or appropriate for the
effective exercise of any Rights under the Loan Documents. Because Borrower
agrees that Co-Agents' and Determining Lenders' remedies at Law for failure of
Borrower to comply with the provisions of this section would be inadequate and
that failure would not be adequately compensable in damages, Borrower agrees
that the covenants of this section may be specifically enforced.
12.9 Expenditures by Lenders. Any sums spent by Co-Agents or any
Lender in the exercise of any Right under any Loan Document is payable by the
Companies to Administrative Agent within five Business Days after demand,
becomes part of the Obligation, and bears interest at the Default Rate from the
date spent until the date repaid.
12.10 Diminution in Value of Collateral. Neither of the Co-Agents
nor any Lender has any liability or responsibility whatsoever for any
diminution in or loss of value of any collateral now or in the future securing
payment or performance of any of the Obligation (other than diminution in or
loss of value caused by their or its own gross negligence or willful
misconduct).
SECTION 13 CO-AGENTS AND LENDERS.
13.1 Co-Agents.
(a) Appointment. Each Lender appoints Co-Agents
(including, without limitation, each successor to the Co-Agents in
accordance with this SECTION 13) as its nominee and agent to act in
its name and on its behalf (and Co-Agents and each such successor
accepts that appointment): (i) to act as its nominee and on its
behalf in and under all Loan Documents; (ii) to arrange the means
whereby its funds are to be made available to Borrower under the Loan
Documents; (iii) to take any action that it properly requests under
the Loan Documents (subject to the concurrence of other Lenders as may
be required under the Loan Documents); (iv) to receive all documents
and items to be furnished to it under the Loan Documents; (v) to be
the secured party, mortgagee, beneficiary, recipient, and similar
party in respect of any collateral for the benefit of Lenders; (vi) to
promptly distribute to it all material information, requests,
documents, and items received from Borrower under the Loan Documents;
(vii) to promptly distribute to it its ratable part of each payment or
prepayment (whether voluntary, as proceeds of collateral upon or after
foreclosure, as proceeds of insurance thereon, or otherwise) in
accordance with the terms of the Loan Documents; and (viii) to deliver
to the appropriate Persons requests, demands, approvals, and consents
received from it. However, neither of the Co-Agents is required to
take any action that exposes either of them to personal liability or
that is contrary to any Loan Document or applicable Law.
(b) Successor. Either of the Co-Agents may assign all of
their Rights and obligations as Administrative Agent, or Documentation
Agent (as the case may be), under the Loan Documents to any of its
Affiliates, which Affiliate shall then be the successor Administrative
Agent, or Documentation Agent (as the case may be), under the Loan
Documents. Either of the Co-Agents may also voluntarily resign and
shall resign upon the request of Determining
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Lenders for cause (i.e., a Co-Agent is continuing to fail to perform
its responsibilities under the Loan Documents). If either of the
initial, or any successor to, the Co-Agents ever ceases to be a party
to this agreement or if either of the initial, or any successor to, the
Co-Agents ever resigns (whether voluntarily or at the request of
Determining Lenders), then Determining Lenders shall appoint a
successor to such Co-Agent from among Lenders (other than the resigning
Co-Agent). If Determining Lenders fail to appoint a successor to such
Co-Agent within 30 days after the resigning Co-Agent has given notice
of resignation or Determining Lenders have removed the resigning
Co-Agent, then the resigning Co-Agent may, on behalf of Lenders,
appoint a successor Co-Agent, that (i) must be a commercial bank having
a combined capital and surplus of at least $1,000,000,000 (as shown on
its most recently published statement of condition), and (ii) must be
consented to by Borrower, which consent shall not be unreasonably
delayed or withheld. Upon its acceptance of appointment as successor
Co-Agent, the successor Co-Agent succeeds to and becomes vested with
all of the Rights of the prior Co-Agent, and the prior Co-Agent is
discharged from its duties and obligations as Administrative Agent, or
Documentation Agent (as the case may be), under the Loan Documents, and
each Lender shall execute the documents that any Lender, the resigning
or removed Co-Agent, or the successor Co-Agent reasonably request to
reflect the change. After any Co-Agent's resignation or removal as an
Administrative Agent, or Documentation Agent (as the case may be),
under the Loan Documents, the provisions of this section inure to its
benefit as to any actions taken or not taken by it while it was
Co-Agent under the Loan Documents.
