<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
--------------------------
FORM 10-Q
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED APRIL 30, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 0-12771
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 95-3630868
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10260 CAMPUS POINT DRIVE
SAN DIEGO, CALIFORNIA 92121
(619) 546-6000
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
---- ----
As of May 31, 1995, the registrant had 46,233,087 shares of Class A common
stock, $.01 par value per share, issued and outstanding, and 338,381 shares of
Class B common stock, $.05 par value per share, issued and outstanding.
<PAGE>
PART I
FINANCIAL INFORMATION
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Unaudited, in thousands, except per-share amounts)
<TABLE>
<CAPTION>
Three months ended
-----------------------------
April 30, 1995 April 30, 1994
-------------- --------------
<S> <C> <C>
Revenues $ 476,839 $ 413,280
------------ ------------
Costs and expenses:
Cost of revenues 417,501 364,220
Selling, general and administrative expenses 35,527 31,394
Interest expense 969 768
------------ ------------
453,997 396,382
------------ ------------
Income before income taxes 22,842 16,898
Provision for income taxes 10,050 7,249
------------ ------------
Net income $ 12,792 $ 9,649
------------ ------------
------------ ------------
Earnings per share of common stock
and equivalents $ .26 $ .20
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
CONSOLIDATED BALANCE SHEET
(in thousands)
<TABLE>
<CAPTION>
April 30, 1995 January 31, 1995
-------------- ----------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,233 $ 28,203
Restricted cash 7,067
Receivables 439,130 421,790
Inventories 19,504 25,356
Prepaid expenses and other current assets 17,926 13,647
Deferred income taxes 20,807 20,536
--------- ---------
Total current assets 509,667 509,532
Property and equipment (less accumulated depreciation
of $107,425 and $105,054 at April 30, 1995
and January 31, 1995, respectively) 56,276 57,715
Land and buildings (less accumulated depreciation of
$9,081 and $8,508 at April 30, 1995
and January 31, 1995, respectively) 88,989 88,997
Intangible assets 58,880 56,214
Other assets 37,963 40,126
--------- ---------
$ 751,775 $ 752,584
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 168,647 $ 191,429
Accrued payroll and employee benefits 92,932 124,745
Income taxes payable 17,512 18,409
Notes payable and current portion of long-term liabilities 30,517 1,482
--------- ---------
Total current liabilities 309,608 336,065
Long-term liabilities 30,808 28,955
Stockholders' equity:
Common stock:
Class A, $.01 par value
Authorized: 100,000 shares
Issued and outstanding:
April 30, 1995 - 46,041 shares 461
January 31, 1995 - 45,243 shares 452
Class B, $.05 par value
Authorized: 5,000 shares
Issued and outstanding:
April 30, 1995 - 341 shares 17
January 31, 1995 - 343 shares 17
Additional paid-in capital 215,420 198,052
Retained earnings 195,461 189,043
--------- ---------
Total stockholders' equity 411,359 387,564
--------- ---------
$ 751,775 $ 752,584
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited, in thousands)
<TABLE>
<CAPTION>
Three months ended
-----------------------------------
April 30, 1995 April 30, 1994
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 12,792 $ 9,649
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 7,017 5,549
Non-cash compensation 11,313 9,130
Loss on disposal of property and equipment 130 47
Increase (decrease) in cash, excluding effects of
acquisitions, resulting from changes in:
Receivables (13,442) 21,237
Inventories 6,645 (5,955)
Prepaid expenses (1,508) (517)
Progress payments 2,886 1,194
Deferred income taxes (271) 277
Other assets 515 73
Accounts payable and accrued liabilities (34,013) (21,397)
Accrued payroll and employee benefits (32,114) (25,634)
Income taxes payable (8) 6,353
---------- ----------
(40,058) 6
---------- ----------
Cash flows from investing activities:
Expenditures for property and equipment (2,479) (1,284)
Expenditures for land and buildings (565)
Acquisitions of certain business assets, net of cash
acquired (11,824)
Proceeds from disposal of property and equipment 96 70
Purchase of debt securities held to maturity (13,988)
---------- ----------
(2,948) (27,026)
---------- ----------
Cash flows from financing activities:
Net borrowings under revolving credit agreements 29,000
Decrease in notes payable and long-term liabilities (5,847) (5,481)
Sales of common stock 5,551 3,200
Repurchases of common stock (8,668) (8,744)
---------- ----------
20,036 (11,025)
---------- ----------
Decrease in cash and cash equivalents (22,970) (38,045)
Cash and cash equivalents at beginning of period 28,203 53,556
---------- ----------
Cash and cash equivalents at end of period $ 5,233 $ 15,511
---------- ----------
---------- ----------
Supplemental schedule of non-cash investing and
financing activities:
Issuance of common stock for acquisitions of certain
business assets $ 3,882 $ 5,282
---------- ----------
---------- ----------
Liabilities assumed in acquisitions of certain
business assets $ 10,235 $ 14,498
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION:
The accompanying financial information has been prepared in accordance with the
instructions to Form 10-Q and therefore does not necessarily include all
information and footnotes necessary for a fair presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles.
Certain amounts from the three months ended April 30, 1994 have been
reclassified in the consolidated financial statements to conform to the
presentation of the three months ended April 30, 1995.
In the opinion of management, the unaudited financial information for the three
month periods ended April 30, 1995 and 1994 reflect all adjustments (which
include only normal, recurring adjustments) necessary for a fair presentation
thereof.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Long-term debt securities are included in other assets and consist of long-term
municipal bonds which have been recorded at amortized cost and classified as
"held-to-maturity." Those securities which are short-term in nature because of
approaching maturity dates are included in prepaid expenses and other current
assets. As of April 30, 1995, short and long-term debt securities of
$20,036,000 had a fair value of $19,727,000 maturing between 1996 and 1998.
Gross unrealized losses amounted to $309,000.
It is the Company's policy not to enter into derivative financial instruments
for speculative purposes. The Company has entered into foreign currency forward
exchange contracts to protect against currency exchange risks associated with
certain firm and identifiable foreign currency commitments entered into in the
ordinary course of business. At April 30, 1995, the Company had approximately
$13,642,000 of foreign currency forward exchange contracts in Australian
dollars, Spanish pesetas, British pounds sterling and French francs outstanding
with net unrealized gains of $176,000. These contracts were executed with
creditworthy banks for terms ranging from four months to seven years.
NOTE C - RESTRICTED CASH:
In March 1995, the Company was awarded a contract to provide support services to
the National Cancer Institute's Frederick Cancer Research and Development
Center. The contract is for a term of one year with two one-year options. As
part of the contract, the Company is responsible for paying for materials,
equipment and other direct costs of the Center through the use of a restricted
cash account which is pre-funded by the U.S. Government.
NOTE D - RECEIVABLES:
Unbilled accounts receivable include $15,758,000 of costs incurred on projects
for which the Company has been requested by the customer to begin work under a
new contract, or extend work under a present contract, but for which formal
contracts or contract modifications have not been executed at April 30, 1995.
NOTE E - COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS:
April 30, 1995
--------------
(in thousands)
Inventories:
Contracts-in-process, less progress payments of $1,178 $ 2,586
Raw Materials 16,918
-------
$19,504
-------
-------
<PAGE>
NOTE F - NOTES PAYABLE
Effective April 13, 1995, the Company replaced its credit/term loan agreements
with new unsecured revolving credit loan agreements with three banks totaling
$105,000,000 which allow borrowings on a revolving basis until March 31, 2000.
The agreements enable borrowings at various interest rates, at the Company's
option, based on prime, money market, certificate of deposit, or interbank
offshore borrowing rates. Annual facility fees are 1/2 of 1% of the total
commitment during the revolving credit term. As of April 30, 1995, $29,000,000
was outstanding at an interest rate of 6.4%. The balance of $76,000,000 was
available under the most restrictive debt covenants of the credit loan
agreements.
NOTE G - INCOME TAXES
Income taxes for interim periods are computed using the estimated annual
effective rate method.
NOTE H - COMMITMENTS AND CONTINGENCIES
On February 15, 1994, the Company was served with search warrants and a subpoena
for documents and records associated with the performance by the SAIT operating
unit of the Company under three contracts with the DOD. The search warrants and
subpoena state that the U.S. Government is seeking evidence regarding the making
of false statements and false claims to the DOD, as well as conspiracy to commit
such offenses. The search warrant and subpoena appear to be based upon
allegations contained in a civil complaint that had been filed under seal on
March 13, 1993 by an employee of the Company's SAIT operating unit. The
complaint was filed in the U.S District Court for the Southern District of
California and sought damages on behalf of the U.S. Government under the Federal
False Claims Act. On August 1, 1994, the Department of Justice, on behalf of
the U.S. Government, announced its intention to intervene in the case. Based on
the Company's motion, on November 8, 1994, the District Court dismissed the
employee who had originally filed the complaint from the lawsuit, leaving only
the U.S. Government and the Company as parties. The employee has appealed the
District Court's order to the US. Court of Appeals for the Ninth Circuit. The
Company has engaged in a series of presentations and submissions with the
Department of Justice in which the Company responded to issues raised by the
Department of Justice. At this stage of the proceedings, the Company is unable
to assess the impact, if any, of this investigation and lawsuit on its
consolidated financial position, results of operations or ability to conduct
business.
The Company is involved in various other investigations, claims and lawsuits
arising in the normal conduct of its business, none of which, in the opinion of
the Company's management, will have a material adverse effect on its
consolidated financial position, results of operations or its ability to conduct
business.
The Company leases a general purpose office building and has guaranteed a
$12,250,000 loan on behalf of the building owner. Certain financial ratios and
balances required by the guarantee have been maintained.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Revenues for the three months ended April 30, 1995 increased 15.4% compared to
the same period of the prior year and continued to shift toward lower cost
service type contracts. This trend reflects the increasingly competitive
business environment in the Company's traditional business areas, as well as the
Company's increased success in the engineering and field services market, which
typically involve lower cost contracts.
Revenues are generated from the efforts of the Company's technical staff as well
as the pass through of costs for materials and subcontract efforts, which
primarily occur on large, multi-year contracts. At April 30, 1995, the Company
had approximately 18,500 full-time employees (including approximately 1,300
full-time employees of the contract described in Note C of the Notes to
Consolidated Financial Statements) compared to approximately 15,900 at April 30,
1994. Material and subcontract ("M&S") revenues were $122 million and $94
million for the three months ended April 30, 1995 and 1994, respectively. As a
percentage of total revenues, M&S revenues were 26% and 23% for the three months
ended April 30, 1995 and 1994, respectively, and have increased due to the
growth in the pass-through of M&S costs on certain large, multi-year systems
integration contracts and the growth of product revenues. Product revenues
generally have a very high percentage of M&S content.
Revenues by contract type indicate that the percentage of the Company's revenues
attributable to the higher risk, firm fixed-price ("FFP") contracts increased to
20% for the three months ended April 30, 1995 from 17% for same period of the
prior year. Fixed-price level-of-effort ("FP-LOE") and time-and-materials
("T&M") type contracts represented 24% and 21% of revenues for the three months
ended April 30, 1995 and 1994, respectively, while cost reimbursement contracts
were 56% and 62% for the same periods, respectively. The Company assumes
greater performance risk on FFP contracts and the failure to accurately estimate
ultimate costs or to control costs during performance of the work may result in
reduced profits or losses.
The cost of revenues as a percentage of revenues (excluding interest income)
decreased to 87.6% for the three months ended April 30, 1995 compared to 88.2%
for the same period of the prior year. The decrease in the cost of revenues
percentage is primarily attributable to decreased overruns during the
performance of certain FFP contracts.
Selling, general and administrative ("SG&A") expenses as a percentage of
revenues (excluding interest income) remained relatively constant at 7.5% and
7.6% for the three months ended April 30, 1995 and 1994, respectively. SG&A is
comprised of general and administrative ("G&A"), bid and proposal ("B&P") and
independent research and development ("IR&D") expenses. B&P costs decreased
slightly as a percentage of revenues. The level of B&P activity and costs has
historically fluctuated depending on the availability of bidding opportunities
and resources. IR&D and G&A costs remained constant as a percentage of
revenues. The Company continues to closely monitor G&A expenses as part of an
on-going program to control indirect costs.
Interest expense for the three months ended April 30, 1995 and 1994 primarily
relates to interest on a building mortgage, deferred compensation and borrowings
outstanding under the Company's credit loan agreements.
The Company is a defendant in a lawsuit filed in the U.S. District Court for the
Southern District of California which seeks damages on behalf of the U.S.
Government under the Federal False Claims Act. No material developments
occurred during the three months ended April 30, 1995.
The Company is involved in various other investigations, claims and lawsuits
arising in the normal conduct of its business, none of which, in the opinion of
the Company's management, will have a material adverse effect on its
consolidated financial position, results of operations or its ability to conduct
business.
Liquidity and Capital Resources
The Company's primary sources of liquidity continue to be funds provided by
operations and revolving credit loan agreements. Effective April 13, 1995, the
Company replaced its credit/term loan agreements with new unsecured revolving
credit loan agreements with three banks totalling $105,000,000 which allow
borrowings on a revolving basis until March 31, 2000. As of April 30, 1995,
$29,000,000 was outstanding at an interest rate of 6.4%. The
<PAGE>
balance of $76,000,000 was available under the most restrictive debt covenants
of the credit loan agreements. At April 30, 1994 there were no borrowings
outstanding under the prior agreements.
