UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[FEE REQUIRED]
For the fiscal year ended:
December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]
For the transition period from
to
Commission file number 0-315
CCH INCORPORATED
(Exact Name of Registrant as
specified in its charter)
Delaware
36-0936850
(State or other jurisdiction of
(IRS Employer
incorporation or organization)
Identification No.)
2700 Lake Cook Road
Riverwoods, Illinois
60015
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code
(708) 267-7000
Securities registered pursuant to Section 12(g) of the
Act:
Title of each class Name of each
exchange on which registered
Class A NASDAQ
Class B NASDAQ
Indicate by checkmark 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 at least the past 90 days.
Yes X No
Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in
definitive proxy or information statements
incorporated by reference in Part III of this Form 10-
K or any amendment to this Form 10-K. [X]
As of March 27, 1995, 16,975,944 shares of Class
A Common Stock were outstanding and the aggregate
market value of the Common Stock (based upon the
closing bid price of these shares in the Over the
Counter Market) of CCH INCORPORATED held by
nonaffiliates was approximately $116 million.
As of March 27, 1995, 16,465,054 shares of Class
B Common Stock were outstanding and the aggregate
market value of the Common Stock (based upon the
closing bid price of these shares in the Over the
Counter Market) of CCH INCORPORATED held by
nonaffiliates was approximately $106 million.
DOCUMENTS INCORPORATED BY REFERENCE
See Listing on Page 10
FORM 10-K CONTENTS
PART I
Page
Item 1. Business 3
Item 2. Properties 3
Item 3. Legal Proceedings 5
Item 4. Submission of Matters to a Vote of
Security Holders 5
PART II
Item 5. Market for the Registrant's Common Stock
and
Related Security Holder Matters 6
Item 6. Selected Financial Data 6
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 6
Item 8. Financial Statements and Supplementary
Data 6
Item 9. Changes in and Disagreements with
Accountants on
Accounting and Financial Disclosure 6
PART III
Item 10. Directors and Executive Officers of the
Registrant 7
Item 11. Executive Compensation 8
Item 12. Security Ownership of Certain Beneficial
Owners
and Management 8
Item 13. Certain Relationships and Related
Transactions 8
PART IV
Item 14. Exhibits, Financial Statement Schedules
and
Reports on Form 8-K 9
Signatures 12
-2
PART I
ITEM 1. BUSINESS
(a) General Development of Business
CCH INCORPORATED (CCH), name changed from
Commerce Clearing House, Inc. effective January 1,
1995, was incorporated in Delaware in 1927. The
corporate headquarters is located at 2700 Lake Cook
Road, Riverwoods, Illinois 60015. The Company and its
affiliated companies' principal products include (1)
publication of looseleaf current news reports, books
and electronic products primarily on the subjects of
tax and business law, (2) corporate services for
lawyers, financial managers and credit managers and
(3) computer software and services for use by
professionals in processing income tax returns.
(b) Financial Information About Business Segments
The sales and operating profit of each business
segment and the identifiable assets attributable to
each business segment for the three years ended
December 31, 1994 are set forth in Note I (Segment
Information) on pages 32 through 34 of the CCH 1994
Annual Report, which note is incorporated herein by
reference.
(c) Narrative Description of Business
The business of CCH and subsidiaries is
discussed on pages 7 through 9 of the CCH 1994 Annual
Report, which discussion is incorporated herein by
reference.
(d) Foreign Operations
Financial information relating to foreign and
domestic operations for the three years ended December
31, 1994 is presented in Note I (Segment Information)
on pages 32 through 34 of the CCH 1994 Annual Report,
which note is incorporated herein by reference.
ITEM 2. PROPERTIES
The Company owns the following properties,
listed by segment:
Description of Property
Location Square Ft.
Administrative, editorial
and production facilities:
Domestic Publishing Riverwoods,
Illinois 235,000
St.
Petersburg, Florida 144,000
San Rafael,
California 136,000
Chicago,
Illinois 117,000
Clark, New
Jersey 75,000
San Rafael,
California - (1) 63,000
-3-
ITEM 2. PROPERTIES (continued)
Description of Property
Location Square Ft.
Administrative, editorial
and production facilities:
International Publishing Sydney,
Australia 163,200
Don Mills,
Ontario 130,000
Farnham,
Quebec 51,125
Auckland,
New Zealand 43,200
Bicester,
England 42,400
Branch offices:
Legal Information Services Wilmington,
Delaware 24,000
Dover, Delaware 4,000
Administrative and Processing
Centers:
Computer Processing Services Cedar Grove,
New Jersey 54,000
The Company leases the following space, listed
by segment:
Year of
Lease
Description of Property Location Square Ft. Expiration
Administrative, editorial
and production facilities:
Domestic Publishing Chicago, Illinois 225,000 2000
Westfield, New
Jersey 58,500 2003
Washington, D.C. 24,300 2000
Lincolnwood,
Illinois 15,000 1995
Cedar Rapids, Iowa 6,600 1998
Legal Information
Services New York, New York 144,900 1999
Washington, D.C. 22,000 2001
New York, New York 12,400 1999 San Francisco,
California 9,000 2000
Computer Processing
Services Torrance,
California 204,000 (6) 2008
-4-
ITEM 2. PROPERTIES (continued)
Year of Lease
Description of Property Location
Square Ft.
Expiration
Sales and Branch Offices:
Domestic Publishing Various - (2) 113,300 1995-2002
International Publishing Australia,
Various 11,900 1995-2002
Singapore 9,200 1996
Tokyo, Japan 1,100 1995
Various - (3) 8,800 1995-1998
Malaysia 500 1996
London 500 1995-1999
Legal Information Services Various - (4) 187,800 1995-2002
Computer Processing Support Services Various - (5) 169,249 1995-1998
(1) 1/2 of building used by CCH; 1/2 leased to an
outside party
(2) Includes sales offices in 27 different states
(3) Includes sales offices in 4 Canadian Provinces
(4) Includes branch offices in 29 different states
(5) Includes offices in 6 different states
(6) Includes 20,000 square feet of space which has
been sublet to an
outside party and 57,000 square feet of space
available for lease
ITEM 3. LEGAL PROCEEDINGS
1) Robert Taglia, d/b/a Communications Control Ltd.,
a former consultant, filed an action against CCH in
Lake County, IL alleging breach of contract, and
seeking an amount in excess of $4.4 million. This
action was settled out of court in 1994; the
settlement did not have a material impact on the CCH
balance sheet or statement of operations.
2) NationBase, Inc., Clarkson & Sons, Inc. and Gavin
Clarkson filed suit against CCH in Texas alleging
negligent misrepresentation and fraud and seeking
judgment of an unspecified amount and punitive
damages. The plaintiffs recently sent a letter to CCH
demanding $11.5 million in actual damages including
attorney fees, claiming that CCH violated the Texas
Deceptive Trade Practices Act. CCH filed a motion to
dismiss the Texas action or alternatively enter an
order abating the action. CCH has filed an action in
Illinois for collection on a promissory note to CCH.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
None
-5-
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND
RELATED
SECURITY HOLDER MATTERS
(a) Principal Market
Principal market on which CCH's common stock is
traded: NASDAQ Stock Market.
(b) Approximate Number of Holders of Common Stock
The approximate number of holders of CCH's common
stock as of February 10, 1995: 4,254 of Class A and
4,251 of Class B. Of this number, approximately 2,456
Class A and B holders are Company employees who
participate in stock ownership plans.
(c) Stock Price and Dividend Information
The information concerning the range of prices of
the Company's common stock and the dividend
information is shown on page 38 of the CCH 1994 Annual
Report, which information is incorporated herein by
reference.
ITEM 6. SELECTED FINANCIAL DATA
A presentation of selected financial data appears
on page 11 of the CCH 1994 Annual Report, which data
is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The discussion by management and its analysis of
financial condition and results of operations is
contained on pages 12 through 16 of the CCH 1994
Annual Report, which discussion is incorporated herein
by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated financial statements and the related
notes for the three years ended December 31, 1994 are
presented on pages 17 through 36 of the CCH 1994
Annual Report, which statements and related notes are
incorporated herein by reference. Supplementary
financial information on quarterly earnings statement
data for the three years ended December 31, 1994 is
included on page 39 of the CCH 1994 Annual Report,
which supplementary financial information is
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None
-6-
Part III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT
Identification of Directors
The names and ages of and family relationships
among the Registrant's Directors, and the position
held by the Registrant's Directors and the business
experience of each Director are stated in the CCH
Proxy Statement dated March 2, 1995 in connection with
its Annual Meeting to be held on March 30, 1995, under
the caption "Election of Directors, which is
incorporated herein by reference.
Identification of Executive Officers
Listed below are the names and ages of the
Registrant's executive officers, the position
currently held by each officer, the business
experience of each officer and the year of initial
election as an executive officer:
Initially Elected
Name Age as Officer
Oakleigh B. Thorne 62 Chairman of the Board 1975
Executive Committee:
Edward L. Massie (1) 65 President and Chief
Executive Officer 1976
Oakleigh Thorne 37 Member, CCH Executive
Committee 1988
Ralph C. Whitley 51 Member, CCH Executive
Committee 1978
Senior Officers:
John I. Abernethy 37 Finance (Chief
Financial Officer) 1990
Christopher Ainsley 36 Strategy 1992
JoAnn Augustine 47 Administration (Corp.
Secretary) 1992
Jonathan Copulsky 40 Product/Customer
Management 1992
Nancy McKinstry 36 Product Management 1992
Stephen J. Uhring 48 Customer Management 1992
Richard G. Honor (2) 65 International 1988
John J. Lynch Jr. 36 Service Products 1993
Eric K. Marcus (3) 40 Technology 1992
Thomas N. Taylor 54 Operations 1984
Hugh J. Yarrington 52 Knowledge 1993
James C. Rooney 61 Knowledge Teams 1993
Each of the foregoing officers has served CCH or a
CCH subsidiary, either as a department manager, junior
officer or executive officer, for five years or more,
except for:
John I. Abernethy previously a partner
with Deloitte & Touche
Christopher Ainsley previously a principal
with Booz-Allen &
Hamilton, and Marakon
Associates
Jonathan Copulsky previously a vice-
president with Booz-
Allen & Hamilton
Nancy McKinstry previously a principal
with Booz-Allen & Hamilton
Eric K. Marcus (3) previously with Coopers
& Lybrand and Financial
Decision Systems, Inc.
Hugh J. Yarrington previously Chief
Operating Officer at the
Bureau of National
Affairs
(1) Retiring as President & CEO April 1995
(2) Retired February 1995
(3) Resigned February 1995
-7-
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT (continued)
Other
There have been no events under any bankruptcy
act, no criminal proceedings and no judgments or
injunctions material to the evaluation of the ability
and integrity of any CCH director or executive officer
during the past five years.
ITEM 11. EXECUTIVE COMPENSATION
Remuneration of Directors and Officers
The information on the remuneration of directors
and officers is contained in the CCH Proxy Statement
dated March 2, 1995 in connection with its Annual
Meeting to be held on March 30, 1995, under the
captions Summary Compensation Table, Options/SAR
Grants, Report of the Compensation Committee,
Shareholder Return Performance Information, Pension
Plan, and Supplemental Retirement Plan, which are
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners
The information concerning persons who are known
by CCH to own beneficially more than 5% of the
Company's stock on February 10, 1995 is shown in the
Proxy Statement for the 1995 Annual Meeting, under the
caption "Stock Ownership of Principal Stockholders and
Management," which is incorporated herein by
reference.
(b) Security Ownership of Management
The information concerning the beneficial
ownership of the Company's common stock by all
directors and officers as a group is shown in the
Proxy Statement for the 1995 Annual Meeting, under the
caption "Stock Ownership of Principal Stockholders and
Management," which is incorporated herein by refer-
ence.
(c) Changes in Control
The Company knows of no contractual arrangements
which may at a subsequent date result in a change in
control of the Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
None
-8-
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
(a) 1. Financial Statements
The following consolidated financial statements
of CCH INCORPORATED and subsidiaries are presented on
pages 17 through 36 of the CCH 1994 Annual
Report, which pages are incorporated herein by
reference:
Consolidated Statements of Operations for the
years ended December 31, 1994, 1993 and
1992
Consolidated Balance Sheets as of December 31,
1994 and 1993
Consolidated Statements of Cash Flows for the
years ended December 31, 1994, 1993 and
1992
Consolidated Statements of Stockholders
Investment for the years ended December
31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements for
the three years ended December 31, 1994
Independent Auditors' Report
(a) 2. Financial Statement Schedules
Financial Statement
Schedules are omitted because they are not applicable,
or not required, or because the required information
is included in the consolidated financial statements
or notes thereto.
(a) 3. Exhibit No.
The following exhibits of CCH INCORPORATED are
included in this report:
(3) By-laws of CCH INCORPORATED filed as
Exhibit 3 to the Companys
Annual Report on Form 10-K for the year
ended December 31, 1993
and incorporated herein by reference
(4) Revolving Credit Agreement By and Among
Commerce Clearing House,
Inc., the Banks Signatory Thereto and
National Westminster Bank
PLC, as agent for such banks, dated as
of July 1, 1994
(10) 1993 Long Term Incentive Plan adopted
February 11, 1993 as amended
and restated January 6, 1994 filed as
Appendix A to Proxy
Statement dated March 3, 1995
(13) The Companys 1994 Annual Report to
Shareholders
(21) Subsidiaries of the Registrant
(27) Financial Data Schedule
(99) Certificate of Ownership and Merger
merging Commerce Clearing
House Inc. into CCH INCORPORATED
(b) Reports on Form 8-K
On January 24, 1995, the Company filed a Report
on Form 8-K announcing that it had changed its name
from Commerce Clearing House, Inc. to CCH INCORPORATED
and that its stock symbols were changed from CCLR A
and CCLR B to CCHI A and CCHI B.
-9-
CCH INCORPORATED & Subsidiaries
DOCUMENTS INCORPORATED BY REFERENCE
Part I
Item 1 - Business Pages 7
through 9,
and 32
through 34
of CCH 1994
Annual
Report.
Part II
Item 5 - Market for the Registrant's Page 38 of
CCH 1994
Annual
Report.
Common Stock and Related
Security Holder Matters
Item 6 - Selected Financial Data Page 11 of
CCH 1994
Annual
Report.
Item 7 - Management's Discussion Pages 12
through 16 of CCH 1994 Annual and
Analysis of Financial Report.
Condition and Results of
Operations
Item 8 - Financial Statements and Pages 17
through 39 of CCH 1994 Annual
Supplementary Data Report.
Part III
Item 10 - Directors and Executive CCH Proxy
Statement dated March 2, 1995
Officers of the Registrant in
connectio
n with
its
Annual
Meeting
to be
held on
March 30,
1995 under
the caption
Election of
Directors".
Item 11 - Executive Compensation CCH Proxy
Statement
dated March
2, 1995 in
connection
with its
Annual
Meeting to
be held on
March 30,
1995 under
the captions
"Election of
Directors",
Summary
Compensation
Table,
Options/SAR
Grants,
Report of
the
Compansation
Committee,
Pension
Plan,
Supplementa
l Plan.
Item 12 - Security Ownership of CCH Proxy
Statement dated March 2,
Certain Beneficial Owners 1995 in
connection with its Annual
and Management Meeting to
be held on
March 30,
1995, under
the caption
"Stock
Ownership of
Principal
Stockholders
and
Management.
Part IV
Item 14 - Exhibits, Financial Pages 17
through 36 of CCH
Statement Schedules and 1994 Annual
Report.
Reports on Form 8-K.
-10-
Exhibit No. 22 Subsidiaries
Name of Subsidiary
Organized in
CCH Asia Limited
Delaware
CCH Malaysia SDN. BHD.
Malaysia
CCH Australia Limited
Australia
CCH New Zealand Limited New
Zealand
CCH Canadian Limited
Canada
Les Publications CCH/FM Lte
Canada
CCH Cayman Limited
Grand Cayman, B.W.I.
CCH Editions Limited
Delaware
CCH Europe, Inc.
Delaware
CCH Japan Limited
Delaware
CCH Legal Information Services, Inc.
Delaware
C T Corporation System
Delaware
Washington Service Bureau, Inc.
District of Columbia
All of the above subsidiaries are included
in the consolidated financial statements
furnished by this report and are wholly owned by
CCH or the subsidiary below which such
corporation's name is indented.
-11-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d)
of the Securities Exchange Act of 1934, CCH
INCORPORATED has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly
authorized.
CCH
INCORPORATED
/s/
Edward L. Massie
Edward
L. Massie
President & Chief Executive Officer
(Director)
/s/
John I. Abernethy
John
I. Abernethy
Chief
Financial Officer
Date: March 30, 1995
Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the
Registrant and in the capacities on the dates
indicated:
/s/ John C. Burton /s/
Daniel K. Thorne
John C. Burton Daniel K. Thorne
(Director) (Director)
/s/ William C. Egan, III /s/
Oakleigh B. Thorne
William C. Egan, III Oakleigh B. Thorne
(Director) (Director)
/s/ Richard T. Merrill /s/
Oakleigh Thorne
Richard T. Merrill Oakleigh Thorne
(Director) (Director)
/s/ Ralph C. Whitley /s/
Robert H. Mundheim
Ralph C. Whitley Robert H. Mundheim
(Director) (Director)
Date: March 30, 1995
-12-
SIGNATURES
Pursuant to the requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, CCH
INCORPORATED has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly
authorized.
CCH
INCORPORATED
Edward
L. Massie
President & Chief Executive Officer
(Director)
John
I. Abernethy
Chief
Financial Officer
Date: March 30, 1995
Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the
Registrant and in the capacities on the dates
indicated:
John C. Burton Daniel K. Thorne
(Director) (Director)
William C. Egan, III Oakleigh B. Thorne
(Director) (Director)
Richard T. Merrill Oakleigh Thorne
(Director) (Director)
Ralph C. Whitley Robert H. Mundheim
(Director) (Director)
Date: March 30, 1995
-12-
ANNUAL REPORT 1994
3 To our stockholders
7 Business of CCH and subsidiaries
10 Addresses of headquarters and subsidiary companies
11 Selected financial data
12 Management's discussion and analysis
17 Consolidated statements of operations
18 Consolidated balance sheets
20 Consolidated statements of cash flows
21 Consolidated statements of stockholders' investment
22 Notes to consolidated financial statements
37 Independent auditors' report
38 Quarterly market price and dividend information
39 Supplementary financial statement information
40 Corporate organization
TO OUR STOCKHOLDERS
Two years ago, we set out on a mission to build CCH into a
provider of powerful decision-making tools for professionals, a company that
delivers products that increase profitability and improve productivity.
This mission was established in response to our customers' growing need to
contain costs and in response to rapid changes in the technology to deliver and
use information.
To achieve this mission we knew we needed to produce truly innovative
products, to deliver top-notch customer service, and to beat the competition to
the market with applications that joined new technologies to our traditional
content.
If we can accomplish these things, CCH can deliver above-market returns for
our stockholders and a fun and rewarding work environment for employees
who want to work in an innovative and dynamic company.
In the pursuit of that mission, 1994 will be remembered as the year CCH began
to deliver a lot of innovative products to the market, to build the foundation
for delivering superior customer service, and to reap a substantial return on
earlier investments in our Computax and LIS business units.
As we turn the corner into 1995, we have made significant progress; however,
the challenges we face continue to grow. Customers are more value-conscious
than ever, and technological change continues to accelerate.
1994 Results
The results_in terms of financial results, products, and reengineering
programs_ were consistent with, and in some cases ahead of, the five-year
reengineering plans we established in 1993.
Going into the year we set five major objectives:
n to exceed $10 million in operating profit, while growing the dollar
value of the U.S. publishing operation's renewal inventory base by 7%;
n to introduce at least 20 new products in the U.S. publishing
operations;
n to build accountability and innovation into CCH by creating 10
product teams and a new planning process;
n to implement a new technology platform, moving away from
mainframe-based applications to a client-server environment; and
n to develop and install a new order processing and customer
information
system.
How did we do against these targets? On the whole, pretty well.
We exceeded our earnings objective due to strong performance in computer
processing, at LIS, and at our Australian, British, and Canadian publishing
operations. The U.S. publishing operations fell short of targeted revenue, but
strong cost controls mitigated the effect on operating profit. While the target
of a 7% increase in renewal inventory was not fully reached, 1994 ended with
the first real increase in renewal inventory since the late 1980s.
We introduced more than 30 new products in the United States alone in 1994,
including many innovative products such as our Tax Assistant practice systems.
The HR Assistant was named one of the best new HR products for 1994 by
Human Resource Executive, an influential professional magazine. We staffed
and trained our product teams and gave them full accountability for their own
product lines. They were responsible for our record number of product
introductions and developed aggressive and innovative plans for 1995.
We were not as successful as we would have liked at migrating out of our
traditional mainframe computing environment. We succeeded in moving all but
one product or business application either to the new client-server system or
to an outsource mainframe vendor. The exception was CCH Online, which will be
transferred by the third quarter of 1995. Nevertheless, we have been able to
reduce our mainframe costs considerably and will save $6.6 million in 1995 as
a result.
Finally, we succeeded in replacing our order processing and customer
information systems (some of them 35 years old) with a state-of-the-art
relational database system. This not only will lower our costs, but it will
dramatically improve our order turnaround time, billing accuracy, and
customer service.
CCH also achieved several other milestones in 1994.
CCH-LIS completed the major phases of reengineering its operations,
improving both profitability and customer satisfaction.
The computer processing team completed a sensational tax processing season,
introducing a new WindowsTM release, delivering extraordinary customer
service, and achieving a high renewal rate as a result.
The British publishing operations significantly improved profitability. The
Canadian publishing company introduced its first WindowsTM product, and
our Australian company completed most of the work on its first major
electronic product.
In the United States, we closed our Chicago and New Jersey printing plants,
outsourced many kinds of printing jobs, and consolidated our remaining
printing in Florida. While the closures brought mixed emotions, the
consolidation was necessary because of the move of our customers to electronic
products. We opened a new fulfillment center in Chicago, which is expected to
speed order turnaround and improve inventory management. The U.S.
publishing company introduced its first company-wide performance
management system and compensation program.
Looking Ahead to 1995
As we look ahead to 1995, several significant trends reinforce the vision
established back in 1993.
First, the pace of technological change continues to accelerate; but even more
important, consumer acceptance of new communications and information
management technology is growing faster than expected.
Second, the U.S. information industry is going through a phase of major
consolidation, at very high acquisition prices, as non-U.S. companies acquire
U.S. properties and major businesses of our competitors change hands.
Third, successful American businesses are striving to be more customer
focused. We have conducted significant research into what influences customer
satisfaction in our industry. Our focus in 1995, from product development to
customer service, remains meeting customer needs.
And fourth, as we reengineer, we learn. We have learned how to implement
much of the business vision in less time and at less cost.
With these factors in mind, we have established the following very aggressive
goals for 1995:
n to improve earnings dramatically. _1995 is the year to start paying
stockholders back for the investments of the past few years.
n to improve our customer satisfaction scores. _We implemented
customer satisfaction scoring methodologies at LIS beginning in the late 1980s,
and at U.S. publishing in 1994. We want to improve the scores in those two
operations and install the methodology at our other operations in 1995.
n to extend our technology lead. _ In 1993 we established CCH as the
first company to offer WindowsTM products for both tax compliance and
research. CCH was the first to employ expert systems technology to deliver
practice systems to the accounting, legal, and human resources markets. Over
the past two years, CCH has introduced more CD-ROM tax research products
than our competitors. We plan to extend this lead with more CD-ROM
products, more practice systems, and more integration among our products.
n to strengthen our position in our core international markets. _ Our
plans for 1995 include the introduction of many new electronic products in
international markets as well as the rollout of business processes that have
been reengineered in the U.S.
n to improve service and lower costs. _ Processes that are targeted for
reengineering this year include customer service, the sales cycle, and product
delivery.
n to continue investing in the tax processing and legal information
services segments. _ These investments will include new products, further
reengineering projects, and new business alliances.
If CCH can accomplish these goals, it will mean significant progress towards
the vision we established two years ago _ a vision of a truly customer-focused
company, delivering products that make its customers better informed, more
productive, and more profitable.
Achieving this vision in the eyes of our customers will enable us to produce
the earnings our stockholders deserve and the rewarding work environment that
innovative CCH employees desire.
At the end of 1993, we introduced our new logo and began to phase out the use
of the name Commerce Clearing House, Inc. and to consistently refer to
ourselves as CCH Incorporated. As of the end of the year, the name change is
official. In conjunction with that change, we began using new stock
symbols_CCHIA and CCHIB_which we hope will be easier to locate in the
NASDAQ listings.
At the end of this month, the top leadership position at CCH will change hands,
as our President and Chief Executive Officer, Edward L. Massie, retires after a
40-year career with the Company. Mr. Massie stands for reelection to the
Board of Directors in 1995, and we hope he will continue to help guide CCH
for many years in that capacity. President-elect Oakleigh Thorne, a member of
the Executive Committee for the past three years, will take the helm in April
in a seamless transition. Our thanks to Mr. Massie for his many years of
leadership and his valuable guidance during the difficult times of the early
'90s.Thank you for sticking with us in 1994, and here's to a great 1995.
Pull Quote: 1994 results_in terms of financial results, products, and
reengineering programs_were consistent with, and in some cases ahead of, the
five-year reengineering plans we established in 1993.
Pull Quote: The HR Assistant was named one of the best new HR products of
the year.
Pull Quote: Our plans for 1995 include the introduction of many new electronic
products in international markets.
BUSINESS OF CCH AND SUBSIDIARIES
CCH INCORPORATED, a Delaware
corporation with headquarters at 2700 Lake Cook Road, Riverwoods,
Illinois, is a leading provider of tax and business law information, software,
and services for tax, legal, and business professionals. Directly and through
subsidiaries, CCH has been engaged for over 80 years in providing products
and services in the fields of tax and business law.
CCH offers legal information products and tax compliance software and
processing services in the United States. Through subsidiaries, similar
information products are offered in Australia, Canada, the United Kingdom,
New Zealand, Singapore, and
Japan.
Revenue and earnings information is included in the "Selected Financial Data"
on page 11.
Publishing
Most of CCH's publishing revenues come from the sale of loose-leaf current
news reports and compilations, sold on an annual subscription basis. The
reports are designed to be included in organized, indexed publications housed
in ring binders. Most subscriptions provide information on a selected topic,
conveying pertinent laws, regulations, rulings, and interpretations of
administrative agencies, together with explanatory material provided by CCH
writers and outside authors. The material is organized and indexed by subject
matter for easy research and retrieval.
Increasingly, the product line for CCH publishing is migrating toward
electronic delivery, through innovative electronic research systems designed by
CCH for CCH products. Electronic products are offered in a variety of formats,
with CD-ROM the most successful thus far. During 1994, CCH introduced 17
new CD-ROM products. CCH Online, which made its debut in the fall of 1990,
continues to bring customers the most up-to-date tax information available.
With the new WindowsTM 2.0 release in November 1994, which includes
enhanced search techniques, most notably plain language searching, users can
search seamlessly between CD and online services. Another method of getting
the most up-to-date information was introduced in 1994 when our capital
changes product for Lotus Notes users debuted.
An important new kind of electronic product is known as the "practice
system." Such products lead users through a series of questions and, using the
answers along with the body of applicable federal and state laws, suggest a
solution. Also, practice systems often produce a client memo, policy statement,
or other documentation. In 1994, CCH introduced five new practice systems.
Markets and competitors. The markets for CCH products consist principally of
accountants, lawyers, businesses, libraries, schools, and government agencies.
Marketing is achieved through a variety of sales channels, with primary
emphasis on a direct selling organization.
Despite increased competition, CCH remains the leading topical legal
publisher in the United States. Management believes that CCH is the number
one publisher of tax CD-ROM products.
The competitive structure of the legal publishing industry has changed in the
last few years, as Thomson Information/Publishing Group, an operating group
of the Thomson Corporation, acquired a large number of previously
independent competitors. In addition to Thomson, CCH competitors include,
among others, The Bureau of National Affairs, Inc.; Matthew Bender & Co.,
Inc., a subsidiary of The Times Mirror Company; Wolters Kluwer nv; Reed
Elsevier plc; Shepherd's/McGraw-Hill, Inc; West Publishing Company; and
LEXIS-NEXIS, a division of Reed Elsevier Inc., part of Reed Elsevier plc.
CCH is the leading topical legal publisher in Australia and New Zealand. The
Company has a significant presence in Canada, the United Kingdom, and
Singapore. CCH has a start-up presence in Japan and continental Europe.
Computer Processing Services
An important source of earnings is the sale of software and computer services
for the processing of tax returns. With the merger of Computax Inc. into CCH
at the end of 1994, the repositioning of the tax compliance business as a
product line within CCH is complete. Through two remaining processing
centers, CCH continues to provide microcomputer-based tax return processing.
The tax return software line allows tax preparers to use their own
microcomputer workstations to input data, perform calculations, and print
returns in their offices. The 1040 Solutions software product, which processed
individual and limited business returns, was discontinued during 1994 because
the ProSystem fx product offered complete programs for individual,
partnership, corporation, S Corporation, fiduciary, expatriate, deferred
compensation, and estate and gift returns_a complete solution for all
taxpayers'returns. A large proportion of the 1040 Solutions customers
became ProSystem fx customers.
The computer processing services business is highly seasonal, with almost all
revenue from software licenses recognized when the products are shipped to
customers in December and January, and most processing services are
concluded by April 15.
Market and competition. CCH's tax compliance software is sold only to
professional tax return preparers and not to individual taxpayers. Management
believes that, among those firms offering tax processing software and services
of a similar level of functionality to the ProSystem fx product, CCH serves the
largest base of professional tax preparers.
Major competitors in the professional tax return preparer market are Lacerte
Software Corp., Computer Language Research, Inc. (FastTax), Intuit Inc.
(TurboTax professional version), Arthur Andersen & Co. (A-plusTax), and
SCS/Compute, Inc. These competitors offer software and services in a broad
range of sophistication of functionality and complexity.
Legal Information Services
CCH Legal Information Services, Inc. (LIS) offers a variety of services to
assist
attorneys in handling corporate, securities, credit, and intellectual property
matters. The following wholly owned subsidiaries conduct the business of LIS:
CT Corporation System and Washington Service Bureau.
As customers in the legal market look toward practice automation tools to help
meet their clients' increasing time and cost demands, LIS has committed itself
to the development of practice system applications utilizing expert systems
technology. In 1994, LIS successfully introduced its UCC Filing Manager for
banks and legal professionals engaged in secured lending activities. Also,
several enhancements were made to its CT Advantage product, including the
addition of a Forms Library of "intelligent" corporate forms required for the
organization and maintenance of legal entities. LIS Trademark Research
division enhanced its CD-ROM product for corporate legal practitioners with
the addition of a State Trademark file to accompany the existing Federal
Trademark file.
Services offered. CT Corporation System's services include statutory
representation for corporations, production of papers required in connection
with corporate filings, handling of the mechanics of these filings, furnishing
of information compiled from public records and regulations, obtaining
documents from government officials, and registration and reservation of
corporate names. CT also provides services in connection with stockholder
meetings. CT offers public record search services through McCord, the division
of CT that specializes in the collection and dissemination of public record
information (such as UCC filings, bankruptcies, and liens) through
publications, electronic publishing, and search services.
LIS offers access to federal government agency documents and information
and loose-leaf publishing through its Washington Service Bureau, Inc. CT also
provides trademark searches through its Trademark Research division.
Markets and competitors. LIS provides services to over 80% of Fortune 500
companies, as well as to other business entities. LIS is the leading provider
in
the corporate representation and filing services market, but not in the credit,
trademark, or SEC filings markets, where competitors have stronger positions.
Primary competitors are the following: Corporation Service Company
(corporate filings), which now owns P-H Legal & Financial Services;
Disclosure Inc., a division of VNU (SEC filings); Information America (online
access to public records) now owned by West Publishing Company; Dun &
Bradstreet Software Holding, Inc. (public records); Mead Data Central (public
records) now owned by Reed Elsevier Inc.; dozens of small companies located
in state capitals; private attorneys; and companies that perform these services
in-house.
Addresses of headquarters and subsidiary companies
CCH INCORPORATED
Headquarters
2700 Lake Cook Road, Riverwoods, Illinois 60015
Subsidiary Companies
CCH Asia Limited
139 Cecil Street #02-00
Singapore 0106
CCH Australia Limited
P.O. Box 230
North Ryde N.S.W. 2133
Australia
CCH Canadian Limited
6 Garamond Court
Don Mills, Ontario M3C1Z5
CCH Editions Limited
Telford Road
Bicester, Oxon OX6 OXD
England
CCH Europe, Inc.
Parkstrasse, 71-73
D-65191
Wiesbaden, Germany
CCH Japan Limited
Ginza Tk Bldg. 3F
1-1-7 Shintomi
Chuo-ku, Tokyo, 104
Japan
CCH New Zealand Limited
17 Kahika Road
Beach Haven
Auckland 10, New Zealand
Les Publications CCH/FM Lte'e
33 rue Racine
Farnham, Quebec J2N3A3
Canada
CCH Legal Information Services, Inc.