(c) Rights as Lender. Each Co-Agent, in its capacity as
a Lender, has the same Rights under the Loan Documents as any other
Lender and may exercise those Rights as if it were not acting as
Co-Agent. The term "Lender", unless the context otherwise indicates,
includes each Co-Agent. A Co-Agent's resignation or removal does not
impair or otherwise affect any Rights that it has or may have in its
capacity as an individual Lender. Each Lender and Borrower agree that
neither of the Co-Agents is a fiduciary for Lenders or for Borrower,
but each Co-Agent is simply acting in the capacity described in this
agreement to alleviate administrative burdens for Borrower and
Lenders, that neither of the Co-Agents has any duties or
responsibilities to Lenders or Borrower except those expressly set
forth in the Loan Documents, and that each Co-Agent in its capacity as
a Lender has the same Rights as any other Lender.
(d) Other Activities. A Co-Agent or any Lender may now
or in the future be engaged in one or more loan, letter of credit,
leasing, or other financing transactions with Borrower, act as trustee
or depositary for Borrower, or otherwise be engaged in other
transactions with Borrower (collectively, the "OTHER ACTIVITIES") not
the subject of the Loan Documents. Without limiting the Rights of
Lenders specifically set forth in the Loan Documents, neither of the
Co-Agents nor any Lender is responsible to account to the other
Lenders for those other activities, and no Lender shall have any
interest in any other Lender's activities, any present or future
guaranties by or for the account of Borrower that are not contemplated
by or included in the Loan Documents, any present or future offset
exercised by a Co-Agent or any Lender in respect of those other
activities, any present or future property taken as security for any
of those other activities, or any property now or hereafter in a
Co-Agents' or any other Lender's possession or control that may be or
become security for the obligations of Borrower arising under the Loan
Documents by reason of the general description of indebtedness secured
or of property contained in any other agreements, documents, or
instruments related to any of those other activities (but, if any
payments in respect of those guaranties or that property or the
proceeds thereof is applied by a Co-Agent or any Lender to reduce the
Obligation, then each Lender is entitled to share ratably in the
application as provided in the Loan Documents).
13.2 Expenses. Each Lender shall pay its Pro Rata Part of any
reasonable expenses (including, without limitation, court costs, reasonable
attorneys' fees and other costs of collection) incurred by a Co-Agent or
Issuing Lender (while acting in such capacity) in connection with any of the
Loan Documents if such Co-Agent or Issuing Lender is not reimbursed from other
sources within 30 days after incurrence. Each Lender is entitled to receive
its Pro Rata Part of any reimbursement that it makes to a Co-Agent or Issuing
Lender if such Co-Agent or Issuing Lender is subsequently reimbursed from other
sources.
13.3 Proportionate Absorption of Losses. Except as otherwise
provided in the Loan Documents, nothing in the Loan Documents gives any Lender
any advantage over any other Lender insofar as the Obligation is concerned or
relieves any Lender from ratably absorbing any losses sustained with respect to
the Obligation (except to the extent unilateral actions or inactions by any
Lender result in Borrower or any other obligor on the Obligation having any
credit, allowance, set off, defense, or counterclaim solely with respect to all
or any part of that Lender's Pro Rata Part of the Obligation).
13.4 Delegation of Duties; Reliance. Lenders may perform any of
their duties or exercise any of their Rights under the Loan Documents by or
through a Co-Agent, and Lenders and Co-Agents may perform any of their duties
or exercise any of their Rights under the Loan Documents by or through their
respective Representatives. Co-Agents, Lenders, and their respective
Representatives (a) are entitled to rely upon (and shall be protected in
relying upon) any written or oral statement believed by them to be genuine and
correct and to have been signed or made by the proper Person and, with respect
to legal matters, upon opinion of counsel selected by Co-Agents or that Lender
(but nothing in this CLAUSE (A) permits Co-Agents to rely on (i) oral
statements if a writing is required by this agreement or (ii) any other writing
if a specific writing is required by this agreement), (b) are entitled to deem
and treat each Lender as the owner and holder of its portion of the Obligation
for all purposes until, written notice of the assignment or transfer is given
to and received by Administrative Agent (and any request, authorization,
consent, or approval of any Lender is conclusive and binding on each subsequent
holder, assignee, or transferee of or Participant in that Lender's portion of
the Obligation until that notice is given and received), (c) are not deemed to
have notice of the occurrence of a Default unless a responsible officer of
Administrative Agent, who handles matters associated with the Loan Documents
and transactions thereunder, has actual knowledge or Administrative Agent has
been notified by a Lender or Borrower, and (d) are entitled to consult with
legal counsel (including counsel for Borrower), independent accountants, and
other experts selected by Co-Agents and are not liable for any action taken or
not taken in good faith by it in accordance with the advice of counsel,
accountants, or experts.