Cash flows utilized for operating activities increased to $40 million for the
three months ended April 30, 1995 compared to a source of cash of six thousand
dollars for the same period of the prior year. The increase was caused
primarily by working capital requirements due to revenue growth and higher tax
payments, partially offset by inventory reductions. The Company continues to
actively monitor receivables with emphasis placed on collection activities and
the negotiation of more favorable payment terms. Receivable days outstanding as
of April 30, 1995 and 1994 were 63 days. Average receivable days outstanding
for the three months ended April 30, 1995 were 65 days compared to 64 days for
the same period of the prior year.
Cash flows spent on investing activities decreased to $3 million for the three
months ended April 30, 1995 compared to $27 million for the same period of the
prior year. The decrease was primarily due to lower acquisition activity and
purchases of debt securities in the prior year. The Company expects to continue
acquiring businesses to complement the Company's capabilities in the areas of
transportation, environment, health and energy.
Cash flows generated from financing activities were $20 million for the three
months ended April 30, 1995 compared to a use of cash of $11 million for the
same period for the prior year. The increase was caused primarily by $29
million of borrowings under the Company's revolving credit loan agreements. The
borrowed funds were primarily used to finance the working capital requirements
described above. The Company's cash flows from operations plus borrowing
capacity are expected to provide sufficient funds for the Company's operations,
business acquisitions, common stock repurchases, capital expenditures and future
long-term debt requirements.
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is a defendant in a lawsuit filed in the U.S District Court for the
Southern District of California which seeks damages on behalf of the U.S.
Government under the Federal False Claims Act. No material developments
occurred during the three months ended April 30, 1995. Additional information
concerning the lawsuit is contained in the Company's Annual Report on Form 10-K
for the fiscal year ended January 31, 1995.
The Company is involved in various other investigations, claims and lawsuits
arising in the normal conduct of its business, none of which, in the opinion of
the Company's management, will have a material adverse effect on its
consolidated financial position, results of operations or its ability to conduct
business.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - See Exhibit Index.
(b) Reports on Form 8-K.
During the fiscal quarter for which this report is filed, the
following report(s) on Form 8-K were filed by the Registrant:
No reports on Form 8-K were filed by the registrant during the fiscal
quarter for which this report is on file.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
Date: June 13, 1995 /s/W. A. Roper
----------------------------
Senior Vice President and
Chief Financial Officer and
as a duly authorized officer
<PAGE>
Exhibit Index
Science Applications International Corporation
Fiscal Quarter Ended April 30, 1995
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibits
- ------- -------------------------------------------------------------
<S> <C>
10(a) Credit Agreement with Bank of America NT&SA dated as of April 7, 1995
10(b) Credit Agreement with Citicorp USA, Inc. dated as of April 7, 1995
10(c) Credit Agreement with Morgan Guaranty Trust Company of New York dated as of April 7, 1995
11 Statement re: Computation of Per Share Earnings
27 Financial Data Schedule
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
between
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
and
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
Dated as of April 7, 1995
[Logo]
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Interpretive Provisions . . . . . . . . . . . . . . . . . . 14
(a) Performance; Time . . . . . . . . . . . . . . . . . . . . . 14
(b) Captions . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.3 Accounting Principles . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2. THE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.1 The Commitment . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.2 Loan Accounts; Notes . . . . . . . . . . . . . . . . . . . . . . 15
2.3 Procedure for Borrowings . . . . . . . . . . . . . . . . . . . . 15
2.4 Conversion and Continuation Elections . . . . . . . . . . . . . . 16
2.5 Voluntary Termination or Reduction of Commitment . . . . . . . . 17
2.6 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.7 Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.8 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.9 Facility Fee . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.10 Computation of Fees and Interest . . . . . . . . . . . . . . . . 19
2.11 Payments by the Borrower . . . . . . . . . . . . . . . . . . . . 19
2.12 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.13 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.14 Increased Costs and Reduction of Return . . . . . . . . . . . . . 21
2.15 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.16 Inability to Determine Rates . . . . . . . . . . . . . . . . . . 22
SECTION 3. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . 23
3.1 Conditions of Closing . . . . . . . . . . . . . . . . . . . . . . 23
(a) Credit Agreement . . . . . . . . . . . . . . . . . . . . . . 23
(b) Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(c) Resolutions; Incumbency . . . . . . . . . . . . . . . . . . 23
(d) Articles of Incorporation; By-laws and Good Standing . . . . 23
(e) Certificate . . . . . . . . . . . . . . . . . . . . . . . . 23
(f) Compliance Certificate . . . . . . . . . . . . . . . . . . . 24
(g) Termination of Existing Agreements . . . . . . . . . . . . . 24
(h) Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . 24
(i) Other Documents . . . . . . . . . . . . . . . . . . . . . . 24
3.2 Conditions to All Borrowings . . . . . . . . . . . . . . . . . . 24
(a) Notice of Borrowing or Conversion/ Continuation . . . . . . 24
(b) Continuation of Representations and Warranties . . . . . . . 24
(c) No Existing Default . . . . . . . . . . . . . . . . . . . . 24
SECTION 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 25
4.1 Corporate Existence and Power . . . . . . . . . . . . . . . . . . 25
- i -
<PAGE>
Section Page
4.2 Corporate Authorization; No Contravention . . . . . . . . . . . . 25
4.3 Governmental Authorization . . . . . . . . . . . . . . . . . . . 25
4.4 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.6 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.7 ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . 26
4.8 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . 27
4.9 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . 27
4.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.11 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . 28
4.12 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . 28
4.13 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.14 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.15 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . 29
5.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 29
5.2 Certificates; Other Information . . . . . . . . . . . . . . . . . 30
5.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.4 Preservation of Corporate Existence, Etc . . . . . . . . . . . . 31
5.5 Maintenance of Property . . . . . . . . . . . . . . . . . . . . . 32
5.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.7 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . 32
5.8 Inspection of Property and Books and Records . . . . . . . . . . 32
5.9 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . 33
5.10 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . 33
6.1 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . 34
6.2 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . 36
6.3 Consolidations and Mergers . . . . . . . . . . . . . . . . . . . 36
6.4 Limitation on Contingent Obligations . . . . . . . . . . . . . . 37
6.5 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.6 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . 37
6.7 Consolidated Tangible Net Worth . . . . . . . . . . . . . . . . . 38
6.8 Consolidated Funded Debt to Capital Ratio . . . . . . . . . . . . 38
6.9 Accounting Changes . . . . . . . . . . . . . . . . . . . . . . . 38
6.10 Bilateral Agreement . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . 38
7.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . 38
(a) Non-Payment . . . . . . . . . . . . . . . . . . . . . . . . 38
(b) Representation or Warranty . . . . . . . . . . . . . . . . . 39
(c) Specific Defaults . . . . . . . . . . . . . . . . . . . . . 39
(d) Other Defaults . . . . . . . . . . . . . . . . . . . . . . . 39
(e) Cross Default to Bilateral Agreements . . . . . . . . . . . 39
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<PAGE>
Section Page
(f) Cross Default . . . . . . . . . . . . . . . . . . . . . . . 39
(g) Insolvency; Voluntary Proceedings . . . . . . . . . . . . . 40
(h) Involuntary Proceedings . . . . . . . . . . . . . . . . . . 40
(i) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(j) Monetary Judgments . . . . . . . . . . . . . . . . . . . . . 40
(k) Change in Control . . . . . . . . . . . . . . . . . . . . . 41
(l) Suspension . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.3 Rights Not Exclusive . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.1 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . 42
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . 43
8.4 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . 43
8.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 43
8.6 Assignments, Participations, etc. . . . . . . . . . . . . . . . . 44
8.7 Set off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.8 Automatic Debits of Fees . . . . . . . . . . . . . . . . . . . . 45
8.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.11 No Third Parties Benefited . . . . . . . . . . . . . . . . . . . 46
8.12 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.13 Governing Law and Jurisdiction . . . . . . . . . . . . . . . . . 46
8.14 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 48
8.15 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . 48
EXHIBITS
A Form of Note
B Notice of Borrowing
C Notice of Conversion/Continuation
D Form of Compliance Certificate
SCHEDULES
1.1 Existing Credit Facilities
4.5 Litigation
4.7 ERISA Plans
4.12(b) Environmental Matters
4.13 Subsidiaries
6.1 Existing Liens
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<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of April 7, 1995, between SCIENCE
APPLICATIONS INTERNATIONAL CORPORATION, a Delaware corporation (the "Borrower"),
and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking
association (the "Bank").
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the following terms
will have the following meanings, unless the context otherwise requires:
"AFFILIATE" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract or otherwise. In no
event shall the Bank be deemed an "Affiliate" of the Borrower or of any
Subsidiary of the Borrower.
"AGREEMENT" means this Credit Agreement, as amended from time to time
in accordance with the terms hereof.
"APPLICABLE MARGIN" means the rates per annum, expressed in basis
points, set forth below:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Leverage Ratio LESS THAN OR EQUAL TO 0.30:1.00 GREATER THAN 0.30:1.00
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Facility Fee 12.5 b.p. 15.0 b.p.
- --------------------------------------------------------------------------------
Offshore Rate Margin 25.0 b.p. 28.0 b.p.
- --------------------------------------------------------------------------------
CD Rate Margin 37.5 b.p. 40.0 b.p.
- --------------------------------------------------------------------------------
Base Rate Margin 0 0
- --------------------------------------------------------------------------------
The Leverage Ratio shall be that reflected on the most recent
Compliance Certificate received by the Bank pursuant to Section 5.2(a). If the
Bank does not receive a Compliance Certificate by the date required by Section
5.2(a), the Applicable Margin shall, effective as of such date, be the highest
Applicable Margin, which shall remain in effect to but excluding the date the
Bank receives such certificate. Subject to the foregoing, until the delivery of
the first Compliance
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<PAGE>
Certificate after the Closing Date, the Applicable Margin shall be that
indicated by the certificate delivered pursuant to Section 3.1(f).
"ATTORNEY COSTS" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the allocated cost of
internal legal services and all disbursements of internal counsel.
"BANKRUPTCY CODE" means the Federal Bankruptcy Reform Act of 1978 (12
U.S.C. Section 101, ET SEQ.).
"BASE RATE" means the higher of: (a) the rate of interest publicly
announced from time to time by the Bank in San Francisco, California, as its
"reference rate," which is a rate set by the Bank based upon various factors
including the Bank's costs and desired return, general economic conditions and
other factors, and is used as a reference point for pricing some loans, which
may be priced at, above, or below such announced rate; and (b) one-half percent
per annum above the Federal Funds Rate. Any change in the reference rate
announced by the Bank shall take effect at the opening of business on the day
specified in the public announcement of such change.
"BASE RATE LOAN" means a Loan bearing interest at the rate determined
by reference to the Base Rate.
"BILATERAL AGREEMENT" means those certain credit agreements entered
into substantially concurrently with this Agreement and having terms and
conditions substantially the same as those contained herein between the Borrower
and each of Citicorp USA, Inc. and Morgan Guaranty Trust Company of New York.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which commercial banks in New York City or San Francisco are authorized
or required by law to close and, if the applicable Business Day relates to any
Offshore Rate Loan, means such a day on which dealings are carried on in the
applicable offshore dollar interbank market.
"CAPITAL ADEQUACY REGULATION" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other law
(provided that if such guideline, request or directive does not have the force
of law, compliance therewith is customary for banks regulated in a manner
similar to the Bank), rule or regulation, whether or not having the force of
law, in each case, regarding capital adequacy of the Bank or of any corporation
controlling the Bank.
"CAPITAL LEASE" has the meaning specified in the definition of Capital
Lease Obligations.
- 2 -
<PAGE>
"CAPITAL LEASE OBLIGATIONS" means all monetary obligations of the
Borrower or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, is classified as a capital lease ("CAPITAL
LEASE").
"CD RATE" means, for each Interest Period in respect of a CD Rate
Loan, the rate of interest (rounded upward to the nearest 1/100th of 1%)
determined pursuant to the following formula:
CD Rate = Certificate of Deposit Rate + Assessment
---------------------------
1.0 - Reserve Percentage Rate
Where:
"ASSESSMENT RATE" means the net annual assessment rate applicable
to the Bank determined by the Bank to be in effect on the first day of
such Interest Period payable by banks to the Federal Deposit Insurance
Corporation, or any successor, for insuring time deposits made in
dollars at the offices of banks in the United States.
"CERTIFICATE OF DEPOSIT RATE" means for any Interest Period for a
CD Rate Loan, the rate of interest per annum determined by the Bank to
be the arithmetic mean (rounded upward to the nearest 1/100th of 1%)
of the rates notified to the Bank as the rates of interest bid by two
or more certificate of deposit dealers of recognized standing selected
by the Bank for the purchase at face value of dollar certificates of
deposit issued by major United States banks, for a maturity comparable
to such Interest Period and in the approximate amount of the CD Rate
Loan to be made, at the time selected by the Bank on the first day of
such Interest Period.