1633 Broadway
New York, New York 10019
C T Corporation System
1633 Broadway
New York, New York 10019
Washington Service Bureau, Inc.
655 Fifteenth Street, NW
Washington, D.C. 20005
Transfer Agent and Registrar
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60690
SELECTED FINANCIAL DATA
(Dollars in thousands, except share amounts)
Years Ended December 31
Revenues: 1994 1993 1992 1991 1990
Publishing $384,782 $391,018 $411,017 $410,636 $398,354
Computer processing services
77,400 84,441 151,220 197,58 224,260
Legal information services
116,594 102,536 97,171 96,009 93,474
$578,776 $577,995 $659,408 $704,225 $716,088
Operating earnings (loss): (A), (B)
Publishing $(8,792) $(9,388) $29,472 $28,999 $39,649
Computer processing services
21,560 (3,452) (49,816) 10,158 4,487
Legal information services
12,596 (2,528) 619 5,459 7,689
25,364 (15,368) (19,725) 44,616 51,825
Other income, net
7,065 23,969 7,977 9,339 18,846
Earnings (loss) before income taxes
and cumulative effect of
accounting changes
32,429 8,601 (11,748) 53,955 70,671
Income taxes 13,500 2,160 1,900 22,930 30,000
Earnings (loss) before cumulative
effect of accounting changes
18,929 6,441 (13,648) 31,025 40,671
Cumulative effect of changes in method
of accounting for:
Postemployment and postretirement
benefits other than pensions
_ - (51,675) _ _
Income taxes _ _ 1,173 _ _
Net earnings (loss)
18,929 $6,441 $(64,150) $31,025 $40,671
Weighted average number of
shares outstanding(C)
34,113,855 34,476,644 34,783,631 34,882,211 35,452,114
Per share of common stock:(C)
Net earnings (loss)
$ .55 $ .19 $ (1.84) $.89 $1.15
Cash dividends declared
$ .70 $ .70 $ .70 $ .70 $.70
Balance sheet items (as of December 31):
Total assets
$581,156 $593,829 $619,896 $654,171 $642,942
Stockholders' investment
$91,814 $98,196 $126,175 $219,401 $222,015
Long-term obligations
$269 $2,442 $3,976 $7,694 $14,575
Number of employees
5,299 5,728 6,600 7,02 7,613
(A) 1993 includes $36 million provision for restructuring of publishing ($24.5
million), computer processing services ($7.0 million) and legal information
services ($4.5 million) segments.
(B) 1992 includes $50 million provision for restructuring computer processing
services segment.
(C) Restated to reflect a stock dividend in 1991.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Three years ended December 31, 1994
Liquidity and Capital Resources:
The Company's publishing and legal information services segments generally
require payment in advance for services and, accordingly, the Company
maintains a liquid financial position. Operations, acquisitions, and
expansions
have been internally financed, except for capital leases relating principally
to
computer equipment. In 1994, the Company entered into a three year $60.0
million revolving credit agreement. At this time, the Company does not have
any plans to use the agreement.
In 1993 and 1992, the Company recorded restructuring charges aggregating
$86.0 million on a pretax basis. The Company anticipates the 1995 working
capital requirements of the restructuring charges to approximate $7.5 million.
The Company has sufficient liquid assets to absorb the working capital
requirements of the restructuring charges.
Acquisitions aggregated $17.5 million in 1993, including the acquisition of
certain federal and state tax publications of Matthew Bender & Co., Inc., a
subsidiary of The Times Mirror Company. There were no acquisitions in 1994
or 1992.
There were no divestitures in 1994. Divestitures generated approximately
$19.0 million in cash in 1993 and approximately $8.0 million in 1992. During
1993, the Company disposed of Facts on File, Inc. (FOF), National Quotation
Bureau, Inc. (NQB), State Capital Information Services, Inc., CCH Solvware
Limited, and a 49% equity investment in LYF, S.A. de C.V., in the publishing
segment and Optima in the computer processing services segment. During
1992, the Company disposed of ancillary payroll processing operations and
Fiduciary TaxSystems in the computer processing services segment.
Capital expenditures, including software, in 1994 totaled $32.8 million,
compared with $17.3 million and $13.3 million in 1993 and 1992, respectively.
In 1994, technology spending in the publishing segment increased substantially
as the Company developed a client server computing environment to replace its
mainframe computing platform to support new administrative systems and
electronic product development. The increase in 1993 was the result of the
purchase by the legal information services segment of a microcomputer-based
network system and related workstations to automate branch operations and
support CT Advantage customer applications.
During the past three years, the Company purchased a total of 294,390 shares
of its Class A common stock and 507,380 shares of its Class B common stock
at a cost of approximately $3.1 million, $8.9 million, and $1.6 million in 1994,
1993 and 1992, respectively. At December 31, 1994, $6.5 million of
authorization to purchase Class A and/or Class B treasury stock remained.
Results of Operations:
Consolidated revenues increased 0.1% in 1994, compared to a decrease of
12.3% in 1993. The revenue increase in 1994 arose from increases at LIS and
publishing operations which offset revenue declines at computer processing
services. FOF and NQB had revenue of $12.0 million and $28.0 million in
1993 and 1992, respectively, prior to the divestiture during the second quarter
of 1993. The 1993 revenue decline is primarily a result of the computer
processing services segment's migration of its principal products from
mainframe service bureau processing to microcomputer-based software and
services.
Consolidated operating earnings, before restructuring charges, increased $4.7
million or 22.9% in 1994 and declined $9.6 million or 31.9% in 1993.
Operating profits increased from 1993 due to significant improvements at LIS
and computer processing services which offset increased spending in domestic
publishing. Decreased publishing operating earnings in 1993 were partially
offset by improved operating earnings from legal information services and
computer processing services as compared to 1992. The Company recorded
pretax restructuring charges of $36.0 million and $50.0 million during the
second quarters of 1993 and 1992, respectively.
Publishing:
Publishing revenues, excluding the impact of divested businesses, increased
1.6% in 1994 compared to a 1.0% decrease in 1993. Operating results
decreased $23.9 million in 1994 following a $14.4 million decrease in 1993,
excluding the impact of a $24.5 million provision for restructuring publishing
operations.
Domestic revenues, excluding the effects of divested operations, increased 1.0%
in 1994 and decreased 0.6% in 1993. Strong sales of books and electronic
products and the addition of the Matthew Bender tax product line offset erosion
in loose-leaf products in both 1994 and 1993. Book sales relating to the 1993
tax legislation and the institution of new shipping and handling charges in
1993 also offset the declines from 1992.
Domestic publishing is experiencing a migration of products from paper to
electronic media. Through 1994, approximately 65% of new subscription
product sales are in electronic formats. These products contributed over 10% of
domestic revenues in 1994.
Domestic operating results decreased $32.1 million in 1994 and $14.9 million
in 1993, excluding the impact of the 1993 restructuring provision. In 1994,
significant investment in domestic publishing associated with the development
of order processing systems, sales force automation, content management and
related technology platforms in support of reengineering contributed to the
increased operating loss. Development of alternative distribution channels and
increased staffing in customer service, product management and general and
administrative areas also increased 1994 domestic publishing costs.
Contributing to the decline in 1993 was $6.6 million of operating losses arising
from the acquisition of Matthew Bender publications. Increased spending on
reengineering initiatives also contributed to the decline.
International publishing revenue increased 3.0% in 1994, as compared to a
5.2% decrease in 1993. In 1993, an actual increase in sales volume was masked
by the effects of currency exchange rate movements, resulting in a net $4.5
million decrease.
International operating earnings of $17.8 million increased $8.1 million in
1994 and increased $0.6 million in 1993 (prior to the restructuring charge).
The 1993 results were adversely impacted by a $4.7 million charge recorded at
the end of the second quarter to cover problems encountered with a tax
compliance software product in Australia. The 1994 operating results benefited
from improved operating results in the United Kingdom.
The 1993 charge for restructuring included costs to be incurred in the
consolidation of North American printing, shipping, and compiling operations
and the 1993 consolidation of publishing and computer processing services
sales organizations. The Company's Chicago print operations were closed
during the first quarter of 1994, resulting in the elimination of 135 positions
and the print operations in Clark, New Jersey were closed in October, 1994
resulting in the elimination of an additional 112 positions.
Computer Processing Services:
Computer processing services revenue declined 8.3% in 1994, and 44.2% in
1993, as a result of the shift from mainframe service bureau tax return
processing to microcomputer-based software and services. The Company's
1040 Solutions product line was discontinued at the conclusion of the 1994 tax
season. Many former 1040 Solutions customers were converted to the
ProSystem fx product line, contributing approximately $3.0 million of revenue
during the fourth quarter of 1994. Revenue from these customers was also
recognized in the first quarter of 1994 when the 1040 Solutions product was
shipped.
Operating earnings increased $18.0 million in 1994 and $3.4 million in 1993,
after removing the impact of restructuring charges. The significant
improvement in operating earnings despite decreased revenues reflects the
impact of the reduced infrastructure associated with a tax compliance software
business. Selling, marketing and administrative costs were reduced through
consolidation with the domestic publishing organization in mid-1993 and the
discontinuation of the 1040 Solutions product line in 1994. Operating costs for
the first half of 1993 included transitional costs for customer support, direct
sales, and system support necessary to ensure a smooth migration to the
microcomputer-based product lines.
Operating results for 1993 included a $7.0 million charge for restructuring
costs associated with the elimination of a data processing center which will be
completed in 1995. The 1992 restructuring charge of $50.0 million included
costs related to this segment's migration from a mainframe service bureau
business to microcomputer-based software and services operations.
Legal Information Services:
Legal information services revenue increased 13.7% in 1994 and 5.5% in 1993.
Growth in representation renewals, sales of new electronic products, and
increases in filing services, due in part to the launch of CT Advantage in
April 1993, contributed to the increases in both 1994 and 1993.
Operating earnings of $12.6 million in 1994 increased $10.6 million, and
increased $1.4 million in 1993, prior to a $4.5 million restructuring charge in
1993. The substantial improvement in operating earnings is a result of both
revenue increases and an improved cost structure arising from implementation
of key reengineering initiatives during 1993 and 1994.
Operating results for 1993 included a $4.5 million charge for restructuring
costs associated with the streamlining and automation of branch and
headquarter's operations within this segment. The charge consists primarily
of one-time costs associated with the elimination of approximately 300
positions. Reorganization of branch operations was completed in July 1993;
reorganization of headquarters operations was substantially completed at the
end of 1994.
Other Income, Net:
Other income decreased $16.9 million from 1993 and increased $16.0 million
in 1993 over 1992. Included in 1993 results were $12.8 million of pre-tax
gains on sales of subsidiaries and a $3.2 million judgement award received in
connection with a legal information services judgement award. Investment
income decreased by $0.7 million from 1993 and $3.3 million from 1992 as a
result of lower interest rates. Currency exchange rate fluctuations were not
significant in 1994 or 1993.
Income Taxes:
The 1993 provision for income taxes includes the effect of the change in
federal
income tax rates enacted in August 1993, retroactive to January 1, 1993. Other
effects of federal, state and foreign income taxes are explained in Note C to
the Consolidated Financial Statements.
Known Trends, Events and Commitments:
The Company's 1995 consolidated operating profit goal is $42.0 million; LIS
is to achieve continued growth in revenue and operating profits in 1995. The
Company expects that computer processing services will report lower revenues
and profit levels due to the absence of the 1040 Solutions' conversion impact
which occurred in 1994, and that publishing operations will return to modest
profitability in 1995. The Company remains focused on implementing its
reengineering initiatives which will allow publishing to cost-effectively
deliver
electronic knowledge products and practice system software while providing
world-class customer support.
In February, 1995 the Company announced a voluntary early retirement
program for employees with 25 years of service. This program offers an
enhanced pension and benefit package and approximately 260 employees are
eligible. See Note D to the Consolidated Financial Statements.
There have been no material changes to the Company's restructuring plans and
implementation is proceeding on schedule. The Company has sublet 20,000
square feet of space in computer processing services' headquarters, which were
vacated in connection with the restructuring of its operations and continues
to
seek opportunities for subletting additional space. The Company will continue
to monitor and assess reserves established in prior years in light of the
Southern
California real estate market.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share amounts)
Years Ended December 31
1994 1993 1992
REVENUES $578,776 $577,995 $659,408
COSTS AND EXPENSES:
Editorial, production and distribution costs
275,364 292,483 342,175
General and administrative
137,355 127,763 137,778
Selling expenses 84,265 75,748 88,042
Commissions 47,943 53,870 47,203
Pension and profit sharing (Note D)
8,485 7,499 13,935
Provision for restructured operations (Note L)
_ 36,000 50,000
553,412 593,363 679,133
OPERATING EARNINGS (LOSS)
25,364 (15,368) 19,725)
OTHER INCOME, NET 7,065 23,969 7,977
EARNINGS (LOSS) BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGES
32,429 8,601 (11,748)
INCOME TAXES (Note C) 13,500 2,160 1,900
EARNINGS (LOSS) BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGES
18,929 6,441 (13,648)
CUMULATIVE EFFECT OF CHANGES IN METHOD
OF ACCOUNTING FOR:
Postemployment and postretirement
benefits other than pensions (Notes A and D)
_ _ (51,675)
Income taxes (Note C) _ _ 1,173
NET EARNINGS (LOSS) $18,929 $6,441 $(64,150)
NET EARNINGS (LOSS) PER SHARE OF COMMON STOCK,
based on weighted average number of shares outstanding (Note J):
EARNINGS (LOSS) BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGES $ .55 $ .19 $(.39)
CUMULATIVE EFFECT OF CHANGES IN METHOD
OF ACCOUNTING FOR:
Postemployment and postretirement
benefits other than pensions
_ _ (1.48)
Income taxes _ _ .03
NET EARNINGS (LOSS) PER SHARE
$ .55 $.19 $ (1.84)
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING (Note J)
34,113,855 34,476,644 34,783,631
See Notes to Consolidated Financial Statements.
CONSOLIDATED
(In thousands,
ASSETS
December 31
1994 1993
CURRENT ASSETS:
Cash and cash equivalents $43,302 $32,322
Short-term investments 39,918 62,150
Accounts receivable, less allowance for doubtful
accounts (1994 - $20,049 and 1993 - $17,025)
204,295 200,010
Prepaid employee health care 23,416 26,214
Prepaid commissions 29,415 27,955
Inventories 8,877 9,733
Prepaid expenses and other 5,876 7,595
Refundable income taxes _ 8,777
TOTAL CURRENT ASSETS 355,099 374,756
PROPERTY, PLANT AND EQUIPMENT:
Land and improvements 13,588 13,308
Buildings and leasehold improvements 96,358 95,850
Machinery and equipment (Note E) 119,436 104,888
Furniture and office equipment 65,939 59,637
295,321 273,683
Accumulated depreciation and amortization
(175,818) (159,740)
119,503 113,943
Construction in progress 4,500 99
124,003 114,042
OTHER ASSETS:
Deferred tax assets (Note C) 40,852 40,666
Intangible assets (Note B) 15,629 21,586
Commissions on unfilled orders not recorded
in the financial statements 22,236 22,098
Prepaid pension costs (Note D) 8,919 10,598
Purchased software 5,853 3,848
Other 8,565 6,235
TOTAL ASSETS $581,156 $593,829
See Notes to Consolidated Financial Statements.
BALANCE SHEETS
except share amounts)
LIABILITIES AND STOCKHOLDERS' INVESTMENT
December 31
1994 1993
CURRENT LIABILITIES:
Accounts payable $20,164 $19,041
Accrued expenses 33,083 22,927
Payroll and related withholdings 18,877 14,658
Taxes other than income taxes 13,193 10,142
Dividends payable 5,972 5,987
Income taxes 978 838
Current portion of long-term obligations (Note E)
791 1,698
Reserve for restructuring (Note L) 7,522 15,633
Unearned revenue (Note A) 263,234 277,733
TOTAL CURRENT LIABILITIES
363,814 368,657
LONG-TERM LIABILITIES:
Accrued postretirement benefits (Note D)
94,639 89,719
Reserve for restructuring (Note L) 25,259 28,917
Long-term obligations (Note E) 269 2,442
Other liabilities 5,361 5,898
TOTAL LONG-TERM LIABILITIES
125,528 126,976
COMMITMENTS (Notes F and M)
STOCKHOLDERS' INVESTMENT (Notes J and K):
Class A common stock, par value $1 per share;
authorized 40,000,000 shares; issued 17,418,202 shares
17,418 17,418
Class B common stock, par value $1 per share;
authorized 40,000,000 shares; issued 17,418,202 shares
17,418 17,418
Retained earnings 75,632 80,580
Cumulative translation adjustments (5,159) (6,785)
Treasury stock, at cost (13,495) (10,435)
TOTAL STOCKHOLDERS' INVESTMENT
91,814 98,196
TOTAL LIABILITIES AND STOCKHOLDERS'
INVESTMENT $581,156 $ 593,829
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Years Ended December 31
1994 1993 1992
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers $556,963 $587,327 $649,942
Interest income 4,195 6,057 10,839
Payments to suppliers (273,537) (273,788) (306,720)
Payments to employees (230,384) (272,184) (279,756)
Payments for pension and profit sharing plans
(6,528) (8,869) (12,912)
Income taxes paid (5,062) (12,244) (31,684)
Interest paid (125) (893) (1,671)
Other 1,402 5,085 (216)
NET CASH PROVIDED BY OPERATING ACTIVITIES (Note H)
46,924 30,491 27,822
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (23,892) (24,230) (24,351)
Purchase of treasury stock (3,060) (8,863) (1,572)
Payments on long-term obligations (1,440) (4,296) (9,405)
NET CASH USED IN FINANCING ACTIVITIES
(28,392) (37,389) (35,328)
CASH FLOWS FROM INVESTING ACTIVITIES:
Changes in short-term securities, net
21,312 15,475 15,065
Cash paid for property, plant and equipment
(29,010) (14,823) (10,753)
Cash paid for capitalized purchased software
(3,817) (2,244) (1,882)
Acquisition of product line/businesses
_ (17,507) _
Proceeds from sale of property, plant and equipment
2,495 887 468
Proceeds from sale of subsidiaries, net of cash disposed
_ 18,750 7,971
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES
(9,020) 538 10,869
EFFECT OF EXCHANGE RATE CHANGES
1,468 (105) (3,531)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS
10,980 (6,465) (168)
CASH AND CASH EQUIVALENTS AT JANUARY 1
32,322 38,787 38,955
CASH AND CASH EQUIVALENTS AT DECEMBER 31
$43,302 $32,322 $38,787
See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
(In thousands, except share amounts)
Years Ended December 31
1994 1993 1992
CLASS A COMMON STOCK (Notes J and K):
Balance at January 1 (17,418,202 shares)
$17,418 $17,418 $17,418
Balance at December 31 (17,418,202 shares)
17,418 17,418 17,418
CLASS B COMMON STOCK (Notes J and K):
Balance at January 1 (17,418,202 shares)
17,418 17,418 17,418
Balance at December 31 (17,418,202 shares)
17,418 17,418 17,418
RETAINED EARNINGS:
Balance at January 1 80,580 98,275 186,761
Net earnings (loss) 18,929 6,441 (64,150)
Cash dividends ($.70 per share) (23,877) (24,136) (24,336)
Balance at December 31 75,632 80,580 98,275
CUMULATIVE TRANSLATION ADJUSTMENTS:
Balance at January 1 (6,785) (5,364) (2,196)
Rate changes during the year 1,626 (1,421) (3,168)
Balance at December 31 (5,159) (6,785) (5,364)
TREASURY STOCK (Note J):
Balance at January 1 (165,758 shares of Class A and 460,748
shares of Class B in 1994; 70,748 shares of Class A and
15,748 shares of Class B in 1993)
(10,435) (1,572) _
Class A stock purchases (128,632 shares in 1994;
95,010 shares in 1993; 70,748 shares in 1992)
(2,277) (1,567) (250)
Class B stock purchases (46,632 shares in 1994;
445,000 shares in 1993; 15,748 shares in 1992)
(783) (7,296) (1,322)
Balance at December 31 (294,390 shares of Class A and
507,380 shares of Class B in 1994; 165,758 shares of
Class A and 460,748 shares of Class B in 1993; 70,748
shares of Class A and 15,748 shares of Class B in 1992)
(13,495) (10,435) (1,572)
STOCKHOLDERS' INVESTMENT $91,814 $98,196 $126,175
See Notes to Consolidated Financial Statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Years Ended December 31, 1994
A. Summary of Significant Accounting Policies:
Consolidation: The consolidated financial statements include the accounts of
CCH INCORPORATED and its wholly-owned subsidiaries (the Company). All
significant intercompany transactions and balances have been eliminated.
Intangible Assets: Goodwill is amortized on a straight-line basis over seven
years or less. Other intangible assets are amortized over periods ranging from
two to seven years.
Short-term Investments: In 1994, the Company adopted Financial Accounting
Standards Board (FASB) Statement of Financial Accounting Standards (SFAS)
No. 115, Accounting for Certain Investments in Debt and Equity Securities.
Securities held by the Company are classified as "held to maturity" and are
carried at amortized cost which approximates fair market value. Adoption of
this Statement had no impact on the Company's balance sheet or statement of
operations.
Cash Equivalents: The Company defines cash equivalents as highly liquid
investments with original maturities of three months or less. The Company has
included $41.3 million and $26.6 million, respectively, of cash equivalents at
December 31, 1994 and 1993 under the balance sheet caption "Cash and cash
equivalents".
Property, Plant and Equipment: Property, plant and equipment are carried at
cost and depreciated over their estimated useful lives or lease periods by
accelerated and straight-line methods.
Purchased Software: Purchased software is amortized on a straight line basis
over five years.
Postretirement Benefits: In December 1990, the FASB issued SFAS No. 106,
Employers' Accounting for Postretirement Benefits Other Than Pensions. This
Statement requires full accrual of postretirement benefits (such as health care
benefits) during the years an employee provides services. The Company
adopted this Statement as of January 1, 1992. See Note D for further
information.
Postemployment Benefits: In November 1992, the FASB issued SFAS No. 112,
Employers' Accounting for Postemployment Benefits. This Statement requires
the current recognition of postemployment benefits (long-term disability, short-
term disability and workers' compensation benefits). The Company adopted
this Statement as of January 1, 1992 and recorded a charge in 1992 of $1.9
million ($3.1 million before taxes), or $.05 per share for the cumulative
effect of the change in accounting method for periods prior to 1992.
Income Taxes: In February 1992, the FASB issued SFAS No. 109, Accounting
for Income Taxes, which changes accounting for income taxes from the
deferred method prescribed by APB 11 to the liability method. Under SFAS
No. 109, a deferred tax liability or asset is recognized for the estimated
future
tax effects attributable to temporary differences and carry-forwards using the
current enacted marginal tax rate. Deferred tax assets are reduced by a
valuation reserve, if necessary, to avoid recognition of tax benefits that
are not
expected to be realized. The Company adopted this Statement as of January 1,
1992. See Note C for further information.
Subscription and Representation Revenue Recognition: The Company's
subscription and representation revenues are generally billed to customers at
the beginning of the period of service and, to the extent that the service
period
does not exceed one year, a receivable is recorded at that time. Revenues are
recognized in the statement of operations when the service is performed; costs
and expenses other than commissions are recorded in the statement of
operations as incurred. Unearned revenue on the balance sheet reflects the
revenue to be recognized in the future (primarily within one year) on
subscription and representation contracts. Orders for periods of service
beyond
one year which have not been invoiced are not reflected in the financial
statements (such orders amounted to $156.6 million at December 31, 1994 and
$177.8 million at December 31, 1993), except that commissions paid on these
orders are recorded as an other asset.
Software Revenue Recognition: Revenue with respect to the Company's tax
compliance software products is recognized when there are insignificant
obligations remaining under the licensing agreements. Remaining obligations
are accounted for by deferral of a pro rata portion of the revenue and
recognized at completion of obligation. As of December 31, 1994 and 1993,
there was $7.1 million and $11.4 million of deferred software revenue,
respectively.
Earnings Per Common Share: Net earnings per common share is computed on
the basis of the weighted average number of shares of both Class A and Class B
common stock outstanding during each period. The shares shown as
outstanding in the statements of operations do not require adjustment for
common stock equivalents as they are not dilutive in effect after applying the
treasury stock method.
Reclassifications: Certain reclassifications have been made to the 1993 and
1992 Consolidated Financial Statements and related notes to conform to the
1994 presentation.
B. Acquisitions and divestitures:
The Company acquired a product line in the publishing segment for $17.5
million in 1993. This acquisition has been accounted for as a purchase and,
accordingly, operating results include the acquisition from the date of
purchase.
The purchase price in excess of fair value of assets acquired aggregated $3.5
million and has been recorded as an intangible asset. The effect of this
acquisition on the Company's consolidated results of operations on a pro forma
basis is not material.
The Company disposed of one business in the computer processing services
segment and five businesses in the publishing segment in 1993, including Facts
on File, Inc. (FOF) and National Quotation Bureau, Inc. (NQB). Aggregate
proceeds of $23.4 million consisted of $18.8 million cash, $3.65 million
convertible preferred stock and $1.0 million notes receivable, resulting in a
pretax gain of $12.8 million. Revenue contributions from divested businesses
prior to disposal totaled $16.1 million and $33.1 million in 1993 and 1992,
respectively.
C. Income Taxes:
Earnings (loss) before income taxes:
1994 1993 1992
(in thousands)
Domestic $14,388 $(3,242) $(24,512)
International 18,041 11,843 12,764
$32,429 $8,601 $(11,748)
The provision for income taxes consists of the following:
1994 1993 1992
(in thousands)
Current:
Federal $6,973 $2,140 $6,150
State and local 1,397 680 2,640
International 5,316 4,700 5,510
13,686 7,520 14,300
Deferred:
Federal (1,637) (3,070) (10,200)
State and local 586 (1,370) (2,040)
International 865 (920) (160)
(186) (5,360) (12,400)
$13,500 $ 2,160 $ 1,900
In December 1992, the Company adopted SFAS No. 109, effective as of
January 1, 1992. The Company recorded a credit of $1.2 million, or $0.03 per
share, to reflect the cumulative effect of the change in accounting method for
periods prior to 1992.
Deferred income taxes reflect the impact of "temporary differences" between
amounts of assets and liabilities for financial reporting purposes and such
amounts as measured by tax laws. Temporary differences and carry-forwards
which give rise to a significant portion of deferred tax assets and
liabilities are
as follows:
December 31
1994 1993 1992
(in thousands)
DEFERRED TAX ASSETS:
Postretirement and postemployment
$39,323 $37,011 $35,421
Restructure 17,557 20,902 9,954
Allowance for doubtful accounts
8,397 8,135 6,930
Depreciation and amortization 7,525 6,640 5,162
Other 10,469 8,003 10,204
83,271 80,691 67,671
DEFERRED TAX LIABILITIES:
Prepaid commissions 19,369 19,188 17,358
Prepaid employee benefits 14,393 12,335 8,008
Capital leases 7,861 7,457 6,909
Other 796 1,045 2,179
42,419 40,025 34,454
NET DEFERRED TAX ASSETS $40,852 $40,666 $33,217
A reconciliation of the statutory federal income tax rate with the effective
tax rate is as follows:
1994 1993 1992
Statutory federal tax rate 35.0% 35.0% (34.0%)
State and local income tax (benefit),
net of federal income tax effec 4.0 (5.2) 3.4
Additional provision for prior years 2.5 5.8 4.0
Exempt interest and dividends (0.6) (1.1) (1.6)
Nondeductible amortization 0.2 2.7 7.3
Taxes due on repatriation of
foreign dividends _ 16.8 _
Effect of retroactive rate change
on deferred taxes _ (11.0) _
Permanent basis differences in divested companies
_ (13.4) 28.1
International rate differences _ (4.2) 8.6
Other, net 0.5 (0.3) 0.3
Effective tax rate 41.6% 25.1% 16.1%
C. INCOME TAXES (continued):
The Internal Revenue Service has audited the Company's federal income tax
returns through 1989 and is currently auditing 1990, 1991 and 1992. It is
management's opinion that the Company's reserve for federal income taxes is
adequate.
D. RETIREMENT, PROFIT SHARING AND POSTRETIREMENT BENEFIT
PLANS:
Retirement Plans: The Company and its subsidiaries have pension plans,
primarily defined benefit plans, that cover substantially all employees who
meet
age and length of service requirements. Benefits are based on years of service
and compensation levels. Pension costs are funded in amounts not less than
minimum levels required by regulation.
The following table sets forth the funded status of the defined benefit
plans as
of December 31, 1994 and 1993 and amounts recognized in the consolidated
financial statements applicable to such plans:
1994 1993
(in thousands)
Actuarial present value of benefit obligations:
Vested benefit obligation $ 130,576 $135,548
Nonvested benefit obligation 13,070 17,319
$143,646 $152,867
Projected benefit obligation $180,173 $192,315
Plan assets at fair value, primarily listed stocks and U.S. bonds
186,058 211,701
Plan assets in excess of projected benefit obligation
5,885 19,386
Unrecognized net loss (gain) 6,674 (2,388)
Unrecognized net transition asset recognized over average
remaining service period (8,164) (11,103)
Unrecognized prior service cost 5,311 7,008
Recognized actuarial gain relating to plan settlement/curtailments
(787) (2,305)
Prepaid pension cost $8,919 $10,598
The rate of increase in future compensation levels is based on salary increases
of 5.6% and 5.5% at December 31, 1994 and 1993, respectively. The weighted
average discount rates used in determining the actuarial present value of the
projected benefit obligation were 8.1% and 7.1% at December 31, 1994 and
1993, respectively. The weighted average long-term rate of return on assets
was 9.1% for 1994 and 9.0% for 1993.
Net pension expense for defined benefit plans includes the following
components:
1994 1993 1992
(in thousands)
Service cost-benefits earned during the period
$9,439 $8,265 $11,684
Interest cost on projected benefit obligation
14,028 13,321 15,123
Actual return on plan assets
(451) (26,601) (12,126)
Net amortization and deferral
(18,920) 8,529 (7,172)
Settlement loss 876 _ _
Net pension expense $4,972 $3,514 $7,509
Total pension expense was $6.2 million, $4.7 million and $9.0 million for
1994, 1993 and 1992, respectively, including $1.2 million, $1.2 million and
$1.5 million applicable to defined contribution plans, principally in Australia.
In February, 1995, the Company announced a voluntary early retirement
program for employees who will have completed 25 years or more of credited
service by the end of 1995. This program will provide an enhanced pension and
benefits package and will be offered to approximately 260 employees. The
Company estimates that a 50% participation would result in a one time
operating cost charge of $7.4 million, including a non-cash charge of $3.9
million. At 100% participation, the program would result in a $16.9 million
operating cost charge, including a non-cash charge of $7.8 million.
Profit Sharing Plans: The CCH Employees' Profit Sharing Plan covers the
Company and its principal domestic subsidiaries. All full-time employees are
eligible to participate. Employees electing to participate in the Plan may
authorize payroll deductions ranging from 2% to 10% of their compensation as
defined in the Plan, expect that highly compensated employees may contribute
only up to 6% of their compensation. During the year, the Company's
contribution matches 25% of the employees' contributions up to 6% of their
compensation. In addition, the Company makes contributions to the Plan of
10% of consolidated earnings before income taxes of the participating
companies less the amounts previously contributed as matching contributions.
Since 1991, 20% of the Company's contribution is allocated to all eligible
employees, including those not contributing to the Plan. The Company's
contributions to profit sharing plans (including the separate plan of one
subsidiary, until mid-1993) in 1994, 1993 and 1992 were $2.3 million, $2.8
million and $4.9 million, respectively.
Postretirement Benefits: In addition to providing pension benefits, the
Company and its subsidiaries provide certain health care and life insurance
benefits for retired employees. Substantially all of the Company's employees,
including employees outside the United States, may become eligible for these
benefits if they reach age 55 with at least ten years of service.
D. RETIREMENT, PROFIT SHARING AND POSTRETIREMENT BENEFIT
PLANS (continued):
In December 1992, the Company changed its method of accounting for
postretirement benefit costs other than pensions by adopting the requirements
of SFAS No. 106, Employers' Accounting for Postretirement Benefits Other
Than Pensions, effective as of January 1, 1992. The Company recorded a
charge of $49.8 million ($81.4 million before tax), or $1.43 per share, to
reflect the cumulative effect of the change in accounting method for periods
prior to 1992.
Net periodic postretirement benefit cost included the following components :
Years Ended December 31
1994 1993 1992
(in thousands)
Service cost for benefits attributed to service
during the period $2,921 $3,111 $3,338
Interest cost on accumulated postretirement
benefit obligation 6,136 6,441 6,208
Net periodic postretirement benefit cost
$9,057 $9,552 $9,546
The following table sets forth the plans' combined funded status reconciled
with
the amounts included in the consolidated balance sheets at December 31, 1994
and 1993:
December 31
1994 1993
(in thousands)
Accumulated postretirement benefit obligation:
Retirees and beneficiaries $56,276 $43,034
Fully eligible active plan participants 6,902 3,229
Other active plan participants 22,673 44,390
85,851 90,653
Fair value of plan assets _ _
Unfunded status 85,851 90,653
Unrecognized net gain 12,888 3,066
Accrued postretirement benefit cost $98,739 $93,719
The portion of the obligation ($4.1 million) that is expected to be settled in
1995 is recognized as a current liability and included with accrued expenses.