13.5 Limitation of Co-Agents' Liability.
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(a) Exculpation. Neither of the Co-Agents nor any of their
respective Affiliates or Representatives will be liable for any action
taken or omitted to be taken by it or them under the Loan Documents in
good faith and believed by them to be within the discretion or power
conferred upon them by the Loan Documents or be responsible for the
consequences of any error of judgment (except for fraud, gross
negligence, or willful misconduct), and neither of the Co-Agents nor
any of their respective Affiliates or Representatives has a fiduciary
relationship with any Lender by virtue of the Loan Documents (but
nothing in this agreement negates the obligation of Co-Agents to
account for funds received by them for the account of any Lender).
(b) Indemnity. Unless indemnified to its satisfaction
against loss, cost, liability, and expense, neither of the Co-Agents
is compelled to do any act under the Loan Documents or to take any
action toward the execution or enforcement of the powers thereby
created or to prosecute or defend any suit in respect of the Loan
Documents. If a Co-Agent requests instructions from Lenders, or
Determining Lenders, as the case may be, with respect to any act or
action in connection with any Loan Document, such Co-Agent is entitled
to refrain (without incurring any liability to any Person by so
refraining) from that act or action unless and until it has received
instructions. In no event, however, may such Co-Agent or any of its
Representatives be required to take any action that it or they
determine could incur for it or them criminal or onerous civil
liability. Without limiting the generality of the foregoing, no
Lender has any right of action against a Co-Agent as a result of such
Co-Agent's acting or refraining from acting under this agreement in
accordance with instructions of Determining Lenders.
(c) Reliance. Neither Co-Agent is responsible to any Lender
or any Participant for, and each Lender represents and warrants that
it has not relied upon either Co-Agent in respect of, (i) the
creditworthiness of any Company and the risks involved to that Lender,
(ii) the effectiveness, enforceability, genuineness, validity, or the
due execution of any Loan Document (except by Co-Agents), (iii) any
representation, warranty, document, certificate, report, or statement
made therein (except by Agent) or furnished thereunder or in
connection therewith, (iv) the adequacy of any collateral now or
hereafter securing the Obligation or the existence, priority, or
perfection of any Lien now or hereafter granted or purported to be
granted on the collateral under any Loan Document, or (v) observation
of or compliance with any of the terms, covenants, or conditions of
any Loan Document on the part of any Company. EACH LENDER AGREES TO
INDEMNIFY EACH CO-AGENT AND THEIR RESPECTIVE REPRESENTATIVES AND HOLD
THEM HARMLESS FROM AND AGAINST (BUT LIMITED TO SUCH LENDER'S
COMMITMENT PERCENTAGE OF) ANY AND ALL LIABILITIES, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
REASONABLE EXPENSES, AND REASONABLE DISBURSEMENTS OF ANY KIND OR
NATURE WHATSOEVER THAT MAY BE IMPOSED ON, ASSERTED AGAINST, OR
INCURRED BY THEM IN ANY WAY RELATING TO OR ARISING OUT OF THE LOAN
DOCUMENTS OR ANY ACTION TAKEN OR OMITTED BY THEM UNDER THE LOAN
DOCUMENTS IF EITHER CO-AGENT OR THEIR RESPECTIVE REPRESENTATIVES ARE
NOT REIMBURSED FOR SUCH AMOUNTS BY ANY COMPANY. ALTHOUGH EACH
CO-AGENT AND THEIR RESPECTIVE REPRESENTATIVES HAVE THE RIGHT TO BE
INDEMNIFIED UNDER THIS AGREEMENT FOR THEIR OWN ORDINARY NEGLIGENCE,
NEITHER CO-AGENT NOR THEIR RESPECTIVE REPRESENTATIVES HAVE THE RIGHT
TO BE INDEMNIFIED UNDER THIS AGREEMENT FOR THEIR OWN FRAUD, GROSS
NEGLIGENCE, OR WILLFUL MISCONDUCT.
13.6 Default. While a Default exists, Lenders agree to promptly
confer in order that Determining Lenders or Lenders, as the case may be, may
agree upon a course of action for the enforcement of the Rights of Lenders.