"RESERVE PERCENTAGE" means for any Interest Period for a CD Rate
Loan the maximum reserve percentage (expressed as a decimal, rounded
upward to the nearest 1/100th of 1%), as determined by the Bank, in
effect on the first day of such Interest Period (including any
ordinary, marginal, emergency, supplemental, special and other reserve
percentages) prescribed by the Federal Reserve Board for determining
the maximum reserves to be maintained by member banks of the Federal
Reserve System with deposits exceeding $1,000,000,000 for new
non-personal time deposits for a period comparable to such Interest
Period and in an amount of $100,000 or more.
- 3 -
<PAGE>
"CD RATE LOAN" means a Loan bearing interest at the rate determined by
reference to the CD Rate.
"CERCLA" has the meaning specified in the definition of "Environmental
Laws."
"CLOSING DATE" means the date on which all conditions precedent set
forth in Section 3.1 are satisfied or waived by the Bank.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITMENT" means $35,000,000, as such amount may be reduced pursuant
to Section 2.5.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of Exhibit D annexed hereto.
"CONSOLIDATED CAPITAL" means the sum of Consolidated Funded Debt and
Consolidated Tangible Net Worth.
"CONSOLIDATED FUNDED DEBT" means, for any period, for the Borrower and
its Subsidiaries on a consolidated basis in accordance with GAAP, an amount
equal to the sum of, without duplication, (a) all Indebtedness of such Person
for borrowed money or which has been incurred in connection with the acquisition
of assets (excluding therefrom deferred salary, accrued interest and policy
loans related to the cash value of life insurance policies purchased in
connection with the Keystaff Deferral Plan or similar executive compensation
programs) PLUS (b) the principal portion of all Capital Lease Obligations of
such Person PLUS (c) all Contingent Obligations of such Person with respect to
Consolidated Funded Debt of others.
"CONSOLIDATED TANGIBLE NET WORTH" means, at any date of determination,
the net worth of the Borrower and its Subsidiaries on a consolidated basis,
without giving effect to translation adjustments, and MINUS intangible assets,
all determined in conformity with GAAP. Consolidated Tangible Net Worth shall
include any amounts classified as temporary or mezzanine equity pursuant to the
limited put rights associated with Borrower shares held in the ESOP.
"CONTINGENT OBLIGATION" means, as applied to any Person, any direct or
indirect liability of that Person with respect to any Indebtedness, lease,
dividend, letter of credit or other obligation (the "primary obligations") of
another Person (the "primary obligor"), including any obligation of that Person,
whether or not contingent, (a) to purchase, repurchase or otherwise acquire
such primary obligations or any Property constituting direct or indirect
security therefor, or (b) to
- 4 -
<PAGE>
advance or provide funds (i) for the payment or discharge of any such primary
obligation, or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
item, level of income or financial condition of the primary obligor, or (c) to
purchase Property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, or (d) otherwise to assure or hold
harmless the holder of any such primary obligation against loss in respect
thereof. The amount of any Contingent Obligation shall be deemed equal to the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or if indeterminable, the
maximum reasonably anticipated liability in respect thereof.
"CONTRACTUAL OBLIGATIONS" means, as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement to
which such Person is a party or by which it or any of its Property is bound.
"CONTROLLED GROUP" means the Borrower and all Persons (whether or not
incorporated) under common control or treated as a single employer with the
Borrower pursuant to Section 414(b), (c), (m) or (o) of the Code.
"DEFAULT" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
"EFFECTIVE DATE" means April 13, 1995.
"ENVIRONMENTAL CLAIMS" means all claims, however asserted, by any
Governmental Authority or other Person alleging liability or responsibility for
violation of any Environmental Law or for release or injury to the environment
or threat to public health, personal injury (including sickness, disease or
death), Property damage, natural resources damage, or otherwise alleging
liability or responsibility for damages (punitive or otherwise), cleanup,
removal, remedial or response costs, restitution, civil or criminal penalties,
injunctive relief, or other type of relief, resulting from or based upon (a) the
presence, placement, discharge, emission or release (including intentional and
unintentional, negligent and non-negligent, sudden or non-sudden, accidental or
non-accidental placement, spills, leaks, discharges, emissions or releases) of
any Hazardous Material at, in, or from Property, whether or not owned by the
Borrower, or (b) any other circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law.
- 5 -
<PAGE>
"ENVIRONMENTAL LAWS" means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authorities, in each case
relating to environmental, health, safety and land use matters (excluding
matters relating to zoning and building permits); including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), the
Clean Air Act, the Federal Water Pollution Control Act of 1972, the Solid Waste
Disposal Act, the Federal Resource Conservation and Recovery Act, the Toxic
Substances Control Act, the Emergency Planning and Community Right-to-Know Act,
the California Hazardous Waste Control Law, the California Solid Waste
Management, Resource, Recovery and Recycling Act, the California Water Code and
the California Health and Safety Code.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control with the Borrower or any Subsidiary of the
Borrower within the meaning of Section 414(b), 414(c) or 414(m) of the Code.
"ERISA EVENT" means (a) a Reportable Event with respect to a Qualified
Plan or a Multiemployer Plan; (b) a withdrawal by any member of the Controlled
Group from a Qualified Plan subject to Section 4063 of ERISA during a plan year
in which it was a substantial employer (as defined in Section 4001(a)(2) of
ERISA); (c) a complete or partial withdrawal by any member of the Controlled
Group from a Multiemployer Plan; (d) the filing of a notice of intent to
terminate, the treatment of a plan amendment as a termination under Section 4041
or 4041A of ERISA or the commencement of proceedings by the PBGC to terminate a
Qualified Plan or Multiemployer Plan subject to Title IV of ERISA; (e) a failure
to make required contributions to a Qualified Plan or Multiemployer Plan; (f) an
event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Qualified Plan or Multiemployer Plan; (g) the
imposition of any liability under Title IV of ERISA, other than PBGC premiums
due but not delinquent under Section 4007 of ERISA, upon any member of the
Controlled Group; (h) an application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code with respect to any
Qualified Plan; (i) any member of the Controlled Group engages in or otherwise
becomes liable for a non-exempt prohibited transaction which would have a
Material Adverse Effect; or (j) a violation of the applicable requirements of
Section 404 or 405 of ERISA or the exclusive benefit rule under Section 401(a)
of the Code by any fiduciary with respect to any Qualified Plan for which the
- 6 -
<PAGE>
Borrower or any of its Subsidiaries may be directly or indirectly liable which
would have a Material Adverse Effect.
"EURODOLLAR RESERVE PERCENTAGE" has the meaning specified in the
definition of "Offshore Rate".
"EVENT OF DEFAULT" means any of the events or circumstances specified
in Section 7.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"EXISTING AGREEMENTS" means (a) that certain Credit Agreement dated as
of October 31, 1988 between the Borrower and the Bank; (b) that certain Credit
Agreement dated as of October 31, 1988 between the Borrower and Citicorp USA,
Inc. and (c) that certain Credit Agreement dated as of May 26, 1992 between the
Borrower and Bank of America Illinois (formerly named Continental Bank).
"FEDERAL FUNDS RATE" means the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day of determination
(or if such day of determination is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a Business Day, the average of the quotations
for such day on such transaction received by the Bank from three Federal funds
brokers of recognized standing selected by it.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System, or any successor thereto.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession), or in such other statements by such other entity as may be in
general use by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination.
"GOVERNMENTAL AUTHORITY" means (a) any international, foreign,
federal, state, county or municipal government, or political subdivision
thereof, (b) any governmental agency, authority, board, bureau, commission,
department or instrumentality, or (c) any court or administrative tribunal.
- 7 -
<PAGE>
"HAZARDOUS MATERIALS" means all those substances which are regulated
by, or which may form the basis of liability under, any Environmental Law,
including all substances identified under any Environmental Law as a pollutant,
contaminant, hazardous waste, hazardous constituent, special waste, hazardous
substance, hazardous material, or toxic substance, or petroleum or petroleum
derived substance or waste.
"INDEBTEDNESS" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of Property or services (other than trade
payables entered into in the ordinary course of business pursuant to ordinary
terms); (c) all matured or drawn and unreimbursed reimbursement obligations with
respect to surety bonds, letters of credit, bankers' acceptances and similar
instruments (in each case, to the extent material or non-contingent); (d) all
obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition
of Property, assets or businesses; (e) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to Property acquired by the Person (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such Property); (f) all
Capital Lease Obligations; (g) all indebtedness referred to in clauses (a)
through (f) above secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any Lien upon or
in Property (including accounts and contracts rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Indebtedness; and (h) all Contingent Obligations in respect of indebtedness or
obligations of others of the kinds referred to in clauses (a) through (f) above.
Indebtedness shall not include life insurance policy loans secured by the
surrender value of such life insurance policy.
"INSOLVENCY PROCEEDING" means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; in the case of clause (a) and (b) undertaken under U.S. Federal,
State or foreign law, including the Bankruptcy Code.
"INTEREST PAYMENT DATE" means, (a) with respect to any Offshore Rate
Loan, CD Rate Loan or a Money Market Rate Loan, the last Business Day of each
Interest Period applicable to such
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<PAGE>
Loan; (b) with respect to any Base Rate Loan, the last Business Day of each
calendar quarter and each date a Base Rate Loan is converted into an Offshore
Rate Loan, CD Rate Loan or a Money Market Loan; and (c) with respect to all
Loans, the Maturity Date; PROVIDED, HOWEVER, that if (i) any Interest Period for
a Money Market Rate Loan or an Offshore Rate Loan exceeds three months, interest
shall also be paid on the date which falls three months after the beginning of
such Interest Period; and (b) if any Interest Period for a CD Rate Loan exceeds
90 days, interest shall also be paid on the date which falls 90 days after the
beginning of such Interest Period.
"INTEREST PERIOD" means, (a) with respect to any Offshore Rate Loan,
the period commencing on the Business Day the Offshore Rate Loan is disbursed or
continued or on the date on which a Loan is converted into a Offshore Rate Loan
and ending on the date one, two, three or six months thereafter, as selected by
the Borrower in its Notice of Borrowing or Notice of Conversion/Continuation;
(b) with respect to any CD Rate Loan, the period commencing on the Business Day
the CD Rate Loan is disbursed or continued or on the date on which a Loan is
converted to the CD Rate Loan and ending 30, 60, 90 or 180 days thereafter, as
selected by the Borrower in its Notice of Borrowing or Notice of
Conversion/Continuation; and (c) with respect to any Money Market Rate Loan, the
period commencing on the Business Day that the Money Market Rate Loan is
disbursed or continued or on the date on which a Loan is converted into a Money
Market Rate Loan and ending on the date which is (i) 1 to 7 days thereafter or
(ii) one or more weeks or one or more months thereafter but in no event
exceeding six months, in each case as selected by the Borrower in its Notice of
Borrowing; PROVIDED that:
(i) if any Interest Period pertaining to an Offshore Rate
Loan, CD Rate Loan or a Money Market Rate Loan would otherwise end on
a day which is not a Business Day, that Interest Period shall be
extended to the next succeeding Business Day unless, in the case of an
Offshore Rate Loan, the result of such extension would be to carry
such Interest Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding Business Day;
(ii) any Interest Period pertaining to a Offshore Rate
Loan or Money Market Rate Loan that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at
the end of such Interest Period; and
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<PAGE>
(iii) no Interest Period for any Loan shall extend beyond
the Maturity Date.
"LENDING OFFICE" means, with respect to the Bank, the office or
offices of the Bank specified as its "Lending Office" or "Domestic Lending
Office" or "Offshore Lending Office", as the case may be, opposite its name on
the signature page hereto, or such other office or offices of the Bank as it may
from time to time notify the Borrower.
"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, lien (statutory or other) or other security interest or encumbrance
(including those created by, arising under or evidenced by any conditional sale
or other title retention agreement, the interest of a lessor under a Capital
Lease Obligation, any financing lease having substantially the same economic
effect as any of the foregoing, or the filing of any financing statement naming
the owner of the asset to which such lien relates as debtor, under the UCC or
any comparable law), but not including the interest of a lessor under an
Operating Lease.
"LOANS" means the Loans made by the Bank to the Borrower pursuant to
Section 2.1
"LOAN DOCUMENTS" means this Agreement, the Note if requested by the
Bank and all documents and instruments delivered from time to time in connection
therewith.
"MARGIN STOCK" means "margin stock" as such term is defined in
Regulation G, T, U or X of the Federal Reserve Board.
"MATERIAL ADVERSE EFFECT" means a material adverse change in, or a
material adverse effect upon, any of (a) the operations, business, Properties or
financial condition of the Borrower; (b) the ability of the Borrower to perform
under any Loan Document; or (c) the legality, validity, binding effect or
enforceability of any Loan Document.
"MATURITY DATE" means March 31, 2000.
"MONEY MARKET RATE" means the fixed rate of interest determined in
accordance with Section 2.3(a) for the applicable Interest Period.
"MONEY MARKET RATE LOAN" means a Loan bearing interest at the rate
determined by reference to the Money Market Rate.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" (within the meaning
of Section 4001(a)(3) of ERISA) and to which any member of the Controlled Group
makes, is making, or is obligated to make contributions or has made, or been
obligated to
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<PAGE>
make, contributions, but does not include (i) Multiemployer Plans to which no
member of the Controlled Group had withdrawal liability and an obligation to
contribute at all times following the enactment of the Multiemployer Pension
Plan Amendments Act of 1980, and (ii) Multiemployer Plans as to which all
members of the Controlled Group have both completely withdrawn and paid the full
amount of any withdrawal liability.