As a result of the Company's decisions during 1993 to restructure its
operations
and to divest itself of FOF and NQB, it recognized net costs of $3.3 million to
provide special termination benefits, offset by a curtailment gain of $2.5
million, that were recorded as a component of the restructuring charge and part
of the gain on divestiture, respectively.
For measurement purposes, a 10.0% annual rate of increase in the per capita
cost of covered health care benefits was assumed for 1995, decreasing gradually
to 6.0% through the year 1999 and remaining at that level thereafter. The
health care cost trend rate assumption has a significant effect on the
amount of
the obligation and periodic cost reported. An increase in the assumed health
care cost trend rates of 1.0% in each year would increase the accumulated
postretirement benefit obligation by $8.2 million and $10.0 million as of
December 31, 1994 and 1993, respectively, and would increase the aggregate of
the service and interest cost components of net periodic postretirement benefit
cost by $1.2 million and $1.5 million for the years ended December 31, 1994
and 1993, respectively.
The weighted average discount rates used in determining the accumulated
postretirement benefit obligation as of December 31, 1994 and 1993 were 8.0%
and 7.0%, respectively.
E. Long-Term Obligations:
The Company and its subsidiaries have capitalized lease and other long-term
obligations. At December 31, 1994 and 1993, such obligations include:
December 31
1994 1993
(in thousands)
Capitalized leases, at interest rates of 10.6% and 14.9%
$554 $886
Long-term obligations due in 1995 506 3,254
1,060 4,140
Less current portion (791) (1,698)
$269 $2,442
E. Long-Term Obligations (continued):
Maturities of
Payments under long-term
capitalized leases obligations
(in thousands)
1995 $327 $ 506
1996 278 _
1997 7 _
612 506
Less amount representing interest 58 _
$554 $506
Capitalized leased property, plant and equipment, net totaled $0.5 million at
December 31, 1994 and consisted of machinery and equipment of $1.0 million
less accumulated amortization of $0.5 million.
F. LEASES:
The Company and its subsidiaries have operating lease agreements, principally
for office and production facilities and equipment. These leases, in some
instances, include renewal provisions at the option of the Company. Rent
expense under such lease agreements in 1994, 1993, and 1992 was $23.1
million, $30.1 million, and $30.8 million, respectively. The 1994, 1993 and
1992 amounts exclude payments for lease commitments of $4.3 million, $4.5
million and $2.3 million, respectively, attributable to facilities related to
restructured operations. Aggregate rental commitments at December 31, 1994
were as follows:
Leases no longer used in operations
Non-cancellable Total Sublease Net
operating lease rent commitment income commitment
(in thousands)
1995 $20,936 $ 3,441 $ 282 $3,159
1996 15,407 2,635 282 2,353
1997 13,548 2,604 282 2,322
1998 12,362 2,472 282 2,190
1999 11,536 2,472 282 2,190
Thereafter 57,794 20,297 360 19,937
$131,583 $33,921 $1,770 $32,151
G. COSTS AND EXPENSES:
Set forth below is a comparative summary of certain costs and expenses:
Years Ended December 31
1994 1993 1992
(in thousands)
Advertising $18,646 $15,409 $16,196
Maintenance and repairs 10,056 10,215 11,615
H. SUPPLEMENTARY STATEMENTS OF CASH FLOWS INFORMATION:
Reconciliation of net earnings (loss) with cash flows from operating activities:
Years Ended December 31
1994 1993 1992
(in thousands)
NET EARNINGS (LOSS) $18,929 $6,441 $(64,150)
ADD (DEDUCT) NONCASH ITEMS:
Depreciation 19,039 20,703 28,344
Bad debt expense 6,391 5,821 10,350
Amortization of intangibles and software
7,872 5,459 6,204
Deferred income taxes (186) (5,360) (12,400)
Gain on sale of subsidiaries _ (12,796) _
Write-off of assets and liabilities related to
restructured operations _ 6,450 5,600
Cumulative effect of changes in accounting
_ _ 51,675
Other _ (1,172) 1,043
52,045 25,546 26,666
CHANGES IN ASSETS AND LIABILITIES:
(Decrease) increase in unearned revenue
(18,194) 288 (14,347)
Decrease (increase) in current assets
(246) 17,375 (8,940)
Increase (decrease) in current liabilities
excluding restructure reserve
16,342 (8,562) (2,081)
Decrease in deferred income taxes
_ (1,387) (8,821)
(Decrease) increase in restructure reserve
(11,769) 13,804 30,741
Increase in accrued postretirement
and postemployment benefits
6,442 5,678 6,812
(Increase) decrease in prepaid employee health care
2,798 (8,030) (5,640)
(Increase) decrease in other assets
(494) (14,221) 3,432
NET CASH PROVIDED BY OPERATING ACTIVITIES
$46,924 $30,491 $27,822
H. SUPPLEMENTARY STATEMENTS OF CASH FLOWS INFORMATION:
(continued):
Years Ended December 31
1994 1993 1992
(in thousands)
SUPPLEMENTARY SCHEDULE OF NONCASH
FINANCING TRANSACTIONS :
Property acquired under capital leases
$_ $266 $642
Convertible preferred stock received for
a portion of the proceeds due from the
sale of subsidiaries $_ $3,650 $_
ACQUISITION OF BUSINESSES:
Fair value of assets acquired $_ $20,507 $_
Cash paid for businesses - 17,507 _
Liabilities incurred or assumed $_ $ 3,000 $_
I. Segment Information:
The Company and its subsidiaries are engaged principally in three major areas
of business activity: publishing, computer processing services and legal
information services. The Company's business segments are fully described on
pages 7 through 9, "Business of CCH and Subsidiaries." Information about the
major business segments is as follows:
Years Ended December 31
1994 1993 1992
(in thousands)
REVENUES:
Publishing $384,782 $391,018 $411,017
Computer processing services 77,400 84,441 151,220
Legal information services 116,594 102,536 97,171
$578,776 $577,995 $659,408
OPERATING EARNINGS (LOSS):
Publishing $(8,792) $(9,388) $29,472
Computer processing services 21,560 (3,452) (49,816)
Legal information services 12,596 (2,528) 619
25,364 (15,368) (19,725)
OTHER INCOME, NET 7,065 23,969 7,977
EARNINGS (LOSS) BEFORE INCOME TAXES
AND ACCOUNTING CHANGES $32,429 $8,601 $(11,748)
Operating results for 1993 include a $36.0 million charge for restructuring
operations of the publishing ($24.5 million), computer processing services
($7.0 million) and legal information services ($4.5 million) segments.
Included in the 1992 operating results of computer processing services segment
is a restructuring charge of $50.0 million.
Years Ended December 31
1994 1993 1992
(in thousands)
OPERATING ASSETS:
Publishing $382,870 $353,429 $397,038
Computer processing services 28,418 62,044 50,980
Legal information services 88,699 89,589 63,731
499,987 505,062 511,749
SHORT-TERM INVESTMENTS AND CASH EQUIVALENTS
81,169 88,767 108,147
TOTAL ASSETS AT DECEMBER 31
$581,156 $593,829 $619,896
CAPITAL EXPENDITURES:
Publishing $19,697 $6,422 $5,358
Computer processing services 1,514 2,132 2,722
Legal information services 7,799 6,535 3,315
$29,010 $15,089 $11,395
DEPRECIATION:
Publishing $11,524 $11,202 $12,541
Computer processing services
2,672 5,1921 2,043
Legal information services 4,843 4,309 3,760
$19,039 $20,703 $28,344
I. Segment Information (continued):
Information about the Company's operations in the United States and other
major geographic areas (principally Canada, Australia, United Kingdom,
Singapore and Japan)
follows:
1994 1993 1992
(in thousands)
REVENUES:
United States $473,728 $476,001 $551,792
International 105,048 101,994 107,616
$578,776 $577,995 $659,408
OPERATING EARNINGS (LOSS):
United States $7,520 $(23,910) $(28,846)
International 17,844 8,542 9,121
25,364 (15,368) (19,725)
OTHER INCOME, NET 7,065 23,969 7,977
EARNINGS (LOSS) BEFORE INCOME TAXES AND
ACCOUNTING CHANGES $32,429 $8,601 $(11,748)
OPERATING ASSETS:
United States $412,349 $436,685 $437,959
International 87,638 68,377 73,790
499,987 505,062 511,749
SHORT-TERM INVESTMENTS AND
CASH EQUIVALENTS 81,169 88,767 108,147
TOTAL ASSETS AT DECEMBER 31
$581,156 $593,829 $619,896
Net assets of operations outside the United States were $24.3 million at
December 31, 1994, $13.2 million at December 31, 1993 and $35.6 million at
December 31, 1992.
J. CAPITAL STOCK:
During 1994, the Company purchased 128,632 shares of Class A common
stock and 46,632 shares of Class B common stock at an aggregate cost of $3.1
million. During 1993, the Company purchased 95,010 shares of Class A
common stock and 445,000 shares of Class B common stock at an aggregate
cost of $8.9 million. During 1992, the Company purchased 70,748 shares of
Class A common stock and 15,748 shares of Class B common stock for $1.6
million.
In 1993 and 1992, the Company's Board of Directors authorized a total of $20.0
million for the purchase of Class A and/or Class B treasury stock. At
December 31, 1994,
$6.5 million of the authorization remains outstanding.
K. LONG-TERM INCENTIVE PLAN:
The Company's 1993 Long-Term Incentive Plan (the Plan) was adopted by the
Board of Directors on February 11, 1993 and, approved by the stockholders on
March 25, 1993. The amended and restated Plan was approved by the
stockholders on March 31, 1994. The Plan is designed to align the interests of
the Company's stockholders and its key employees by increasing key employees'
proprietary interests in the Company's growth and success, and to advance the
interests of stockholders by attracting and retaining key employees by
providing
them with performance-based incentives.
The Company has reserved 2,000,000 shares of Class B common stock for
issuance under the Plan. The Plan will expire on February 10, 2003 and no
additional awards or grants can be made after the expiration date.
Awards and grants under the Plan may be made in the form of nonqualified
stock options, "incentive stock options" (within the meaning of Section 422 of
the Internal Revenue Code), stock appreciation rights, performance shares,
stock units, restricted stock, or cash. The Board presently anticipates that
awards will generally be made in the form of nonqualified stock options. The
exercise price of a nonqualified stock option may be equal to, less than, or
greater than the "fair market value" of a share of Class B common stock on the
date of grant of the option.
Options to purchase 266,250 and 820,000 shares of Class B common stock
have been granted at the exercise price of $17.00 and $16.625 per share for
1994 and 1993, respectively. The 1993 options generally become exercisable at
the rate of one-eighth per year beginning at the end of the second year from
the
date of grant and at one-fourth per year beginning at the end of the fourth
year
from the date of grant, although two key employees have accelerated vesting
due to their proximity to retirement age. The 1994 options generally become
exercisable at the rate of one-half on the second anniversary of the grant and
one-fourth on the third and fourth anniversaries of the grant, except that two
key employees were again granted accelerated vesting. At December 31, 1994,
none of the options were exercisable.
L. Provision for Restructured Operations:
During the second quarter of 1993, the Company recorded a $36 million
provision for costs related to work force and facility reductions associated
with
the restructuring of its operations. The charge included estimated costs of
$24.5 million for consolidating North American printing, shipping and
compiling operations in the publishing segment by the end of 1994 and the
consolidation of the publishing and computer tax processing sales organizations
in 1993, and $4.5 million for streamlining and automating operations in the
legal information services segment through 1994. In addition, the charge
included $7 million for costs associated with the elimination of a data
processing center in Torrance, California. Components of the charge included
write-offs of approximately $7 million of excess fixed assets, $7 million for
the
residual cost of excess leased facilities and $22 million of one-time costs
to be
incurred, including severance costs associated with the elimination of
approximately 1,000 positions.
Effective April 30, 1992, the Company recorded a $50 million provision for
restructuring the operations of its computer processing services segment. This
segment shifted its primary product line from mainframe-based service bureau
processing of tax returns to tax software and processing services using
microcomputer-based tax return processing software. The 1992 restructuring
plan included closing 25 of 31 tax processing centers, elimination of support
costs incurred in maintaining the mainframe tax processing applications,
reductions in management, sales and general and administrative areas,
downsizing this segment's headquarter facilities, and disposal of ancillary
products. Subsequently, the Company closed four additional tax processing
centers, leaving two remaining centers in operation.
At the end of 1994, although the data processing center in California had
been
significantly downsized, it had not been totally eliminated because the
migration of the Company's data processing operations from mainframe to
client server platform will not be completed until 1995. The Company has
sublet 20,000 square feet of space in this facility and will continue to seek
opportunities to sublet additional space. Additionally, the Company will
continue to monitor the reserve in light of the real estate market in southern
California. At this time the Company believes the reserve is adequate.
M. LINE OF CREDIT:
Effective July 1, 1994, the Company secured a three-year, $60 million
revolving line of credit. The Company's borrowing options are at LIBOR,
prime and competitive bid rates. The agreement contains certain restrictive
covenants, with which the Company is in compliance. There are no
compensating balance requirements and the facility fees are not material. At
December 31, 1994, there was no outstanding balance under this line.
INDEPENDENT AUDITORS' REPORT
BOARD OF DIRECTORS AND STOCKHOLDERS
CCH INCORPORATED
Riverwoods, Illinois
We have audited the accompanying consolidated balance sheets of CCH
INCORPORATED and subsidiaries as of December 31, 1994 and 1993, and the
related consolidated statements of operations, stockholders' investment and
cash flows for each of the three years in the period ended December 31, 1994.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such consolidated financial statements present fairly, in all
material
respects, the financial position of CCH INCORPORATED and subsidiaries as
of December 31, 1994 and 1993, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1994,
in conformity with generally accepted accounting principles.
As discussed in Notes A, C and D to the consolidated financial statements, in
1992, the Company changed its method of accounting for certain
postretirement and postemployment employee benefits and for income taxes.
DELOITTE & TOUCHE LLP
Chicago, Illinois
February 9, 1995
QUARTERLY MARKET PRICE AND DIVIDEND INFORMATION
The common stock of CCH INCORPORATED is traded on the over-the-
counter market and is quoted on NASDAQ. The chart below shows the range
of prices for the Company's common stock and the dividends paid on the stock
during each quarter within the past two years.
Dividends
High Low Paid
1994:
First Quarter
Class A $ 21 $ 17 $ .175
Class B 19 16 .175
Second Quarter
Class A 19.75 15.25 .175
Class B 19 15 .175
Third Quarter
Class A 19.5 16.75 .175
Class B 19.75 16 .175
Fourth Quarter
Class A 18 15 .175
Class B 18.25 15 .175
1993:
First Quarter
Class A 20.25 16 .175
Class B 19 14.25 .175
Second Quarter
Class A 18.5 16 .175
Class B 18 15.25 .175
Third Quarter
Class A 20.25 14 .175
Class B 19 13 3/4 .175
Fourth Quarter
Class A 18.75 13.75 .175
Class B 18.5 13.75 .175
As of February 10, 1995 there were approximately 4,254 Class A and 4,251
Class B
stockholders.
SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION
QUARTERLY EARNINGS (LOSS) STATEMENT DATA (UNAUDITED)
The quarterly earnings (loss) statement data for the three years in the period
ended
December 31, 1994 is as follows (in thousands, except share amounts):
Earnings (loss) Weighted avg.
before income number
taxes and Acctg. Net earnings (loss) of shares
Quarter Revenues actg. changes changes Total Per Share outstanding
1994
First $155,248 $19,454 $ _ $11,354 $.33 34,209,898
Second 129,296 (5,379) (3,079) (.09) 34,157,248
Third 126,453 (4,677) _ (2,777) (.08) 34,056,199
Fourth 167,779 23,031 _ 13,431 .39 34,034,634
$578,776 $32,429 $_ $18,929 $.55 34,113,855
1993
First $164,400 $12,831 $_ $7,506 $.22 34,749,908
Second 132,010 29,976) _ (17,536) (.51) 34,745,732
Third 123,163 (363) _ 2,322 .07 34,209,904
Fourth 158,422 26,109 _ 14,149 .41 34,209,898
$577,995 $8,601 $_ $6,441 $.19 34,476,644
1992*
First $204,028 $31,515 $(50,502) $(32,407) $(.93) 34,836,404
Second 160,893 (42,675) _ (30,395) (.87) 34,786,239
Third 136,778 (4,528) _ (2,698) (.08) 34,762,575
Fourth 157,709 3,940 _ 1,350 .04 34,749,908
$659,408 $(11,748) $(50,502) $(64,150) $(1.84) 34,783,631
* The 1992 quarterly results have been restated to reflect implementation of
accounting changes for postretirement and postemployment benefits and
income taxes.
CORPORATE ORGANIZATION
BOARD OF DIRECTORS
DIRECTORS_NON-EMPLOYEES
John C. Burton Ernst & Young Professor of Accounting and
Finance, Columbia University
William C. Egan III Executive Vice President, Consumer Products World-
wide Division of Johnson & Johnson Consumer
Products. Inc.
Richard T. Merrill(1) Retired, formerly President and CEO
Robert H. Mundheim Executive Vice President and General Counsel for
Salomon Inc. and Managing Director and
member of the Executive Committee, Salomon
Brothers Inc
Daniel K. Thorne Private Investor
DIRECTORS-EMPLOYEES
Edward L. Massie President and Chief Executive Officer
Oakleigh B. Thorne Chairman of the Board
Oakleigh Thorne Member, CCH Executive Committee
Ralph C. Whitley Member, CCH Executive Committee
EXECUTIVE COMMITTEE
Edward L. Massie(2)
Oakleigh Thorne
Ralph C. Whitley
EXECUTIVE OFFICERS
John I. Abernethy Finance (Chief Financial Officer)
Christopher Ainsley Strategy
JoAnn Augustine Administration (Corporate Secretary)
Jonathan Copulsky Product/Customer Management
Nancy McKinstry Product Management
Stephen J. Uhring Customer Management
Richard G. Honor(3) International
John J. Lynch, Jr. Service Products
Thomas N. Taylor Operations
Hugh J. Yarrington Knowledge
James C. Rooney Knowledge Teams
(1) Retiring from the Board April 1995.
(2) Retiring as President and CEO April 1995.
(3) Retired February 1995.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 43,302
<SECURITIES> 39,918
<RECEIVABLES> 224,344
<ALLOWANCES> (20,049)
<INVENTORY> 8,877
<CURRENT-ASSETS> 355,099
<PP&E> 299,821
<DEPRECIATION> (175,818)
<TOTAL-ASSETS> 581,156
<CURRENT-LIABILITIES> 363,814
<BONDS> 0
<COMMON> 34,836
0
0
<OTHER-SE> 56,978
<TOTAL-LIABILITY-AND-EQUITY> 919,814
<SALES> 578,776
<TOTAL-REVENUES> 578,776
<CGS> 275,264
<TOTAL-COSTS> 275,264
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 6,391
<INTEREST-EXPENSE> 125
<INCOME-PRETAX> 32,429
<INCOME-TAX> 13,500
<INCOME-CONTINUING> 32,429
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,929
<EPS-PRIMARY> .55
<EPS-DILUTED> .55
</TABLE>
REVOLVING CREDIT AGREEMENT
BY AND AMONG
COMMERCE CLEARING HOUSE, INC.
THE BANKS SIGNATORY HERETO
AND
NATIONAL WESTMINSTER BANK PLC,
AS AGENT FOR SUCH BANKS
Dated as of July 1, 1994
EXECUTION COPY
TABLE OF CONTENTS
PAGE
Article 1. Definitions. 1
Article 2. Commitments; Loans. 17
Section 2.1 Committed Loans
17
Section 2.2 The Bid Loans. 20
Section 2.3 Notes. 22
Section 2.4 Mandatory and Voluntary
Payments. 23
Section 2.5 Interest 24
Section 2.6 Fees. 25
Section 2.7 Voluntary Reductions in
Commitment. 25
Section 2.8 Use of Proceeds of Loans.
26
Section 2.9 Computations. 26
Section 2.10 Determination,
Denomination and Redenomination of
Alternative Currency Loans 26
Section 2.11 Time and Method of
Payments. 26
Section 2.12 Lending Offices. 27
Section 2.13 Several Obligations.
28
Section 2.14 Pro Rata Treatment
Among Banks 28
Section 2.15 Non-Receipt of Funds by
the Agent 28
Section 2.16 Sharing of Payments and
Set- Off Among Banks 29
Section 2.17 Additional Costs; Capital
Requirements 29
Section 2.18 Limitation on Types of
Loans 32
Section 2.19 Illegality 33
Section 2.20 Certain Conversions
pursuant
to Sections 2.17
and 2.19 33
Section 2.21 Indemnification 35
Article 3. Representations and Warranties 35
Section 3.1 Organization 35
Section 3.2 Power, Authority,
Consents 36
Section 3.3 No Violation of Law or
Agreements 36
Section 3.4 Due Execution, Validity,
Enforceability 37
Section 3.5 Properties, Priority of
Liens 37
Section 3.6 Judgments, Actions,
Proceedings 37
Section 3.7 No Defaults, Compliance
With Laws 37
Section 3.8 Burdensome Documents
38
Section 3.9 Financial Statements
38
Section 3.10 Tax Returns 38
Section 3.11 Regulation U 39
Section 3.12 Full Disclosure 39
Section 3.13 Condition of Assets 39
Section 3.14 ERISA 39
Article 4. Conditions to the Loans 41
Section 4.1 Conditions to Initial
Loans 41
Section 4.2 Conditions to All Loans
42
Article 5. Delivery of Financial Reports, Documents and
Other Information 42
Section 5.1 Annual Financial
Statements 42
Section 5.2 Quarterly Financial
Statements 43
Section 5.3 Compliance Information
43
Section 5.4 No Default Certificate
43
Section 5.5 Copies of Documents
44
Section 5.6 Notices of Defaults
44
Section 5.7 ERISA Notices and
Requests 44
Article 6. Affirmative Covenants 44
Section 6.1 Books and Records
44
Section 6.2 Inspections and Audits
45
Section 6.3 Continuance of Business
45
Section 6.4 Copies of Corporate
Documents 45
Section 6.5 Perform Obligations
45
Section 6.6 Notice of Litigation
45
Section 6.7 Insurance 46
Section 6.8 Financial Covenants
46
Section 6.9 Notice of Certain Events
46
Section 6.10 Comply with ERISA
46
Section 6.11 Environmental
Compliance 46
Article 7. Negative Covenants 47
Section 7.1 Indebtedness 47
Section 7.2 Liens 47
Section 7.3 Guaranties 48
Section 7.4 Mergers, Acquisitions
48
Section 7.5 Redemptions;
Distributions 49
Section 7.6 Changes in Business
49
Section 7.7 Investments 49
Section 7.8 ERISA Obligations.
50
Section 7.9 Amendments of
Documents. 51
Section 7.10 Transactions with
Affiliates 51
Section 7.11 Sale of Assets 51
Article 8. Events of Default. 51
Section 8.1 Payments. 51
Section 8.2 Certain Covenants.
52
Section 8.3 Other Covenants. 52
Section 8.4 Other Defaults. 52
Section 8.5 Representations and
Warranties 52
Section 8.6 Bankruptcy 52
Section 8.7 Judgments 53
Article 9. The Agent 53
Section 9.1 Appointment, Powers and
Immunities 53
Section 9.2 Reliance by Agent
54
Section 9.3 Events of Default 54
Section 9.4 Rights as a Bank 55
Section 9.5 Indemnification 55
Section 9.6 Non-Reliance on Agent
and other Banks 55
Section 9.7 Failure to Act 56
Section 9.8 Resignation or Removal
of Agent 56
Section 9.9 Sharing of Payments.
56
Article 10. Miscellaneous Provisions 57
Section 10.1 Fees and Expenses;
Indemnity. 57
Section 10.2 Remedies for Cumulative
ERISA Liabilities 58
Section 10.3 Taxes. 59
Section 10.4 Payments. 59
Section 10.5 Survival of Agreements
and
Representations;
Construction 60
Section 10.6 Set-off of Deposits.
60
Section 10.7 Modifications, Consents
and
Waivers; Entire
Agreement. 60
Section 10.8 Remedies Cumulative.
61
Section 10.9 Further Assurances.
61
Section 10.10 Notices. 61
Section 10.11 Counterparts. 62
Section 10.12 Severability. 63
Section 10.13 Binding Effect; No
Assignment
or Delegation by
Borrower. 63
Section 10.14 Assignments and
Participations by Banks. 63
Section 10.15 Confidentiality 65
Section 10.16 GOVERNING LAW;
CONSENT TO JURISDICTION;
WAIVER OF TRIAL BY JURY.
66
REVOLVING CREDIT AGREEMENT AGREEMENT,
made this 1st day of July, 1994, by and among: Commerce
Clearing House, Inc., a Delaware corporation (the "Borrower");
The Banks that from time to time become parties hereto
(individually, a "Bank" and collectively, the "Banks"); and
NATIONAL WESTMINSTER BANK PLC as Agent for the
Banks (in such capacity, together with its successors in such capacity,
the "Agent");
W I T N E S S E T H:
WHEREAS, the Borrower wishes to obtain loans from the
Banks in the aggregate principal Dollar Amount (as hereinafter
defined) of up to Sixty Million Dollars ($60,000,000), on a revolving
credit basis, and the Banks are willing to make such loans to the
Borrower in an aggregate principal Dollar Amount outstanding at any
one time of up to such sum on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, the parties hereto agree as follows:
Article 1. Definitions.
As used in this Agreement, the following terms shall
have the following meanings:
Additional Costs: as defined in subsection 2.17(b)
hereof.
Affected Loans: as defined in Section 2.20 hereof.
Affected Type: as defined in Section 2.20 hereof.
Affiliate: as to any Person, any other Person that
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control"
(including, with its correlative meanings, "controlled by" and "under
common control with") shall mean possession, directly or indirectly, of
power to direct or cause the direction of management or policies
(whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise), provided that, in any
event: (i) any Person that owns directly or indirectly 5% or more of
the securities having ordinary voting power for the election of
directors or other governing body of a corporation or 5% or more of
the partnership or other ownership interests of any other Person (other
than as a limited partner of such other Person) will be deemed to
control such corporation or other Person; and (ii) each shareholder,
director and officer of the Borrower shall be deemed to be an Affiliate
of the Borrower.
Agency Fee: as defined in subsection 2.6(b) hereof.
Agreement: this Revolving Credit Agreement, as
amended, modified or supplemented from time to time.
Alternative Currency: subject to availability
pursuant to Section 2.18 and to the extent fully transferable and
convertible into Dollars, the lawful currencies of Australia, Canada
and England.
Applicable Lending Office: with respect to each
Bank and Type of Loan, the Lending Office as designated for such
Type of Loan below such Bank's name on the signature pages hereof
or such other office of such Bank or of an affiliate of such Bank as it
may from time to time specify to the Agent and the Borrower as the
office at which its Loans of such Type are to be made and maintained.
Applicable Margin or Percentage: the applicable
percentage set forth below opposite the Funded Debt to Capitalization
Ratio as at the date of determination:
Funded Debt to Capitalization Ratio Applicable Margin for
Eurocurrency Loans Applicable Margin for CD Loans
Applicable Percentage for Facility Fee Equal to or less than
40%0.25%0.375%0.15%Greater than 40%0.35%0.475%0.20%The
determination of the applicable percentage pursuant to the table set
forth above shall be made on a quarterly basis based on an
examination of the certified financial statements of the Borrower
delivered pursuant to and in compliance with Section 5.1 or Section
5.2 hereof, which financial statements, if annual, shall be audited and,
if quarterly, shall be certified by the chief financial officer or treasurer
of the Borrower. Each determination of the Applicable Margin for
Eurocurrency and CD Loans, and the Applicable Percentage for the
purpose of calculating the Facility Fee, shall be effective as of the first
day of the calendar month following the date on which the financial
statements on which such determination was based were received by
the Agent. In the event that financial statements for the four full fiscal
quarters most recently completed prior to such date of determination
either: (i) have not been delivered to the Agent in compliance with
Section 5.1 or 5.2 hereof, or (ii) if delivered, do not comply in form or
substance with Section 5.1 or 5.2 hereof (in the sole judgement of the
Agent), then the Agent may determine, in its reasonable judgment, the
ratio referred to above that would have been in effect as at such date,
and, consequently, the Applicable Margin and the Applicable
Percentage in effect for the period commencing on such date.
Assessment Rate: at any time, the rate (rounded
upwards, if necessary, to the nearest 1/100 of 1%) then charged by the
Federal Deposit Insurance Corporation (or any successor) to the Agent
for deposit insurance for Dollar time deposits with the Agent at the
Principal Office as determined by the Agent.
Assignment and Acceptance: an agreement in the
form of Exhibit A hereto.
Assuming Bank: as defined in subsection 2.20(b)
hereof.
Bid: as defined in subsection 2.2(b) hereof.
Bid Loan: as defined in Section 2.2 hereof.
Bid Loan Borrowing Date: as defined in subsection
2.2(b) hereof.
Bid Loan Note: as defined in subsection 2.3(b)
hereof.
Bid Loan Request: as defined in subsection 2.2(a)
hereof.
Borrowing Notice: as defined in Section 2.1(a)
hereof.
Business Day: (a) with respect to any borrowing,
payment or rate selection of a Eurocurrency Loan, a day (other than a
Saturday or Sunday) on which banks generally are open for the
conduct of substantially all of their commercial lending activities in
New York and London and on which dealings in the relevant
Permitted Currency are carried on in the interbank market in London
and, for currencies other than Eurodollars, in the principal financial
center of the country in whose currency the Loan is to be funded, and
(b) for all other purposes, a day (other than a Saturday or Sunday) on
which banks generally are open in New York City for the conduct of
substantially all of their commercial lending activities.
Capitalized Lease: any lease under which the
obligations to pay rent or other amounts constitute Capitalized Lease
Obligations in accordance with generally accepted accounting
principles.
Capitalized Lease Obligations: as to any Person, the
obligations of such Person to pay rent or other amounts under a lease
of (or other agreement conveying the right to use) real and/or personal
property which obligations are required to be classified and accounted
for as a capital lease on a balance sheet of such Person under generally
accepted accounting principles and, for purposes of this Agreement,
the amount of such obligations shall be the capitalized amount thereof,
determined in accordance with generally accepted accounting
principles.
Cash: as to any Person, such Person's cash and cash
equivalents, as defined in accordance with generally accepted
accounting principles consistently applied.
CD Loans: Loans the interest on which is
determined on the basis of rates referred to in clause (b) of the
definition of "Fixed Base Rate" in this Article 1.
Code: the Internal Revenue Code of 1986, as it may
be amended from time to time.
Commitment: as to each Bank, the amount set forth
opposite such Bank's name on the signature pages hereof under the
caption "Commitment" as such amount is subject to adjustment in
accordance with the terms hereof.
Commitment Termination Date: June 30, 1997.
Committed Loan: as defined in subsection 2.1
hereof.
Committed Loan Note: as defined in subsection
2.3(a) hereof.
Compliance Certificate: a certificate in substantially
the form of Exhibit B attached hereto executed by the chief financial
officer or treasurer of the Borrower.
Confidential Information: as defined in Section
10.15 hereof.
Controlled Group: all members of a controlled
group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414(b),
414(c) or 414(m) of the Code and Section 4001(a)(2) of ERISA.
Credit Period: the period commencing on the date of
this Agreement and ending on the Commitment Termination Date.
Cumulative ERISA Liability: the cumulative
amount of liability, claims or costs involved with, relating to or
resulting from any action or inaction of the Borrower and/or its ERISA
Affiliates, which is (a) a breach of any representation or warranty
under Section 3.14, (b) a violation of any covenant under Sections 6.10
or 7.8, or (c) an Event of Default under Section 8.2, 8.3 or 8.5 (solely
to the extent it relates to Borrower's representations or covenants
under Sections 3.14, 6.10 or 7.8), incurred or existing while the
Commitments are outstanding or as long as the Borrower is indebted
to any Bank.
Debt Instrument: as defined in subsection 8.4(a)
hereof.
Default: an event which with notice or lapse of time,
or both, would constitute an Event of Default.
Defined Contribution Plan: a plan which is not
covered by Title IV of ERISA or subject to the minimum funding
standards of Section 412 of the Code and which provides for an
individual account for each participant and for benefits based solely on
the amount contributed to the participant's account, and any income,
expenses, gains and losses, and any forfeitures of accounts of other
participants which may be allocated to such participant's account.
Dollars and $: lawful money of the United States of
America.
Dollar Amount: (a) with respect to each Loan to be
made, continued or converted in Dollars, the principal amount thereof
and (b) with respect to each Loan in an Alternative Currency, the
amount of Dollars into which the principal amount of such Loan may
be converted on the date of determination at the spot rate at which
Dollars are offered to the Agent in London for the Alternative
Currency in which such Loan is or is to be denominated in an amount
comparable to the amount of such Loan at approximately 11:00 A.M.