Each Co-Agent is entitled to act or refrain from taking any action (without
incurring any liability to any Person for so acting or refraining) unless and
until it has received instructions from Determining Lenders. In actions with
respect to any Company's property, Co-Agents are acting for the ratable benefit
of each Lender.
13.7 Collateral Matters.
(a) Each Lender authorizes and directs Administrative
Agent to enter into the Loan Documents for the Lender Liens and agrees
that any action taken by Administrative Agent concerning any
Collateral (with the consent or at the request of Determining Lenders)
in accordance with any Loan Document, that Administrative Agent's
exercise (with the consent or at the request of Determining Lenders)
of powers concerning the Collateral in any Loan Document, and that all
other reasonably incidental powers are authorized and binding upon all
Lenders.
(b) Administrative Agent is authorized on behalf of all
Lenders, without the necessity of any notice to or further consent
from any Lender, from time to time before a Default or Potential
Default, to take any action with respect to any Collateral or Loan
Documents related to Collateral that may be necessary to perfect and
maintain perfected the Lender Liens upon the Collateral.
(c) Administrative Agent has no obligation whatsoever to
any Lender or to any other Person to assure that the Collateral exists
or is owned by any Company or is cared for, protected, or insured or
has been encumbered or that the Lender Liens have been properly or
sufficiently or lawfully created, perfected, protected, or enforced or
are entitled to any particular priority.
(d) Administrative Agent shall exercise the same care and
prudent judgment with respect to the Collateral and the Loan Documents
as it normally and customarily exercises in respect of similar
collateral and security documents.
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(e) Lenders irrevocably authorize Administrative Agent,
at its option and in its discretion, to release any Lender Lien upon
any Collateral (i) constituting property being disposed of as
permitted under any Loan Document, (ii) constituting property in which
no Company owned any interest at the time the Lender Lien was granted
or at any time after that, (iii) constituting property leased to any
Company under a lease that has expired or been terminated in a
transaction permitted under the Loan Documents or is about to expire
and that has not been, and is not intended by that Company to be,
renewed, (iv) consisting of an instrument evidencing Debt pledged to
Administrative Agent (for the benefit of Lenders), if the underlying
Debt has been paid in full, or (v) if approved, authorized, or
ratified in writing by Lenders. Upon request by Administrative Agent
at any time, Lenders shall confirm in writing Administrative Agent's
authority to release particular types or items of Collateral under
this CLAUSE (E).
13.8 Limitation of Liability. No Lender or any Participant will
incur any liability to any other Lender or Participant except for acts or
omissions in bad faith, and neither Co-Agent nor any Lender or Participant will
incur any liability to any other Person for any act or omission of any other
Lender or any Participant.
13.9 Relationship of Lenders. The Loan Documents do not create a
partnership or joint venture among Co-Agents and Lenders or among Lenders.
13.10 Benefits of Agreement. None of the provisions of this section
inure to the benefit of any Company or any other Person except Co-Agents and
Lenders. Therefore, no Company or any other Person is responsible or liable
for, entitled to rely upon, or entitled to raise as a defense -- in any manner
whatsoever -- the failure of a Co-Agent or any Lender to comply with these
provisions.
SECTION 14 MISCELLANEOUS.
14.1 Nonbusiness Days. Any payment or action that is due under any
Loan Document on a non-Business Day may be delayed until the next-succeeding
Business Day (but interest shall continue to accrue on any applicable payment
until payment is in fact made) unless the payment concerns a LIBOR Borrowing,
in which case if the next-succeeding Business Day is in the next calendar
month, then such payment shall be made on the next-preceding Business Day.
14.2 Communications. Unless otherwise specifically provided,
whenever any Loan Document requires or permits any consent, approval, notice,
request, or demand from one party to another, communication must be in writing
(which may be by telex or fax) to be effective and shall be deemed to have been
given (a) if by telex, when transmitted to the appropriate telex number and the
appropriate answer back is received, (b) if by fax, when transmitted to the
appropriate fax number (and all communications sent by fax must be confirmed
promptly thereafter by telephone; but any requirement in this parenthetical
shall not affect the date when the fax shall be deemed to have been delivered),
(c) if by mail, on the third Business Day after it is enclosed in an envelope
and properly addressed, stamped, sealed, and deposited in the appropriate
official postal service, or (d) if by any other means, when actually delivered.
Until changed by notice pursuant to this agreement, the address (and fax
number) for Borrower and Co-Agents are stated beside their respective
signatures to this agreement and for each Lender is stated beside its name on
SCHEDULE 1.