"NET ISSUANCE PROCEEDS" means, in respect of any issuance of equity,
the cash proceeds and non-cash proceeds received or receivable in connection
therewith, net of reasonable costs and expenses paid or incurred in connection
therewith in favor of any Person not an Affiliate of the Borrower.
"NOTE" means a promissory note executed by the Borrower to the order
of the Bank if the Bank has requested the Borrower to do so, substantially in
the form of Exhibit A annexed hereto evidencing the Loans.
"NOTICE OF BORROWING" means a notice substantially in the form of
Exhibit B annexed hereto with respect to a proposed committed borrowing.
"NOTICE OF CONVERSION/CONTINUATION" means a notice in substantially
the form of Exhibit C annexed hereto.
"NOTICE OF LIEN" means any "notice of lien" or similar document
intended to be filed or recorded with any court, registry, recorder's office,
central filing office or other Governmental Authority for the purpose of
evidencing, creating, perfecting or preserving the priority of a Lien securing
obligations owing to a Governmental Authority.
"OBLIGATIONS" means all obligations of every nature of the Borrower
from time to time owed to the Bank, whether for principal, interest, fees,
expenses, indemnification or otherwise, and whether absolute or contingent, due
or to become due, now existing or hereafter arising, pursuant to the terms of
any of the Loan Documents.
"OFFSHORE RATE" means, for each Interest Period in respect of an
Offshore Rate Loan, an interest rate per annum (rounded upward to the nearest
1/16th of 1%) determined pursuant to the following formula:
Offshore Rate = IBOR
-----------------------------------
1.0 - Eurodollar Reserve Percentage
Where,
"EURODOLLAR RESERVE PERCENTAGE" means the reserve percentage
(expressed as a decimal, if any, rounded
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upward to the nearest 1/100th of 1%) in effect on the date IBOR for
such Interest Period is determined applicable to the Bank under
regulations issued from time to time by the Federal Reserve Board for
determining the reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to
Eurocurrency funding (currently referred to as "Eurocurrency
liabilities") having a term comparable to such Interest Period; and
"IBOR" means the rate of interest per annum determined by the
Bank as the rate of interest at which dollar deposits in the
approximate amount of the amount of the Loan to be made or continued
as, or converted into, an Offshore Rate Loan and having a maturity
comparable to such Interest Period would be offered by the Bank to
major banks in the offshore Dollar interbank market at its request at
or about 11:00 a.m. (New York time) on the second Business Day prior
to the commencement of such Interest Period.
The Offshore Rate shall be adjusted automatically as of the
effective date of any change in the Eurodollar Reserve Percentage.
"OFFSHORE RATE LOAN" means a Loan bearing interest at the rate
determined by reference to the Offshore Rate.
"OPERATING LEASE" means, as applied to any Person, any lease of
Property which is not a Capital Lease other than any such lease under which that
Person is the lessor.
"ORDINARY COURSE OF BUSINESS" means, in respect of any transaction
involving the Borrower or any Subsidiary of the Borrower, the ordinary course of
such Person's business, as conducted by any such Person in accordance with past
practice.
"ORGANIZATION DOCUMENTS" means, for any corporation, the certificate
or articles of incorporation, the bylaws, any certificate of determination or
instrument relating to the rights of preferred shareholders of such corporation,
and all applicable resolutions of the board of directors (or any committee
thereof) of such corporation relating to the foregoing or the organization of
such corporation.
"PARTICIPANT" has the meaning specified in Section 8.6(d).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
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"PERMITTED ACCOUNT RECEIVABLES FINANCING" means a sale or discount of
accounts receivable of the Borrower and its Subsidiaries (A) where such sale or
discount is not a sale or discounting of accounts receivable meeting a specified
credit criteria, and (B) that does not involve the creation of a Lien or
negative pledge on any accounts receivable not so sold or discounted.
"PERMITTED LIENS" has the meaning specified in Section 6.1.
"PERSON" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
limited liability company or Governmental Authority.
"PLAN" means an employee pension benefit plan (as defined in Section
3(2) of ERISA) which any member of the Controlled Group sponsors or maintains or
to which the Borrower or member of the Controlled Group makes or is obligated to
make contributions, and which is subject to the provisions of Title IV of ERISA.
"PROPERTY" means any estate or interest in any kind of property or
asset, whether real, personal or mixed, and whether tangible or intangible.
"QUALIFIED PLAN" means a pension plan (as defined in Section 3(2) of
ERISA) intended to be tax-qualified under Section 401(a) of the Code and which
any member of the Controlled Group sponsors, maintains, or to which it makes or
is obligated to make contributions, or in the case of a multiple employer plan
(as described in Section 4064(a) of ERISA) has made contributions at any time
during the immediately preceding period covering at least five (5) plan years,
but excluding any Multiemployer Plan.
"REPORTABLE EVENT" means any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder for which the requirement of 30-
day notice has not been waived, a withdrawal from a Plan described in Section
4063 of ERISA, or a cessation of operations described in Section 4062(e) of
ERISA.
"REQUIREMENT OF LAW" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its Property or to which the Person or any of its Property is subject.
"RESPONSIBLE OFFICER" means the chief executive officer, the
president, the chief operating officer, the chief
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financial officer, the chief legal officer, the treasurer or the controller of
the Borrower.
"SUBSIDIARY" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than 50% of
the voting stock or other equity interests (in the case of Persons other than
corporations), is owned or controlled directly or indirectly by the Person, or
one or more of the Subsidiaries of the Person, or a combination thereof.
"UNFUNDED PENSION LIABILITIES" means with respect to a Plan, the
"amount of unfunded benefit liabilities" as defined in Section 4001(a)(18) of
ERISA.
1.2 OTHER INTERPRETIVE PROVISIONS.
(a) PERFORMANCE; TIME. Except as otherwise specifically
provided herein, whenever any performance obligation hereunder shall be stated
to be due or required to be satisfied on a day other than a Business Day, such
performance shall be made or satisfied on the next succeeding Business Day. In
the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including"; the words "to" and "until"
each mean "to but excluding", and the word "through" means "to and including."
If any provision of this Agreement refers to any action taken or to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be interpreted to encompass any and all means, direct or indirect, of taking, or
not taking, such action.
(b) CAPTIONS. The captions and headings of this Agreement are
for convenience of reference only and shall not affect the interpretation of
this Agreement.
1.3 ACCOUNTING PRINCIPLES. Unless the context otherwise clearly
requires, all accounting terms not expressly defined herein shall be construed,
and all financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied.
SECTION 2. THE LOANS
2.1 THE COMMITMENT. The Bank agrees, on the terms and conditions
hereinafter set forth, to make loans under the Commitment to the Borrower (each
such loan, a "Loan") from time to time on any Business Day from the Effective
Date to but excluding the Maturity Date; PROVIDED, HOWEVER, that, after giving
effect to the making of any Loans, the aggregate principal amount of the
outstanding Loans shall not exceed the Commitment.
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Within the limits of the Commitment, and subject to the other terms and
conditions hereof, the Borrower may borrow under this Section 2.1, prepay
pursuant to Section 2.6 and reborrow pursuant to this Section 2.1.
2.2 LOAN ACCOUNTS; NOTES. (a) Subject to Section 2.2(b), the Loans
shall be evidenced by one or more loan accounts maintained by the Bank in the
ordinary course of business. The loan accounts maintained by the Bank shall be
prima facie evidence absent manifest error of the amount of the Loans made to
the Borrower and the interest and payments thereon. Any failure so to record or
any error in doing so shall not, however, limit or otherwise affect the
obligation of the Borrower hereunder to pay any amount owing with respect to the
Loans.
(b) Upon the request of the Bank, the Loans shall be evidenced
by a Note, instead of loan accounts. The Bank shall endorse on the schedules
annexed to the Note the date, amount and maturity of each Loan made by it and
the amount of each payment of principal made by the Borrower with respect
thereto. The Bank is irrevocably authorized by the Borrower to endorse the Note
and its record shall be prima facie absent manifest error; PROVIDED, HOWEVER,
that the failure of the Bank to make, or an error in making, a notation thereon
with respect to any Loan shall not limit or otherwise affect the obligations of
the Borrower hereunder or under the Note to the Bank.
2.3 PROCEDURE FOR BORROWINGS.
(a) Each Loan shall be made upon the Borrower's irrevocable
written notice in the form of a Notice of Borrowing delivered to the Bank in
accordance with Section 8.2 (which notice must be received by the Bank prior to
(i) 9:00 a.m. (San Francisco time) (A) three Business Days prior to the
requested borrowing date, in the case of an Offshore Rate Loan; (B) two Business
Days prior to the requested borrowing date, in the case of a CD Rate Loan, and
(C) on the requested borrowing date, in the case of a Base Rate Loan and (ii)
11:00 a.m. (San Francisco time) on the requested borrowing date, in the case of
a Money Market Rate Loan. Each Notice of Borrowing shall specify: (v) the
amount of the Loan, which shall be in a minimum principal amount of $1,000,000
and multiples thereof; (w) the requested borrowing date, which shall be a
Business Day; (x) whether the Loan is to be an Offshore Rate Loan, CD Rate Loan,
Base Rate Loan or Money Market Rate Loan; (y) if an Offshore Rate Loan, CD Rate
Loan or Money Market Rate Loan, the duration of the Interest Period applicable
to such Loan; and (z) if a Money Market Loan, the interest rate therefor,
determined in accordance with the next sentence. On any day that the Borrower
desires to request a Money Market Loan, the Borrower shall notify the Bank in
accordance with Section 8.2 not later than 10:00 a.m. (San Francisco time) on
such day, and the Bank shall quote to the
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Borrower the available interest rate(s) for the requested Interest Period(s).
If the Borrower desires to borrow a Money Market Loan at an interest rate so
quoted, it shall submit a Notice of Borrowing on such day as provided above
including such interest rate. Any interest rate quoted by the Bank shall be
good only on the date quoted and only for the Interest Period specified. If a
Notice of Borrowing shall fail to specify the duration of the Interest Period
for any CD Rate Loan, Offshore Rate Loan or Money Market Loan, such Interest
Period shall be 90 days, three months or one day, respectively. The proceeds of
the Loan will then be made available to the Borrower by the Bank by crediting
the account of the Borrower on the books of Bank by wire transfer in accordance
with written instructions provided to the Bank by the Borrower.
(b) During the existence of a Default or Event of Default, the
Borrower may not elect to have a Loan be made as an Offshore Rate Loan, CD Rate
Loan or Money Market Rate Loan.
(c) After giving effect to any borrowing of Loans, there shall
not be more than ten different Interest Periods in effect.
2.4 CONVERSION AND CONTINUATION ELECTIONS.
(a) The Borrower may upon irrevocable written notice to the Bank
in accordance with Section 2.4(b): (i) elect to convert on any Business Day, any
Base Rate Loan (or any part thereof in an amount not less than $1,000,000) into
an Offshore Rate Loan, a CD Rate Loan or a Money Market Rate Loan or; (ii) elect
to convert on any Interest Payment Date any Offshore Rate Loan, CD Rate Loan or
Money Market Rate Loan maturing on such Interest Payment Date (or any part
thereof in an amount not less than $1,000,000) into a Base Rate Loan; or (iii)
elect to continue on any Interest Payment Date any Offshore Rate Loan, CD Rate
Loan or Money Market Rate Loan maturing on such Interest Payment Date (or any
part thereof in an amount not less than $1,000,000); PROVIDED, HOWEVER, that a
Money Market Rate Loan may be continued only at the interest rate and Interest
Period quoted by the Bank in accordance with Section 2.4(b).
(b) The Borrower shall deliver a written notice in the form of a
Notice of Conversion/Continuation in accordance with Section 8.2 to be received
by the Bank not later than (i) 9:00 a.m. (San Francisco time) at least (A) three
Business Days in advance of the conversion or continuation date, if the Loan is
to be converted into or continued as an Offshore Rate Loan; (B) two Business
Days in advance of the conversion or continuation date, if the Loan is to be
converted into or continued as a CD Rate Loan; and (C) on the Business Day of
the conversion, if the Loan is to be converted into a Base Rate Loan and (ii)
11:00 a.m. (San Francisco time) on the day of such conversion or
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continuation date, if the Loan is to be converted into or continued as a Money
Market Rate Loan. Each Notice of Conversion/Continuation shall specify: (v)
the proposed conversion or continuation date; (w) the Loan to be converted or
continued; (x) the nature of the proposed conversion or continuation; (y) the
duration of the requested Interest Period, if applicable; and (z) if a Money
Market Loan, the interest rate therefor, determined in accordance with the
procedure set forth in Section 2.3(a).
(c) If upon the expiration of any Interest Period applicable to
a CD Rate Loan, an Offshore Rate Loan or a Money Market Rate Loan, the Borrower
has failed to select a new Interest Period to be applicable to such CD Rate
Loan, Offshore Rate Loan or Money Market Rate Loan, as the case may be, or if
any Default or Event of Default shall then exist, the Borrower shall be deemed
to have elected to convert such CD Rate Loan, Offshore Rate Loan or Money Market
Rate Loan into a Base Rate Loan effective as of the expiration date of such
current Interest Period.