(London time) two (2) Business Days before such date of
determination.
Eligible Assignee: a commercial bank or other
financial institution to which a Bank may assign all or a portion of its
rights under this Agreement pursuant to Section 10.14 hereof, subject
to the approval of the Borrower, which approval shall not be
unreasonably withheld.
Employee Benefit Plan: any employee benefit plan
within the meaning of Section 3(3) of ERISA which (a) is maintained
for employees of Borrower or any of its ERISA Affiliates or (b) has at
any time within the preceding six (6) years been maintained for
employees of the Borrower or any current or former ERISA Affiliate.
Employee Welfare Benefit Plan: any employee
benefit plan within the meaning of Section 3(1) of ERISA.
Entitled Person: as defined in subsection 2.11(b)
hereof.
Environmental Laws and Regulations: all
environmental, health and safety laws, regulations, and ordinances
applicable to the Borrower or any Subsidiary, or any of their respective
assets or properties, including, without limitation: (i) all regulations,
ordinances, decrees, and other similar documents and instruments of
all courts and governmental authorities, bureaus and agencies,
domestic and foreign, whether issued by environmental regulatory
agencies or otherwise, and (ii) all laws, regulations, ordinances and
decrees relating to Environmental Matters.
Environmental Liability: any liability of the
Borrower or any Subsidiary under any applicable law for any release of
a hazardous substance caused by the seeping, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing of hazardous wastes or other
chemical substances, pollutants or contaminants into the environment,
and any liability for the costs of any clean-up or other remedial action
including, without limitation, costs arising out of security fencing,
alternative water supplies, temporary evacuation and housing and
other emergency assistance undertaken by any environmental
regulatory body having jurisdiction over the Borrower or any
Subsidiary to prevent or minimize any actual or threatened release by
the Borrower or any Subsidiary of any hazardous wastes or other
chemical substances, pollutants and contaminants into the
environment that would endanger the public health or the
environment.
Environmental Matter(s): a release of any toxic or
hazardous waste or other chemical substance, pollutant or contaminant
into the environment or the generation, treatment, storage or disposal
of any toxic or hazardous wastes or other chemical substances.
Environmental Proceeding: any judgment, action,
proceeding or investigation pending before any court or governmental
authority, bureau or agency, including, without limitation, any
environmental regulatory body, with respect to or threatened against or
affecting the Borrower or any Subsidiary or relating to the assets or
liabilities of any of them, including, without limitation, in respect of
any "facility" owned, leased or operated by any of them under the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, or under any state, local or municipal
statute, ordinance or regulation in respect thereof, in connection with
any release of any toxic or hazardous waste or other chemical
substance, pollutant or contaminant into the environment, or with the
generation, storage or disposal of any toxic or hazardous wastes or
other chemical substances.
ERISA: the Employee Retirement Income Security
Act of 1974, as it may be amended from time to time, and the
regulations promulgated thereunder.
ERISA Affiliate: with respect to the Borrower, any
corporation, person or trade or business which is a member of a group
which is under common control with the Borrower, who together with
the Borrower, is treated as a single employer within the meaning of
Sections 414(b) - (o) of the Code and, if applicable, Sections
4001(a)(14) and (b) of ERISA.
Eurocurrency Loan: a Loan denominated in a
Permitted Currency the interest on which is determined on the basis of
rates referred to in clause (a) of the definition of "Fixed Base Rate" in
this Article 1.
Eurodollar Loan: a Eurocurrency Loan
denominated in Dollars.
Event of Default: as defined in Article 8 hereof.
Facility Fee: as defined in subsection 2.6(a) hereof.
Fed Wire: means an electronic transfer of
immediately available funds through the Federal Reserve Wire
Network, or any successor thereto, operated by the Federal Reserve
System.
Federal Funds Rate: for any day, the weighted
average of the rates on overnight federal funds transactions with
member banks of the Federal Reserve System arranged by federal
funds brokers as published by the Federal Reserve Bank of New York
for such day, or if such day is not a Business Day, for the next
preceding Business Day (or, if such rate is not so published for any
such day, the average rate charged to the Agent on such day on such
transactions as reasonably determined by the Agent).
Fee(s): as defined in subsection 2.6(c) hereof.
Financial Statements: with respect to the Borrower:
(i) its audited consolidated balance sheet as at December 31, 1993,
together with the related audited consolidated statement of operations
and audited statement of cash flows for the fiscal year then ended, (ii)
its unaudited consolidated balance sheet as at March 31, 1994,
together with the related unaudited consolidated statement of
operations and unaudited statement of cash flows for the three-month
period then ended, and (iii) the financial statements from time to time
delivered to the Banks pursuant to Sections 5.1 and 5.2 hereof.
Fixed Base Rate: with respect to any Eurocurrency
Loan or CD Loan for any Interest Period therefor:
(a) if such Loan is a Eurocurrency Loan, the
rate per annum equal to the arithmetic average (rounded upwards, if
necessary, to the nearest 1/16 of 1%) of the rates quoted to the Agent
by the Reference Banks at approximately 10:00 a.m. New York time
(or as soon thereafter as practicable) two (2) Business Days prior to the
first day of such Interest Period for the offering by each of the
Reference Banks to leading banks in the London interbank market of
deposits in the applicable Permitted Currency having a term
comparable to such Interest Period and in an amount comparable to
the principal amount of the Eurocurrency Loan to be made by each
such Reference Bank to which such Interest Period relates; and
(b) if such Loan is a CD Loan, the rate per
annum equal to the arithmetic average (rounded upwards, if necessary,
to the nearest 1/20 of 1%) of the bid rates quoted to the Agent by each
of the Reference Banks at approximately 10:00 a.m. New York time
(or as soon thereafter as practicable) on the first day of such Interest
Period as quoted to the Reference Banks by at least two certificate of
deposit dealers in New York of recognized national standing selected
by each Reference Bank for the purchase at face value of time
certificates of deposit of such Reference Bank having a term
comparable to such Interest Period and in an amount comparable to
the principal amount of the CD Loan to be made by such Reference
Bank to which such Interest Period relates.
Fixed Charge Coverage Ratio: at any time a
fraction, the numerator of which is net income plus the sum of
interest, tax and lease expense, and the denominator of which is the
sum of interest and lease expense, all calculated for the most recent
consecutive four fiscal quarters of the Borrower ending on or prior to
the date of determination and calculated on a consolidated basis for the
Borrower and the Subsidiaries in accordance with generally accepted
accounting principles consistently applied.
Fixed Rate: for any Fixed Rate Loan (other than a
Bid Loan) for any Interest Period therefor, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%)
determined by the Agent to be equal to the sum of: (a) (x) the Fixed
Base Rate for such Loan for such Interest Period; divided by (y) 1
minus the Reserve Requirement for such Loan for such Interest Period,
plus (b) if such Loan is a CD Loan, the Assessment Rate in effect at
the commencement of such Interest Period. The Agent shall use its
best efforts to advise the Borrower of the Fixed Rate as soon as
practicable after each change in the Fixed Rate; provided, however,
that the failure of the Agent to so advise the Borrower on any one or
more occasions shall not affect the rights of the Banks or the Agent or
the Obligations of the Borrower hereunder.
Fixed Rate Loans: CD Loans, Eurocurrency Loans
and Bid Loans.
Funded Debt: the aggregate outstanding principal
Dollar Amount of: (i) all indebtedness for borrowed money including,
without limitation, the Loans, and (ii) all Capitalized Lease
Obligations.
Funded Debt to Capitalization Ratio: at any time a
fraction, the numerator of which is aggregate Funded Debt, and the
denominator of which is Net Worth plus Funded Debt, determined on
a consolidated basis for the Borrower and the Subsidiaries in
accordance with generally accepted accounting principles consistently
applied.
Indebtedness: with respect to any Person, all: (i)
liabilities or obligations, direct and contingent, which in accordance
with generally accepted accounting principles would be included in
determining total liabilities as shown on the liability side of a balance
sheet of such Person at the date as of which Indebtedness is to be
determined, including, without limitation, contingent liabilities that in
accordance with such principles, would be set forth in a specific Dollar
amount on the liability side of such balance sheet, and Capitalized
Lease Obligations of such Person; (ii) liabilities or obligations of
others for which such Person is directly or indirectly liable, by way of
guaranty (whether by direct guaranty, suretyship, discount,
endorsement, take-or-pay agreement, agreement to purchase or
advance or keep in funds or other agreement having the effect of a
guaranty) or otherwise; (iii) liabilities or obligations secured by Liens
on any assets of such Person, whether or not such liabilities or
obligations shall have been assumed by it; and (iv) liabilities or
obligations of such Person, direct or contingent, with respect to letters
of credit issued for the account of such Person and bankers acceptances
created for such Person.
Interest Period:
(a) with respect to any Eurocurrency Loan,
each period commencing on the date such Loan is made, continued (or
deemed continued) or converted from a Loan or Loans of another
Type, and ending on the same day in the 1st, 2nd, 3rd or 6th calendar
month thereafter, as the Borrower may select as provided in Sections
2.1(a) and 2.1(e) hereof, except that each such Interest Period that
commences on the last Business Day of a calendar month (or on any
day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business
Day of the appropriate subsequent calendar month;
(b) with respect to any CD Loan, each period
commencing on the date such Loan is made, continued (or deemed
continued) or converted from a Loan or Loans of another Type, and
ending on the day 30, 60, 90 or 180 days thereafter, as the Borrower
may select as provided in Sections 2.1(a) and 2.1(e) hereof; and
(c) with respect to any Bid Loan, the Interest
Period determined pursuant to Section 2.2 hereof.
Notwithstanding the foregoing: (i) each Interest Period that would
otherwise end on a day that is not a Business Day shall end on the next
succeeding Business Day (or, in the case of an Interest Period for
Eurocurrency Loans, if such next succeeding Business Day falls in the
next succeeding calendar month, on the next preceding Business Day);
(ii) no Interest Period for any Type of Loan may be chosen that would
end after the Commitment Termination Date; and (iii) no Interest
Period shall have a duration of less than one (1) month (in the case of
Eurocurrency Loans) or thirty (30) days (in the case of CD Loans).
Interest on all Eurocurrency Loans and CD Loans
(excepting Loans denominated in pounds sterling) shall be computed
on the basis of a year of 360 days and actual days elapsed (including
the first day but excluding the last providing payment is received prior
to 1:00 p.m. (New York City time)) occurring in the period for which
payable. Interest on all other Loans (including Loans denominated in
pounds sterling) shall be computed on the basis of a year of 365 (or
366, if applicable) days and actual days elapsed (including the first day
but excluding the last providing payment is received prior to 1:00 p.m.
(New York City time)) occurring in the period for which payable.
Investment: by any Person:
(a) the amount paid or committed to be paid, or
the value of property or services contributed or committed to be
contributed, by such Person for or in connection with the acquisition
by such Person of any stock, bonds, notes, debentures, partnership or
other ownership interests or other securities of any other Person; and
(b) the amount of any advance, loan or
extension of credit (other than routine extensions of credit in the
ordinary course of business associated with the purchase of such
Person's products or services) by such Person, to any other Person, or
guaranty or other similar obligation of such Person with respect to any
Indebtedness of such other Person, and (without duplication) any
amount committed to be advanced, loaned, or extended by such Person
to any other Person, or any amount the payment of which is committed
to be assured by a guaranty or similar obligation by such Person for the
benefit of, such other Person.
IRS: Internal Revenue Service.
Judgment Currency: as defined in Section 2.11(b).
Latest Balance Sheet: as defined in Section 3.9
hereof.
Leases: leases and subleases (other than Capitalized
Leases), licenses for the use of real property, easements, grants, and
other attachment rights and similar instruments under which the
Borrower has the right to use real or personal property or rights of
way.
Lien: any mortgage, deed of trust, pledge, security
interest, encumbrance, lien or charge of any kind (including any
agreement to give any of the foregoing), any conditional sale or other
title retention agreement, any lease in the nature of any of the
foregoing, and the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction.
Loan(s): individually either a Committed Loan or a
Bid Loan, and collectively all Committed Loans and Bid Loans.
Loan Documents: this Agreement, the Notes, and all
other documents and instruments executed and delivered in connection
herewith or therewith, including all amendments, modifications and
supplements of or to all such documents and instruments.
Majority Banks: at any time Banks holding at least
66-2/3% of the aggregate amount of the Commitments, or, if the
Commitments have been terminated, at any time thereafter Banks
holding at least 66-2/3% of the aggregate amount of Committed Loans
outstanding.
Multiemployer Plan: a "multiemployer plan" as
defined in Section 4001(a)(3) or ERISA to which the Borrower or any
ERISA Affiliate is making, or is accruing an obligation to make,
contributions or has made, or been obligated to make, contributions.
NatWest PLC: National Westminster Bank PLC, in
its individual capacity as a Bank hereunder.
New Bank: as defined in subsection 2.20(b) hereof.
Net Worth: at any time the consolidated
shareholders equity for the Borrower and the Subsidiaries as
determined from a consolidated balance sheet thereof prepared in
accordance with generally accepted accounting principles consistently
applied.
New Type Loans: as defined in Section 2.20 hereof.
Note(s): collectively, the Committed Loan Notes and
the Bid Loan Notes.
Obligations: collectively, all of the Indebtedness,
liabilities and obligations of the Borrower to the Banks and the Agent,
whether now existing or hereafter arising, whether or not currently
contemplated, including, without limitation, those arising under the
Loan Documents.
Offer: as defined in subsection 2.2(b) hereof.
Payor: as defined in Section 2.15 hereof.
Payment Dates: each Quarterly Date in each year
commencing with the first such date after the date hereof.
PBGC: Pension Benefit Guaranty Corporation.
Pension Plan: at any time an employee pension
benefit plan that is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code and is
maintained either: (i) by the Borrower or any ERISA Affiliate for
employees of the Borrower, or by the Borrower for any ERISA
Affiliate, or (ii) pursuant to a collective bargaining agreement or any
other arrangement under which more than one employer makes
contributions and to which the Borrower or any ERISA Affiliate is
then making or accruing an obligation to make contributions or has
within the preceding five (5) plan years made contributions.
Permitted Currencies: (a) Dollars with respect to
Prime Rate Loans and CD Loans, and (b) Dollars or any Alternative
Currency with respect to Eurocurrency Loans or Bid Loans.
Permitted Liens: as to any Person: (i) pledges or
deposits by such Person under workers' compensation laws,
unemployment insurance laws, social security laws, or similar
legislation, or good faith deposits in connection with bids, tenders,
contracts (other than for the payment of Indebtedness of such Person),
or leases to which such Person is a party, or deposits to secure public
or statutory obligations of such Person or deposits of Cash or United
States Government Bonds to secure surety, appeal, performance or
other similar bonds to which such Person is a party, or deposits as
security for contested taxes or import duties or for the payment of rent;
(ii) Liens imposed by law, such as carriers', warehousemen's,
materialmen's and mechanics' liens, or Liens arising out of judgments
or awards against such Person with respect to which such Person at the
time shall currently be prosecuting an appeal or proceedings for
review; (iii) Liens for taxes not yet subject to penalties for non-
payment and Liens for taxes the payment of which is being contested
as permitted by Section 6.5 hereof; (iv) minor survey exceptions,
minor encumbrances, easements or reservations of, or rights of, others
for rights of way, highways and railroad crossings, sewers, electric
lines, telegraph and telephone lines and other similar purposes, or
zoning or other restrictions as to the use of real properties, or Liens
incidental to the conduct of the business of such Person or to the
ownership of such Person's property that were not incurred in
connection with Indebtedness of such Person, all of which Liens
referred to in the preceding clause (iv) do not in the aggregate
materially detract from the value of the properties to which they relate
or materially impair their use in the operation of the business taken as
a whole of such Person; and (v) Liens (other than those referred to in
clauses (i) - (iv) and other than purchase money Liens or Capitalized
Lease Obligations) that secure obligations that in the aggregate do not
exceed $5,000,000 at any one time, and as to all the Liens referred to
in the preceding clauses (i) - (iv) only to the extent arising and
continuing in the ordinary course of business.
Person: an individual, a corporation, a partnership,
a joint venture, a trust or unincorporated organization, a joint stock
company or other similar organization, a government or any political
subdivision thereof, a court, or any other legal entity, whether acting
in an individual, fiduciary or other capacity.
Post-Default Rate: (i) in respect of any Loans a rate
per annum equal to: (x) if such Loans are Prime Rate Loans, 2%
above the Prime Base Rate as in effect from time to time (but in no
event less than the interest rate in effect on the due date), or (y) if such
Loans are Fixed Rate Loans, 2% above the rate of interest in effect
thereon at the time of the Event of Default that resulted in the Post-
Default Rate being instituted until the end of the then current Interest
Period therefor and, thereafter, 2% above the Prime Base Rate as in
effect from time to time (but in no event less than the interest rate in
effect on the due date); and (ii) in respect of other amounts payable by
the Borrower hereunder (other than interest) not paid when due
(whether at stated maturity, by acceleration or otherwise), a rate per
annum during the period commencing on the due date until such other
amounts are paid in full equal to 2% above the Prime Base Rate as in
effect from time to time (but in no event less than the interest rate in
effect on the due date).
Prime Base Rate: The greater of (i) the interest rate
established from time to time by the Agent as its prime rate at the
Principal Office, or (ii) the Federal Funds Rate plus 0.5%.
Notwithstanding the foregoing, the Borrower acknowledges that the
Agent may regularly make domestic commercial loans at rates of
interest less than the prime rate of interest referred to in clause (i) of
the preceding sentence. Each change in any interest rate provided for
herein resulting from a change in the prime rate or the Federal Funds
Rate shall take effect at the time of such change in the prime rate or
the Federal Funds Rate.
Prime Rate Loans: Loans that bear interest at a rate
based upon the Prime Base Rate.
Principal Office: the office of NatWest PLC
presently located at 175 Water Street, New York, New York 10038, or
the principal office of any successor to the Agent as so designated by
such successor.
Purchase Money Security Interest: as defined in
subsection 7.2(b) hereof.
Quarterly Dates: the first day of each April, July,
October and January, the first of which shall be the first such day after
the date of this Agreement, provided that, if any such date is not a
Business Day, the relevant Quarterly Date shall be the next succeeding
Business Day.
Reference Banks: for purposes of determining the
rates referred to in clauses (a) and (b) of the definition of "Fixed Base
Rate" in this Article 1, NatWest PLC, Harris Trust and Savings Bank
and Continental Bank.
Regulation D: Regulation D of the Board of
Governors of the Federal Reserve System, as the same may be
amended or supplemented from time to time.
Regulatory Change: as to any Bank, any change
after the date of this Agreement in United States federal, state or
foreign laws or regulations (including Regulation D and the laws or
regulations that designate any assessment rate relating to certificates of
deposit or otherwise (including the "Assessment Rate" if applicable to
any Loan)) or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks,
including such Bank, of or under any United States federal, state or
foreign laws or regulations (whether or not having the force of law) by
any court or governmental or monetary authority charged with the
interpretation or administration thereof.
Replaceable Bank: as defined in subsection 2.20(b)
hereof.
Required Payment: as defined in Section 2.15
hereof.
Reserve Requirement: for any Fixed Rate Loans
(other than Bid Loans) for any quarterly period (or, as the case may be,
shorter period) as to which interest is payable hereunder, the average
maximum rate at which reserves (including any marginal,
supplemental or emergency reserves) are required to be maintained
during such period under Regulation D by member banks of the
Federal Reserve System with deposits exceeding one billion Dollars
against "Eurocurrency liabilities" (as such term is used in Regulation
D) or, in the case of CD Loans, nonpersonal dollar time deposits in an
amount of $100,000 or more. Without limiting the effect of the
foregoing, the Reserve Requirement shall reflect any other reserves
required to be maintained by such member banks by reason of any
Regulatory Change against: (i) any category of liabilities that includes
deposits by references to which the Fixed Rate for Eurocurrency Loans
or CD Loans (as the case may be) is to be determined as provided in
the definition of "Fixed Base Rate" in this Article 1, or (ii) any
category of extensions of credit or other assets that include
Eurocurrency Loans or CD Loans (as the case may be).
Specified Currency: as defined in Section 2.11(b).
Specified Place: as defined in Section 2.11(b).
Subsidiary: with respect to any Person, any
corporation, partnership or joint venture whether now existing or
hereafter organized or acquired: (i) in the case of a corporation, of
which a majority of the securities having ordinary voting power for the
election of directors (other than securities having such power only by
reason of the happening of a contingency) are at the time owned by
such Person and/or one or more Subsidiaries of such Person, or (ii) in
the case of a partnership or joint venture in which such Person is a
general partner or joint venturer or of which a majority of the
partnership or other ownership interests are at the time owned by such
Person and/or one or more of its Subsidiaries. Unless the context
otherwise requires, references in this Agreement to "Subsidiary" or
"Subsidiaries" shall be deemed to be references to a Subsidiary or
Subsidiaries of the Borrower.
Termination Event: any one of the following:
(a) a "Reportable Event" described in Section 4043
of ERISA and the regulations issued thereunder;
(b) the withdrawal of the Borrower or any ERISA
Affiliate from a Pension Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA or
was deemed such under Section 4068(f) of ERISA;
(c) the termination of a Pension Plan, the filing of a
notice of intent to terminate a Pension Plan or the treatment of a
Pension Plan amendment as a termination under Section 4041 of
ERISA;
(d) the institution of proceedings to terminate a
Pension Plan by the PBGC;
(e) any other event or condition which would
constitute grounds under Section 4042(a) of ERISA for the
termination of, or the appointment of a trustee to administer, any
Pension Plan;
(f) the partial or complete withdrawal of the
Borrower or any ERISA Affiliate from a Multiemployer Plan;
(g) the imposition of a Lien pursuant to Section 412
of the IRC or Section 302 of ERISA;
(h) any event or condition which results in the
reorganization or insolvency of a Multiemployer Plan under Section
4241 or Section 4245 of ERISA, respectively; or
(i) any event or condition which results in the
termination of a Multiemployer Plan under Section 4041A of ERISA
or the institution by the PBGC of proceedings to terminate a
Multiemployer Plan under Section 4042 of ERISA.
Total Commitment: the aggregate obligation of the
Banks to make Loans hereunder not exceeding Sixty Million Dollars
($60,000,000), as the same may be reduced pursuant to Section 2.7
hereof.
Type: refers to the characteristics of a Loan as a
Prime Rate Loan, Bid Loan, CD Rate Loan with a particular Interest
Period, or Eurocurrency Loan for a particular Interest Period in a
particular Permitted Currency. All Prime Rate Loans are of the same
Type. Each Bid Loan is of a different Type. All CD Loans with
identical interest rates and Interest Periods are of the same Type. All
Eurocurrency Loans with identical interest rates and Interest Periods
and in the same currency are of the same Type. All other Loans are of
different Types. Interest Periods are identical if they begin and end on
the same days.
Unfunded Liability: the amount (if any) by which
the present value of all vested and unvested accrued benefit obligations
under a Pension Plan exceeds the fair market value of assets allocable
to such benefits, all determined as of the then most recent valuation
date for such Pension Plans using actuarial assumptions used by the
Borrower's actuary.
Unused Commitment: as at any date, for each Bank,
the positive difference, if any, between: (i) the amount of such Bank's
Commitment as in effect on such date, and (ii) the then aggregate
outstanding principal Dollar Amount of all Loans made by such Bank,
excluding Bid Loans.
Any accounting terms used in this Agreement that are not specifically
defined herein shall have the meanings customarily given to them in
accordance with generally accepted accounting principles as in effect
on the date of this Agreement, except that references in Article 5 to
such principles shall be deemed to refer to such principles as in effect
on the date of the financial statements delivered pursuant thereto.
Article 2. Commitments; Loans.
Section 2.1 Committed Loans.
Each Bank hereby severally agrees, on the
terms and subject to the conditions of this Agreement, to make loans
(individually a "Committed Loan" and, collectively, the "Committed
Loans") to the Borrower during the Credit Period to and including the
Commitment Termination Date in any one or more of the Permitted
Currencies in an aggregate principal Dollar Amount at any one time
outstanding up to, but not exceeding, the Commitment of such Bank as
then in effect. Subject to the terms and conditions of this Agreement,
during the Credit Period the Borrower may borrow, repay (provided
that repayment of Fixed Rate Loans shall be subject to the provisions
of Section 2.21 hereof) and reborrow up to an aggregate Dollar
Amount of Loans outstanding (including Bid Loans) at any time not to
exceed the Total Commitment (after giving effect to voluntary
reductions permitted herein) by means of Prime Rate Loans or Fixed
Rate Loans, and during such period and thereafter until the date of the
payment in full of all of the Loans, the Borrower may convert
Committed Loans of one Type into Committed Loans of another Type
(as provided in Section 2.1(e) hereof). Committed Loans in
Alternative Currencies shall be determined, denominated and
redenominated as set forth in Section 2.10.
(a) Notices Relating to Committed Loans.
The Borrower shall give the Agent written
notice of each borrowing or conversion of each Committed Loan and
of the duration of each Interest Period applicable to each Fixed Rate
Loan that is a Committed Loan (in each case, a "Borrowing Notice").
Each such written notice shall be irrevocable and shall be effective
only if received by the Agent not later than 11:00 A.M., (or, in the
case of Prime Rate Loans, 12:00 noon) New York City time on the
date that is:
(i) In the case of each notice of
borrowing of, or conversion into, Prime Rate Loans, on the date
thereof;
(ii) In the case of each notice of borrowing of,
or conversion into, CD Loans, or the duration of an Interest Period for
CD Loans, 2 Business Days prior to the effective date thereof;
(iii) In the case of each notice of borrowing of,
or conversion into, Eurocurrency Loans (other than Loans
denominated in Australian dollars), or the duration of an Interest
Period for Eurocurrency Loans (other than Loans denominated in
Australian dollars), 3 Business Days prior to the effective date thereof;
and
(iv) In the case of each notice of borrowing of,
or conversion into, Loans denominated in Australian dollars, or the
duration of an Interest Period for Loans denominated in Australian
dollars, 4 Business Days prior to the effective date thereof.
Each such notice of borrowing or conversion shall specify the amount
and Type of Committed Loans to be borrowed or converted (and, in
the case of a conversion, the Type of Committed Loans to result from
such conversion) and the date of borrowing or conversion (which shall
be a Business Day for executing each Type of Committed Loan to be
borrowed or converted). Each such notice of the duration of an
Interest Period shall specify the Committed Loans to which such
Interest Period is to relate. The Agent shall notify the Banks of the
content of each such Borrowing Notice promptly after its receipt
thereof.
(b) Disbursement of Committed Loan Proceeds.
The Borrower shall give the Agent notice of
each borrowing hereunder as provided in Section 2.1(a) hereof. Not
later than 12:00 noon (or, in the case of Prime Rate Loans, 1:00 p.m.),
New York City time, on the date specified for each borrowing
hereunder, each Bank shall initiate a transfer to the Agent, by Fed
Wire or otherwise, but in any event in immediately available funds, the
amount of the Committed Loans to be made by it on such date, and the
Agent, upon its receipt thereof, shall disburse such sum to the
Borrower by depositing the amount thereof in an account of the
Borrower designated by the Borrower.
(c) Minimum Borrowings and Conversions of
Committed Loans.
Each borrowing of Committed Loans (other than
Prime Rate Loans) requested from the Banks shall be in a minimum
aggregate Dollar Amount of $5,000,000 and in integral Dollar
Amount multiples of $1,000,000, provided that any request for Prime
Rate Loans may be in the amount of the Unused Commitment. Each
borrowing of Prime Rate Loans (other than Prime Rate Loans in the
amount of the Unused Commitment) requested from the Banks shall
be in a minimum aggregate Dollar Amount of $1,000,000 and in
integral Dollar Amount multiples of $1,000,000. Each conversion of
Committed Loans of one Type into Committed Loans of another Type
(other than into Prime Rate Loans), or continuation of existing
Committed Loans of the same Type (other than Prime Rate Loans) for
a successive Interest Period, shall be in a minimum aggregate Dollar
Amount of $5,000,000. Each conversion of Committed Loans into
Prime Rate Loans shall be in a minimum aggregate Dollar Amount of
$1,000,000. The Agent and the Borrower may make immaterial
mutually convenient adjustments to the thresholds and multiples set
forth above in respect of Eurocurrency Loans in Alternative
Currencies.
(d) Interest on and Maturity of Committed
Loans.
Interest on Committed Loans shall accrue and be
paid in accordance with Sections 2.5 and 2.9 hereof. Subject to earlier
payment pursuant to the terms and provisions of this Agreement,
Committed Loans shall be due and payable on the Commitment
Termination Date.
(e) Continuance and Conversion of Committed
Loans.
Each Fixed Rate Loan shall continue as a Fixed Rate
Loan until the end of the applicable Interest Period. The Borrower
shall have the right to continue Fixed Rate Loans (other than Bid
Loans) for a like Interest Period in the same currency or convert
Committed Loans of one Type into Committed Loans of another Type
from time to time, provided that: (i) the Borrower shall give the Agent
notice of each desired conversion as provided in Section 2.1(a) hereof;
(ii) except as required by Sections 2.17(c), 2.19 or 2.20, Fixed Rate
Loans may be converted only on the last day of an Interest Period for
such Loans; (iii) no Fixed Rate Loan shall be continued as or
converted into a Fixed Rate Loan, or Prime Rate Loan converted into a
Fixed Rate Loan, for a new Interest Period if the principal Dollar
Amount (determined as of the date of any proposed conversion or
continuation thereof) of the aggregate Loans outstanding after giving
effect to such continuation or conversion would exceed the Total
Commitment then in effect; (iv) no Prime Rate Loan may be converted
into a Fixed Rate Loan or Fixed Rate Loan continued as or converted
into a Fixed Rate Loan if on the proposed date of conversion a Default
or an Event of Default exists; and (v) each continuance and conversion
shall comply with Section 2.1(c) hereof. The Agent shall use its best
efforts to notify the Borrower of the effectiveness of each continuation
or conversion, and the new interest rate to which the continued or
converted Loans are subject, as soon as practicable thereafter;
provided, however, that any failure to give such notice shall not affect
the Borrower's Obligations, or the Agent's or the Banks' rights and
remedies, hereunder in any way whatsoever. Each Fixed Rate Loan
(other than Bid Loans), if not repaid or converted in accordance with
the terms hereof, shall be continued for a like Interest Period in the
same currency, provided that if such Loan is neither repaid or
converted, nor satisfies the conditions for continuance hereunder, such
Loan automatically shall be converted to a Prime Rate Loan.
(f) Rate Quotations.
Each Reference Bank shall use its best efforts to
furnish quotations to the Agent as contemplated by this Agreement. If
any Reference Bank does not furnish a timely quotation, the Agent
shall determine the relevant interest rate on the basis of the quotation
or quotations furnished by the remaining Reference Bank or Reference
Banks or, if no such quotation is provided on a timely basis, the
provisions of Section 2.18 shall apply.
Section 2.2 The Bid Loans.
Prior to the Commitment Termination Date, the
Borrower may request the Banks to offer to make loans (each a "Bid
Loan" and collectively the "Bid Loans") in the manner set forth in this
Section 2.2 and in amounts such that the aggregate principal Dollar
Amount of all Loans at any time outstanding shall not exceed the
Total Commitment of the Banks then in effect. The Banks may, but
shall have no obligation to, make such offers in any amount up to the
full amount requested by the Borrower, and the Borrower may, but
shall have no obligation to, accept any such offers in the manner set
forth in this Section 2.2. Notwithstanding any other provision of this
Agreement, the aggregate principal Dollar Amount of the Bid Loans
made by any Bank may cause the aggregate Dollar Amount of all of its
Loans at any time to exceed the Commitment of such Bank, so long as
the aggregate principal Dollar Amount of all Loans outstanding at any
time does not exceed the Total Commitment then in effect.
(a) Invitation to Bid. In order to request a Bid Loan
(a "Bid Loan Request"), the Borrower shall give telephonic notice to
each Bank and the Agent no later than 10:45 A.M. (New York City
time) on the date that is (A) in the case of proposed Bid Loans
denominated in Dollars, the proposed date of such borrowing (the "Bid
Loan Borrowing Date"); (B) in the case of proposed Bid Loans
denominated in Canadian dollars or pounds sterling, 3 Business Days
prior to the Bid Loan Borrowing Date; or (C) in the case of proposed
Bid Loans denominated in Australian Dollars, 4 Business Days prior
to the Bid Loan Borrowing Date, inviting each Bank to bid, on the
terms and conditions of this Agreement, to make Bid Loans pursuant
to the Bid Loan Request. Requests for Bid Loans shall in each case
specify (i) the proposed Bid Loan Borrowing Date, (ii) the Permitted
Currency requested for such Bid Loan, (iii) the aggregate principal
Dollar Amount of Bid Loans requested (which shall not be less than
$1,000,000 and shall be an integral multiple of $100,000) and (iv) up
to not more than five (5) Interest Periods with respect to the entire
amount specified in such Bid Loan Request.