14.3 Form and Number of Documents. The form, substance, and number
of counterparts of each writing to be furnished under this agreement must be
satisfactory to Documentation Agent and its counsel.
14.4 Exceptions to Covenants. No Company may take or fail to take
any action that is permitted as an exception to any of the covenants contained
in any Loan Document if that action or omission would result in the breach of
any other covenant contained in any Loan Document.
14.5 Survival. All covenants, agreements, undertakings,
representations, and warranties made in any of the Loan Documents survive all
closings under the Loan Documents and, except as otherwise indicated, are not
affected by any investigation made by any party.
14.6 Governing Law. Unless otherwise stated in any Loan Document,
the Laws of the State of Texas and of the United States of America govern the
Rights and duties of the parties to the Loan Documents and the validity,
construction, enforcement, and interpretation of the Loan Documents.
14.7 Invalid Provisions. Any provision in any Loan Document held
to be illegal, invalid, or unenforceable is fully severable; the appropriate
Loan Document shall be construed and enforced as if that provision had never
been included; and the remaining provisions shall remain in full force and
effect and shall not be affected by the severed provision. Documentation
Agent, Lenders, and each Company party to the affected Loan Document agree to
negotiate, in good faith, the terms of a replacement provision as similar to
the severed provision as may be possible and be legal, valid, and enforceable.
14.8 Amendments, Consents, Conflicts, and Waivers.
(a) Determining Lenders. Unless otherwise specifically
provided (i) the provisions of this agreement may be amended,
modified, or waived, only by an instrument in writing executed by
Borrower, Co-Agents, and Determining Lenders and supplemented only by
documents delivered or to be delivered in
29
<PAGE> 35
accordance with the express terms of this agreement, and (ii) the
other Loan Documents may only be the subject of an amendment,
modification, or waiver that has been approved by Determining Lenders
and Borrower.
(b) All Lenders. Except as specifically otherwise
provided in this SECTION 14.8, any amendment to or consent or waiver
under this agreement or any Loan Document that purports to accomplish
any of the following must be by an instrument in writing executed by
Borrower and the Co-Agents and executed (or approved, as the case may
be) by each Lender: (i) extends the due date or decreases the amount
of any scheduled payment or amortization of the Obligation beyond the
date specified in the Loan Documents; (ii) decreases any rate or
amount of interest, fees, or other sums payable to Co-Agents or
Lenders under this agreement (except such reductions as are
contemplated by this agreement); (iii) changes the definition of
"COMMITMENT," "COMMITMENT PERCENTAGE," "DETERMINING LENDERS," or "PRO
RATA PART;" (iv) increases any one or more Lenders' Commitment; (v)
waives compliance with, amends, or fully or partially releases --
except as expressly provided by SECTION 5.5 or any other Loan
Documents -- any Guaranty or Collateral; or (vi) changes this CLAUSE
(B) or any other matter specifically requiring the consent of all
Lenders under this agreement.
(c) Fees to Co-Agents. Any amendment or consent or
waiver with respect to fees payable solely to Co-Agents under a
separate letter agreement must be executed in writing only by
Co-Agents and Borrower.
(d) LCs. Any LC may be renewed, extended, amended,
replaced, or canceled consistent with the terms of this agreement by
writing executed by the Issuing Lender and Borrower that is first
approved by Administrative Agent.
(e) Conflicts. Any conflict or ambiguity between the
terms and provisions of this agreement and terms and provisions in any
other Loan Document is controlled by the terms and provisions of this
agreement.
(f) Waivers. No course of dealing or any failure or
delay by Co-Agents, any Lender, or any of their respective
Representatives with respect to exercising any Right of Co-Agents or
any Lender under this agreement operates as a waiver thereof. A
waiver must be in writing and signed by Co-Agents and Lenders (or
Determining Lenders, if permitted under this agreement) to be
effective, and a waiver will be effective only in the specific
instance and for the specific purpose for which it is given.
14.9 Multiple Counterparts. Any Loan Document may be executed in a
number of identical counterparts (including, at Administrative Agent's
discretion, counterparts or signature pages executed and transmitted by fax)
with the same effect as if all signatories had signed the same document. All
counterparts must be construed together to constitute one and the same
instrument.