(d) During the existence of a Default or Event of Default, the
Borrower may not elect to have a Loan converted into or continued as an Offshore
Rate Loan, a CD Rate Loan or a Money Market Rate Loan.
(e) Notwithstanding any other provision contained in this
Agreement, after giving effect to any conversion or continuation of any Loans,
there shall not be more than ten different Interest Periods for all Loans in
effect.
2.5 VOLUNTARY TERMINATION OR REDUCTION OF COMMITMENT. The Borrower
may, upon not less than three Business Days' prior notice to the Bank, terminate
or permanently reduce the Commitment by a minimum amount of $5,000,000; PROVIDED
that no such reduction or termination shall be permitted to the extent that,
after giving effect thereto and to any prepayments of the Loans made on the
effective date thereof, the then outstanding principal amount of the Loans would
exceed the Commitment then in effect; PROVIDED, FURTHER, that once reduced in
accordance with this Section 2.5, the Commitment only may be increased by mutual
agreement between Borrower and Bank. All accrued commitment fees to, but not
including the effective date of any reduction or termination of the Commitment,
shall be paid on the effective date of such reduction or termination.
2.6 PREPAYMENTS. The Borrower may, at any time or from time to time,
prepay a Loan in whole or in part in minimum amount of $1,000,000 (a) upon at
least three Business Days' notice to the Bank in the case of a prepayment of an
Offshore Rate Loan; (b) upon at least two Business Days' notice to the Bank in
the case of a prepayment of a CD Rate Loan; and (c) with notice to
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the Bank on the Business Day of such prepayment in the case of a Base Rate Loan
or a Money Market Rate Loan. Such notice of prepayment shall specify the date
and amount of such prepayment and whether such prepayment is of a Base Rate
Loan, CD Rate Loan, Offshore Rate Loan or Money Market Rate Loan, or any
combination thereof. Such notice shall not thereafter be revocable by the
Borrower. Any prepayment of a CD Rate Loan, Offshore Rate Loan or Money Market
Rate Loan hereunder shall be accompanied by accrued interest to the date of such
prepayment on the amount prepaid and any amounts required pursuant to Section
2.15.
2.7 REPAYMENT. The Borrower shall repay to the Bank in full on the
Maturity Date the aggregate principal amount of all Loans outstanding on the
Maturity Date; PROVIDED, HOWEVER, that unless converted or continued as set
forth in Section 2.4, each Money Market Rate Loan shall mature, and the
principal amount thereof shall be due and payable, on the last day of the
Interest Period applicable thereto, but in no event later than the Maturity
Date.
2.8 INTEREST.
(a) Subject to Section 2.8(b), each Loan shall bear interest on
the outstanding principal amount thereof from the date when made until it
becomes due at a rate per annum equal to (i) the CD Rate, the Offshore Rate or
the Base Rate, as the case may be, PLUS the Applicable Margin or (ii) the Money
Market Rate. Interest on each Loan shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the date of any prepayment of any
CD Rate Loan, Offshore Rate Loan or Money Market Rate Loan pursuant to Section
2.6 for the portion of the Loan so prepaid and upon payment (including
prepayment) in full of any Loan and, during the existence of any Event of
Default, interest shall be paid on demand.
(b) While any Event of Default exists or after acceleration, at
the Bank's option, the Borrower shall pay interest (after as well as before
entry of judgment thereon to the extent permitted by law) on the principal
amount of all Obligations then due and unpaid, at a rate per annum which is
determined by adding 2% per annum to the Applicable Margin then in effect for
such Loans or the interest rate applicable to any Money Market Rate Loan;
PROVIDED, HOWEVER, that, on and after the expiration of any Interest Period
applicable to any Offshore Rate Loan, CD Rate Loan or Money Market Rate Loan
outstanding on the date of occurrence of such Event of Default or acceleration,
at the Bank's option, the principal amount of such Loan shall, during the
continuation of such Event of Default or after acceleration, bear interest at a
rate per annum equal to the Base Rate plus 2%.
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2.9 FACILITY FEE. The Borrower shall pay to the Bank a facility fee
on the average amount of the Commitment, regardless of usage, computed on a
quarterly basis in arrears on the last Business Day of each calendar quarter
equal to the Applicable Margin. Such facility fee shall accrue from the
Effective Date to the Maturity Date and shall be due and payable quarterly in
arrears on the last Business Day of each quarter commencing on June 30, 1995
through the Maturity Date, with the final payment to be made on the Maturity
Date; provided that, in connection with any reduction or termination of the
Commitment pursuant to Section 2.5, the accrued facility fee calculated for the
period ending on such date shall also be paid on the date of such reduction or
termination, with the next succeeding quarterly payment being calculated on the
basis of the period from the reduction or termination date to such quarterly
payment date. The facility fee provided in this Section shall accrue at all
times after the above-mentioned commencement date, including at any time during
which one or more conditions in Section 3 are not met.
2.10 COMPUTATION OF FEES AND INTEREST. All computations of interest
payable in respect of Base Rate Loans at all times as the Base Rate is
determined by the Bank's "reference rate" shall be made on the basis of a year
of 365 or 366 days, as the case may be, and actual days elapsed. All other
computations of fees and interest under this Agreement shall be made on the
basis of a 360-day year and actual days elapsed, which results in more interest
being paid than if computed on the basis of a 365-day year. Interest and fees
shall accrue during each period during which interest or such fees are computed
from the first day thereof to the last day thereof. Each determination of an
interest rate by the Bank pursuant hereto shall be conclusive and binding on the
Borrower in the absence of manifest error.
2.11 PAYMENTS BY THE BORROWER.
(a) All payments (including prepayments) to be made by the
Borrower on account of principal, interest, fees and other amounts required
hereunder shall be made without set-off, recoupment or counterclaim and shall,
except as otherwise expressly provided herein, be made to the Bank at the Bank's
Lending Office, in dollars and in immediately available funds, no later than
10:00 a.m. (San Francisco time) on the date specified herein. Any payment which
is received by the Bank later than such time shall be deemed to have been
received on the immediately succeeding Business Day and any applicable interest
or fee shall continue to accrue.
(b) Whenever any payment hereunder shall be stated to be due on
a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the
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computation of interest or fees, as the case may be; subject to the provisions
set forth in the definition of "Interest Period" herein.
2.12 TAXES. Any and all payments by the Borrower to the Bank under
this Agreement shall be made free and clear of, and without deduction or
withholding for, any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding such taxes (including income taxes or franchise taxes) as are imposed
on or measured by the Bank's net income by the jurisdiction under the laws of
which the Bank is organized or maintains a Lending Office or any political
subdivision thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as "TAXES").
In addition, the Borrower shall pay any present or future stamp or documentary
taxes or any other excise or Property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other Loan
Documents (hereinafter referred to as "OTHER TAXES"). The Borrower shall
indemnify and hold harmless the Bank for the full amount of Taxes or Other Taxes
(including any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.12) paid by the Bank and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom or with
respect thereto. Payment under this indemnification shall be made within 30
days from the date the Bank makes written demand therefor, which demand shall
set forth in reasonable detail the calculation of the amount of Taxes or Other
Taxes being requested from the Borrower.
2.13 ILLEGALITY.
(a) If the Bank shall determine that the introduction of any
Requirement of Law after the date hereof, or any change in any Requirement of
Law or in the interpretation or administration thereof after the date hereof,
has made it unlawful, or that any central bank or other Governmental Authority
has asserted after the date hereof that it is unlawful, for the Bank or its
Lending Office to make Offshore Rate Loans, then, on notice thereof by the Bank
to the Borrower, the obligation of the Bank to make Offshore Rate Loans shall be
suspended until the Bank shall have notified the Borrower that the circumstances
giving rise to such determination no longer exists.
(b) If the Bank shall determine that it is unlawful to maintain
any Offshore Rate Loan, the Borrower shall prepay in full all Offshore Rate
Loans then outstanding, together with interest accrued thereon, either on the
last day of the Interest Period thereof if the Bank may lawfully continue to
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maintain such Offshore Rate Loans to such day, or immediately, if the Bank may
not lawfully continue to maintain such Offshore Rate Loans, together with any
amounts required to be paid in connection therewith pursuant to Section 2.15.
2.14 INCREASED COSTS AND REDUCTION OF RETURN.
(a) If the Bank shall determine that, due to either (i) the
introduction of or any change (other than any change by way of imposition of or
increase in reserve requirements included in the calculation of the CD Rate or
the Offshore Rate) in or in the interpretation of any law or regulation or
(ii) the compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law, provided that if
such guideline or request does not have the force of law, compliance therewith
is customary for banks regulated in a manner similar to such Bank), after the
date hereof there shall be any increase in the cost to the Bank of agreeing to
make or making, funding or maintaining any Offshore Rate Loans or CD Rate Loans,
then the Borrower shall be liable for, and shall from time to time, within 10
Business Days after demand therefor by the Bank, pay to the Bank additional
amounts as are sufficient to compensate the Bank for such increased costs.
(b) If the Bank shall have determined that (i) the introduction
after the date hereof of any Capital Adequacy Regulation, (ii) any change after
the date hereof in any Capital Adequacy Regulation, (iii) any change after the
date hereof in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by the Bank (or its
Lending Office) or any corporation controlling the Bank, with any Capital
Adequacy Regulation; affects or would affect the amount of capital required or
expected to be maintained by the Bank or any corporation controlling the Bank
and (taking into consideration the Bank's or such corporation's policies with
respect to capital adequacy and the Bank's desired return on capital) determines
that the amount of such capital is increased as a consequence of its Commitment,
loans, credits or obligations under this Agreement, then, within 10 Business
Days after demand of the Bank, the Borrower shall upon demand pay to the Bank,
from time to time as specified by the Bank, additional amounts sufficient to
compensate the Bank for such increase.
2.15 FUNDING LOSSES. The Borrower agrees to reimburse the Bank and to
hold the Bank harmless from any loss or expense which the Bank may sustain or
incur as a consequence of: (a) the failure of the Borrower to make any payment
or prepayment of principal of any Offshore Rate Loan, CD Rate Loan or Money
Market Rate Loan (including payments made after any acceleration
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thereof); (b) the failure of the Borrower to borrow, continue or convert an
Offshore Rate Loan, CD Rate Loan or Money Market Rate after the Borrower has
given a Notice of Borrowing or a Notice of Conversion/Continuation; (c) the
failure of the Borrower to make any prepayment after the Borrower has given a
notice in accordance with Section 2.6; (d) the prepayment (including pursuant to
Section 2.6) of an Offshore Rate Loan, a CD Rate Loan or Money Market Rate Loan
on a day which is not the last day of the Interest Period with respect thereto;
or (e) the conversion pursuant to Section 2.4 of any Offshore Rate Loan, CD Rate
Loan or Money Market Rate Loan to a Base Rate Loan on a day that is not the last
day of the respective Interest Period; including any such loss or expense
arising from the liquidation or reemployment of funds obtained by it to maintain
its Offshore Rate Loans, CD Rate Loans or Money Market Rate Loans hereunder or
from fees payable to terminate the deposits from which such funds were obtained.
Solely for purposes of calculating amounts payable by the Borrower to the Bank
under this Section 2.15, (i) each Offshore Rate Loan (and each related reserve,
special deposit or similar requirement) shall be conclusively deemed to have
been funded at the IBOR used in determining the Offshore Rate for such Offshore
Rate Loan by a matching deposit or other borrowing in the interbank eurodollar
market for a comparable amount and for a comparable period, whether or not such
Offshore Rate Loan is in fact so funded, (ii) each CD Rate Loan made by the Bank
(and each related reserve, special deposit or similar requirement) shall be
conclusively deemed to have been funded at the Certificate of Deposit Rate used
in determining the CD Rate for such CD Rate Loan by the issuance of its
certificate of deposit in a comparable amount and for a comparable period,
whether or not such CD Rate Loan is in fact so funded, and (iii) each Money
Market Rate Loan made by the Bank shall be conclusively deemed to have been
funded by the Bank in the manner which was the basis for the interest rate for
such Loan, whether or not such Money Market Rate Loan is in fact so funded.
2.16 INABILITY TO DETERMINE RATES. If the Bank shall have determined
that for any reason adequate and reasonable means do not exist for ascertaining
the Offshore Rate or the CD Rate for any requested Interest Period with respect
to a proposed Offshore Rate Loan or CD Rate Loan or that the Offshore Rate or
the CD Rate applicable pursuant to Section 2.8(a) for any requested Interest
Period with respect to a proposed Offshore Rate Loan or CD Rate Loan does not
adequately and fairly reflect the cost to the Bank of funding such Loan, the
Bank will forthwith give notice of such determination to the Borrower.
Thereafter, the obligation of the Bank to make or maintain CD Rate Loans or
Offshore Rate Loans, as the case may be, hereunder shall be suspended until the
Bank revokes such notice in writing; provided however that no outstanding CD
Rate Loan or Offshore Rate Loan shall be terminated prior to the expiration of
the Interest Period unless required by law. Upon receipt of such
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notice, the Borrower may revoke any notice of borrowing or notice of conversion
or continuation then submitted by it. If the Borrower does not revoke such
notice, the Bank shall make, convert or continue the Loans, as proposed by the
Borrower, in the amount specified in the applicable notice submitted by the
Borrower, but such Loans shall be made, converted or continued as Base Rate
Loans or Money Market Rate Loans instead of CD Rate Loans or Offshore Rate
Loans, as the case may be.