(b) Bid Offers. Each Bank may, in its sole
discretion, offer to make a Bid Loan or Loans (a "Bid") to the
Borrower responsive to the Bid Loan Request. Each Bid by a Bank
must be received by the Borrower by telephone not later than 11:15
A.M. (New York City time) on the proposed Bid Loan Borrowing
Date. Each Bid shall refer to this Agreement and specify (i) the
principal Dollar Amount (which shall not be less than $1,000,000 and
shall be an integral multiple of $100,000) of each Bid Loan that the
Bank is willing to make to the Borrower, (ii) the interest rate at which
the Bank is prepared to make each Bid Loan and (iii) the Interest
Period applicable to each such offered Bid Loan. Any Bank that
determines not to submit a Bid shall so notify the Borrower by 11:15
A.M. (New York City time) on the proposed Bid Loan Borrowing
Date; provided that it shall not incur any liability or obligation to the
Borrower as a result of any failure to provide such notice. Any Bid
shall be deficient and shall be deemed automatically rejected by the
Borrower if such Bid (i) does not specify all of the information
specified in the third sentence of this Section 2.2(b), (ii) contains any
qualifying, conditional, or similar language, (iii) proposes terms other
than or in addition to those set forth in the Bid Loan Request to which
it responds, or (iv) is received by the Borrower later than 11:15 A.M.
(New York City time). Each offer contained in a Bid to make a Bid
Loan in a certain amount, at a certain interest rate, and for a certain
Interest Period is referred to herein as an "Offer".
(c) Acceptance or Rejection of Bids. The
Borrower may in its sole and absolute discretion irrevocably accept or
reject, in whole or in part, any offer contained in a Bid; provided,
however, that no Offer of a Bid Loan shall be accepted in a principal
Dollar Amount less than $1,000,000, all Offers shall be accepted in
integral multiples of $100,000, and the aggregate principal Dollar
Amount of all Offers accepted shall not exceed the aggregate principal
Dollar Amount of Bid Loans requested by the Borrower in its Bid
Loan Request.
(d) Notice to Banks Making Offers. The
Borrower shall give telephonic notice to each Bank that submits a Bid
in compliance with Section 2.2(b) hereof whether any of the Offers
contained in its Bid has been accepted (and if so, in what amount, at
what interest rate and for what Interest Period) no later than 11:45
A.M. (New York City time) on the proposed Bid Loan Borrowing
Date, and each successful bidder will thereupon become bound, subject
to Article 4 and the other applicable conditions hereof, to make the
Bid Loan(s) in respect of which its Bid has been accepted. Each
telephonic notice accepting a Bid shall constitute a representation and
warranty by the Borrower that the conditions contained in Section 4.2
of this Agreement have been satisfied. As soon as practicable
thereafter the Borrower shall send written notice substantially in the
form of Exhibit C hereto to each such successful bidder; provided,
however, that failure to give such notice shall not affect the obligation
of such successful bidder to disburse its Bid Loans as herein required.
(e) Disbursement of Bid Loans. Not later than
1:00 P.M. (New York City time) on the Bid Loan Borrowing Date for
each Borrowing of a Bid Loan(s), each Bank bound to make Bid
Loan(s) in accordance with Section 2.2(d) hereof shall initiate a Fed
Wire to make available to the Borrower the principal amount of each
such Bid Loan in immediately available funds at such account or
accounts of the Borrower as the Borrower may designate in writing to
each Bank and the Agent.
(f) Notice to the Banks. As soon as practicable
after each Bid Loan Borrowing Date for Bid Loans, the Borrower shall
notify the Agent of the aggregate Dollar Amount of Bid Loans
advanced pursuant to a Bid Loan Request on such Bid Loan
Borrowing Date, the Interest Period(s) therefor, and the lowest and
highest interest rates at which Bid Loans were made for each Interest
Period, and the Agent shall promptly thereafter notify each Bank of
the contents of such notice from the Borrower.
(g) Interest on Bid Loans. The Borrower shall
pay interest on the unpaid principal amount of each Bid Loan
borrowed by such Borrower from the applicable Bid Loan Borrowing
Date to the maturity thereof at the rate of interest applicable to such
Bid Loan as determined pursuant to the above provisions and Sections
2.5 and 2.9 hereof.
(h) Maturity. Bid Loans shall be due and
payable in full at the end of the Interest Period. No Bid Loan may be
converted to another Type of Loan or continued as a Bid Loan.
Section 2.3 Notes.
(a) The Committed Loans made by
each Bank shall be evidenced by a single promissory note of the
Borrower in substantially the form of Exhibit D1 hereto (each, a
"Committed Loan Note" and collectively, the "Committed Loan
Notes"). Each Committed Loan Note shall be dated the date of this
Agreement, shall be payable to the order of such Bank and shall
otherwise be duly completed. The Committed Loan Notes shall be
payable as provided in this Agreement.
(b) Each Bid Loan which may be made
by any Bank shall be evidenced by a separate promissory note of the
Borrower in substantially the form of Exhibit D2 hereto (each, a "Bid
Loan Note") and collectively the "Bid Loan Notes." Each Bid Loan
Note shall be dated as of its respective Bid Loan Borrowing Date, shall
be payable to the order of the Bank making the Bid Loan evidenced by
the Bid Loan Note in the principal amount of the Bid Loan, shall
otherwise be duly completed, and shall be delivered to each Bank
making a Bid Loan under this Agreement not later than 2 Business
Days after its respective Bid Loan Borrowing Date. The Bid Loan
Notes shall be payable as provided in this Agreement.
(c) Each Bank shall enter on a
schedule attached to its Committed Loan Note a notation with respect
to each Loan made hereunder of: (i) the date and principal amount
thereof, (ii) each payment and prepayment of principal thereof, (iii)
whether the interest rate is initially to be determined in accordance
with subsection 2.5(a)(i) or 2.5(a)(ii) hereof, and (iv) the Interest
Period, if applicable. The failure of any Bank to make a notation on
the schedule to its Committed Loan Note as aforesaid shall not limit or
otherwise affect the obligation of the Borrower to repay the Committed
Loans in accordance with their respective terms as set forth herein.
The notations made by a Bank on the schedule to its Committed Loan
Note shall be conclusive absent manifest error. The Borrower, the
Agent and the relevant Bank shall use their best efforts to resolve any
disputes concerning such notations.
Section 2.4 Mandatory and Voluntary
Payments.
(a) The Loans shall be repaid as and
when necessary and in accordance with Section 2.14 hereof to cause
the aggregate principal Dollar Amount of the Loans outstanding not to
exceed the Total Commitment, as reduced pursuant to subsection 2.7
hereof, provided that (i) all such payments shall be applied first to
Prime Rate Loans, (ii) any remaining payments shall be applied to the
fewest number of Types of Fixed Rate Loans (including Bid Loans) as
possible, and (iii) the Borrower shall comply with Section 2.21 hereof
to the extent such payments are applied to Fixed Rate Loans.
(b) The Borrower at any time and from
time to time voluntarily and in accordance with Section 2.14 hereof
may repay the principal amount of the Prime Rate Loans without
premium or penalty, provided that (i) such repayment shall be on a
Business Day, (ii) the Agent shall have received at least 1 Business
Day's prior written notice of the date and amount of repayment, and
(iii) such repayment shall be in a minimum Dollar Amount of
$5,000,000.
(c) The Borrower at any time and from
time to time voluntarily and in accordance with Section 2.14 hereof
may repay the principal amount of any Type of Fixed Rate Loan (other
than Bid Loans) without premium or penalty, provided that (i) such
repayment shall be on the last day of the relevant Interest Period, (ii)
the Agent shall have received at least 2 Business Days' prior written
notice in the case of CD Loans and 3 Business Days' prior written
notice in the case of Eurocurrency Loans of the Type of Fixed Rate
Loans to be repaid and of the date and Dollar Amount of repayment,
(iii) such repayment shall be in a minimum Dollar Amount of
$5,000,000 for each Type of Fixed Rate Loans, and (iv) if such Fixed
Rate Loans will be repaid only in part, the Borrower shall have
satisfied the conditions to continuing or converting the remaining
portion of such Type of Fixed Rate Loans in accordance with Sections
2.1(a), 2.1(c) and 2.1(e) hereof.
(d) Fixed Rate Loans shall be repaid
on the last day of the applicable Interest Period as and to the extent
required by Sections 2.17(c), 2.18 and 2.19 hereof.
(e) Bid Loans may not be repaid
voluntarily prior to the end of the relevant Interest Period.
(f) All repayments of principal shall
be made together with payment of all accrued and unpaid interest on
the amount repaid through the date of such repayment. Principal
repayments may be reborrowed subject to all of the terms and
conditions of this Agreement.
Section 2.5 Interest.
(a) The Borrower shall pay to the
Agent for the account of each Bank (or, in the case of Bid Loans, to
the applicable Bank(s)) interest on the unpaid principal amount of
each Loan made by such Bank for the period commencing on the date
of such Loan until such Loan shall be paid in full, at the following
rates per annum:
(i) During such periods that
such Loan is a Prime Rate Loan, the Prime Base Rate;
(ii) During such periods that such
Loan is a CD Loan or a Eurocurrency Loan, for each Interest Period
relating thereto, the Fixed Rate for such Loan for such Interest Period
plus the Applicable Margin; and
(iii) During such periods as such Loan
is a Bid Loan, as set forth in Section 2.2(g) hereof.
(b) Notwithstanding the foregoing, the
Borrower shall pay interest on any Loan, and on any other amount
payable by the Borrower hereunder (to the extent permitted by law)
which shall not be paid in full when due (whether at stated maturity,
by acceleration or otherwise) for the period commencing on the due
date thereof until the same is paid in full at the applicable Post-Default
Rate.
(c) Accrued interest on each Loan
shall be payable: (i) in the case of a Prime Rate Loan, quarterly on the
Quarterly Dates, (ii) in the case of a Fixed Rate Loan, on the last day
of each Interest Period for such Loan (and, if such Interest Period
exceeds three months' duration, on each Quarterly Date commencing
on the first Quarterly Date after the first day of such Interest Period),
and (iii) in the case of any Loan, upon the payment or prepayment
thereof or the conversion thereof into a Loan of another Type (but only
on the principal so paid, prepaid or converted). Notwithstanding the
foregoing, interest that is payable at the Post-Default Rate shall be
payable from time to time on demand of the Agent or any Bank.
Promptly after the establishment of any interest rate provided for
herein or any change therein, the Agent will notify the Banks and the
Borrower thereof, provided that the failure of the Agent to so notify
the Borrower or the Banks shall not affect the Obligations of the
Borrower hereunder or under any of the Notes in any respect.
(d) Anything in this Agreement or any
of the Notes to the contrary notwithstanding, the obligation of the
Borrower to make payments of interest shall be subject to the
limitation that payments of interest shall not be required to be made to
any Bank to the extent that such Bank's receipt thereof would not be
permissible under the law or laws applicable to such Bank limiting
rates of interest that may be charged or collected by such Bank. Any
such payments of interest that are not made as a result of the limitation
referred to in the preceding sentence shall be made by the Borrower to
such Bank on the earliest interest payment date or dates on which the
receipt thereof would be permissible under the laws applicable to such
Bank limiting rates of interest that may be charged or collected by
such Bank. Such deferred interest shall not bear interest.
Section 2.6 Fees.
(a) The Borrower shall pay to the
Agent for the account of each Bank a fee (the "Facility Fee") on the
amount of such Bank's Commitment, for the period from the date
hereof to and including the earlier of the date such Bank's
Commitment is terminated or the Commitment Termination Date, at
the rate per annum equal to the Applicable Percentage then in effect
for the Facility Fee on the total Commitment for such Bank. The
accrued Facility Fee shall be payable in arrears in Dollars quarterly on
the Quarterly Dates and on the earlier of the date the Commitments
are terminated or the Commitment Termination Date, and, in the
event the Borrower reduces the Commitments as provided in Section
2.7 hereof, on the effective date of each such reduction.
(b) The Borrower shall pay to the
Agent for its account, in addition to the Facility Fee, those fees in the
amounts and at the times separately agreed to by the Borrower and the
Agent (the "Agency Fee").
(c) The Facility Fee and the Agency
Fee are hereinafter sometimes referred to individually as a "Fee" and
collectively as the "Fees". All Fees shall be nonrefundable and
deemed fully earned when due.
Section 2.7 Voluntary Reductions in
Commitment.
The Borrower shall be entitled to terminate
or reduce the Commitments in accordance with Section 2.14 hereof,
provided that the Borrower shall give 3 Business Day's prior written
notice of such termination or reduction to the Agent, and provided
further that the Total Commitment shall not be reduced below the then
outstanding Dollar Amount of the Loans. Any partial reduction of the
Commitments shall be in an aggregate amount equal to $10,000,000
or an integral multiple thereof. Any such termination or reduction
shall be permanent and irrevocable upon receipt of such notice.
Section 2.8 Use of Proceeds of Loans.
The proceeds of the Loans hereunder may
be used by the Borrower for general corporate purposes.
Section 2.9 Computations.
Interest on all Eurocurrency Loans and CD
Loans (excepting Loans denominated in pounds sterling) and the
Facility Fee shall be computed on the basis of a year of 360 days and
actual days elapsed (including the first day but excluding the last)
occurring in the period for which payable. Interest on all other Loans
(including Loans denominated in pounds sterling) shall be computed
on the basis of a year of 365 (or 366, if applicable) days and actual
days elapsed (including the first day but excluding the last) occurring
in the period for which payable.
Section 2.10 Determination, Denomination and
Redenomination of
Alternative
Currency Loans.
Whenever, pursuant to any provision of this
Agreement:
(a) a Loan is initially funded, as
opposed to any continuation or conversion thereof, in an Alternative
Currency, the amount to be advanced hereunder will be the equivalent
in such Alternative Currency of the Dollar Amount of such Loan; and
(b) an existing Committed Loan
denominated in an Alternative Currency is to be continued, in whole
or in part, the Loan shall be continued in the same amount of the same
Alternative Currency subject, however, to all other terms and
conditions of this Agreement.
Section 2.11 Time and Method of Payments.
(a) All payments of principal, interest,
Fees and other amounts (including indemnities) payable by the
Borrower hereunder shall be made, without setoff, deduction or
counterclaim, in Dollars (or, in the case of payments of principal or
interest on Loans denominated in Alternative Currencies, in the
Alternative Currency borrowed), in immediately available funds, to the
Agent at the Principal Office (or, in the case of Bid Loans, to the
applicable Bank at such Bank's Applicable Lending Office) not later
than 1:00 P.M., New York City time, on the date on which such
payment shall become due (and the Agent or any Bank for whose
account any such payment is to be made may, with the Borrower's
permission, but shall not be obligated to, debit the amount of any such
payment that is not made by such time to any ordinary deposit account
of the Borrower with the Agent or such Bank, as the case may be).
Additional provisions relating to payments are set forth in Section
10.4 hereof. Each payment received by the Agent hereunder for the
account of a Bank shall be paid promptly to such Bank, in like funds,
for the account of such Bank's Applicable Lending Office for the Loan
in respect of which such payment is made.
(b) All payments of principal of and
interest on any Eurocurrency Loan shall be made by the Borrower in
the currency borrowed (the "Specified Currency") in the manner and at
the address (the "Specified Place") specified in Section 2.11(a).
Payment of such obligations shall not be discharged by an amount paid
in another currency or in another place, whether pursuant to a
judgment or otherwise, to the extent that the amount so paid on
conversion to the Specified Currency and transferred to the Specified
Place under normal banking procedures does not yield the amount of
the Specified Currency at the Specified Place due hereunder. If, for
the purpose of obtaining judgment in any court, it is necessary to
convert a sum due hereunder in the Specified Currency into another
currency (the "Judgment Currency"), the rate of exchange which shall
be applied shall be that at which in accordance with normal banking
procedures the Agent could purchase the Judgment Currency with that
amount of the Specified Currency on the Business Day next preceding
that on which such judgment is rendered. The Obligation of the
Borrower in respect of any such sum due from it to the Agent or any
Bank hereunder (an "Entitled Person") shall, notwithstanding the rate
of exchange actually applied in rendering such judgment, be
discharged only to the extent that on the Business Day following
receipt by such Entitled Person of any sum adjudged to be due
hereunder or under the Notes in the Judgment Currency, such Entitled
Person may in accordance with normal banking procedures purchase
and transfer to the Specified Place the Specified Currency with the
amount of the Judgment Currency so adjudged to be due; and the
Borrower hereby, as a separate Obligation and notwithstanding any
such judgment, agrees to indemnify such Entitled Person against, and
to pay such Entitled Person on demand, in the Specified Currency, any
difference between the sum originally due to such Entitled Person in
the Specified Currency and the amount of the Specified Currency so
purchased and transferred.
Section 2.12 Lending Offices.
The Loans of each Type made by each Bank
shall be made and maintained at such Bank's Applicable Lending
Office for Loans of such Type, provided that such Bank shall remain
the legal entity exclusively entitled to all rights and responsible for all
obligations of a Bank hereunder unless such Bank delivers an
Assignment and Acceptance in compliance with Section 10.14 hereof.
Section 2.13 Several Obligations.
The failure of any Bank to make any Loan
to be made by it on the date specified therefor shall not relieve the
other Banks of their respective obligations to make their Loans on
such date, but no Bank shall be responsible for the failure of the other
Banks to make Loans to be made by such other Banks.
Section 2.14 Pro Rata Treatment Among Banks.
Except as otherwise provided herein: (i)
each borrowing from the Banks under Section 2.1 hereof will be made
from the Banks and each payment of each Fee (other than the Agency
Fee) shall be made for the account of the Banks pro rata according to
the Dollar Amount of their respective Commitments; (ii) each partial
reduction of the Total Commitment shall be applied to the
Commitments of the Banks pro rata according to the amount of each
Bank's respective Commitment; (iii) each conversion of Loans of a
particular Type under Section 2.1(e) hereof (other than conversions
provided for by Section 2.20) will be made pro rata among the Banks
holding Loans of such Type according to the respective principal
amounts of such Loans held by such Banks; (iv) each payment of
principal of or interest on Loans of a particular Type (other than Bid
Loans) will be made to the Agent for the account of the Banks holding
Loans of such Type pro rata in accordance with the respective unpaid
principal amounts of such Loans held by such Banks; and (v) Interest
Periods for Loans of a particular Type (other than Bid Loans) shall be
allocated among the Banks holding Loans of such Type pro rata
according to the respective principal amounts of such Loans held by
such Banks.
Section 2.15 Non-Receipt of Funds by the
Agent.
Unless the Agent shall have been notified
by a Bank or the Borrower (the "Payor") prior to the date on which
such Bank is to make payment to the Agent of the proceeds of a Loan
to be made by it hereunder or the Borrower is to make a payment to
the Agent for the account of one or more of the Banks, as the case may
be (such payment being herein called the "Required Payment"), which
notice shall be effective upon receipt, that the Payor does not intend to
make the Required Payment to the Agent, the Agent may assume that
the Required Payment has been made and may, in reliance upon such
assumption (but shall not be required to), make the amount thereof
available to the intended recipient on such date and, if the Payor has
not in fact made the Required Payment to the Agent, the recipient of
such payment shall, on demand, repay to the Agent the amount made
available to it together with interest thereon in respect of each day
during the period commencing on the date such amount was so made
available by the Agent until the date the Agent recovers such amount
at a rate per annum equal to (i) when the recipient is a Bank, the
Federal Funds Rate for such day for amounts denominated in or
calculated with reference to Dollars, and the applicable Fixed Base
Rate for amounts denominated in or calculated with reference to
Alternative Currencies, or (ii) the rate of interest applicable to such
Loan when the recipient is the Borrower.
Section 2.16 Sharing of Payments
and Set-Off Among
Banks.
The Borrower hereby agrees that, in
addition to (and without limitation of) any right of set-off, banker's
lien or counterclaim a Bank may otherwise have, each Bank shall be
entitled, at its option, to offset balances held by it at any of its offices
against any principal of or interest on any of its Loans hereunder, or
any Fee payable to it, that is not paid when due (regardless of whether
such balances are then due to the Borrower), in which case it shall
promptly notify the Borrower and the Agent thereof, provided that its
failure to give such notice shall not affect the validity thereof. If a
Bank shall effect payment of any principal of or interest on Loans held
by it under this Agreement through the exercise of any right of set-off,
banker's lien, counterclaim or similar right, it shall promptly purchase
from the other Banks participations in the Loans held by the other
Banks in such Dollar Amounts, and make such other adjustments from
time to time as shall be equitable, to the end that all the Banks shall
share the benefit of such payment pro rata in accordance with the
unpaid Dollar Amount of principal and interest on the Loans held by
each of them. To such end all the Banks shall make appropriate
adjustments among themselves (by the resale of participations sold or
otherwise) if such payment is rescinded or must otherwise be restored.
The Borrower agrees that any Bank so purchasing a participation in
the Loans held by the other Banks may exercise all rights of set-off,
banker's lien, counterclaim or similar rights with respect to such
participation as fully as if such Bank were a direct holder of Loans in
the amount of such participation. Nothing contained herein shall
require any Bank to exercise any such right or shall affect the right of
any Bank to exercise and retain the benefits of exercising, any such
right with respect to any other indebtedness or obligation of the
Borrower.
Section 2.17 Additional Costs; Capital
Requirements.
(a) In the event that any existing or
future law or regulation, guideline or interpretation thereof, by any
court or administrative or governmental authority charged with the
administration thereof, or compliance by any Bank with any request or
directive (whether or not having the force of law) of any such authority
shall impose, modify or deem applicable or result in the application of,
any capital maintenance, capital ratio or similar requirement against
loan commitments made by any Bank hereunder, and the result of any
event referred to above is to impose upon any Bank or increase any
capital requirement applicable as a result of the making or
maintenance of, such Bank's Commitment or the obligation of the
Borrower hereunder with respect to such Commitment (which
imposition of capital requirements may be determined by each Bank's
reasonable allocation of the aggregate of such capital increases or
impositions), then, upon demand made by such Bank as promptly as
practicable after it obtains knowledge that such law, regulation,
guideline, interpretation, request or directive exists and determines to
make such demand, the Borrower shall immediately pay to such Bank
from time to time as specified by such Bank additional commitment
fees which shall be sufficient to compensate such Bank for such
imposition of or increase in capital requirements together with interest
on each such amount from the date demanded until payment in full
thereof at the Prime Base Rate. A certificate setting forth in
reasonable detail (including the method of computation) the amount
necessary to compensate such Bank as a result of an imposition of or
increase in capital requirements submitted by such Bank to the
Borrower shall be conclusive, absent manifest error, as to the amount
thereof.
(b) In the event that any Regulatory
Change shall: (i) change the basis of taxation of any amounts payable
to any Bank under this Agreement or the Notes in respect of any Loans
including, without limitation, Fixed Rate Loans (other than taxes
imposed on the overall net income of such Bank for any such Loans by
the United States of America or the jurisdiction in which such Bank
has its principal office); or (ii) impose or modify any reserve, Federal
Deposit Insurance Corporation premium or assessment, special deposit
or similar requirements relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of, such Bank
(including any of such Loans or any deposits referred to in the
definition of "Fixed Base Rate" in Article 1 hereof); or (iii) impose any
other conditions affecting this Agreement in respect of Loans,
including, without limitation, Fixed Rate Loans (or any of such
extensions of credit, assets, deposits or liabilities); and the result of
any event referred to in clause (i), (ii) or (iii) above shall be to increase
such Bank's costs of making or maintaining any Loans, including,
without limitation, Fixed Rate Loans, or its Commitment, or to reduce
any amount receivable by such Bank hereunder in respect of any of its
Fixed Rate Loans, or its Commitment (such increases in costs and
reductions in amounts receivable are hereinafter referred to as
"Additional Costs") in each case, only to the extent that such
Additional Costs are not included in the Fixed Base Rate applicable to
such Fixed Rate Loans, then, upon demand made by such Bank as
promptly as practicable after it obtains knowledge that such a
Regulatory Change exists and determines to make such demand (a
copy of which demand shall be delivered to the Agent), the Borrower
shall pay to such Bank from time to time as specified by such Bank,
additional commitment fees or other amounts which shall be sufficient
to compensate such Bank for such increased cost or reduction in
amounts receivable by such Bank from the date of such change,
together with interest on each such amount from the date demanded
until payment in full thereof at the Prime Base Rate. All references to
any "Bank" shall be deemed to include any participant in such Bank's
Commitment.
(c) Without limiting the effect of the
foregoing provisions of this Section 2.17, in the event that, by reason
of any Regulatory Change, any Bank either: (i) incurs Additional
Costs based on or measured by the excess above a specified level of the
amount of a category of deposits or other liabilities of such Bank
which includes deposits by reference to which the interest rate on
Fixed Rate Loans is determined as provided in this Agreement or a
category of extensions of credit or other assets of such Bank which
includes Fixed Rate Loans, or (ii) becomes subject to restrictions on
the amount of such a category of liabilities or assets that it may hold,
then, if such Bank so elects by notice to the Borrower (with a copy to
the Agent), the obligation of such Bank to make, and to convert Loans
of any other Type into, Loans of such Type hereunder shall be
suspended until the date such Regulatory Change ceases to be in effect
(and all Loans of such Type (other than Bid Loans) then outstanding
shall be converted into Prime Rate Loans or into Fixed Rate Loans of
another duration, as the case may be, in accordance with Sections
2.1(e) and 2.20 hereof).
(d) In addition to any other amounts
payable by the Borrower hereunder, each Bank may require the
Borrower to pay, contemporaneously with each payment of interest on
Eurocurrency Loans which are denominated in pounds sterling,
additional interest on the related Eurocurrency Loan of such Bank at
the percentage calculated from time to time by such Bank to be the
percentage required to fully compensate such Bank for all reserve
costs, liabilities, expenses and assessments (other than reserve costs,
liabilities, expenses and assessments taken into account in determining
the interest rate applicable to such Eurocurrency Loan) which have
been incurred by such Bank (or its Applicable Lending Office)
regarding the making, funding or maintaining of such Eurocurrency
Loan (including, without limitation, any and all liquid asset
maintenance requirements of the Bank of England). A certificate of
any Bank claiming compensation under the preceding sentence,
setting forth the additional interest to be paid to it thereunder and
setting forth in reasonable detail a reasonable basis therefor, shall be
conclusive in the absence of manifest error, and in determining the
amount of such interest, such Bank may use any reasonable averaging
and attribution methods. Any Bank wishing to require payment of
such additional interest (i) shall so notify Borrower and the Agent, in
which case such additional interest on the Eurocurrency Loans of such
Bank denominated in pounds sterling shall be payable in pounds
sterling to such Bank at the place indicated in such notice with respect
to each Interest Period commencing at least five Business Days after
receipt by the Borrower of such notice and (ii) shall notify the
Borrower at least five Business Days prior to each date on which
interest is payable on such Eurocurrency Loans of the amount then due
it under this Section 2.17(d). Following Borrower's request made at
least two (2) Business Days prior to the delivery of any Borrowing
Notice relating thereto, the Agent and the Banks shall, prior to the
making of a proposed Eurocurrency Loan denominated in pounds
sterling, provide notice to Borrower of any such additional interest
known at such time to be payable with respect thereto.
(e) Determinations by any Bank for
purposes of this Section 2.17 of the effect of any Regulatory Change on
its costs of making or maintaining Loans or on amounts receivable by
it in respect of Loans, and of the additional amounts required to
compensate such Bank in respect of any Additional Costs, shall be set
forth in writing in reasonable detail and shall be conclusive, absent
manifest error.
Section 2.18 Limitation on Types of Loans.
Anything herein to the contrary
notwithstanding, if, on or prior to the determination of an interest rate
for any CD Loans or Eurocurrency Loans for any Interest Period
therefor, the Majority Banks determine (which determination shall be
conclusive):
(a) by reason of any event affecting the
money markets in the United States of America or the London
interbank market, quotations of interest rates for the relevant deposits
are not being provided in the relevant amounts or for the relevant
maturities for purposes of determining the rate of interest for such
Loans under this Agreement;
(b) the rates of interest referred to in
the definition of "Fixed Base Rate" in Article 1 hereof upon the basis
of which the rate of interest on any CD Loans or Eurocurrency Loans
for such period is determined, do not accurately reflect the cost to the
Banks of making or maintaining such Loans for such period; or
(c) with respect to Eurocurrency Loans
in an Alternative Currency, that (i) deposits in the applicable
Alternative Currency in the amounts and maturities required to fund
such Loan will not be available to a Bank; (ii) a fundamental change
has occurred in the foreign exchange or interbank markets with
respect to the applicable Alternative Currency (including, without
limitation, changes in national or international financial, political or
economic conditions or currency exchange rates or exchange controls);
or (iii) it has become otherwise materially impractical for a Bank to
make such Loan in the applicable Alternative Currency;
then the Agent shall give the Borrower and each Bank prompt notice
thereof (and shall thereafter give the Borrower and each Bank prompt
notice of the cessation, if any, of such condition), and so long as such
condition remains in effect, the Banks shall be under no obligation to
make Loans of such Type or to convert Loans of any other Type into
Loans of such Type and the Borrower shall, on the last day(s) of the
then current Interest Period(s) for the outstanding Loans of the
affected Type either repay such Loans in full or convert such Loans
into Loans of another Type in accordance with Section 2.1(e) hereof.
Section 2.19 Illegality.
Notwithstanding any other provision in this
Agreement, in the event that it becomes unlawful for any Bank or its
Applicable Lending Office to: (i) honor its obligation to make any
Type of Eurocurrency Loan (including any Bid Loan made in an
Alternative Currency) hereunder, or (ii) maintain any Type of
Eurocurrency Loan (including any Bid Loan made in an Alternative
Currency) hereunder, then such Bank shall promptly notify the
Borrower thereof (with a copy to the Agent), describing such illegality
in reasonable detail (and shall thereafter promptly notify the Borrower
and the Agent of the cessation, if any, of such illegality), and such
Bank's obligation to make such Type of Eurocurrency Loan and to
convert other Loans into Eurocurrency Loans hereunder shall, upon
written notice given by such Bank to the Borrower, be suspended until
such time as such Bank may again make and maintain such Type of
Eurocurrency Loan (or such Bid Loan in the affected Alternative
Currency) and such Bank's outstanding Loans denominated in such
currency shall immediately either be repaid in full or converted into
Loans of another Type in accordance with Sections 2.1(e) and 2.20
hereof.
Section 2.20 Certain Conversions pursuant
to Sections 2.17 and 2.19.
(a) If the Loans of any Bank of a particular Type
(Loans of such Type are hereinafter referred to as "Affected Loans"
and such Type is hereinafter referred to as the "Affected Type") are to
be converted pursuant to Sections 2.17(c) or 2.19 hereof, such Bank's
Affected Loans shall be converted into Prime Rate Loans, or Fixed
Rate Loans of another Type, as the case may be (the "New Type
Loans") on the last day(s) of the then current Interest Period(s) for the
Affected Loans (or on such earlier date as such Bank may specify to
the Borrower with a copy to the Agent) and, until such Bank gives
notice as provided below that the circumstances specified in Sections
2.17(c) or 2.19 hereof that gave rise to such conversion no longer
exist:
(i) to the extent that such Bank's
Affected Loans have been so converted, all payments of principal that
would otherwise be applied to such Affected Loans shall be applied
instead to its New Type Loans;
(ii) all Loans that would otherwise be
made by such Bank as Loans of the Affected Type shall be made
instead as New Type Loans and all Loans of such Bank that would
otherwise be converted into Loans of the Affected Type shall be
converted instead into (or shall remain as) New Type Loans; and
(iii) if Loans of any of the Banks other than such
Bank that are the same Type as the Affected Type are subsequently
converted into Loans of another Type (which Type is other than New
Type Loans), then such Bank's New Type Loans shall be automatically
converted on the conversion date into Loans of such other Type to the
extent necessary so that, after giving effect thereto, all Loans held by
such Bank and the Banks whose Loans are so converted are held pro
rata (as to principal amounts, Types and, to the extent applicable,
Interest Periods) in accordance with their respective Commitments.
(b) In the event any Bank (i) elects under Section
2.17(a) or (b) to impose additional commitment fees or other
compensation, or (ii) elects under Section 2.17(c) or Section 2.19 to
suspend its obligation to make or to convert into Loans of any Type,
then the Borrower may request the other Banks hereunder to assume
in full the Commitment of such Bank then in effect and to purchase
the Notes issued to the Bank named in such certificate at a price equal
to the outstanding principal amount of such Notes plus any accrued
and unpaid interest on such Notes and accrued and unpaid Facility
Fees owed to such Bank (the "Replaceable Bank"), and if any Bank or
Banks in their sole discretion agree so to assume in full the
Commitments of the Replaceable Bank (each an "Assuming Bank"),
then such assumption shall take place in the manner set forth in
subsection 2.20(c). In the event no Bank or Banks agrees to assume in
full the Commitments of the Replaceable Bank, then the Borrower
may nominate one or more banks not then party to this Agreement so
to assume in full the Commitments of the Replaceable Bank, and if
such nominated bank or banks are acceptable to the Majority Banks
(excluding the Replaceable Bank), which consent shall not be
unreasonably withheld, such assumption shall take place in the
manner set forth in subsection 2.20(c) and each such bank or banks
shall become a Bank hereunder (each a "New Bank") and the
Replaceable Bank shall no longer be a party hereto or have any rights
hereunder.