14.10 Parties.
(a) Parties Bound. Each Loan Document binds and inures
to the parties to it, any intended beneficiary of it, and each of
their respective successors and permitted assigns. No Company may
assign or transfer any Rights or obligations under any Loan Document
without first obtaining all Lenders' consent, and any purported
assignment or transfer without Lenders' consent is void. No Lender
may transfer, pledge, assign, sell any participation in, or otherwise
encumber its portion of the Obligation except as permitted by CLAUSES
(B) or (C) below.
(b) Participations. Any Lender may (subject to the
provisions of this section, in accordance with applicable Law, in the
ordinary course of its business, and at any time) sell to one or more
Persons (each a "PARTICIPANT") participating interests in its portion
of the Obligation. The selling Lender remains a "Lender" under the
Loan Documents, the Participant does not become a "Lender" under the
Loan Documents, and the selling Lender's obligations under the Loan
Documents remain unchanged. The selling Lender remains solely
responsible for the performance of its obligations and remains the
holder of its share of the Principal Debt for all purposes under the
Loan Documents. Borrower and Co-Agents shall continue to deal solely
and directly with the selling Lender in connection with that Lender's
Rights and obligations under the Loan Documents, and each Lender must
retain the sole right and responsibility to enforce due obligations of
the Companies. Participants have no Rights under the Loan Documents
except as provided below. Subject to the following, each Lender may
obtain (on behalf of its Participants) the benefits of SECTION 3 with
respect to all participations in its part of the Obligation
outstanding from time to time so long as Borrower is not obligated to
pay any amount in excess of the amount that would be due to that
Lender under SECTION 3 calculated as though no participations have
been made. No Lender may sell any participating interest under which
the Participant has any Rights to approve any amendment, modification,
or waiver of any Loan Document except as to matters in SECTION
14.8(B)(I) and (II).
(c) Assignments. Each Lender may make assignments to the
Federal Reserve Bank. Each Lender may also assign to one or more
assignees (each an "ASSIGNEE") all or any part of its Rights and
obligations under the Loan Documents so long as (i) the assignor
Lender and Assignee execute and deliver to Administrative Agent and
Borrower for their consent and acceptance (that may not be
unreasonably withheld in any instance and is not required if the
Assignee is an Affiliate of the assigning Lender) an assignment and
assumption agreement in substantially the form of EXHIBIT E (an
"ASSIGNMENT") and pay to Administrative Agent a processing fee of
$2,500, (ii) the assignment is for an identical percentage of the
assignor Lender's Rights and obligations under the Term Loan and the
Revolving Facility, (iii) the assignment must be for a minimum total
Commitment of $5,000,000 and, if the assigning Lender retains any
Commitment, it must be a minimum total Commitment of $5,000,000, and
(iv) the conditions for that assignment set forth in the applicable
Assignment are satisfied. The Effective Date in each Assignment must
(unless a shorter period is agreeable to Borrower and Co-Agents) be at
least five Business Days after it is executed and delivered by the
30
<PAGE> 36
assignor Lender and the Assignee to Administrative Agent and Borrower
for acceptance. Once that Assignment is accepted by Administrative
Agent and Borrower, and subject to all of the following occurring,
then, on and after the Effective Date stated in it (i) the Assignee
automatically becomes a party to this agreement and, to the extent
provided in that Assignment, has the Rights and obligations of a
Lender under the Loan Documents, (ii) the assignor Lender, to the
extent provided in that Assignment, is released from its obligations
to fund Borrowings under this agreement and its reimbursement
obligations under this agreement and, in the case of an Assignment
covering all of the remaining portion of the assignor Lender's Rights
and obligations under the Loan Documents, that Lender ceases to be a
party to the Loan Documents, (iii) Borrower shall execute and deliver
to the assignor Lender and the Assignee the appropriate Notes in
accordance with this agreement following the transfer, (iv) upon
delivery of the Notes under CLAUSE (III) preceding, the assignor
Lender shall return to Borrower all Notes previously delivered to that
Lender under this agreement, and (v) SCHEDULE 1 is automatically
deemed to be amended to reflect the name, address, telecopy number,
and Commitment of the Assignee and the remaining Commitment (if any)
of the assignor Lender, and Administrative Agent shall prepare and
circulate to Borrower and Lenders an amended SCHEDULE 1 reflecting
those changes. Notwithstanding the foregoing, no Assignee may be
recognized as a party to the Loan Documents (and the assigning Lender
shall continue to be treated for all purposes as the party to the Loan
Documents) with respect to the Rights and obligations assigned to that
Assignee until the actions described in CLAUSES (III) and (IV) have
occurred. The Obligation is registered on the books of Borrower as to
both principal and any stated interest, and transfers of (as opposed
to participations in) principal and interest of the Obligation may
only be made in accordance with this SECTION 14.10.