SECTION 3. CONDITIONS PRECEDENT
3.1 CONDITIONS OF CLOSING. The obligation of the Bank to make its
initial Loan hereunder is subject to the condition that the Bank shall have
received on or before the Closing Date all of the following, in form and
substance satisfactory to the Bank:
(a) CREDIT AGREEMENT. This Agreement executed by the Borrower;
(b) NOTE. If requested by the Bank, a Note executed by the
Borrower.
(c) RESOLUTIONS; INCUMBENCY. (i) Copies of the resolutions of
the board of directors of the Borrower approving and authorizing the execution,
delivery and performance by the Borrower of this Agreement and the other Loan
Documents to be delivered hereunder, and authorizing the borrowing of the Loans,
certified as of the Closing Date by the Secretary or an Assistant Secretary of
the Borrower and (ii) a certificate of the Secretary or Assistant Secretary of
the Borrower certifying the names and true signatures of the officers of the
Borrower authorized to execute, deliver and perform, as applicable, this
Agreement, and all other Loan Documents to be delivered hereunder;
(d) ARTICLES OF INCORPORATION; BY-LAWS AND GOOD STANDING. Each
of the following documents: (i) the articles or certificate of incorporation of
the Borrower as in effect on the Closing Date, certified by the Secretary of
State of the state of incorporation of the Borrower as of a recent date, and the
bylaws of the Borrower as in effect on the Closing Date, certified by the
Secretary or Assistant Secretary of the Borrower as of the Closing Date; and
(ii) a good standing certificate for the Borrower from the Secretary of State of
Delaware as of a recent date;
(e) CERTIFICATE. A certificate signed by a Responsible Officer,
dated as of the Closing Date, stating that: (i) the representations and
warranties contained in Section 4 are true and correct in all material respects
on and as of such
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date, as though made on and as of such date; (ii) no Default or Event of Default
exists; and (iii) there has occurred since January 31, 1994, no event or
circumstance that could reasonably be expected to result in a Material Adverse
Effect;
(f) COMPLIANCE CERTIFICATE. A Compliance Certificate dated as
of the Closing Date, the financial covenant portion of which shall be based on
the financial statements dated as of October 31, 1994.
(g) TERMINATION OF EXISTING AGREEMENTS. Evidence that the
Borrower has terminated, or concurrently with the initial funding hereunder will
be terminating, all Existing Agreements and shall have paid all amounts owing to
the banks thereunder.
(h) OPINION OF COUNSEL. An opinion of Aloma H. Park, Corporate
Counsel of the Borrower and addressed to the Bank.
(i) OTHER DOCUMENTS. Such other approvals, opinions or
documents as the Bank may reasonably request.
3.2 CONDITIONS TO ALL BORROWINGS. The obligation of the Bank to
make, continue or convert any Loan (including the initial Loan) is subject to
the satisfaction of the following conditions precedent on the relevant borrowing
date:
(a) NOTICE OF BORROWING OR CONVERSION/ CONTINUATION. The Bank
shall have received a Notice of Borrowing or a Notice of
Conversion/Continuation;
(b) CONTINUATION OF REPRESENTATIONS AND WARRANTIES. Except for
the representations and warranties set forth in Section 4.11(b) and 4.13 (which
shall be made solely as of the Closing Date, the representations and warranties
made by the Borrower contained in Section 4 shall be true and correct in all
material respects on and as of such borrowing date with the same effect as if
made on and as of such borrowing date; and
(c) NO EXISTING DEFAULT. No Default or Event of Default shall
exist or shall result from such borrowing, conversion or continuation.
Each Notice of Borrowing and Notice of Conversion/Continuation submitted by the
Borrower hereunder shall constitute a representation and warranty by the
Borrower hereunder, as of the date of each such notice and as of the date of
each borrowing, conversion or continuation that the conditions in this Section
3.2 are satisfied.
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SECTION 4. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Bank that:
4.1 CORPORATE EXISTENCE AND POWER. The Borrower and each of its
corporate Subsidiaries: (a) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation;
(b) has the corporate power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its business
and execute, deliver, and perform its obligations under, the Loan Documents; (c)
is duly qualified as a foreign corporation, licensed and in good standing under
the laws of each jurisdiction where its ownership, lease or operation of
Property or the conduct of its business requires such qualification, except
where the failure to be so qualified or in good standing would not have a
Material Adverse Effect; and (d) is in compliance with all Requirements of Law
except where such noncompliance would not have a Material Adverse Effect.
4.2 CORPORATE AUTHORIZATION; NO CONTRAVENTION. The execution,
delivery and performance by the Borrower of each Loan Document to which it is a
party, have been duly authorized by all necessary corporate action, and do not
and will not: (a) contravene the terms of any of the Borrower's Organization
Documents; (b) conflict with or result in any breach or contravention of, or the
creation of any Lien under, any document evidencing any Contractual Obligation
to which the Borrower is a party or any order, injunction, writ or decree of any
Governmental Authority to which the Borrower or its Property is subject; or (c)
violate any Requirement of Law applicable to the Borrower.
4.3 GOVERNMENTAL AUTHORIZATION. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Borrower of
this Agreement or any other Loan Document, other than routine filings required
to be made by the Borrower in the ordinary course of business after the date
hereof.
4.4 BINDING EFFECT. This Agreement and each other Loan Document to
which the Borrower is a party constitute the legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.
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4.5 LITIGATION. Except as set forth in Schedule 4.5, there are no
actions, suits, proceedings, claims or disputes pending, or to the best
knowledge of the Borrower, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, against the Borrower, its
Subsidiaries or any of their respective Properties which: (a) purport to affect
or pertain to this Agreement, or any other Loan Document, or any of the
transactions contemplated hereby or thereby; or (b) would reasonably be expected
to result in liability in excess of $10,000,000. No injunction, writ, temporary
restraining order or any order of any nature has been issued by any court or
other Governmental Authority against the Borrower purporting to enjoin or
restrain the execution, delivery and performance of this Agreement or any other
Loan Document, or directing that the transactions provided for herein or therein
not be consummated as herein or therein provided.
4.6 NO DEFAULT. No Default or Event of Default exists or would
result from the incurring of any Obligations by the Borrower. Neither the
Borrower nor any of its Subsidiaries is in default under or with respect to any
Contractual Obligation in any respect which, individually or together with all
such defaults, would reasonably be expected to have a Material Adverse Effect or
that could, if such default had occurred after the Closing Date, create an Event
of Default under Section 7.1(e) or (f).
4.7 ERISA COMPLIANCE.
(a) Schedule 4.7 lists all Plans maintained or sponsored by the
Borrower or to which it is obligated to contribute, and separately identifies
Plans intended to be Qualified Plans and Multiemployer Plans. Each Plan other
than a Multiemployer Plan is in compliance, and, with respect to each
Multiemployer Plan, the Borrower has no knowledge that such Multiemployer Plan
is not in compliance, in all material respects with the applicable provisions of
ERISA, the Code and other Federal or applicable state law that is not preempted
by ERISA. Each Qualified Plan has been determined by the Internal Revenue
Service ("IRS") to qualify under Section 401 of the Code, and the trusts created
thereunder have been determined to be exempt from tax under the provisions of
Section 501 of the Code, and to the best knowledge of the Borrower nothing has
occurred which would cause the loss of such qualification or tax-exempt status.
(b) There is no outstanding liability (excluding PBGC premiums
due but not delinquent under Section 4001 of ERISA) under Title IV of ERISA with
respect to any Plan maintained or sponsored by the Borrower or any ERISA
Affiliate (as to which the Borrower is or may reasonably be expected to be
liable), nor with respect to any Plan to which the Borrower or any ERISA
Affiliate (wherein the Borrower is or may be liable) contributes or is
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<PAGE>
obligated to contribute, which would reasonably be expected to have a Material
Adverse Effect. None of the Qualified Plans has Unfunded Pension Liabilities as
to which the Borrower is or may be liable, and which would reasonably be
expected to have a Material Adverse Effect.
(c) No ERISA Event has occurred or is reasonably expected to
occur with respect to any Plan maintained or sponsored by the Borrower or to
which the Borrower is obligated to contribute and as to which the Borrower is or
may reasonably be expected to be liable, and which would reasonably be expected
to have a Material Adverse Effect. There are no pending or, to the best
knowledge of the Borrower, threatened claims, actions or lawsuits, other than
routine claims for benefits in the usual and ordinary course, asserted or
instituted against (i) any Plan maintained or sponsored by the Borrower or its
assets, (ii) any member of the Controlled Group with respect to any Qualified
Plan of the Borrower, or (iii) any fiduciary with respect to any Plan for which
the Borrower may be directly or indirectly liable, through indemnification
obligations or otherwise which in each case would reasonably be expected to have
a Material Adverse Effect. The Borrower has not transferred any Unfunded
Pension Liability outside of the Controlled Group or otherwise engaged in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA which has
a reasonable likelihood of having a Material Adverse Effect.
4.8 USE OF PROCEEDS; MARGIN REGULATIONS. The proceeds of the Loans
are intended to be and shall be used solely for the purposes set forth in and
permitted by Section 5.10, and are intended to be and shall be used in
compliance with Section 6.5.
4.9 TITLE TO PROPERTIES. The Borrower and each of its Subsidiaries
has good record and marketable title in fee simple to, or valid leasehold
interests in, all real Property necessary or used in the ordinary conduct of its
business, except for such defects in title as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. As of the
Closing Date, the Property of the Borrower and its Subsidiaries is subject to no
Liens, other than Permitted Liens.
4.10 TAXES. The Borrower and its Subsidiaries have filed all Federal
and other material tax returns and reports required to be filed, and have paid
all Federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their Properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP and no Notice of Lien has been filed or recorded.
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<PAGE>
4.11 FINANCIAL CONDITION.
(a) The audited consolidated financial statements of financial
condition of the Borrower and its Subsidiaries dated January 31, 1994, and the
related consolidated statements of operations, shareholders' equity and cash
flows for the fiscal year ended on that date: (i) were prepared in accordance
with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; (ii) are complete and accurate in all
material respects and fairly present the financial condition of the Borrower and
its consolidated Subsidiaries as of the date thereof and results of operations
for the period covered thereby; and (iii) show all material indebtedness and
other liabilities, direct or contingent of the Borrower and its consolidated
Subsidiaries as of the date thereof, including liabilities for taxes and
material commitments.
(b) Since January 31, 1994, there has been no Material Adverse
Effect.
4.12 ENVIRONMENTAL MATTERS.
(a) To the knowledge of the Responsible Officers of Borrower,
the on-going operations of the Borrower and each of its Subsidiaries comply in
all respects with all Environmental Laws, except such non-compliance which would
not reasonably be likely to result in a Material Adverse Effect. To the
knowledge of the Responsible Officers of the Borrower, the Borrower and each of
its Subsidiaries have obtained all licenses, permits, authorizations and
registrations required under any Environmental Law ("ENVIRONMENTAL PERMITS")
necessary for its ordinary course operations, all such Environmental Permits are
in good standing, and the Borrower and each of its Subsidiaries are in
compliance with all material terms and conditions of such Environmental Permits,
except where the failure to obtain or maintain such Environmental Permits or
such noncompliance would not have a Material Adverse Effect.
(b) Except as set forth in Schedule 4.12(b), none of the
Borrower or any of its Subsidiaries or any of their respective present real
Property or operations is subject to any outstanding written order from or
agreement with any Governmental Authority nor subject to any judicial or
docketed administrative proceeding, respecting any Environmental Law,
Environmental Claim or Hazardous Material.
(c) to the knowledge of the Responsible Officers of the
Borrower, there are no conditions or circumstances which would reasonably be
expected to give rise to any Environmental Claims arising from the operations of
Borrower, its Subsidiaries
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which would be reasonably likely to result in a Material Adverse Effect.
4.13 SUBSIDIARIES. As of the Closing Date, the Borrower has no
Subsidiaries other than those specifically disclosed in Schedule 4.13 annexed
hereto.
4.14 INSURANCE. The material real Properties of the Borrower and its
Subsidiaries are insured with financially sound and reputable insurance
companies (except to the extent self-insurance is permitted pursuant to Section
5.6), in such amounts, with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses and owning
similar Properties in localities where the Borrower or such Subsidiary operates.