(c) In the event a Replaceable Bank's Commitments
are to be assumed in full by an Assuming Bank or a New Bank, then
such assumption shall take place on a date acceptable to the Borrower,
the Replaceable Bank, and the Assuming Bank or New Bank, as the
case may be, but in no event later than the latest maturity date of a
Committed Loan then outstanding, and such assumption shall take
place through the execution of such instruments and documents as
shall, in the opinion of the Agent, be reasonably necessary or
appropriate for the Assuming Bank or New Bank to assume in full the
Commitment of the Replaceable Bank (including, without limitation,
the issuance of new Notes and the execution of an amendment hereto
making any New Bank a party hereto). The Facility Fee with respect
to such Replaceable Bank shall cease to accrue on such date and the
Facility Fee with respect to the New Bank or Assuming Bank
attributable to the Commitment of the Replaceable Bank shall
commence to accrue on such date.
Section 2.21 Indemnification.
The Borrower shall pay to the Agent for the
account of each Bank, upon the request of such Bank through the
Agent, such amount or amounts as shall compensate such Bank for
any loss, cost or expense incurred by such Bank (as reasonably
determined by such Bank) as a result of:
(a) any payment or prepayment or
conversion of a Fixed Rate Loan held by such Bank on a date other
than the last day of an Interest Period for such Fixed Rate Loan; or
(b) any failure by the Borrower to
borrow a Fixed Rate Loan held by such Bank on the date for such
borrowing specified in the relevant Borrowing Notice under Section
2.1 hereof or as provided for Bid Loans in Section 2.2 hereof, such
compensation to include, without limitation, an amount equal to: (i)
any loss or expense suffered by such Bank during the period from the
date of receipt of such early payment or prepayment or the date of such
conversion to the last day of such Interest Period if the rate of interest
obtainable by such Bank upon the redeployment of an amount of funds
equal to such Bank's pro rata share of such payment, prepayment or
conversion or failure to borrow or convert is less than the rate of
interest applicable to such Fixed Rate Loan for such Interest Period, or
(ii) any loss or expense suffered by such Bank in liquidating
Eurocurrency deposits prior to maturity that correspond to such Bank's
pro rata share of such payment, prepayment, conversion, failure to
borrow or failure to convert. The determination by each such Bank of
the amount of any such loss or expense, when set forth in a written
notice to the Borrower, containing such Bank's calculation thereof in
reasonable detail, shall be presumed correct, in the absence of manifest
error.
Article 3. Representations and Warranties.
The Borrower hereby represents and warrants to the
Banks and the Agent that:
Section 3.1 Organization.
(a) The Borrower and each Subsidiary is
duly organized and validly existing under the laws of its state of
organization and has the power to own its assets and to transact the
business in which it is presently engaged and in which it proposes to
be engaged. All of the shares or other equity interests of the Borrower
and the Subsidiaries that are issued and outstanding have been duly
and validly issued and are fully paid and non-assessable. Except as set
forth on Schedule 3.1, there are no outstanding options entitling any
Person to purchase or otherwise acquire any shares of capital stock or
other equity interests of the Borrower or any Subsidiary nor are there
outstanding any securities that are convertible into or exchangeable for
any shares of capital stock or other equity interests of the Borrower or
any Subsidiary.
(b) Each of the Borrower and each
Subsidiary is in good standing in its state of organization and in each
state in which it is qualified to do business.
Section 3.2 Power, Authority, Consents.
The Borrower has the power to execute,
deliver and perform the Loan Documents. The Borrower has the
power to borrow hereunder and has taken all necessary corporate
action to authorize the borrowing hereunder on the terms and
conditions of this Agreement. The Borrower has taken all necessary
action, corporate or otherwise, to authorize the execution, delivery and
performance of the Loan Documents. No consent or approval of any
Person, no consent or approval of any landlord or mortgagee, no
waiver of any Lien or right of distraint or other similar right and no
consent, license, certificate of need, approval, authorization or
declaration of any governmental authority, bureau or agency is or will
be required in connection with the execution, delivery or performance
by the Borrower, or the validity, enforcement or priority, of the Loan
Documents except as set forth on Schedule 3.2 hereto, each of which
either has been duly and validly obtained on or prior to the date hereof
and is now in full force and effect, or is designated on Schedule 3.2 as
waived by the Majority Banks.
Section 3.3 No Violation of Law or
Agreements.
The execution and delivery by the Borrower
of each Loan Document and performance by it hereunder and
thereunder, will not violate any provision of law and will not, except
as set forth on Schedule 3.2 hereto, conflict with or result in a breach
of any order, writ, injunction, ordinance, resolution, decree, or other
similar document or instrument of any court or governmental
authority, bureau or agency, domestic or foreign, or any certificate of
incorporation or by-laws of the Borrower, or create (with or without
the giving of notice or lapse of time, or both) a default under or breach
of any agreement, bond, note or indenture to which the Borrower is a
party, or by which it is bound or any of its properties or assets is
affected, or result in the imposition of any Lien of any nature
whatsoever upon any of the properties or assets owned by or used in
connection with the business of the Borrower.
Section 3.4 Due Execution, Validity,
Enforceability.
This Agreement and each other Loan
Document has been duly executed and delivered by the Borrower and
each constitutes the valid and legally binding Obligation of the
Borrower, enforceable in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws, now or hereafter in
effect, relating to or affecting the enforcement of creditors' rights
generally and except that the remedy of specific performance and other
equitable remedies are subject to judicial discretion.
Section 3.5 Properties, Priority of Liens.
All of the properties and assets owned by
the Borrower and each Subsidiary are owned by each of them,
respectively, free and clear of any Lien of any nature whatsoever,
except as permitted by Section 7.2 hereof.
Section 3.6 Judgments, Actions, Proceedings.
Except as set forth on Schedule 3.6 hereto,
there are no outstanding judgments, actions or proceedings, including,
without limitation, any Environmental Proceeding, pending before any
court or governmental authority, bureau or agency, with respect to or,
to the best of the Borrower's knowledge, threatened against or
affecting the Borrower or any Subsidiary, involving a claim either
individually or in the aggregate in excess of $10,000,000.
Section 3.7 No Defaults, Compliance With
Laws.
Except as set forth on Schedule 3.7 hereto,
neither the Borrower nor any Subsidiary is in default under any
agreement, ordinance, resolution, decree, bond, note, indenture, order
or judgment to which it is a party or by which it is bound, or any other
agreement or other instrument by which any of the properties or assets
owned by it or used in the conduct of its business is affected, which
default reasonably could be expected to have a material adverse effect
on the consolidated financial position or condition of the Borrower and
the Subsidiaries taken as a whole or on the ability of the Borrower to
perform its Obligations under the Loan Documents. In the Borrower's
opinion, the Borrower and each Subsidiary has complied and is in
compliance in all respects with all applicable laws, ordinances and
regulations, resolutions, ordinances, decrees and other similar
documents and instruments of all courts and governmental authorities,
bureaus and agencies, domestic and foreign, including, without
limitation, all applicable provisions of the Americans with Disabilities
Act (42 U.S.C. 12101-12213) and the regulations issued thereunder
and all applicable Environmental Laws and Regulations, non-
compliance with which reasonably could be expected to have a
material adverse effect on the consolidated financial position or
condition of the Borrower and the Subsidiaries taken as a whole or on
the ability of the Borrower to perform its Obligations under the Loan
Documents.
Section 3.8 Burdensome Documents.
Except as set forth on Schedule 3.8 hereto,
neither the Borrower nor any of its Subsidiaries is a party to or bound
by, nor are any of the properties or assets owned by the Borrower or
any Subsidiary used in the conduct of their respective businesses
affected by, any agreement, ordinance, resolution, decree, bond, note,
indenture, order or judgment, including, without limitation, any of the
foregoing relating to any Environmental Matter, that materially and
adversely affects their respective businesses, assets or conditions,
financial or otherwise.
Section 3.9 Financial Statements
Each of the Financial Statements is correct
and complete and presents fairly the consolidated financial position of
the Borrower and its Subsidiaries, and each other entity to which it
relates, as at its date, and has been prepared in accordance with
generally accepted accounting principles. In the Borrower's opinion,
neither the Borrower nor any of the Subsidiaries, nor any other entity
to which any of the Financial Statements relates, has any material
obligation, liability or commitment, direct or contingent (including,
without limitation, any Environmental Liability), that is not reflected
in the Financial Statements. In the Borrower's opinion, there has been
no material adverse change (excluding any material adverse change
that may have been caused solely by any change of generally accepted
accounting principles) in the consolidated financial position or
condition of the Borrower and the Subsidiaries taken as a whole since
the date of the latest balance sheet included in the Financial
Statements (the "Latest Balance Sheet"). The Borrower's fiscal year is
the twelve-month period ending on December 31 in each year.
Section 3.10 Tax Returns.
Each of the Borrower and the Subsidiaries
has filed all federal, state and local tax returns required to be filed by it
and has not failed to pay any taxes, or interest and penalties relating
thereto, on or before the due dates thereof. Except to the extent that
reserves therefor are reflected in the Financial Statements: (i) there
are no material federal, state or local tax liabilities of the Borrower or
any Subsidiary due or to become due for any tax year ended on or prior
to the date of the Latest Balance Sheet relating to such entity, whether
incurred in respect of or measured by the income of such entity, that
are not properly reflected in the Latest Balance Sheet relating to such
entity, and (ii) there are no material claims pending or, to the
knowledge of the Borrower, proposed or threatened against any of the
Borrower or any Subsidiary for past federal, state or local taxes, except
those, if any, as to which the Borrower or the appropriate Subsidiary
has contested in good faith and as to which proper reserves are
reflected in the Financial Statements.
Section 3.11 Regulation U.
No part of the proceeds received by the
Borrower or any Subsidiary from the Loans will be used directly or
indirectly for: (a) any purpose other than general corporate purposes
or (b) the purpose of purchasing or carrying, or for payment in full or
in part of Indebtedness that was incurred for the purposes of
purchasing or carrying, any "margin stock", as such term is defined in
221.3 of Regulation U of the Board of Governors of the Federal
Reserve System, 12 C.F.R., Chapter II, Part 221.
Section 3.12 Full Disclosure.
None of the Financial Statements, nor any
certificate, opinion, or any other statement made or furnished in
writing to the Agent or any Bank by or on behalf of the Borrower or
any of the Subsidiaries in connection with this Agreement or the
transactions contemplated herein, contains any untrue statement of a
material fact, or omits to state a material fact necessary in order to
make the statements contained therein or herein not misleading, as of
the date such statement was made. To the best of the Borrower's
knowledge, there is no fact known to the Borrower that has, or would
in the now foreseeable future have, a material adverse effect on the
consolidated financial position or condition of the Borrower and the
Subsidiaries taken as a whole, which fact has not been set forth herein,
in the Financial Statements or any certificate, opinion or other written
statement so made or furnished to the Agent or the Banks.
Section 3.13 Condition of Assets.
All of the assets and properties of the
Borrower and the Subsidiaries, that are reasonably necessary for the
operation of its business, are in good working condition, ordinary wear
and tear excepted, and are able to serve the function for which they are
currently being used.
Section 3.14 ERISA.
(a) Except as disclosed on Schedule
3.14 hereto, no Multiemployer Plan exists or has ever existed and
neither the Borrower nor any ERISA Affiliate is a participating
employer in any Employee Benefit Plan in which more than one
employer makes contributions as described in Sections 4063 and 4064
of ERISA.
(b) Each Employee Benefit Plan
complies, in both form and operation in all material respects, with its
terms, ERISA and the Code including, without limitation, Code
Section 4980B, and no condition exists or event has occurred with
respect to any such plan which would result in the incurrence by the
Borrower or ERISA Affiliate of any material liability, fine or penalty.
Neither the Borrower nor any ERISA Affiliate has incurred any
liability to the PBGC which remains outstanding other than the
payment of premiums, and there are no premiums which have become
due which are unpaid. Neither the Borrower nor any ERISA Affiliate
has engaged in any transaction which could subject it to liability under
Section 4069 or Section 4212(c) of ERISA. Each Employee Benefit
Plan, related trust agreement, arrangement and commitment of the
Borrower and each ERISA Affiliate is legally valid and binding in full
force and effect. Each Employee Benefit Plan that is intended to be
qualified under Section 401(a) of the Code has been determined by the
IRS to be so qualified, and each trust related to such plan has been
determined to be exempt under Section 501(a) of the Code. To the
best of the knowledge of the Borrower after due inquiry, nothing has
occurred or is expected to occur that would adversely affect the
qualified status of the Employee Benefit Plan or any related trust
subsequent to the issuance of such determination letter. No Employee
Benefit Plan is being audited or investigated by any government
agency or subject to any pending or threatened claim or suit.
(c) Each Pension Plan currently meets
and always has met the minimum funding standard of Section 302 of
ERISA and Section 412 of the Code (without regard to any funding
waiver). All contributions or payments due and owing as required by
Section 302 of ERISA, Section 412 of the Code or the terms of any
Pension Plan have been made by the due date for such contributions or
payments. With respect to each Pension Plan, the market value of
assets (exclusive of any contribution due to the Pension Plan) equals or
exceeds the present value of accrued benefit obligations as of the latest
actuarial valuation date for such plan (which date is within the 12
months immediately preceding the date of this Agreement),
determined in accordance with actuarial assumptions used by the
Borrower's actuary and since its last valuation date, there have been no
amendments to such plan that materially increased the present value of
accrued benefits nor any other material adverse changes in the funding
status of such plan. Neither the Borrower nor any ERISA Affiliate is
required to provide security to a Pension Plan pursuant to Section 307
of ERISA or Section 401(a)(29) of the Code.
(d) Neither the Borrower nor any
ERISA Affiliate nor any fiduciary of any Employee Benefit Plan has
engaged in a prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code. The execution, delivery and performance of
the terms of any agreements that are related to this transaction will not
constitute a prohibited transaction under the aforementioned sections.
(e) No Termination Event has
occurred or is reasonably expected to occur which would result in a
liability to the Borrower or any ERISA Affiliate.
(f) To the best of the Borrower's
knowledge, neither the Borrower nor any ERISA Affiliate has within
the last 5 years engaged in a transaction which resulted in a Pension
Plan with an Unfunded Liability being transferred out of the
Controlled Group.
Article 4. Conditions to the Loans.
Section 4.1 Conditions to Initial Loans.
The obligation of each Bank to make the
initial Loan (including any Bid Loan) to be made by it hereunder shall
be subject to the fulfillment (to the satisfaction of the Majority Banks)
of the following conditions precedent:
(a) The Borrower shall have executed
and delivered to each Bank its Committed Loan Note.
(b) The Borrower shall have paid to the
Agent any Agency Fee at the time due and payable.
(c) Counsel to the Borrower shall have
delivered their opinion to the Agent in substantially the form of
Exhibit E attached hereto.
(d) Counsel to the Agent shall have
delivered their opinion to the Agent in form and substance satisfactory
to the Agent.
(e) The Agent shall have received
copies of the following:
(i) All of the consents, approvals
and waivers referred to on Schedule 3.2 hereto (except only those
which, as stated on Schedule 3.2, shall not be delivered);
(ii) The certificate of incorporation of the
Borrower, certified by the Secretary of State of its state of
incorporation;
(iii) The by-laws of the Borrower,
certified by its secretary;
(iv) All corporate action taken by the
Borrower to authorize the execution, delivery and performance of each
of the Loan Documents to which it is a party and the transactions
contemplated thereby, certified by its secretary; and
(v) An incumbency certificate (with
specimen signatures) with respect to the Borrower.
Section 4.2 Conditions to All Loans.
The obligation of each Bank to make each
Loan (including a Bid Loan) shall be subject to the fulfillment (to the
satisfaction of the Agent) of the following additional conditions
precedent:
(a) If the Loan is a Committed Loan
the Agent shall have received a Borrowing Notice in accordance with
Section 2.1(a) hereof.
(b) If the Loan is a Bid Loan, the
Borrower shall have satisfied the requirements of Section 2.2 hereof.
(c) After giving effect to such Loan,
there shall exist no Default or Event of Default hereunder.
(d) The representations and warranties
contained in Article 3 hereof are true and correct with the same effect
as though such representations and warranties were made on the date
of such Loan.
(e) All legal matters incident to such
Loan shall be satisfactory to counsel for the Agent.
Each Borrowing Notice with respect to each such
Loan shall constitute a representation and warranty by the Borrower
that the conditions contained in this Section 4.2 have been satisfied.
Any Bank may require a duly completed Compliance Certificate in
substantially the form of Exhibit B attached hereto as a condition to
making a Loan.
Article 5. Delivery of Financial Reports,
Documents and Other
Information.
While the Commitments are outstanding, and, in the
event any Loan remains outstanding, so long as the Borrower is
indebted to any of the Banks or the Agent and until payment in full of
the Notes and full and complete performance of all of its other
Obligations arising hereunder, the Borrower shall deliver to each
Bank:
Section 5.1 Annual Financial Statements.
Annually, as soon as available, but in any
event within ninety (90) days after the last day of each of its fiscal
years, a consolidated balance sheet of the Borrower and the
Subsidiaries as at such last day of the fiscal year, and consolidated
statements of income and retained earnings and statements of cash
flow, for such fiscal year, each prepared in accordance with generally
accepted accounting principles consistently applied, in reasonable
detail, and certified without qualification by Deloitte & Touche or
another firm of independent certified public accountants satisfactory to
the Agent.
Section 5.2 Quarterly Financial Statements.
As soon as available, but in any event
within forty-five (45) days after the end of the Borrower's first three
fiscal quarterly periods, a consolidated balance sheet of the Borrower
and the Subsidiaries as of the last day of such quarter and consolidated
statements of income and retained earnings and statements of cash
flow, for such quarter and for the portion of the fiscal year through
such quarter, and on a comparative basis figures for the corresponding
periods of the immediately preceding fiscal year, all in reasonable
detail, each such statement to be certified in a certificate of the chief
financial officer or treasurer of the Borrower as accurately presenting
the financial position and the results of operations of the Borrower and
the Subsidiaries as at its date and for such quarter and as having been
prepared in accordance with generally accepted accounting principles
consistently applied (subject to year-end audit adjustments).
Section 5.3 Compliance Information.
Promptly after a written request therefor,
such other financial data or information evidencing compliance with
the requirements of this Agreement, the Notes and the other Loan
Documents, as any Bank may reasonably request from time to time.
Section 5.4 No Default Certificate.
At the same time as it delivers the financial
statements required under the provisions of Section 5.1 and 5.2 hereof,
a certificate of the chief financial officer or treasurer of the Borrower
to the effect that no Event of Default hereunder and that no default
under any other agreement to which the Borrower or any of the
Subsidiaries is a party or by which it is bound, or by which, to the best
knowledge of the Borrower or any Subsidiary, any of its properties or
assets, taken as a whole, may be materially affected, and no event
which, with the giving of notice or the lapse of time, or both, would
constitute such an Event of Default or default, exists, or, if such cannot
be so certified, specifying in reasonable detail the exceptions, if any, to
such statement. Such certificate shall be accompanied by a detailed
calculation indicating compliance with the covenants contained in
Section 6.8 hereof.
Section 5.5 Copies of Documents.
Promptly upon their becoming available,
copies of any: (i) registration statements and any amendments and
supplements thereto, and any regular and periodic reports, if any, filed
by the Borrower or any of its Subsidiaries with any securities exchange
or with the Securities and Exchange Commission or any governmental
authority succeeding to any or all of the functions of the said
Commission; (ii) all reports, projections, notices (other than routine
correspondence) and requests for waivers delivered by the Borrower or
any of the Subsidiaries to any lending institution other than the Banks;
and (iii) such other documents, instruments and agreements of or
relating to the Borrower or any of the Subsidiaries as the Agent from
time to time may reasonably request.
Section 5.6 Notices of Defaults.
Promptly, notice of the occurrence of any
Default or Event of Default, or any event that would constitute or
cause a material adverse change in the consolidated financial position
or condition of the Borrower or any of the Subsidiaries taken as a
whole.
Section 5.7 ERISA Notices and Requests.
The Borrower shall provide written notice
by its chief financial officer or treasurer (or, in the case of an event
involving an ERISA Affiliate, by an appropriate officer thereof) within
fifteen (15) Business Days of the occurrence of any event which makes
or would make any of the representations or warranties set forth under
Section 3.14 inaccurate or untrue, and which could result in the
Cumulative ERISA Liability exceeding the aggregate sum of
$5,000,000.
Article 6. Affirmative Covenants.
While the Commitments are outstanding, and, in the
event any Loan remains outstanding, so long as the Borrower is
indebted to any of the Banks or the Agent, and until payment in full of
the Notes and full and complete performance of all of its other
Obligations arising hereunder, the Borrower shall and shall cause each
Subsidiary to:
Section 6.1 Books and Records.
Keep proper books of record and accounts
in the ordinary course of business in accordance with generally
accepted accounting principles in which full, true and correct entries
shall be made of all dealings or transactions in relation to its business
and activities.
Section 6.2 Inspections and Audits.
Permit the Agent to make or cause to be
made (and, after the occurrence of and during the continuance of an
Event of Default, at the Borrower's expense), inspections and audits of
any books, records and papers of the Borrower and each of the
Subsidiaries and to make extracts therefrom and copies thereof, or to
make inspections and examinations of any properties and facilities of
the Borrower and the Subsidiaries, on reasonable notice, at all such
reasonable times and as often as the Agent may reasonably require, in
order to assure that the Borrower is and will be in compliance with its
Obligations under the Loan Documents or to evaluate the Banks'
investment in the then outstanding Notes.
Section 6.3 Continuance of Business.
Do, or cause to be done, all things
reasonably necessary to preserve and keep in full force and effect its
corporate existence and all permits, rights and privileges necessary for
the proper conduct of its business, and continue to engage in the same
line of business and comply in all material respects with all applicable
laws, regulations and orders.
Section 6.4 Copies of Corporate Documents.
Subject to the prohibitions set forth in
Section 7.9 hereof, promptly deliver to the Agent copies of any
amendments or modifications to its certificate of incorporation and by-
laws, certified with respect to the certificate of incorporation by the
Secretary of State of its state of incorporation and, with respect to the
by-laws, by the secretary or assistant secretary of such corporation.
Section 6.5 Perform Obligations.
Pay and discharge all of its obligations and
liabilities, including, without limitation, all taxes, assessments and
governmental charges upon its income and properties when due,
unless and to the extent only that such obligations, liabilities, taxes,
assessments and governmental charges shall be contested in good faith
and by appropriate proceedings and that, to the extent required by
generally accepted accounting principles then in effect, proper and
adequate book reserves relating thereto are established by the
Borrower, or, as the case may be, by the appropriate Subsidiary, and
then only to the extent that a bond is filed in cases where the filing of a
bond is necessary to avoid the creation of a Lien against any of its
properties.
Section 6.6 Notice of Litigation.
Promptly notify the Agent in writing of any
litigation, legal proceeding or dispute, other than disputes in the
ordinary course of business or, whether or not in the ordinary course of
business, involving amounts in excess of $10,000,000 affecting the
Borrower or any Subsidiary whether or not fully covered by insurance,
and regardless of the subject matter thereof (excluding, however, any
actions relating to workers' compensation claims or negligence claims
relating to use of motor vehicles, if fully covered by insurance, subject
to deductibles).
Section 6.7 Insurance.
Maintain with responsible insurance
companies acceptable to the Agent such insurance on such of its
properties, in such amounts and against such risks as is customarily
maintained by similar businesses.
Section 6.8 Financial Covenants.
Have or maintain, on a consolidated basis:
(a) Net Worth not less than (i)
$67,000,000 on or prior to June 30, 1995, (ii) $75,000,000 on and
after July 1, 1995 and on or prior to June 30, 1996, and (iii)
$85,000,000 thereafter;
(b) At all times Funded Debt to
Capitalization Ratio not greater than 0.60 to 1.0; and
(c) As of the end of each fiscal quarter
of the Borrower Fixed Charge Coverage Ratio not less than 1.25 to 1.0
for each such fiscal quarter ending on or prior to September 30, 1995,
and 2.0 to 1.0 for each such fiscal quarter thereafter.
Section 6.9 Notice of Certain Events.
Promptly notify the Agent in writing of the
occurrence of any Reportable Event, as defined in Section 4043 of
ERISA, if a notice of such Reportable Event is required under ERISA
to be delivered to the PBGC within 30 days after the occurrence
thereof, together with a description of such Reportable Event and a
statement of the action the Borrower or the ERISA Affiliate intends to
take with respect thereto, together with a copy of the notice thereof
given to the PBGC.
Section 6.10 Comply with ERISA.
Materially comply with all applicable
provisions of ERISA and the Code now or hereafter in effect.
Section 6.11 Environmental Compliance.
Materially comply with all applicable
Environmental Regulations now or hereafter in effect.
Article 7. Negative Covenants.
While the Commitments are outstanding, and, in the
event any Loan remains outstanding, so long as the Borrower is
indebted to any of the Banks or the Agent and until payment in full of
the Notes and full and complete performance of all of its other
Obligations arising hereunder, the Borrower shall not and not permit
any of its Subsidiaries to do, agree to do, or permit to be done, any of
the following:
Section 7.1 Indebtedness.
Create, incur, permit to exist or have
outstanding any Funded Debt if, after giving effect thereto, the
Borrower would not be in compliance with Section 6.8 hereto.
Section 7.2 Liens.
Create, or assume or permit to exist, any
Lien on any of the properties or assets of the Borrower or any of its
Subsidiaries, whether now owned or hereafter acquired, except:
(a) Permitted Liens;
(b) Purchase money mortgages or
security interests, conditional sale arrangements and other similar
security interests, on motor vehicles and equipment acquired by the
Borrower or any Subsidiary (hereinafter referred to individually as a
"Purchase Money Security Interest"); provided, however, that:
(i) The transaction in which
any Purchase Money Security Interest is proposed to be created is not
then prohibited by this Agreement;
(ii) Any Purchase Money Security
Interest shall attach only to the property or asset acquired in such
transaction and shall not extend to or cover any other assets or
properties of the Borrower or, as the case may be, a Subsidiary;
(iii) The Indebtedness secured or
covered by any Purchase Money Security Interest shall not exceed the
lesser of the cost or fair market value of the property or asset acquired
and shall not be renewed, extended or prepaid from the proceeds of
any borrowing by the Borrower or any Subsidiary; and
(iv) The aggregate amount of all
Indebtedness secured by Purchase Money Security Interests (including
any renewals or extensions thereof pursuant to subsection (c) of this
Section 7.2) on a consolidated basis for the Borrower and the
Subsidiaries plus the aggregate amount of all Capitalized Lease
Obligations shall not at any time exceed $25,000,000 outstanding;
(c) The renewal or extension of any
such Purchase Money Security Interests provided that the aggregate
amount of all Indebtedness secured by Purchase Money Security
Interests (including any renewals or extensions thereof pursuant to this
subsection (c)) on a consolidated basis for the Borrower and the
Subsidiaries plus the aggregate amount of all Capitalized Lease
Obligations shall not at any time exceed $25,000,000 outstanding;
(d) The interests of the lessor under
any Capitalized Lease permitted hereunder provided the aggregate
amount of all Capitalized Lease Obligations plus the aggregate amount
of all Indebtedness secured by Purchase Money Security Interests
(including any renewals or extensions thereof pursuant to subsection
(c) of this Section 7.2) on a consolidated basis for the Borrower and
the Subsidiaries shall not at any time exceed $25,000,000 outstanding;
and
(e) As set forth on Schedule 7.2
hereto.
Section 7.3 Guaranties.
Assume, endorse, be or become liable for, or
guarantee, the obligations of any Person, except: (i) by the
endorsement of negotiable instruments for deposit or collection in the
ordinary course of business; (ii) the Borrower may guarantee the
Funded Debt of any Subsidiary if, after giving effect thereto, the
Borrower would continue to be in compliance with Section 6.8 hereto;
and (iii) as set forth on Schedule 7.3 hereto. For the purposes hereof,
the term "guarantee" shall include any agreement, whether such
agreement is on a contingency or otherwise, to purchase, repurchase or
otherwise acquire Indebtedness of any other Person, or to purchase,
sell or lease, as lessee or lessor, property or services, in any such case
primarily for the purpose of enabling another person to make payment
of Indebtedness, or to make any payment (whether as an advance,
capital contribution, purchase of an equity interest or otherwise) to
assure a minimum equity, asset base, working capital or other balance
sheet or financial condition, in connection with the Indebtedness of
another Person, or to supply funds to or in any manner invest in
another Person in connection with such Person's Indebtedness.
Section 7.4 Mergers, Acquisitions.
(a) Merge or consolidate with any
Person unless, (x) if the merger or consolidation involves the
Borrower, the Borrower is the surviving entity, (y) if the merger or
consolidation involves any Subsidiary (i) the Subsidiary merges or
consolidates with the Borrower and the Borrower is the surviving
entity, (ii) the Subsidiary merges or consolidates with any other
Subsidiary and the surviving entity remains a Subsidiary, (iii) the
Subsidiary merges or consolidates with any other Person and the
Subsidiary is the surviving entity, and (z) after giving effect thereto, no
Default or Event of Default exists;
(b) Acquire all or substantially all of
the assets or capital stock of any Person unless, after giving effect
thereto no Default or Event of Default exists.
Section 7.5 Redemptions; Distributions.
Pay any dividends or make any distribution
of any kind or set aside any sum for such purpose, or make any sinking
fund payments with respect to, any shares of any class of stock of the
Borrower or any Subsidiary now or hereafter outstanding (a
"Declaration"), except that (i) the Borrower may declare or pay any
dividend payable solely in shares of its common stock, and (ii)
provided no Default or Event of Default at the time shall exist, the
Borrower may make Declarations other than in shares of its common
stock not in excess in the aggregate for any fiscal year of (a) during
fiscal year 1994, $26,500,000, (b) during fiscal year 1995,
$29,200,000, (c) during fiscal year 1996, $32,100,000 and (d) during
that period of fiscal year 1997 ending on the Commitment
Termination Date, $16,500,000, provided that if the Borrower in any
fiscal year does not pay or declare Declarations in the aggregate
maximum amount permitted by clause (ii) for such fiscal year,
Borrower shall be permitted to carry over such amounts to subsequent
fiscal years.
Section 7.6 Changes in Business.
Make any material change in its business,
or in the nature of its operation, or liquidate or dissolve itself (or suffer
any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of any of its property, assets or business except in
the ordinary course of business and for a fair consideration or dispose
of any shares of stock or any Indebtedness, whether now owned or
hereafter acquired, or discount, sell, pledge, hypothecate or otherwise
dispose of accounts receivable; provided, however, the Borrower may
permit for the purposes of administrative convenience the dissolution
of any Subsidiary for which the aggregate net book value of such
Subsidiary's assets does not exceed $18,000,000.
Section 7.7 Investments.
Make, or suffer to exist, any Investment in
any Person, including, without limitation, any shareholder, director,
officer or employee of the Borrower or any of the Subsidiaries, except:
(a) Investments in accordance with the
Borrower's investment policy guidelines from time to time in effect
and approved by the Borrower's board of directors, which such
guidelines shall have been furnished to and approved by the Agent.
(b) Investments that may be permitted
under Section 7.4 hereof.
(c) Investments by the Borrower in
any Subsidiary and by any Subsidiary in the Borrower or another
Subsidiary as in effect on the date hereof.
(d) Intercompany loans and advances
made in the ordinary course of business between and among the
Borrower and the Subsidiaries.
(e) loans to members of the board of
directors or officers of the Borrower not to exceed in the aggregate for
all such loans $5,000,000 provided that such loans are made on terms
and conditions substantially as advantageous to the Borrower as would
obtain in a comparable arm's length loan with a Person not a member
of the board of directors or an officer of the Borrower.
Section 7.8 ERISA Obligations.
(a) Permit (i) the occurrence of any
Termination Event, (ii) any accumulated funding deficiency (as
defined in Section 302 of ERISA and Section 412 of the Code) with
respect to any Pension Plan, whether or not waived, (iii) any ERISA
Affiliate to engage in any prohibited transaction under Section 406 of
ERISA or Section 4975 of the Code for which a civil penalty pursuant
to Section 502(i) of ERISA or a tax pursuant to Section 4975 of the
Code is imposed, (iv) the establishment or amendment of any
Employee Benefit Plan (including without limitation any such plan
providing post-retirement welfare benefits) which could result in
additional liability to the Borrower of any ERISA Affiliate, or (v) the
occurrence of any event requiring the Borrower to make contributions
to any Multiemployer Plan; or
(b) Fail to make any contribution or
payment to any Multiemployer Plan which the Borrower or any
ERISA Affiliate may be required to make under any agreement
relating to such Multiemployer Plan or any law pertaining thereto, or
fail to establish, maintain and operate each Employee Benefit Plan in
compliance in all material respects with the provisions of ERISA, the
Code and all other applicable laws and the regulations and
interpretations thereof.