14.11 Venue, Service of Process, and Jury Trial. BORROWER AND
(PURSUANT TO ITS GUARANTY) EACH COMPANY, IN EACH CASE FOR ITSELF AND ITS
SUCCESSORS AND ASSIGNS, IRREVOCABLY (A) SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS IN TEXAS, (B) WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR IN THE FUTURE
HAVE TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF OR IN CONNECTION
WITH ANY LOAN DOCUMENT AND THE OBLIGATION BROUGHT IN THE DISTRICT COURTS OF
DALLAS COUNTY, TEXAS, OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF TEXAS, DALLAS DIVISION, (C) WAIVES ANY CLAIMS THAT ANY LITIGATION
BROUGHT IN ANY OF THE FOREGOING COURTS HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM, (D) CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THOSE COURTS IN ANY
LITIGATION BY THE MAILING OF COPIES OF THAT PROCESS BY CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, POSTAGE PREPAID, BY HAND DELIVERY, OR BY DELIVERY BY A
NATIONALLY-RECOGNIZED COURIER SERVICE, AND SERVICE SHALL BE DEEMED COMPLETE
UPON DELIVERY OF THE LEGAL PROCESS AT ITS ADDRESS FOR PURPOSES OF THIS
AGREEMENT, (E) AGREES THAT ANY LEGAL PROCEEDING AGAINST ANY PARTY TO ANY LOAN
DOCUMENT ARISING OUT OF OR IN CONNECTION WITH THE LOAN DOCUMENTS OR THE
OBLIGATION MAY BE BROUGHT IN ONE OF THE FOREGOING COURTS, AND (F) WAIVES TO THE
FULLEST EXTENT PERMITTED BY LAW, ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY LOAN DOCUMENT. The
scope of each of the foregoing waivers is intended to be all encompassing of
any and all disputes that may be filed in any court and that relate to the
subject matter of this transaction, including, without limitation, contract
claims, tort claims, breach of duty claims, and all other common law and
statutory claims. BORROWER AND (PURSUANT TO ITS GUARANTY) EACH OTHER COMPANY
ACKNOWLEDGES THAT THESE WAIVERS ARE A MATERIAL INDUCEMENT TO CO-AGENTS' AND
EACH LENDER'S AGREEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH
CO-AGENT AND EACH LENDER HAS ALREADY RELIED ON THESE WAIVERS IN ENTERING INTO
THIS AGREEMENT, AND THAT EACH CO-AGENT AND EACH LENDER WILL CONTINUE TO RELY ON
EACH OF THESE WAIVERS IN RELATED FUTURE DEALINGS. BORROWER AND (PURSUANT TO
ITS GUARANTY) EACH OTHER COMPANY FURTHER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THESE WAIVERS WITH ITS LEGAL COUNSEL, AND THAT IT KNOWINGLY AND
VOLUNTARILY AGREES TO EACH WAIVER FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
The waivers in this section are irrevocable, meaning that they may not be
modified either orally or in writing, and these waivers apply to any future
renewals, extensions, amendments, modifications, or replacements in respect of
the applicable Loan Document. In connection with any Litigation, this
agreement may be filed as a written consent to a trial by the court.
14.12 Confidentiality Obligations. All nonpublic information
furnished by any Company to Co-Agents or Lenders pursuant to this Agreement
(that is designated by such Company to Co-Agents and Lenders as nonpublic
information) will be treated as confidential, but nothing herein contained
shall limit or impair any Co-Agent's or Lender's Rights (and any Co-Agent or
Lender shall be entitled) (a) to disclose the same to any Tribunal, if required
to do so, or to any prospective or actual Assignee or Participant (provided
that such prospective or actual Assignee or Participant agrees to comply with
this SECTION 14.12), or to the respective affiliates, directors, officers,
employees, attorneys, and agents of any Co-Agent or Lender or any prospective
or actual Assignee or Participant, (b) to use such information to the extent
pertinent to an evaluation of the Obligation, (c) to enforce compliance for the
terms and conditions of the Loan Documents, or (d) to take any action which any
Co-Agent or Lender deems necessary to protect its interests if a Default has
occurred and is continuing.
14.13 Entirety. THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN BORROWER, LENDERS, AND CO-AGENTS AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGES FOLLOW.
31
<PAGE> 37
<TABLE>
<S> <C>
EXECUTED as of the date first stated above.