4.15 FULL DISCLOSURE. None of the representations or warranties made
by the Borrower in the Loan Documents as of the date such representations and
warranties are made or deemed made, and none of the statements contained in each
exhibit or any certificate furnished by or on behalf of the Borrower or any of
its Subsidiaries in connection with the Loan Documents, contains any untrue
statement of a material fact or omits any material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, so long as the Bank shall have
any Commitment hereunder, or any Loan or other Obligation shall remain unpaid or
unsatisfied:
5.1 FINANCIAL STATEMENTS. The Borrower shall deliver to the Bank in
form and detail satisfactory to the Bank:
(a) as soon as available, but not later than 120 days after the
end of each fiscal year, a copy of the audited consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such year and the related
statement of income and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous year, and accompanied by
the opinion of Price Waterhouse or another nationally-recognized independent
public accounting firm which report shall state that such consolidated financial
statements present fairly the financial position of the Borrower and its
Subsidiaries for the periods indicated in conformity with GAAP applied on a
basis consistent with prior years. Such opinion shall not be qualified or
limited because of a restricted or
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limited examination by such accountant of any material portion of the Borrower's
or any Subsidiary's records;
(b) as soon as available, but not later than 45 days after the
end of each of the first three fiscal quarters of each year, a copy of the
unaudited consolidated balance sheet of the Borrower and its Subsidiaries as of
the end of such quarter and the related consolidated statements of income and
cash flows for the period commencing on the first day and ending on the last day
of such quarter, setting forth the financial position and the results of
operations of the Borrower and its Subsidiaries in conformity with GAAP applied
on a basis consistent with prior years, subject to changes resulting from audit
and normal year-end adjustments;
5.2 CERTIFICATES; OTHER INFORMATION. The Borrower shall furnish to
the Bank:
(a) concurrently with the delivery of the financial statements
referred to in Sections 5.1(a) and (b) above, a Compliance Certificate signed by
a Responsible Officer (i) stating that, to the best of such officer's knowledge,
the Borrower, during such period, has observed and performed all of its
covenants and other agreements, and satisfied every condition contained in this
Agreement to be observed, performed or satisfied by it, and that such officer
has obtained no knowledge of any Default or Event of Default except as specified
(by applicable Section reference) in such certificate, and (ii) showing in
detail the calculations supporting such statement in respect of Sections 6.7 and
6.8; and
(b) promptly, such additional business, financial, corporate
affairs and other information as the Bank, at the request of the Bank, may from
time to time reasonably request.
5.3 NOTICES. Promptly upon a Responsible Officer of the Borrower
becoming aware of the same, the Borrower shall promptly notify the Bank:
(a) of the occurrence of any Default or Event of Default;
(b) of (i) any breach or non-performance of, or any default
under, any Contractual Obligation of the Borrower or any of its Subsidiaries
which would reasonably be expected to result in a Material Adverse Effect; and
(ii) any dispute, litigation, investigation, proceeding or suspension which may
exist at any time between the Borrower or any of its Subsidiaries and any
Governmental Authority which would reasonably be expected to have a Material
Adverse Effect;
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<PAGE>
(c) of the commencement of, or of any material development in,
any litigation or proceeding affecting the Borrower or any Subsidiary which
would reasonably be expected to have a Material Adverse Effect;
(d) upon, but in no event later than 10 days after, a
Responsible Officer becoming aware of (i) any and all enforcement, cleanup,
removal or other governmental or regulatory actions instituted, completed or
threatened against the Borrower, any of its Subsidiaries or any of their
respective Properties pursuant to any applicable Environmental Laws, and (ii)
any other material Environmental Claims, which in the case of clauses (i) and
(ii) would reasonably be expected to have a Material Adverse Effect;
(e) of any ERISA Event affecting the Borrower or any member of
its Controlled Group (but in no event more than ten days after such ERISA Event)
together with (i) a copy of any notice with respect to such ERISA Event that may
be required to be filed with the PBGC and (ii) any notice delivered by the PBGC
to the Borrower or any member or its Controlled Group with respect to such ERISA
Event;
(f) of any Material Adverse Effect (of which the Borrower has
knowledge) subsequent to the date of the most recent audited financial
statements of the Borrower delivered to the Bank pursuant to Section 5.1(a); and
(g) of any material change in accounting policies or financial
reporting practices by the Borrower.
Each notice pursuant to this Section shall be accompanied by a
written statement by a Responsible Officer of the Borrower setting forth details
of the occurrence referred to therein, and stating what action (if any is
required) the Borrower proposes to take with respect thereto.
5.4 PRESERVATION OF CORPORATE EXISTENCE, ETC. The Borrower shall
preserve and maintain in full force and effect its corporate existence and good
standing under the laws of its state or jurisdiction of incorporation and
preserve and maintain in full force and effect all rights, privileges,
qualifications, permits, licenses and franchises necessary or desirable in the
normal conduct of its business the non-preservation of which would reasonably be
expected to have a Material Adverse Effect; provided that nothing herein shall
prevent to the extent not otherwise prohibited by the provisions of Section 6.2
or 6.3, a consolidation or merger of Borrower or any of its Subsidiaries, or the
sale, transfer or disposition of all or a substantial part of the Property or
assets of, or the abandonment or termination of the corporate existence, rights
and franchises of, any Subsidiary of the Borrower if, in the reasonable opinion
of the
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Borrower's Board of Directors, such abandonment or termination is in the best
interests of the Borrower and is not prejudicial to the Bank in any material
respect.
5.5 MAINTENANCE OF PROPERTY. The Borrower shall maintain, and shall
cause each of its Subsidiaries to maintain, and preserve all its Property which
is used or useful in its business in good working order and condition, ordinary
wear and tear excepted, the non-maintenance or non-preservation of which would
reasonably be expected to have a Material Adverse Effect; provided that nothing
in this Section 5.5 shall require the making of any repair or replacement of or
to any particular Property that would not be required in the exercise of sound
business judgment.
5.6 INSURANCE. The Borrower shall maintain, and shall cause each of
its Subsidiaries to maintain, with financially sound and reputable independent
insurers, insurance with respect to its Properties and business against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons; including workers'
compensation insurance, public liability and Property and casualty insurance;
provided that the Borrower or any of its Subsidiaries may self-insure to the
extent that it maintains adequate reserves therefor and self-insurance is
customary and prudent in its business judgment. Upon request of the Bank, the
Borrower shall furnish the Bank at reasonable intervals (but not more than once
per calendar year) a certificate of a Responsible Officer of the Borrower (and,
if requested by the Bank, any insurance broker of the Borrower) setting forth
the nature and extent of all insurance maintained by the Borrower and its
Subsidiaries in accordance with this Section 5.6 (and which, in the case of a
certificate of a broker, were placed through such broker).
5.7 COMPLIANCE WITH LAWS. The Borrower shall comply, and shall cause
each of its Subsidiaries to comply, in all material respects with all
Requirements of Law of any Governmental Authority having jurisdiction over it or
its business (including the Federal Fair Labor Standards Act), except such as
may be contested in good faith or as to which a bona fide dispute may exist, the
non-compliance with which would reasonably be expected to have a Material
Adverse Effect.
5.8 INSPECTION OF PROPERTY AND BOOKS AND RECORDS. The Borrower shall
maintain and shall cause each of its Subsidiaries to maintain proper books of
record and account, in which full, true and correct entries in conformity with
GAAP consistently applied shall be made of all financial transactions and
matters involving the assets and business of the Borrower and such Subsidiaries.
The Borrower shall permit, and shall cause each of
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its Subsidiaries to permit, representatives and independent contractors of the
Bank to visit and inspect any of their respective Properties, to examine their
respective corporate, financial and operating records, and make copies thereof
or abstracts therefrom, and to discuss their respective affairs, finances and
accounts with their respective directors, officers, and independent public
accountants (provided that the Borrower may, if it chooses, be present at any
such discussions) at such reasonable times during normal business hours and as
often as may be reasonably desired, upon reasonable advance notice to the
Borrower; provided that the foregoing shall be subject to compliance with
applicable security regulations of any Governmental Authority and shall not
require the Borrower to permit inspection of any Properties or financial or
operating records to an extent that would require the Borrower or any of its
Subsidiaries to reveal any of its trade secrets, research data or proprietary
information which its management in good faith believes to be irrelevant to this
Agreement.
5.9 ENVIRONMENTAL LAWS. The Borrower shall, and shall cause each of
its Subsidiaries to, conduct its operations and keep and maintain its Properties
in compliance with all Environmental Laws, except for such non-compliance as
would not reasonably be expected to have a Material Adverse Effect. Upon the
written request of the Bank, the Borrower shall submit and cause each of its
Subsidiaries to submit, at the Borrower's sole cost and expense, at reasonable
intervals, a report providing an update of the status of any environmental,
health or safety compliance, hazard or liability issue identified in any notice
or report required pursuant to Section 5.3(d).
5.10 USE OF PROCEEDS. The Borrower shall use the proceeds of the Loans
for working capital and other general corporate purposes not in contravention of
any Requirement of Law.
5.11 FURTHER ASSURANCES. The Borrower shall ensure that all written
information, exhibits and reports furnished to the Bank by the Borrower do not
and will not contain any untrue statement of a material fact and do not and will
not omit to state any material fact or any fact necessary to make the statements
contained therein not misleading in light of the circumstances in which made,
and will promptly disclose to the Bank and correct any defect or error that may
be discovered by a Responsible Officer of the Borrower therein or in any Loan
Document or in the execution, acknowledgement or recordation thereof.
SECTION 6. NEGATIVE COVENANTS
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The Borrower hereby covenants and agrees that, so long as the Bank
shall have any Commitment hereunder, or any Loan or other Obligation shall
remain unpaid or unsatisfied:
6.1 LIMITATION ON LIENS. The Borrower shall not, and shall not
suffer or permit any of its Subsidiaries to, directly or indirectly, make,
create, incur, assume or suffer to exist any Lien upon or with respect to any
part of their respective Properties, whether now owned or hereafter acquired,
other than the following ("PERMITTED LIENS"):
(a) any Lien securing Indebtedness existing on the Closing Date
and, in the case of Liens securing Indebtedness in excess of $100,000, set forth
in Schedule 6.1 annexed hereto, and any Lien securing any Indebtedness permitted
hereunder that replaces any such Lien provided that such replacement Lien does
not encumber any additional Property;
(b) Liens for taxes, fees, assessments or other governmental
charges which are not delinquent or remain payable without penalty, or to the
extent that non-payment thereof is permitted by Section 5.7, provided that no
Notice of Lien has been filed or recorded under the Code;
(c) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the Ordinary Course
of Business which are not delinquent or remain payable without penalty or which
are being contested in good faith and by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the Property
subject thereto or which do not in the aggregate with respect to any one
Property so encumbered have a Material Adverse Effect;
(d) Liens (other than any Lien imposed by ERISA) incurred or
pledges or deposits required in the Ordinary Course of Business in connection
with workers' compensation, unemployment insurance and other social security
legislation;
(e) Liens consisting of judgment or judicial attachment liens,
provided that the enforcement of such Liens is effectively stayed and all such
liens in the aggregate at any time outstanding for the Borrower and its
Subsidiaries do not exceed $1,000,000;
(f) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the Ordinary Course of Business which do not in any
case materially detract from the value of the Property subject thereto or
interfere with the ordinary conduct of the businesses of the Borrower and its
Subsidiaries;
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(g) Liens arising solely by virtue of any statutory or common
law provision relating to banker's liens, rights of set-off or similar rights
and remedies as to deposit accounts or other funds maintained with a creditor
depository institution; PROVIDED that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Borrower in excess of those set forth by regulations promulgated
by the Federal Reserve Board, and (ii) such deposit account is not intended by
the Borrower or any of its Subsidiaries to provide collateral to the depository
institution;
(h) Liens on the Property of the Borrower securing (i) the
performance of bids, trade contracts (other than borrowed money), leases,
statutory obligations, and (ii) obligations on surety and appeal bonds, and
(iii) other obligations of a like nature incurred in the ordinary course of
business listed on Schedule 6.1 annexed hereto, provided all such Liens in the
aggregate do not secure Indebtedness exceeding $10,000,000;
(i) Liens associated with a Permitted Accounts Receivable
Financing involving the sale or discount of accounts receivable having a book
value not exceeding the lesser of (i) $25,000,000 and (ii) 35% of Borrower's
gross accounts receivable;
(j) Liens (i) on the assets of a single purpose Subsidiary
formed solely for the purpose of entering into outsourcing contracts and (ii) on
assets of the Borrower or any of its Subsidiaries incurred in connection with
and related solely to the toll collection business (including assignments of
toll receipts), not exceeding $50,000,000 in asset value in the aggregate.
(k) Liens on Property or assets of a Subsidiary of the Borrower
to secure indebtedness of such Subsidiary to the Borrower or its Subsidiaries;
(l) Liens securing financing for all or a portion of the
purchase or construction cost of real Property acquired after the Closing Date
to be used in the Ordinary Course of the Business (provided that any such Lien
shall not encumber any other Property of the Borrower or its Subsidiaries),
including the ownership by third parties of assets capitalized as finance leases
under GAAP;
(m) Liens arising from purchase money financing of equipment,
including the ownership by third parties of assets capitalized as finance leases
under GAAP;
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(n) Liens arising in the Ordinary Course of Business in favor of
a customer, which Liens are inherent in the government contracting process; and
(o) other Liens provided that the aggregate amount of
indebtedness secured by such other Liens permitted by this clause (o) does not
at any time exceed an amount equal to 10% of Consolidated Tangible Net Worth.