Section 7.9 Amendments of Documents.
Modify, amend or supplement or agree to
modify, amend or supplement, its certificate of incorporation or by-
laws if any such modification, amendment, supplement or termination
could reasonably be expected to have a material adverse effect on the
consolidated financial condition of the Borrower and the Subsidiaries
taken as a whole or conflict with the terms and provisions of the Loan
Documents.
Section 7.10 Transactions with Affiliates.
Enter into any transaction with an Affiliate
other than the Subsidiaries unless the transaction is in the ordinary
course of business, and the monetary or business consideration arising
therefrom would be substantially as advantageous to the Borrower or a
Subsidiary as the monetary or business consideration that would obtain
in a comparable arm's length transaction with a Person not an
Affiliate.
Section 7.11 Sale of Assets.
Sell, lease, or otherwise dispose, outside of
the ordinary course of the Borrower's or any Subsidiary's business,
any asset or assets which in the aggregate for all such transactions
have a net book value in excess of $18,000,000.
Article 8. Events of Default.
If any one or more of the following events ("Events
of Default") shall occur and be continuing, the Commitments shall
terminate and the entire unpaid balance of the principal of and interest
on the Notes outstanding and all other Obligations and Indebtedness of
the Borrower to the Banks and the Agent arising hereunder and under
the other Loan Documents shall immediately become due and payable
upon written notice to that effect given to the Borrower by the Agent
(except that in the case of the occurrence of any Event of Default
described in Section 8.6 no such notice shall be required), without
presentment or demand for payment, notice of non-payment, protest or
further notice or demand of any kind, all of which are expressly
waived by the Borrower:
Section 8.1 Payments.
Failure to make any payment or mandatory
prepayment of principal or interest upon any Loan or Note, to make
any payment of any Fee or to make any payment of any other
Obligation arising under this Agreement as and when due; or
Section 8.2 Certain Covenants.
Failure to perform or observe any of the
agreements of the Borrower or any Subsidiary contained in Section 6.8
or Article 7 hereof; or
Section 8.3 Other Covenants.
Failure by the Borrower to perform or
observe any other term, condition or covenant of this Agreement or of
any of the other Loan Documents to which it is a party, which shall
remain unremedied for a period of 30 days after notice thereof shall
have been given to the Borrower by the Agent; or
Section 8.4 Other Defaults.
(a) Failure to perform or observe any
term, condition or covenant of any bond, note, debenture, loan
agreement, indenture, guaranty, trust agreement, mortgage,
Capitalized Lease or similar instrument to which the Borrower or any
Subsidiary is a party or by which it is bound, or by which any of its
properties or assets may be affected (a "Debt Instrument"), so that, as a
result of any such failure to perform, the indebtedness included therein
or secured or covered thereby may be declared due and payable prior to
the date on which such indebtedness would otherwise become due and
payable; or
(b) Failure to pay any indebtedness for
borrowed money due at final maturity or pursuant to demand under
any Debt Instrument or Capitalized Lease;
provided, however, that the provisions of this Section 8.4 shall not be
applicable to any Debt Instrument relating to or evidencing
Indebtedness in a principal amount outstanding of less than
$10,000,000; or
Section 8.5 Representations and Warranties.
Any representation or warranty made in
writing to the Banks or the Agent in any of the Loan Documents or in
connection with the making of the Loans, or any certificate, statement
or report made or delivered in compliance with this Agreement, shall
have been false or misleading in any material respect when made or
delivered; or
Section 8.6 Bankruptcy.
(a) The Borrower or any Subsidiary
shall make an assignment for the benefit of creditors, file a petition in
bankruptcy, be adjudicated insolvent, petition or apply to any tribunal
for the appointment of a receiver, custodian, or any trustee for it or a
substantial part of its assets, or shall commence any proceeding under
any bankruptcy, reorganization, arrangement, readjustment of debt,
dissolution (other than any dissolution permitted by Section 7.6
hereof) or liquidation law or statute of any jurisdiction, whether now
or hereafter in effect, or the Borrower or any Subsidiary shall take any
corporate action to authorize any of the foregoing actions; or there
shall have been filed any such petition or application, or any such
proceeding shall have been commenced, against it, that remains
undismissed for a period of sixty (60) days or more; or any order for
relief shall be entered in any such proceeding; or the Borrower or any
Subsidiary by any act or omission shall indicate its consent to,
approval of or acquiescence in any such petition, application or
proceeding or the appointment of a custodian, receiver or any trustee
for it or any substantial part of any of its properties, or shall suffer any
custodianship, receivership or trusteeship to continue undischarged for
a period of sixty (60) days or more; or
(b) The Borrower or any material
Subsidiary shall generally not pay its debts as such debts become due;
or
(c) The Borrower or any material
Subsidiary shall have concealed, removed, or permitted to be
concealed or removed, any part of its or their property, with intent to
hinder, delay or defraud its or their creditors or any of them or made
or suffered a transfer of any of its or their property that may be
fraudulent under any bankruptcy, fraudulent conveyance or similar
law; or shall have made any transfer of its or their property to or for
the benefit of a creditor at a time when other creditors similarly
situated have not been paid; or shall have suffered or permitted, while
insolvent, any creditor to obtain a Lien upon any of its or their
property through legal proceedings or distraint that is not vacated
within thirty (30) days from the date thereof; or
Section 8.7 Judgments.
Any judgment against the Borrower or any
Subsidiary or any attachment, levy or execution against any of its
properties for any amount in excess of $10,000,000 shall remain
unpaid, unstayed on appeal, undischarged, unbonded or undismissed
for a period of thirty (30) days or more.
Article 9. The Agent.
Section 9.1 Appointment, Powers and
Immunities.
Each Bank hereby irrevocably appoints and
authorizes the Agent to act as its agent hereunder and under the Loan
Documents with such powers as are specifically delegated to the Agent
by the terms of this Agreement and the Loan Documents together with
such other powers as are reasonably incidental thereto. The Agent
shall have no duties or responsibilities except those expressly set forth
in this Agreement and the other Loan Documents and shall not be a
trustee for any Bank. The Agent shall not be responsible to the Banks
for any recitals, statements, representations or warranties contained in
this Agreement or the other Loan Documents in any certificate or
other document referred to or provided for in, or received by any of
them under, this Agreement or the other Loan Documents, or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement or the other Loan Documents or any other document
referred to or provided for herein or therein or for any failure by the
Borrower to perform any of its Obligations hereunder or under the
other Loan Documents. The Agent may employ agents and attorneys-
in-fact and shall not be answerable, except as to money or securities
received by it or its authorized agents, for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care. Neither the Agent nor any of its directors, officers,
employees or agents shall be liable or responsible for any action taken
or omitted to be taken by it or them hereunder or the other Loan
Documents or in connection herewith or therewith, except for its or
their own gross negligence or willful misconduct.
Section 9.2 Reliance by Agent.
The Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telex, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper
person or persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Agent. As
to any matters not expressly provided for by this Agreement or the
other Loan Documents, the Agent shall in all cases be fully protected
in acting, or in refraining from acting, hereunder, under the other
Loan Documents in accordance with instructions signed by the
Majority Banks, and such instructions of the Majority Banks and any
action taken or failure to act pursuant thereto shall be binding on all of
the Banks.
Section 9.3 Events of Default.
The Agent shall not be deemed to have
knowledge of the occurrence of a Default or an Event of Default (other
than the non-payment of principal of or interest on Loans) unless the
Agent has received notice from a Bank or the Borrower specifying
such Default or Event of Default and stating that such notice is a
"Notice of Default". In the event that the Agent receives such a notice
of the occurrence of a Default or an Event of Default, the Agent shall
give notice thereof to the Banks (and shall give each Bank notice of
each such non-payment). The Agent shall (subject to Section 9.7
hereof) take such action with respect to such Default or Event of
Default as shall be directed by the Majority Banks.
Section 9.4 Rights as a Bank.
With respect to its Commitment and the
Loans made by it, the Agent in its capacity as a Bank hereunder shall
have the same rights and powers hereunder as any other Bank and
may exercise the same as though it were not acting as the Agent, and
the term "Bank" or "Banks" shall, unless the context otherwise
indicates, include the Agent in its individual capacity. The Agent and
its Affiliates may (without having to account therefor to any Bank)
accept deposits from, lend money to and generally engage in any kind
of banking, trust or other business with the Borrower or its Affiliates,
as if it were not acting as the Agent, and the Agent may accept fees
and other consideration from the Borrower or its Affiliates, for
services in connection with this Agreement or any of the other Loan
Documents or otherwise without having to account for the same to the
Banks.
Section 9.5 Indemnification.
The Banks shall indemnify the Agent (to
the extent not reimbursed by the Borrower under Sections 10.1 and
10.2 hereof), ratably in accordance with the aggregate principal
amount of the Loans made by the Banks (or, if no Loans are at the
time outstanding, ratably in accordance with their respective
Commitments), for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever that may be imposed on, incurred
by or asserted against the Agent in any way relating to or arising out
of this Agreement or any of the other Loan Documents or any other
documents contemplated by or referred to herein or therein or the
transactions contemplated by or referred to herein or therein or the
transactions contemplated hereby and thereby (including, without
limitation, the costs and expenses that the Borrower is obligated to pay
under Sections 10.1 and 10.2 hereof, but excluding, unless a Default
has occurred and is continuing, normal administrative costs and
expenses incident to the performance of its agency duties hereunder or
under the other Loan Documents) or the enforcement of any of the
terms hereof or of the other Loan Documents, provided that no Bank
shall be liable for any of the foregoing to the extent they arise from the
gross negligence or willful misconduct of the party to be indemnified.
Section 9.6 Non-Reliance on Agent and other
Banks.
Each Bank agrees that it has, independently
and without reliance on the Agent or any other Bank, and based on
such documents and information as it has deemed appropriate, made
its own credit analysis of the Borrower and decision to enter into this
Agreement and that it will, independently and without reliance upon
the Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make
its own analysis and decisions in taking or not taking action under this
Agreement or the other Loan Documents. The Agent shall not be
required to keep itself informed as to the performance or observance by
the Borrower of this Agreement or the other Loan Documents or any
other document referred to or provided for herein or therein or to
inspect the properties or books of the Borrower. Except for notices,
reports and other documents and information expressly required to be
furnished to the Banks by the Agent hereunder or under the other
Loan Documents, the Agent shall not have any duty or responsibility
to provide any Bank with any credit or other information concerning
the affairs, financial condition or business of the Borrower, that may
come into the possession of the Agent or any of its Affiliates.
Section 9.7 Failure to Act.
Except for action expressly required of the
Agent hereunder, the Agent shall in all cases be fully justified in
failing or refusing to act hereunder or thereunder unless it shall be
indemnified to its satisfaction by the Banks against any and all liability
and expense that may be incurred by it by reason of taking or
continuing to take any such action.
Section 9.8 Resignation or Removal of Agent.
Subject to the appointment and acceptance
of a successor Agent as provided below, the Agent may resign at any
time by giving not less than 10 days' prior written notice thereof to the
Banks and the Borrower and the Agent may be removed at any time
with or without cause by the Majority Banks. Upon any such
resignation or removal, the Majority Banks shall have the right to
appoint a successor Agent. If no successor Agent shall have been so
appointed by the Majority Banks and shall have accepted such
appointment within 30 days after the retiring Agent's giving of notice
of resignation or the Majority Banks' removal of the retiring Agent,
then the retiring Agent may, on behalf of the Banks, after consultation
with the Borrower, appoint a successor Agent which shall be one of
the Banks. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any
retiring Agent's resignation or removal hereunder as Agent, the
provisions of this Article 9 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was
acting as the Agent.
Section 9.9 Sharing of Payments.
In the event that any Bank shall obtain
payment in respect of a Note, or interest thereon, whether voluntarily
or involuntarily, and whether through the exercise of a right of
banker's lien, set-off or counterclaim against the Borrower or
otherwise, in a greater proportion than any such payment obtained by
any other Bank in respect of the corresponding Note held by it, then
the Bank so receiving such greater proportionate payment shall
purchase for cash from the other Bank or Banks such portion of each
such other Bank's or Banks' Loan as shall be necessary to cause such
Bank receiving the proportionate overpayment to share the excess
payment with each Bank; provided, however, that if all or any portion
of such excess payment or benefits is thereafter recovered from the
Bank that received the proportionate overpayment, such purchase of
Loans or payment of benefits, as the case may be, shall be rescinded,
and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
Article 10. Miscellaneous Provisions.
Section 10.1 Fees and Expenses; Indemnity.
The Borrower will promptly pay all costs of
the Agent in preparing the Loan Documents and all costs and
expenses of the issue of the Notes and of the Borrower's performance
of and compliance with all agreements and conditions contained
herein on its part to be performed or complied with, and the
reasonable fees and expenses and disbursements of counsel to the
Agent in connection with the preparation, execution and delivery,
administration, interpretation and enforcement of this Agreement, the
other Loan Documents and all other agreements, instruments and
documents relating to this transaction, the consummation of the
transactions contemplated by all such documents, the preservation of
all rights of the Banks and the Agent, the negotiation, preparation,
execution and delivery of any amendment, modification or supplement
of or to, or any consent or waiver under, any such document (or any
such instrument that is proposed but not executed and delivered) and
with any claim or action threatened, made or brought against any of
the Banks or the Agent arising out of or relating to any extent to this
Agreement, the other Loan Documents or the transactions
contemplated hereby or thereby. In addition, the Borrower will
promptly pay all costs and expenses (including, without limitation,
reasonable fees and disbursements of counsel) suffered or incurred by
each Bank in connection with its enforcement of the payment of the
Notes held by it or any other sum due to it under this Agreement or
any of the other Loan Documents or any of its other rights hereunder
or thereunder. In addition to the foregoing, the Borrower shall
indemnify each Bank and the Agent and each of their respective
directors, officers, employees, attorneys, agents and Affiliates against,
and hold each of them harmless from, any loss, liabilities, damages,
claims, costs and expenses (including reasonable attorneys' fees and
disbursements) suffered or incurred by any of them arising out of,
resulting from or in any manner connected with, the execution,
delivery and performance of each of the Loan Documents, the Loans
and any and all transactions related to or consummated in connection
with the Loans, including, without limitation, losses, liabilities,
damages, claims, costs and expenses suffered or incurred by any Bank
or the Agent or any of their respective directors, officers, employees,
attorneys, agents or Affiliates arising out of or related to any
Environmental Matter, Environmental Liability or Environmental
Proceeding, or in investigating, preparing for, defending against, or
providing evidence, producing documents or taking any other action in
respect of any commenced or threatened litigation, administrative
proceeding or investigation under any federal securities law or any
other statute of any jurisdiction, or any regulation, or at common law
or otherwise, that is alleged to arise out of or is based upon: (i) any
untrue statement or alleged untrue statement of any material fact of the
Borrower and its Subsidiaries in any document or schedule filed with
the Securities and Exchange Commission or any other governmental
body; (ii) any omission or alleged omission to state any material fact
required to be stated in such document or schedule, or necessary to
make the statements made therein, in light of the circumstances under
which made, not misleading; (iii) any acts, practices or omission or
alleged acts, practices or omissions of the Borrower or its agents
related to the making of any acquisition, purchase of shares or assets
pursuant thereto, financing of such purchases or the consummation of
any other transactions contemplated by any such acquisitions that are
alleged to be in violation of any federal securities law or of any other
statute, regulation or other law of any jurisdiction applicable to the
making of any such acquisition, the purchase of shares or assets
pursuant thereto, the financing of such purchases or the consummation
of the other transactions contemplated by any such acquisition; or (iv)
any withdrawals, termination or cancellation of any such proposed
acquisition for any reason whatsoever. The indemnity set forth herein
shall be in addition to any other obligations or liabilities of the
Borrower to the Agent and the Banks hereunder or at common law or
otherwise. The provisions of this Section 10.1 shall survive the
payment of the Notes and the termination of this Agreement.
Notwithstanding anything in this Section 10.1 to the contrary, the
Borrower shall have no obligation to indemnify or hold harmless any
Person for any loss, liabilities, damages, claims, costs or expenses
resulting from such Person's gross negligence or willful misconduct.
Section 10.2 Remedies for Cumulative ERISA
Liabilities.
It is agreed that notwithstanding any other
provision of this Agreement to the contrary, the Bank(s) shall not be
entitled to assert any claim of (a) breach of any representation or
warranty under Section 3.14, (b) violation of any covenant under
Sections 6.10 or 7.8, or (c) occurrence of any Event of Default under
Section 8.2, 8.3 or 8.5 (solely to the extent they relate to Borrower's
representations or covenants under Sections 3.14, 6.10 or 7.8), until
such time as the Cumulative ERISA Liability exceeds the aggregate
sum of $5,000,000.
Section 10.3 Taxes.
If, under any law in effect on the date of the
closing of any Loan hereunder, or under any retroactive provision of
any law subsequently enacted, it shall be determined that any Federal,
state or local tax is payable in respect of the issuance of any Note, or in
connection with the filing or recording of any assignments, mortgages,
financing statements, or other documents (whether measured by the
amount of Indebtedness secured or otherwise) as contemplated by this
Agreement, then the Borrower will pay any such tax and all interest
and penalties, if any, and will indemnify the Banks and the Agent
against and save each of them harmless from any loss or damage
resulting from or arising out of the nonpayment or delay in payment of
any such tax. If any such tax or taxes shall be assessed or levied
against any Bank or any other holder of a Note, such Bank, or such
other holder, as the case may be, may notify the Borrower and make
immediate payment thereof, together with interest or penalties in
connection therewith, and shall thereupon be entitled to and shall
receive immediate reimbursement therefor from the Borrower.
Notwithstanding any other provision contained in this Agreement, the
covenants and agreements of the Borrower in this Section 10.3 shall
survive payment of the Notes and the termination of this Agreement.
Section 10.4 Payments.
As set forth in Article 2 hereof, all
payments by the Borrower on account of principal, interest, fees and
other charges (including any indemnities) shall be made to the Agent
(except that all payments of principal and interest on Bid Loans shall
be made to the applicable Bank(s) at its (their) Applicable Lending
Office(s)) at the Principal Office of the Agent, in lawful money of the
United States of America in immediately available funds, by wire
transfer or otherwise, not later than 1:00 P.M. New York City time on
the date such payment is due. Any such payment made on such date
but after such time shall, if the amount paid bears interest, be deemed
to have been made on, and interest shall continue to accrue and be
payable thereon until, the next succeeding Business Day. If any
payment of principal or interest becomes due on a day other than a
Business Day, such payment may be made on the next succeeding
Business Day and such extension shall be included in computing
interest in connection with such payment. All payments hereunder
and under the Notes shall be made without set-off or counterclaim and
in such amounts as may be necessary in order that all such payments
shall not be less than the amounts otherwise specified to be paid under
this Agreement and the Notes (after withholding for or on account of:
(i) any present or future taxes, levies, imposts, duties or other similar
charges of whatever nature imposed by any government or any
political subdivision or taxing authority thereof, other than any tax
(except those referred to in clause (ii) below) on or measured by the
net income of the Bank to which any such payment is due pursuant to
applicable federal, state and local income tax laws, and (ii) deduction
of amounts equal to the taxes on or measured by the net income of
such Bank payable by such Bank with respect to the amount by which
the payments required to be made under this sentence exceed the
amounts otherwise specified to be paid in this Agreement and the
Notes). Upon payment in full of any Note, the Bank holding such
Note shall mark the Note "Paid" and return it to the Borrower.
Section 10.5 Survival of Agreements and
Representations;
Construction.
All agreements, representations and
warranties made herein shall survive the delivery of this Agreement
and the Notes. The headings used in this Agreement and the table of
contents are for convenience only and shall not be deemed to
constitute a part hereof. All uses herein of the masculine gender or of
singular or plural terms shall be deemed to include uses of the
feminine or neuter gender, or plural or singular terms, as the context
may require.
Section 10.6 Set-off of Deposits.
Any and all monies, securities and other
property of the Borrower, and the proceeds thereof, now or hereafter
held or received by or in transit to any Bank or the Agent from or for
the Borrower, whether for safekeeping, custody, pledge, transmission,
collection or otherwise, may at any time after the occurrence and
during the continuance of any Event of Default be set-off, appropriated
and applied by any Bank or the Agent against any of the Obligations,
whether or not any of such Obligations is then due or is secured by any
collateral, or, if it is so secured, whether or not the collateral held by
the Agent is considered to be adequate.
Section 10.7 Modifications, Consents and
Waivers; Entire
Agreement.
No modification, amendment or waiver of
any provision of this Agreement, any Notes or any of the other Loan
Documents and all other agreements, instruments and documents
delivered pursuant hereto or thereto, nor consent to any departure by
the Borrower therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Borrower, the Agent and the
Majority Banks and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given;
provided, however, that no amendment, waiver or consent shall, unless
signed by the Borrower, the Agent and all the Banks (a) waive any of
the conditions to the making of Loans specified in Section 4.1 or 4.2,
(b) increase the amounts of or extend the terms of the Commitments or
subject the Banks to any additional obligations, (c) reduce the
principal of, or interest on, the Committed Loan Notes or any fees or
other amounts payable hereunder, (d) postpone any date fixed for any
payment of principal of, or interest on, the Committed Loan Notes or
any fees or other amounts payable hereunder, (e) change the
percentages which shall be required for the Banks or any of them to
take any action hereunder or (f) amend this Section 10.7. No consent
to or demand on the Borrower in any case shall, of itself, entitle it to
any other or further notice or demand in similar or other
circumstances. This Agreement and the other Loan Documents
embody the entire agreement and understanding among the Banks, the
Agent and the Borrower and supersede all prior agreements and
understandings relating to the subject matter hereof.
Section 10.8 Remedies Cumulative.
Each and every right granted to the Agent
and the Banks hereunder or under any other document delivered
hereunder or in connection herewith, or allowed it by law or equity,
shall be cumulative and may be exercised from time to time. No
failure on the part of the Agent or any Bank or the holder of any Note
to exercise, and no delay in exercising, any right shall operate as a
waiver thereof, nor shall any single or partial exercise of any right
preclude any other or future exercise thereof or the exercise of any
other right. The due payment and performance of the Obligations
shall be without regard to any counterclaim, right of offset or any other
claim whatsoever that the Borrower may have against any Bank or the
Agent and without regard to any other obligation of any nature
whatsoever that any Bank or the Agent may have to the Borrower, and
no such counterclaim or offset shall be asserted by the Borrower in any
action, suit or proceeding instituted by any Bank or the Agent for
payment or performance of the Obligations.
Section 10.9 Further Assurances.
At any time and from time to time, upon the
request of the Agent, the Borrower shall execute, deliver and
acknowledge or cause to be executed, delivered and acknowledged,
such further documents and instruments and do such other acts and
things as the Agent may reasonably request in order to fully effect the
purposes of this Agreement, the other Loan Documents and any other
agreements, instruments and documents delivered pursuant hereto or
in connection with the Loans.
Section 10.10 Notices.
All notices, requests, reports and other
communications pursuant to this Agreement shall be in writing, either
by letter (delivered by hand or commercial messenger service or sent
by certified mail, return receipt requested, except for routine reports
delivered in compliance with Article 5 hereof which may be sent by
ordinary first-class mail) or telegram or facsimile, addressed as
follows:
(a) If to the Borrower:
Commerce Clearing House, Inc.
2700 Lake Cook Road
Riverwoods, Illinois 60015
Attention: Treasurer
Telecopier No.: (708) 267-2520
(b) If to any Bank:
To its address set forth below its
name on the signature pages
hereof,
with a copy to the Agent; and
(c) If to the Agent:
National Westminster Bank PLC,
as Agent
175 Water Street
New York, New York 10038
Attention: Doug Burnett
Telecopier No.: (212) 602-4046
and to:
National Westminster Bank PLC,
as Agent
33 N. Dearborn Street
Chicago, Illinois 60602
Attention: David Hannah
Telecopier No.: (312) 621-1564
Any notice, request or communication hereunder shall be deemed to
have been given on the day on which it is telecopied to such party at
the telecopier number specified above or delivered by hand or such
commercial messenger service to such party at its address specified
above, or, if sent by mail, on the third Business Day after the day
deposited in the mail, postage prepaid, or in the case of telegraphic
notice, when delivered to the telegraph company, addressed as
aforesaid. Any party may change the person, address or telecopier
number to whom or which notices are to be given hereunder, by notice
duly given hereunder; provided, however, that any such notice shall be
deemed to have been given hereunder only when actually received by
the party to which it is addressed.
Section 10.11 Counterparts.
This Agreement may be signed in any
number of counterparts with the same effect as if the signatures thereto
and hereto were upon the same instrument.
Section 10.12 Severability.
The provisions of this Agreement are
severable, and if any clause or provision hereof shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall affect only such clause or provision,
or part thereof, in such jurisdiction and shall not in any manner affect
such clause or provision in any other jurisdiction, or any other clause
or provision in this Agreement in any jurisdiction. Each of the
covenants, agreements and conditions contained in this Agreement is
independent and compliance by the Borrower with any of them shall
not excuse non-compliance by the Borrower with any other. All
covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or be
otherwise within the limitations of, another covenant shall not avoid
the occurrence of a Default or an Event of Default if such action is
taken or condition exists.
Section 10.13 Binding Effect; No Assignment
or Delegation by
Borrower.
This Agreement shall be binding upon and
inure to the benefit of the Borrower and its successors and to the
benefit of the Banks and the Agent and their respective successors and
assigns. The rights and obligations of the Borrower under this
Agreement shall not be assigned or delegated without the prior written
consent of the Agent and each Bank, and any purported assignment or
delegation without such consent shall be void.
Section 10.14 Assignments and Participations by
Banks.
(a) Each Bank may assign to one or
more banks or other entities all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or
a portion of its Commitment, the Loans owing to it, and the Note or
Notes held by it); provided, however, that: (i) each such assignment
shall be of a constant, and not a varying, percentage of all of the
assigning Bank's rights and obligations under this Agreement, (ii) the
amount of the Commitment of the assigning Bank being assigned
pursuant to each such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in
no event be less than $9,000,000 and shall be an integral multiple of
$1,000,000, (iii) each such assignment shall be to an Eligible
Assignee. Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least 3 Business Days after
the execution thereof: (x) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, have
the rights and obligations of a Bank hereunder, and (y) the Bank
assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations
under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning
Bank's rights and obligations under this Agreement, such Bank shall
cease to be a party hereto).
(b) By executing and delivering an
Assignment and Acceptance, the Bank assignor thereunder and the
assignee thereunder confirm to and agree with each other and the
other parties hereto as follows: (i) other than as provided in such
Assignment and Acceptance, such assigning Bank makes no
representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or
any other instrument or document furnished pursuant hereto; (ii) such
assigning Bank makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower
or the performance or observance by the Borrower of any of its
obligations under this Agreement or any other instrument or document
furnished pursuant hereto; (iii) such assignee confirms that it has
received a copy of this Agreement, together with copies of such
financial statements and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to
enter into such Assignment and Acceptance, provided, however, that
nothing herein shall require the Borrower or any Subsidiary to provide
any documents or information other than as expressly required under
the terms of this Agreement; (iv) such assignee will, independently
and without reliance upon the Agent, such assigning Bank or any
other Bank and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement; (v) such
assignee confirms that it is an Eligible Assignee; (vi) such assignee
appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are
delegated to the Agent by the terms hereof, together with such powers
as are reasonably incidental thereto; and (vii) such assignee agrees that
it will perform in accordance with their terms all of the obligations
which by the terms of this Agreement are required to be performed by
it as a Bank.
(c) Upon its receipt of an Assignment
and Acceptance executed by an assigning Bank and an assignee
representing that it is an Eligible Assignee, together with any Note
subject to such assignment, and payment of a $2,500 fee to the Agent
for processing such assignment (which fee shall be the sole
responsibility of the assigning Bank or its assignee), the Agent shall:
(i) accept such Assignment and Acceptance, and (ii) give prompt
notice thereof to the Borrower. Within five Business Days after its
receipt of such notice, the Borrower, at its own expense, shall execute
and deliver to the Agent in exchange for the surrendered Note a new
Note to the order of such Eligible Assignee in an amount equal to the
Commitment assumed by it pursuant to such Assignment and
Acceptance and, if the assigning Bank has retained a Commitment
hereunder, a new Note to the order of the assigning Bank in an
amount equal to the Commitment retained by it hereunder. Such new
Note shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Note, shall be dated the effective
date of such Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibit A hereto.
(d) Each Bank may sell participations
to one or more banks or other entities in all or a portion of its rights
and obligations under this Agreement (including, without limitation,
all or a portion of its Commitment, the Loans owing to it, and the Note
held by it; provided, however, that: (i) such Bank's obligations under
this Agreement (including, without limitation, its Commitment
hereunder) shall remain unchanged, (ii) such Bank shall remain solely
responsible to the other parties hereto for the performance of such
obligations, (iii) such Bank shall not grant the purchaser of any such
participation, vis-a-vis such Bank, any right to consent to any
amendments, waivers or other modifications of the Loan Documents
except any such amendment, waiver or other modification that would
reduce the principal amount of any Loan payable hereunder, reduce
the amount of any interest payable hereunder or extend the
Commitment Termination Date, and (iv) such Bank shall remain the
holder of any such Note for all purposes of this Agreement, and the
Borrower, the Agent and the other Banks shall continue to deal solely
and directly with such Bank in connection with such Bank's rights and
obligations under this Agreement.
(e) Any Bank may, in connection with
any assignment or participation or proposed assignment or
participation pursuant to this Section 10.14, disclose to the assignee or
participant or proposed assignee or participant, any information
relating to the Borrower furnished to such Bank by or on behalf of the
Borrower; provided that, prior to any such disclosure, the assignee or
participant or proposed assignee or participant shall agree to preserve
the confidentiality of any confidential information relating to the
Borrower received by it from such Bank.
Section 10.15 Confidentiality.
The Borrower, the Subsidiaries, the Agent
and the Banks shall keep confidential and shall not disclose to any
person or entity the terms of the Loan Documents and all negotiations
and documentation relating thereto (collectively, the "Confidential
Information"), except (i) as may be permitted in a written waiver
signed by the Borrower, (ii) pursuant to an order of any court of
competent jurisdiction issued in writing to such party, (iii) to the
extent specifically required by law or regulation, (iv) if the
Confidential Information has been made publicly available by a person
or entity other than such party without contravening any
confidentiality obligation of such person or entity, (v) to any affiliate,
director, officer, employee, agent, counsel, auditor or advisor to such
party, or (vi) to any prospective (a) commercial bank or other financial
institution to which a Bank may wish to assign or sell all or a portion
of its rights under this Agreement pursuant to Section 10.14 hereof,
and (b) New Bank which may assume the Commitments of a
Replaceable Bank pursuant to Section 2.20 hereof; provided, however,
that any party supplying Confidential Information (x) to any party
referenced in clause (vi) hereof shall cause such party to make the
same undertaking of confidentiality and non-disclosure in writing as
set forth in this section prior to any disclosure hereunder to such party
and (y) to any party referenced in clause (v) hereof shall be responsible
for the compliance by such party with the terms of this section as
though such party were party hereto.
Section 10.16 GOVERNING LAW; CONSENT
TO JURIS-
DICTION; WAIVER OF
TRIAL BY JURY.
(a) THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS AND ALL OTHER DOCUMENTS
AND INSTRUMENTS EXECUTED AND DELIVERED IN
CONNECTION HEREWITH AND THEREWITH, SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO ITS RULES PERTAINING TO
CONFLICTS OF LAWS.
(b) THE BORROWER
IRREVOCABLY CONSENTS THAT ANY LEGAL ACTION OR
PROCEEDING AGAINST IT UNDER, ARISING OUT OF OR IN
ANY MANNER RELATING TO THIS AGREEMENT, AND EACH
OTHER LOAN DOCUMENT MAY BE BROUGHT IN ANY COURT
OF THE STATE OF NEW YORK, COUNTY OF NEW YORK, OR
IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK. THE BORROWER, BY
THE EXECUTION AND DELIVERY OF THIS AGREEMENT,
EXPRESSLY AND IRREVOCABLY ASSENTS AND SUBMITS TO
THE PERSONAL JURISDICTION OF ANY OF SUCH COURTS IN
ANY SUCH ACTION OR PROCEEDING. THE BORROWER
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
ANY COMPLAINT, SUMMONS, NOTICE OR OTHER PROCESS
RELATING TO ANY SUCH ACTION OR PROCEEDING BY
DELIVERY THEREOF TO IT BY HAND OR BY MAIL IN THE
MANNER PROVIDED FOR IN SECTION 10.10 HEREOF. THE
BORROWER HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES ANY CLAIM OR DEFENSE IN ANY SUCH ACTION OR
PROCEEDING BASED ON ANY ALLEGED LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS OR ANY SIMILAR BASIS. THE BORROWER
SHALL NOT BE ENTITLED IN ANY SUCH ACTION OR
PROCEEDING TO ASSERT ANY DEFENSE GIVEN OR
ALLOWED UNDER THE LAWS OF ANY STATE OTHER THAN
THE STATE OF NEW YORK UNLESS SUCH DEFENSE IS ALSO
GIVEN OR ALLOWED BY THE LAWS OF THE STATE OF NEW
YORK. NOTHING IN THIS SECTION 10.16 SHALL AFFECT OR
IMPAIR IN ANY MANNER OR TO ANY EXTENT THE RIGHT OF
ANY BANK TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE BORROWER IN ANY
JURISDICTION OR TO SERVE PROCESS IN ANY MANNER
PERMITTED BY LAW.