2828 N. Haskell AFFILIATED COMPUTER SERVICES, INC.,
Dallas, TX 75204 as Borrower
Attn: Ms. Lee O. Harper,
Treasurer
Fax: (214) 823-4431
By /s/ Lee O. Harper
---------------------------------------------------
Lee O. Harper, Treasurer
1717 Main Street, 4th Floor BANK ONE, TEXAS, N.A.,
Dallas, TX 75201 as Documentation Agent and a Lender
Attn: Mr. Alan L. Miller,
Vice President
Fax: (214) 290-2305
By /s/ Alan L. Miller
---------------------------------------------------
Alan L. Miller, Vice President
1445 Ross Ave., Suite 300 FIRST INTERSTATE BANK OF TEXAS, N.A.,
Dallas, TX 75202 as Administrative Agent and a Lender
Attn: Mr. Todd D. Robichaux,
Vice President
Fax: (214) 740-1543
By /s/ Todd D. Robichaux
---------------------------------------------------
Todd D. Robichaux, Vice President
</TABLE>
REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGES FOR OTHER LENDERS FOLLOW.
<PAGE> 38
<TABLE>
<S> <C>
EXECUTED as of the date first stated above.
GUARANTY FEDERAL BANK, F.S.B., UNITED STATES NATIONAL BANK OF
as a Lender OREGON, as a Lender
By /s/ Robert S. Hays By /s/ Blake R. Howells
------------------------------------------ -------------------------------------------
Robert S. Hays Blake R. Howells
Vice President Vice President
NBD BANK, as a Lender TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as a Lender
By /s/ Larry E. Schuster By /s/ Allen K. King
------------------------------------------ -------------------------------------------
Larry E. Schuster Allen K. King
Vice President Vice President
SUNTRUST BANK, ATLANTA, as a Lender
By /s/ Jennifer L. McClure
------------------------------------------
Jennifer L. McClure
Banking Officer
By /s/ Raymond B. King
------------------------------------------
Raymond B. King
Vice President
</TABLE>
<PAGE> 1
Exhibit 11.1
AFFILIATED COMPUTER SERVICES, INC.
Computation of Earnings per Common and Common Equivalent Share
(in thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
-------------------------- ------------------------
1996 1995 1996 1995
---------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
NET INCOME $5,735 $4,459 $16,468 $12,528
========== =========== ========== =========
PRIMARY
Weighted average number of shares
outstanding 13,623 12,816 13,492 11,943
Additional weighted average shares from
assumed exercise of dilutive stock
options and warrants, net of shares
assumed to be repurchased with
exercise proceeds 377 428 357 638
Additional weighted average shares from
assumed issuance of shares issuable
from acquisition - 52 - 17
---------- ----------- ---------- ---------
14,000 13,296 13,849 12,598
========== =========== ========== =========
Earnings Per Share $0.41 $0.34 $1.19 $0.99
========== =========== ========== =========
FULLY DILUTED
Weighted average number of shares
outstanding 13,623 12,816 13,492 11,943
Additional weighted average shares from
assumed exercise of dilutive stock options
and warrants, net of shares assumed to be
repurchased with exercise proceeds 428 496 464 731
Additional weighted average shares from
assumed issuance of shares issuable
from acquisition - 52 - 17
Additional weighted average shares from
assumed conversion of preferred stock 26 38 26 38
---------- ----------- ---------- ---------
14,077 13,402 13,982 12,729
========== =========== ========== =========
Earnings Per Share (fully diluted): $0.41 $0.33 $1.18 $0.98
========== =========== ========== =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 35,401
<SECURITIES> 0
<RECEIVABLES> 60,138
<ALLOWANCES> 1,768
<INVENTORY> 10,892
<CURRENT-ASSETS> 131,942
<PP&E> 86,265
<DEPRECIATION> 28,962
<TOTAL-ASSETS> 305,660
<CURRENT-LIABILITIES> 87,268
<BONDS> 7,315
<COMMON> 154
1,100
0
<OTHER-SE> 193,844
<TOTAL-LIABILITY-AND-EQUITY> 305,660
<SALES> 0
<TOTAL-REVENUES> 279,708
<CGS> 0
<TOTAL-COSTS> 251,435
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 614
<INCOME-PRETAX> 27,659
<INCOME-TAX> 11,191
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,468
<EPS-PRIMARY> 1.19
<EPS-DILUTED> 1.18
</TABLE>