(c) EACH OF THE BORROWER,
THE BANKS AND THE AGENT WAIVES TRIAL BY JURY IN
ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN
CONNECTION WITH, OR ARISING OUT OF, THIS
AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS, OR
ANY INSTRUMENT OR DOCUMENT DELIVERED PURSUANT
TO THIS AGREEMENT, OR THE VALIDITY, PROTECTION,
INTERPRETATION, COLLECTION OR ENFORCEMENT
THEREOF.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on the date first above written.
COMMERCE
CLEARING HOUSE, INC.
the Borrower
By:________________________________
Oakleigh
Thorne
Member of
Executive Committee
By:
John I.
Abernethy
Chief Financial
Officer
By:________________________________
Kenneth J.
Ashley
Treasurer
Commitment:
$15,000,000 NATIONAL
WESTMINSTER BANK PLC,
as Agent and as
a Bank
By_______________________________
David
H. Hannah
Vice
President
Lending Office
for Prime Rate
Loans and CD
Loans:
175 Water Street
New York, New
York 10038
Attention: Doug
Burnett
Lending Office
for Eurocurrency
Loans:
175 Water Street
New York, New
York 10038
Attention: Doug
Burnett
Address for
Notices:
National
Westminster Bank PLC
175 Water Street
New York, New
York 10038
Attention: Doug
Burnett
Telex: 232369
Answer-Back
Code: NBNA UR
Telecopier:
(212) 602-4169
-and-
National
Westminster Bank PLC
33 N. Dearborn
Street
Chicago, Illinois
60602
Attention: David
Hannah
Telecopier:
(312) 621-1564
Commitment:
$9,000,000 MELLON BANK, N.A.
By_______________________________
Blake
McKim
Vice
President
Lending Office
for Prime Rate
Loans:
Mellon Bank,
N.A.
Three Mellon
Bank Center
Room 2302
Pittsburgh,
Pennsylvania 15269
Lending Office
for CD Loans
and
Eurocurrency Loans:
Mellon Bank,
N.A.
Three Mellon
Bank Center
Room 2302
Pittsburgh,
Pennsylvania 15269
Attention: Sue
Cooke
Address for
Notices:
Mellon Bank,
N.A.
Three Mellon
Bank Center
Room 2302
Pittsburgh,
Pennsylvania 15269
Attention: Sue
Cooke
Telex No.:
199103 or 812367
Answer-Back
Code: MELBNK
Telecopier:
(412) 234-5049
or
(412) 236-2027
or
(412) 236-2028
Commitment:
$9,000,000 NBD BANK, N.A.
By_______________________________
Jenny
Gilpin
Second
Vice President
Lending Office
for Prime Rate
Loans:
NBD Bank, N.A.
611 Woodward
Ave.
Detroit,
Michigan 48226
Lending Office
for CD Loans
and
Eurocurrency Loans:
NBD Bank, N.A.
611 Woodward
Ave.
Detroit,
Michigan 48226
Attention:
Sharon Popp
Address for
Notices:
NBD Bank, N.A.
611 Woodward
Ave.
Detroit,
Michigan 48226
Attention:
Sharon Popp
Telex No.: NA
Answer-Back
Code: NA
Telecopier:
(313) 225-3269
Commitment:
$9,000,000 HARRIS TRUST AND
SAVINGS BANK
By_______________________________
David
R. Casper
Senior
Vice President
Lending Office
for Prime Rate
Loans:
Harris Trust and
Savings Bank
111 West
Monroe
P.O. Box 755
Chicago, Illinois
60690-0755
Lending Office
for CD Loans
and
Eurocurrency Loans:
Harris Trust and
Savings Bank
111 West
Monroe
P.O. Box 755
Chicago, Illinois
60690-0755
Attention:
Christine M. Chayka
Address for
Notices:
Harris Trust and
Savings Bank
111 West
Monroe
P.O. Box 755
Chicago, Illinois
60690-0755
Attention:
Christine M. Chayka
Telex No.: NA
Answer-Back
Code: NA
Telecopier:
(312) 461-2591
Commitment:
$9,000,000 THE NORTHERN
TRUST COMPANY
By_______________________________
John J.
Conway
Vice
President
Lending Office
for Prime Rate
Loans:
Chicago
Division, B-11
The Northern
Trust Company
50 South LaSalle
Street
Chicago, Illinois
60675
Lending Office
for CD Loans
and
Eurocurrency Loans:
Chicago
Division, B-11
The Northern
Trust Company
50 South LaSalle
Street
Chicago, Illinois
60675
Attention:
Stephanie Taylor
Address for
Notices:
Chicago
Division, B-11
The Northern
Trust Company
50 South LaSalle
Street
Chicago, Illinois
60675
Attention:
Stephanie Taylor
Telex No.: NA
Answer-Back
Code: NA
Telecopier:
(312) 630-1566
Commitment:
$9,000,000 CONTINENTAL BANK
By_______________________________
Its:
Lending Office
for Prime Rate
Loans:
Continental Bank
231 S. LaSalle
Street
Chicago, IL
60693
Lending Office
for CD Loans
and
Eurocurrency Loans:
Continental Bank
231 S. LaSalle
Street
Chicago, IL
60693
Attention:
Richard Dominquez
Address for
Notices:
Continental Bank
2850 W. Golf
Road
Rolling
Meadows, Illinois 60008
Attention:
Edmund H. Lester
Telex No.: NA
Answer-Back
Code: NA
Telecopier:
(708) 952-1136
EXHIBITS AND SCHEDULES TO
REVOLVING CREDIT AGREEMENT
BY AND BETWEEN
COMMERCE CLEARING HOUSE, INC.,
THE BANK SIGNATORY HERETO
AND
NATIONAL WESTMINSTER BANK PLC
EXHIBITS
A Form of Assignment and Acceptance
B Form of Compliance Certificate
C Form of Acceptance of Bid with Respect to Bid
Loans
D1 Form of Committed Loan Note
D2 Form of Bid Loan Note
E Form of Borrower's Counsel's Opinion Letter
SCHEDULES
3.1 Options Relating to the Purchase of the Capital
Stock or Other Equity Interests of the Borrower or the Subsidiaries
3.2 Consents, Waivers, Approvals; Violation of
Agreements
3.6 Judgments, Actions, Proceedings
3.7 Defaults; Compliance with Laws, Regulations,
Agreements
3.8 Burdensome Documents
3.14 Pension Plans
7.2 Permitted Security Interests, Liens and
Encumbrances
7.3 Permitted Guaranties
EXHIBIT A
TO REVOLVING CREDIT AGREEMENT
BY AND AMONG
COMMERCE CLEARING HOUSE, INC.,
THE BANKS SIGNATORY HERETO
AND
NATIONAL WESTMINSTER BANK PLC, AS AGENT
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated ___________
Reference is hereby made to the Revolving Credit
Agreement dated ___________________ (the "Loan Agreement") by
and among Commerce Clearing House, Inc., a Delaware corporation
(the "Borrower"), the Banks signatory thereto (collectively, the
"Banks") and National Westminster Bank PLC in its capacity as agent
for the Banks (in such capacity, the "Agent"). Capitalized terms used
herein that are defined in the Loan Agreement that are not otherwise
defined herein shall have the respective meanings ascribed thereto in
the Loan Agreement.
_______________________________, a
__________________ (the "Assignor") and
_______________________________________, a
________________, (the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the
Assignee, and the Assignee hereby purchases and assumes from the
Assignor, a __ % interest in and to all of the Assignor's rights and
obligations under the Loan Agreement as of the Effective Date (as
defined below) (including, without limitation, such percentage interest
in the Assignor's Commitment as in effect on the Effective Date, and
the Loans owing to the Assignor on the Effective Date, and the Note(s)
held by the Assignor).
2. The Assignor: (i) represents and warrants
that as of the date hereof its Commitment (without giving effect to
assignments thereof that have not yet become effective) is $9,000,000
and the aggregate outstanding principal amount of Loans owing to it
(without giving effect to assignments thereof that have not yet become
effective) is $__________; (ii) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it
hereunder, and that such interest is free and clear of any adverse
claim; (iii) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with the Loan Agreement or
any other instrument or document furnished pursuant thereto; and (iv)
makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations
under the Loan Agreement or any other instrument or document
furnished pursuant thereto; and (v) attaches the Note(s) referred to in
paragraph 1 above and requests that the Agent exchange such Note(s)
for new Note(s) as follows: [a Revolving Note dated the Effective Date
in the principal amount of $________ payable to the order of the
Assignee and a Revolving Note dated the Effective Date in the
principal amount of $________ payable to the order of the Assignor.]
3. The Assignee: (i) confirms that it has
received a copy of the Loan Agreement, together with copies of such
financial statements and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to
enter into this Assignment and Acceptance; (ii) agrees that it will,
independently and without reliance upon the Agent, the Assignor or
any other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Loan Agreement;
(iii) confirms that it is an Eligible Assignee; (iv) appoints and
authorizes the Agent to take such action as its agent on its behalf and
to exercise such powers under the Loan Agreement as are delegated to
the Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; (v) agrees that it will perform in
accordance with their terms all of the obligations which by the terms
of the Loan Agreement are required to be performed by it as a Bank;
and (vi) specifies as its addresses for Prime Rate Loans, Eurocurrency
Loans and CD Loans (and address for notices) the offices set forth
beneath its name on the signature pages hereof.
4. The effective date for this Assignment and
Acceptance shall be ________________ (the "Effective Date").
Following the execution of this Assignment and Acceptance, it will be
delivered to the Agent for acceptance by the Agent.
5. Upon such acceptance, as of the Effective
Date: (i) the Assignee shall be a party to the Loan Agreement and, to
the extent provided in this Assignment and Acceptance, have the
rights and obligations of a Bank thereunder and (ii) the Assignor shall,
to the extent provided in this Assignment and Acceptance, relinquish
its rights and be released from its obligations under the Loan
Agreement.
6. Upon such acceptance, from and after the
Effective Date, the Agent shall make all payments under the Loan
Agreement and the Note(s) in respect of the interest assigned hereby
(including, without limitation, all payments of principal, interest and
commitment fees with respect thereto) to the Assignee. The Assignor
and Assignee shall make all appropriate adjustments in payments
under the Loan Agreement and the Note(s) for periods prior to the
Effective Date directly between themselves.
7. This Assignment and Acceptance shall be
governed by, and construed in accordance with, the laws of the State of
New York.
[NAME OF
ASSIGNOR]
By_________________________________
Title
[NAME OF
ASSIGNEE]
By_________________________________
Title
Lending Office
for Prime Rate
Loans:
Lending Office
for Eurocurrency
Loans and CD Loans:
Attention:
Address for
Notices:
Attention:
Telephone No.:
Telex No.:
Accepted this ___ day
of ______________, 199_
NATIONAL WESTMINSTER BANK PLC,
as Agent
By___________________________
Title
EXHIBIT B
TO REVOLVING CREDIT AGREEMENT
BY AND AMONG
COMMERCE CLEARING HOUSE, INC.,
THE BANKS SIGNATORY HERETO
AND
NATIONAL WESTMINSTER BANK PLC, AS AGENT
FORM OF COMPLIANCE CERTIFICATE
To: The Banks Party to the Revolving
Credit Agreement Described Below
This Compliance Certificate is furnished pursuant to
that certain Revolving Credit Agreement dated as of July 1, 1994 (the
"Agreement") among the Borrower, the Banks party thereto and
National Westminster Bank PLC, as Agent for the Banks. Unless
otherwise defined herein, capitalized terms used in this Compliance
Certificate have the meanings ascribed thereto in the Agreement.
Section references in this Compliance Certificate are to the respective
sections in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES
THAT:
I am the duly elected of the Borrower, and I am
duly authorized to execute and deliver this Compliance Certificate.
I have reviewed the terms of the Agreement and I have made,
or have caused to be made under my supervision, a detailed review of
the transactions and conditions of the Borrower and its Subsidiaries
during the accounting period covered by the attached Financial
Statements and as of the date hereof.
The examinations described in paragraph 2 did not disclose,
and to the best of my knowledge I have no knowledge of, the existence
of any condition or event which constitutes a Default or an Event of
Default during or at the end of the accounting period covered by the
attached Financial Statements or as of the date of this Certificate after
giving effect to any Loan made contemporaneously herewith, except as
set forth below;
To the best of my knowledge, the representations and
warranties contained in Article 3 of the Agreement are true and
correct as of the date hereof; and
Schedule I attached hereto sets forth financial data and
computations evidencing the Borrower's compliance with certain
covenants of the Agreement, all of which data and computations are,
to the best of my knowledge, true, complete and correct in all respects.
Described below are the exceptions, if any, to
paragraph 3 by listing, in detail, the nature of the condition or event,
the period during which it has existed and the action which the
Borrower has taken, is taking, or proposes to take with respect to each
such condition or event: (Attach an additional page(s) if necessary).
The foregoing certifications, together with the
computations set forth in Schedule I hereto and the financial
statements delivered with this Certificate in support hereof, are made
and delivered this day of , 19 .
COMMERCE
CLEARING HOUSE, INC.
By:
Title:
SCHEDULE I Page 1 of 3 Pages
COMMERCE CLEARING CORPORATION, INC.
COVENANT COMPLIANCE REPORT
AS OF
NET WORTH
$
-Section 6.8(a) (not less than (i) $67,000,000
on or prior to June 30, 1995, (ii) $75,000,000
on and after July 1, 1995 and on or prior to
June 30, 1996, and (iii) $85,000,000 thereafter) $
B(1) FUNDED DEBT (as of the date hereof)
(a) indebtedness for Borrowed Money
$
(b) Capitalized Lease Obligations
$
Funded Debt (sum of (a) and (b))
$
B(2) FUNDED DEBT TO CAPITALIZATION RATIO
(as of the date hereof)
(c) Numerator: Funded Debt
$
(d) Denominator: Net Worth Plus Funded Debt $
Funded Debt to Capitalization Ratio
((c) divided by (d))
$
-Section 6.8(b)
.6:1.0
C. FIXED CHARGE COVERAGE RATIO
(as of the Latest Balance Sheet)
(e) Net income for the most recent consecutive
four fiscal quarters*/
$
(f) Interest expense for the most recent
consecutive four fiscal quarters*/
$
(g) Tax expense for the most recent consecutive
four fiscal quarters*/
$
(h) Lease expense for the most recent
consecutive four fiscal quarters*/
$
(i) Numerator (sum of (e), (f), (g) and (h)) $
(j) Denominator (sum of (f) and (h))
$
Page 2 of 3
COMMERCE CLEARING CORPORATION, INC.
COVENANT COMPLIANCE REPORT
AS OF
Fixed Charge Coverage Ratio
((i) divided by (j))
$
-Section 6.8(c)
1.25X or
greater
E. LIENS
(k) Indebtedness secured by Purchase Money
Security Interests
$
(l) Indebtedness secured by renewals or
extensions of Purchase Money Security
Interests
$
(m) Capitalized Lease Obligations
$
Total
$
The Aggregate of 7.2(b)(iv),(C), (d)
may not exceed
$25,000,000
F. SALES OF ASSETS
Aggregate net book value of any assets of the
Borrower or any Subsidiary sold, leased or
disposed of outside of the ordinary course
of business of the Borrower or the Subsidiaries
since July 1, 1994
$
-Section 7.11 may not exceed
$18,000,000
G. DECLARATIONS
Declarations paid to date in fiscal year $
Not to exceed:
For Fiscal Year
The Sum of
1994
$26,500,000
1995
29,200,000
1996
32,200,000
That period of
fiscal year 1997 ending on the Commitment
Termination Date
16,500,000
Page 3 of 3
COMMERCE CLEARING CORPORATION, INC.
COVENANT COMPLIANCE REPORT
AS OF
The foregoing financial data and computations are true, complete and
correct in all respects.
COMMERCE
CLEARING HOUSE, INC.
By:
Title:
Date:
Date:
EXHIBIT C
TO REVOLVING CREDIT AGREEMENT
BY AND AMONG
COMMERCE CLEARING HOUSE, INC.,
THE BANKS SIGNATORY HERETO
AND
NATIONAL WESTMINSTER BANK PLC, AS AGENT
FORM OF ACCEPTANCE OF BID WITH RESPECT TO
BID LOANS
[COMMERCE CLEARING HOUSE, INC. LETTERHEAD]
Re: Notice of Acceptance of Bid Responsive
to Bid Loan Borrowing Request
Ladies and Gentlemen:
Reference is made to that certain Revolving Credit
Agreement dated July 1, 1994 by and among Commerce Clearing
House, Inc., as Borrower thereunder, the Banks signatory thereto and
National Westminster Bank PLC, as Agent for the Banks (the
"Agreement"). Capitalized terms used but not defined herein shall
have the meanings ascribed to such terms in the Agreement.
Pursuant to Section 2.2(a) of the Agreement, the
Borrower made a Bid Loan Request on , 199 .
Pursuant to Section 2.2(b) of the Agreement, you
made a Bid responsive to the Bid Loan Request.
The Borrower hereby provides you with written
notice of acceptance of your Bid pursuant to Section 2.2(d) of the
Agreement as follows:
1. Bid Loan Borrowing Date:
2. Principal Dollar Amount of Bid Loan to be
made (or, already made) by you on the Bid Loan Borrowing Date:
Permitted CurrencyDollar AmountInterest RateInterest PeriodDollars
Australian dollars
Pounds Sterling
Canadian dollars
Total Dollar Amount This Notice
constitutes a representation and warranty by the Borrower that the
conditions contained in Section 4.2 of the Agreement have been
satisfied as of the Bid Loan Borrowing Date and the date hereof.
The "Borrower":
COMMERCE
CLEARING HOUSE, INC.
By:
Print Name:
Title:
EXHIBIT D1
TO REVOLVING CREDIT AGREEMENT
BY AND AMONG
COMMERCE CLEARING HOUSE, INC.,
THE BANKS SIGNATORY HERETO
AND
NATIONAL WESTMINSTER BANK PLC, AS AGENT
FORM OF COMMITTED LOAN NOTE
COMMITTED LOAN NOTE
Dated: July 1,
1994
FOR VALUE RECEIVED, the undersigned,
COMMERCE CLEARING HOUSE, INC. (the "Borrower"), HEREBY
PROMISES TO PAY to the order of
______________________________ (the "Bank") the aggregate
unpaid principal amount of the Committed Loans made by the Bank to
the Borrower from time to time pursuant to Section 2.1 of the
Agreement (as hereinafter defined); payable pursuant to the terms and
conditions of the Agreement but in no event not later than the
Commitment Termination Date together, in each case, with interest on
any and all principal amounts of the Committed Loans remaining
unpaid hereunder from time to time outstanding. Interest upon the
unpaid principal amount of the Committed Loans shall accrue at the
rates, shall be calculated in the manner and shall be payable on the
dates set forth in the Agreement. After maturity, whether by
acceleration or otherwise, accrued interest shall be payable upon
demand. Both principal and interest shall be payable in the applicable
currency determined in accordance with the Agreement to National
Westminster Bank PLC, as Agent (the "Agent") on behalf of the Bank,
at its office determined in accordance with the Agreement in
immediately available funds. The Committed Loans made by the
Bank to the Borrower pursuant to the Agreement and all payments on
account of principal of the Committed Loans shall be recorded by the
Bank and, prior to any transfer thereof, endorsed on Schedule A
attached hereto which is part of this Committed Loan Note or
otherwise in accordance with its usual practices and such notations
shall be conclusively presumed to be accurate absent manifest error;
provided, however, that the failure to so record shall not affect the
Borrower's obligations under this Committed Loan Note.
This Committed Loan Note is a Note referred to in,
and is entitled to the benefits of, the Agreement dated as of July 1,
1994 by and among the Borrower, the Banks signatory thereto
(including the Bank) and the Agent (as amended, modified or
supplemented from time to time, the "Agreement") and the other Loan
Documents. Capitalized terms used but not otherwise defined herein
shall have the respective meanings ascribed thereto in the Agreement.
The Agreement, among other things, contains provisions for
acceleration of the maturity hereof upon the happening of certain
stated events and also for prepayments on account of principal of the
Committed Loans prior to the maturity hereof upon the terms and
conditions therein specified.
The Borrower hereby waives presentment, demand,
protest or notice of any kind in connection with this Committed Loan
Note.
THIS COMMITTED LOAN NOTE SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF
LAWS PROVISIONS, OF THE STATE OF NEW YORK BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO
NATIONAL BANKS.
COMMERCE
CLEARING HOUSE, INC.
By:________________________________
John I.
Abernethy
Chief
Financial Officer
By:
Kenneth
J. Ashley
Treasurer
Schedule A
_________________________________________________________
_________________________________________________________
________________
PRINCIPAL PAYMENTS
Interest
_________________________________________________________
_________________________________________________________
________________
Committed Loan Note
dated July 1, 1994
payable to the order of
[Bank]
DatePrincipal Amount of Loan Type of Loan CurrencyInterest
Period (if other than a Prime Rate Loan) and Interest Rate
Amount of Principal Repaid Unpaid Principal Balance Notation
Made By
EXHIBIT D2
TO REVOLVING CREDIT AGREEMENT
BY AND AMONG
COMMERCE CLEARING HOUSE, INC.,
THE BANKS SIGNATORY THERETO
AND
NATIONAL WESTMINSTER BANK PLC, AS AGENT
FORM OF BID LOAN NOTE
BID LOAN NOTE
FOR VALUE RECEIVED, the undersigned,
COMMERCE CLEARING HOUSE, INC. (the "Borrower"), HEREBY
PROMISES TO PAY to the order of (the "Bank")
the principal sum of ( ) on , 199 together with
interest
thereon at the rate of percent ( %) per annum computed [insert the
text indicated at (1) or (2) below, as appropriate]. After maturity,
whether by acceleration or otherwise accrued interest shall be payable
on demand. Both principal and interest shall be payable in the
applicable currency determined in accordance with the Agreement (as
hereinafter defined) to the Bank at its Applicable Lending Office in
immediately available funds.
This Bid Note is a Note referred to in, and is entitled
to the benefits of, the Revolving Credit Agreement dated as of July 1,
1994, by and among the Borrower, the Banks signatory thereto
(including the Bank) and National Westminster Bank PLC, as Agent
(as amended, modified or supplemented from time to time, the
"Agreement") and the other Loan Documents. Capitalized terms used
but not otherwise defined herein shall have the respective meanings
ascribed thereto in the Agreement. The Agreement, among other
things, contains provisions for acceleration of the maturity hereof upon
the happening of certain stated events.
(1) If the Bid Loan is a Eurocurrency Loan (except Loans
denominated in pounds sterling) insert the following: "on the basis of
a year of 360 days and actual days elapsed ."
(2) If the Loan is other than a Eurocurrency Loan or a Loan
denominated in pounds sterling, insert the following: "on the basis of
a year of 365 (366, if applicable) days and actual days elapsed."
The Borrower hereby waives presentment, demand,
protest or notice of any kind in connection with this Bid Loan Note.
THIS BID LOAN NOTE SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF
LAWS PROVISIONS, OF THE STATE OF NEW YORK BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO
NATIONAL BANKS.
COMMERCE
CLEARING HOUSE, INC.
By:
John I.
Abernethy
Chief
Financial Officer
By:
Kenneth
J. Ashley
Treasurer
EXHIBIT E
TO REVOLVING CREDIT AGREEMENT
BY AND AMONG
COMMERCE CLEARING HOUSE, INC.,
THE BANKS SIGNATORY HERETO
AND
NATIONAL WESTMINSTER BANK PLC, AS AGENT
FORM OF BORROWER'S COUNSEL'S OPINION LETTER
July 1, 1994
To the Agent and the Banks who are Parties
to the Revolving Credit Agreement Described Below:
Gentlemen and Ladies:
I am the counsel of Commerce Clearing
House, Inc., a Delaware corporation (the "Borrower"), and have
represented the Borrower in connection with its execution and delivery
of a Revolving Credit Agreement, dated July 1, 1994 (the
"Agreement"), among the Borrower, National Westminster Bank PLC
(individually and as Agent), and the Banks named therein. This
opinion is being delivered pursuant to Section 4.1(c) of the
Agreement. All capitalized terms used but not defined herein shall
have the meanings ascribed to such terms in the Agreement.
I have examined the Certificates or Articles of
Incorporation of the Borrower and each Subsidiary and the By-laws
and the resolutions of the Board of Directors of the Borrower, and
originals, or copies certified to my satisfaction, of such documents,
certificates of officers of the Borrower and each Subsidiary and public
officials and such other documents as I have deemed necessary for
purposes hereof. My examination extended to such matters of law as I
deemed necessary for purposes of this opinion.
Based upon and subject to the foregoing, I am of the
opinion that:
The Borrower is a corporation duly incorporated, validly
existing, and in good standing under the laws of the State of Delaware
and in each state in which it is qualified to do business.
Each Subsidiary is duly organized, validly existing, and in
good standing under the laws of their respective states of organization
and in each state where they are respectively qualified to do business.
The Borrower and each Subsidiary is duly qualified and in
good standing as a foreign corporation, and is duly authorized to do
business in each jurisdiction in which the failure to so qualify would
have a material adverse effect, either individually or in the aggregate,
on the financial position or condition of the Borrower and the
Subsidiaries taken as a whole or on the ability of the Borrower to
perform its obligations under the Loan Documents.
The execution and delivery by the Borrower of the Loan
Documents and the performance by the Borrower of its obligations
thereunder have been duly authorized by all necessary corporate action
and proceedings on the part of the Borrower and will not:
(a) require any consent or approval of
any Person;
(b) violate any provision of law and
will not conflict with or result in a breach of any order, writ,
injunction, ordinance, resolution, decree, or other similar document or
instrument of any court or governmental authority, bureau or agency,
domestic or foreign, or any certificate of incorporation or by-laws of
the Borrower; or
(c) create (with or without the giving
of notice or lapse of time, or both) a default under or breach of any
agreement, bond, note or indenture to which the Borrower is a party or
by which it is bound or any of its properties or assets is affected or the
creation or imposition of any Lien of any nature whatsoever upon any
of the properties or assets owned by or used in connection with the
business of the Borrower.
The Loan Documents have been duly executed and delivered
by the Borrower and constitute the legal, valid and binding obligations
of the Borrower, enforceable in accordance with their respective terms,
except to the extent the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter affecting the enforcement of
creditors' rights generally and subject also to the availability of
equitable remedies if equitable remedies are sought.
Except as set forth on Schedule 3.6 to the Agreement, there
are no outstanding judgments, actions or proceedings, including,
without limitation, any Environmental Proceeding, pending before any
court or governmental authority, bureau or agency, with respect to or,
to the best of my knowledge threatened against or affecting the
Borrower or any Subsidiary, involving a claim either individually or in
the aggregate in excess of $10,000,000.
This opinion is limited to the laws of the State of
New York, the General Corporation Law of the State of Delaware and
the federal laws of the United States.
This opinion may be relied upon by the Agent, the
Banks and their participants, assignees and other transferees.
Very truly yours,
SCHEDULE 3.1
TO REVOLVING CREDIT AGREEMENT
BY AND AMONG
COMMERCE CLEARING HOUSE, INC.,
THE BANKS SIGNATORY HERETO
AND
NATIONAL WESTMINSTER BANK PLC, AS AGENT
OPTIONS RELATING TO THE PURCHASE OF
THE CAPITAL STOCK OR OTHER EQUITY
INTERESTS OF THE BORROWER OR THE SUBSIDIARIES
Options for senior management to purchase Class B Common
Stock of Commerce Clearing House, Inc. as follows:
Number of
Year Granted Exercise Price Class B Shares
1993 $16.62
820,000
1994 $17.00
266,250
TOTAL 1,086,250
SCHEDULE 3.2
TO REVOLVING CREDIT AGREEMENT
BY AND AMONG
COMMERCE CLEARING HOUSE, INC.,
THE BANKS SIGNATORY HERETO
AND
NATIONAL WESTMINSTER BANK PLC, AS AGENT
CONSENTS, WAIVERS, APPROVALS;
VIOLATION OF AGREEMENTS
NONE
SCHEDULE 3.6
TO REVOLVING CREDIT AGREEMENT
BY AND AMONG
COMMERCE CLEARING HOUSE, INC.,
THE BANKS SIGNATORY HERETO
AND
NATIONAL WESTMINSTER BANK PLC, AS AGENT
JUDGMENTS, ACTIONS, PROCEEDINGS
NONE
SCHEDULE 3.7
TO REVOLVING CREDIT AGREEMENT
BY AND AMONG
COMMERCE CLEARING HOUSE, INC.,
THE BANKS SIGNATORY HERETO
AND
NATIONAL WESTMINSTER BANK PLC, AS AGENT
DEFAULTS; COMPLIANCE WITH LAWS,
REGULATIONS, AGREEMENTS
NONE
SCHEDULE 3.8
TO REVOLVING CREDIT AGREEMENT
BY AND AMONG
COMMERCE CLEARING HOUSE, INC.,
THE BANKS SIGNATORY HERETO
AND
NATIONAL WESTMINSTER BANK PLC, AS AGENT
BURDENSOME DOCUMENTS
NONE
SCHEDULE 3.14
TO REVOLVING CREDIT AGREEMENT
BY AND AMONG
COMMERCE CLEARING HOUSE, INC.,
THE BANKS SIGNATORY HERETO
AND
NATIONAL WESTMINSTER BANK PLC, AS AGENT
MULTIEMPLOYER PLANS
NONE
SCHEDULE 7.2
TO REVOLVING CREDIT AGREEMENT
BY AND AMONG
COMMERCE CLEARING HOUSE, INC.,
THE BANKS SIGNATORY HERETO
AND
NATIONAL WESTMINSTER BANK PLC, AS AGENT
PERMITTED SECURITY INTERESTS,
LIENS AND ENCUMBRANCES
NONE
SCHEDULE 7.3
TO REVOLVING CREDIT AGREEMENT
BY AND AMONG
COMMERCE CLEARING HOUSE, INC.,
THE BANKS SIGNATORY HERETO
AND
NATIONAL WESTMINSTER BANK PLC, AS AGENT
PERMITTED GUARANTIES
NONE
*/ Ending on or prior to the date of determination and calculated
on a consolidated basis for the Borrower and the Subsidiaries in
accordance with generally accepted accounting principles consistently
applied.
??(..continued) -ii- -iii- -62- -63- -2- -3-
-2- -1- -3- -3-
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING CCH, INC. INTO
COMMERCE CLEARING HOUSE, INC.
Commerce Clearing House, Inc., a corporation organized
and existing under the laws of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That this corporation was incorporated on the
7th day of July, 1927, pursuant to the General
Corporation Law of the State of Delaware.
SECOND: That this corporation owns all of the
outstanding shares of the stock of CCH, Inc., a
corporation incorporated on the 3rd day of August,
1982, pursuant to the General Corporation Law of the
State of Delaware.
THIRD: That this corporation, duly adopted the
following preamble and resolutions at a meeting of its
Board of Directors held on the 8th day of December,
1994:
RESOLVED, that CCH, Inc. a Delaware corporation and a
wholly owned subsidiary of this Corporation shall be
merged (the Merger) into this Corporation which shall
be the surviving corporation, and
FURTHER RESOLVED, that the Merger shall be effective
at 12:01 A.M. Eastern Standard Time on January 1,
1995, following the filing of a Certificate of
Ownership and Merger with the Secretary of State of
the State of Delaware (such time and date being
referred to herein as the Effective Time); and
FURTHER RESOLVED, that the name of this Corporation
shall be changed at the Effective Time to CCH
Incorporated.
FURTHER RESOLVED, that the proper officers of this
Corporation be and they hereby are directed to make
and execute a Certificate of Ownership and Merger
setting forth a copy of these resolutions to merge
CCH, Inc. into this Corporation, and assume its
liabilities and obligations, and the date of adoption
thereof, and to cause the same to be filed with the
Secretary of State of Delaware and a certified copy
recorded in the Office of the Recorder of Deeds of New
Castle County, Delaware and to do all acts and things
whatsoever, whether within or without the State of
Delaware, which may be in anywise a necessary or
proper to effect the Merger.
FOURTH: Anything herein or elsewhere to the contrary
notwithstanding, this Certificate of Ownership and
Merger may be amended or terminated and abandoned by
the Board of Directors of Commerce Clearing House,
Inc. at any time prior to the Effective Time of the
Merger.
IN WITNESS WHEREOF, said Commerce Clearing House, Inc.
has caused this Certificate to be signed by Edward L.
Massie, its President and attested by JoAnn Augustine,
its Secretary, this 13th day of December, 1994.
Commerce Clearing House, Inc.
by:/s/ Edward L. Massie, President
Attest:
/s/ JoAnn Augustine, Secretary