6.2 DISPOSITION OF ASSETS. The Borrower shall not, and shall not
suffer or permit any of its Subsidiaries to, directly or indirectly, sell,
assign, lease, convey, transfer or otherwise dispose of (whether in one or a
series of transactions) any Property (including accounts and notes receivable,
with or without recourse) or enter into any agreement to do any of the
foregoing, except:
(a) dispositions of inventory, or used, worn-out or surplus
equipment, all in the Ordinary Course of Business;
(b) sales of accounts receivable in connection with Permitted
Accounts Receivable Financings to the extent permitted by Section 6.1(i);
(c) the sale of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar replacement
equipment, or the proceeds of such sale are reasonably promptly applied to the
purchase price of such replacement equipment;
(d) the sale, assignment, lease, conveyance, transfer or other
disposition of any Property owned by a Subsidiary to the Borrower or any of its
other Subsidiaries; and
(e) dispositions not otherwise permitted hereunder which are
made for fair market value in the Ordinary Course of Business; PROVIDED, that at
the time of any disposition, no Event of Default shall exist or shall result
from such disposition.
6.3 CONSOLIDATIONS AND MERGERS. The Borrower shall not, and shall
not suffer or permit any of its Subsidiaries to, merge, consolidate with or
into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions all or substantially all of its
assets (whether now owned or hereafter acquired) to or in favor of any Person,
except:
(a) any Subsidiary may merge with the Borrower, provided that
the Borrower shall be the continuing or surviving corporation, or with any one
or more Subsidiaries of the Borrower, provided that if any transaction shall be
between a
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<PAGE>
Subsidiary and a wholly-owned Subsidiary, the wholly-owned Subsidiary shall be
the continuing or surviving corporation;
(b) any Subsidiary of the Borrower may sell all or substantially
all of its assets (upon voluntary liquidation or otherwise), to the Borrower or
a wholly-owned Subsidiary of the Borrower; and
(c) the Borrower may merge with another corporation, provided
that the Borrower shall be the surviving corporation, and that after giving
effect to such merger, no Default or Event of Default shall then have occurred
or exist.
6.4 LIMITATION ON CONTINGENT OBLIGATIONS. The Borrower shall not,
and shall not suffer or permit any of its Subsidiaries to, create, incur,
assume, suffer to exist, or otherwise become or remain directly or indirectly
liable with respect to, any Contingent Obligations, except Contingent
Obligations not exceeding 15% of Consolidated Tangible Net Worth; provided that
in addition to such 15% limitation, the Borrower may be liable for the
Contingent Obligations consisting of the $12,250,000 loan guarantee described in
its 1994 Annual Report and up to $5,000,000 in guarantees of employee loans
secured by the Borrower's common stock. The Contingent Obligations limited by
this Section 6.4 shall not include claims for refunds or the imposition of
charges made by customers of the Borrower and its Subsidiaries based on
unsatisfactory work by the Borrower or any of its Subsidiaries in the Ordinary
Course of Business, except that such claims shall be included, and shall be
taken into account, with respect to the other covenants set forth in this
Section 6 when recognized as liabilities on the Borrower's balance sheet in
accordance with GAAP.
6.5 USE OF PROCEEDS. The Borrower shall not use any portion of the
Loan proceeds, directly or indirectly, (i) to purchase or carry Margin Stock,
(ii) to repay or otherwise refinance indebtedness of the Borrower or others
incurred to purchase or carry Margin Stock, (iii) to extend credit for the
purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any
security in any transaction that is subject to Section 13 or 14 of the Exchange
Act.
6.6 COMPLIANCE WITH ERISA. To the extent an event or condition
specified in this Section 6.6 has a reasonable likelihood of having a Material
Adverse Effect, the Borrower shall not directly or indirectly and shall not
permit any ERISA Affiliate directly or indirectly (i) to terminate any Plan
subject to Title IV of ERISA, (ii) to permit to exist any ERISA Event, (iii) to
enter into any new Plan or modify any existing Plan so as to increase its
obligations thereunder except in the ordinary course of business consistent with
past practice or (iv) permit the existence of Unfunded Pension Liabilities.
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<PAGE>
6.7 CONSOLIDATED TANGIBLE NET WORTH. The Borrower shall not permit
its Consolidated Tangible Net Worth at any time to be less than $250,000,000
PLUS 50% of each quarter's consolidated net income commencing February 1, 1994
(but without reduction for any losses) PLUS 75% of the Net Issuance Proceeds of
any equity securities issued by the Borrower (other than from Net Issuance
Proceeds received from employees' and pension plans' customary quarterly stock
purchases).
6.8 CONSOLIDATED FUNDED DEBT TO CAPITAL RATIO. The Borrower shall not
at any time permit its ratio of Consolidated Funded Debt to Consolidated Capital
to be greater than 0.45 to 1.00.
6.9 ACCOUNTING CHANGES. The Borrower shall not, and shall not suffer
or permit any of its Subsidiaries to, make any significant change in accounting
treatment or reporting practices, except as required or permitted by GAAP, or
change the fiscal year of the Borrower or of any of its consolidated
Subsidiaries; PROVIDED, HOWEVER, that if any change GAAP would affect the
computation of any covenants herein, the parties will enter into good faith
negotiations to adjust such covenants in order to implement the original intent
of the parties with respect to such covenants, and, until such adjustments are
agreed upon by the Borrower and the Bank, the prior version of GAAP shall be
used in computing compliance with such covenants.
6.10 BILATERAL AGREEMENTS. The Borrower shall not enter into any
waiver, amendment, extension, renewal or other modification to any Bilateral
Agreement without concurrently offering the Bank the right to similarly waive,
amend, extend, renew or otherwise modify this Agreement with all, but not less
than all, of the terms and conditions of such waiver, amendment, extension,
renewal or other modification. The Bank shall have the right to accept or
reject such waiver, amendment, extension, renewal or other modification to this
Agreement in its sole discretion.
SECTION 7. EVENTS OF DEFAULT
7.1 EVENTS OF DEFAULT. Any of the following shall constitute an
"Event of Default":
(a) NON-PAYMENT. The Borrower fails to pay, (i) within one day
after the same shall become due, any amount of principal of any Loan, or (ii)
within five days after the same shall become due, any interest on any Loan, fee
or any other amount payable hereunder or pursuant to any other Loan Document; or
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(b) REPRESENTATION OR WARRANTY. Any material representation or
warranty by the Borrower made or deemed made herein, in any Loan Document, or
which is contained in any certificate, document or financial or other statement
by the Borrower, any of its Subsidiaries, or their respective Responsible
Officers, furnished at any time under this Agreement, or in or under any Loan
Document, shall prove to have been incorrect in any material respect on or as of
the date made or deemed made; or
(c) SPECIFIC DEFAULTS. The Borrower fails to perform or observe
any term, covenant or agreement contained in Section 6.3, 6.5, 6.7 or 6.8; or
(d) OTHER DEFAULTS. The Borrower fails to perform or observe
any other term, covenant or agreement contained in any Loan Document not
specifically mentioned in this Section 7.1 and, such default shall continue
unremedied for a period of 30 days after notice by the Bank thereof; or
(e) CROSS DEFAULT TO BILATERAL AGREEMENTS. The Borrower (i)
fails to make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) under any Bilateral Agreement;
or (ii) fails to perform or observe any other condition or covenant, or any
other event shall occur or condition exist, under any Bilateral Agreement, if
the effect of such failure, event or condition is to cause, or to permit the
holder or holders of Indebtedness thereunder to cause such Indebtedness to be
declared to be due and payable prior to its stated maturity; or
(f) CROSS DEFAULT. The Borrower or any of its Subsidiaries (i)
fails to make any payment in respect of any Indebtedness or Contingent
Obligation owing to any Person (other than the Obligations hereunder) when due
(whether by scheduled maturity, required prepayment, acceleration, demand,
or otherwise) having an aggregate principal amount (including undrawn committed
or available amounts and including amounts owing to all creditors under any
combined or syndicated credit arrangement) of more than $10,000,000; or (ii)
fails to perform or observe any other condition or covenant, or any other event
shall occur or condition exist, under any agreement or instrument relating to
any such Indebtedness or Contingent Obligation having an aggregate principal
amount (including undrawn committed or available amounts and including amounts
owing to all creditors under any combined or syndicated credit arrangement) of
more than $10,000,000, if the effect of such failure, event or condition is to
cause, or to permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause such Indebtedness to
be declared to be due and payable prior to its stated maturity, or
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such Contingent Obligation to become payable or cash collateral in respect
thereof to be demanded; or
(g) INSOLVENCY; VOLUNTARY PROCEEDINGS. The Borrower or any of
its Subsidiaries, (i) ceases or fails to be solvent, or generally fails to pay,
or admits in writing its inability to pay, its debts as they become due, subject
to applicable grace periods, if any, whether at stated maturity or otherwise;
(ii) voluntarily ceases to conduct its business in the ordinary course; (iii)
commences any Insolvency Proceeding with respect to itself; or (iv) takes any
action to effectuate or authorize any of the foregoing; or
(h) INVOLUNTARY PROCEEDINGS. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Borrower or any of its
Subsidiaries, or any writ, judgment, warrant of attachment, execution or similar
process, is issued or levied against a substantial part of the Borrower's or any
Subsidiary's Properties, and any such proceeding or petition shall not be
dismissed, or such writ, judgment, warrant of attachment, execution or similar
process shall not be released, vacated or fully bonded within 60 days after
commencement, filing or levy; (ii) the Borrower or any of its Subsidiaries
admits the material allegations of a petition against it in any Insolvency
Proceeding, or an order for relief (or similar order under non-U.S. law) is
ordered in any Insolvency Proceeding; or (iii) the Borrower or any of its
Subsidiaries acquiesces in the appointment of a receiver, trustee, custodian,
conservator, liquidator, mortgagee in possession (or agent therefor), or other
similar Person for itself or a substantial portion of its Property or business;
or
(i) ERISA. Any of the following events or conditions occurs or
exists which has a reasonable likelihood of having a Material Adverse Effect:
(i) the Borrower or an ERISA Affiliate shall fail to pay when due, after the
expiration of any applicable grace period, any installment payment with respect
to its withdrawal liability under a Multiemployer Plan; (ii) the Borrower or an
ERISA Affiliate shall fail to satisfy its contribution requirements under
Section 412(c)(11) of the Code, whether or not it has sought a waiver under
Section 412(d) of the Code; (iii) an ERISA Event; (iv) a Plan that is intended
to be qualified under Section 401(a) of the Code shall lose its qualification;
or (v) the occurrence of any combination of events listed in clauses (iii)
through (iv) that involves a net increase in aggregate Unfunded Pension
Liabilities and other liabilities; or
(j) MONETARY JUDGMENTS. One or more final (non-interlocutory)
judgments, orders or decrees shall be entered against the Borrower or any of its
Subsidiaries, involving in the aggregate a liability (not fully covered by
independent third-
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<PAGE>
party insurance and for which the relevant insurer has acknowledged liability)
as to any single or related series of transactions, incidents or conditions, of
$500,000 or more, and the same shall remain unsatisfied, unvacated and unstayed
pending appeal for a period of 30 days after the entry thereof or such later
time as may be provided for the filing of an appeal; or
(k) CHANGE IN CONTROL. (i) Any Person (other than a Plan or
Plans) or two or more Persons (other than a Plan or Plans) acting in concert
shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under the Securities and Exchange Act of
1934, as amended), directly or indirectly, of securities of the Borrower (or
other securities convertible into such securities) representing 20% or more of
the combined voting power of all securities of the Borrower entitled to vote in
the election of directors, other than securities having such power only by
reason of the happening of a contingency; or (ii) individuals who at the
beginning of any two year period constituted the Borrower's Board of Directors
cease for any reason to constitute a majority of directors then in office; or
(l) SUSPENSION. Any Governmental Authority shall notify or
otherwise advise the Borrower or any of its Subsidiaries in writing or verbally
to the effect that the Borrower or any of its Subsidiaries is ineligible or
disqualified in any respect as a present or future contractor to a Governmental
Authority and such ineligibility or disqualification constitutes a Material
Adverse Effect.
7.2 REMEDIES. Upon the occurrence of any Event of Default described
in Section 7.1(g) or 7.1(h) the Commitment will be terminated automatically
without any affirmative action on the part of the Bank, and the Loans (with
accrued interest thereon) and all other amounts owing under this Agreement shall
become due and payable, without presentment, demand, protest or other notice of
any kind, all of which are hereby expressly waived, anything contained herein to
the contrary notwithstanding. Upon the occurrence of any other Event of Default
the Bank may, by written notice to the Borrower (x) terminate the Commitment
and/or (y) declare the Loans (with accrued interest thereon) and all other
amounts owing under this Agreement to be due and payable, forthwith, whereupon
the same will immediately become due and payable, without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived,
anything contained herein to the contrary notwithstanding.
7.3 RIGHTS NOT EXCLUSIVE. The rights provided for in this Agreement
and the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other
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<PAGE>
instrument, document or agreement now existing or hereafter arising.
SECTION 8. MISCELLANEOUS
8.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision
of this Agreement or any other Loan Document, and no consent with respect to any
departure by the Borrower therefrom, shall be effective unless the same shall be
in writing and signed by the Bank and the Borrower.
8.2 NOTICES.
(a) All notices, requests and other communications provided for
hereunder shall be in writing (including, unless the context expressly otherwise
provides, by facsimile transmission, provided that any matter transmitted by the
Borrower by facsimile (i) shall be immediately confirmed by a telephone call to
the recipient at the number specified on the applicable signature page hereof,
and (ii) shall be followed promptly by a hard copy original thereof) and mailed,
faxed or delivered, to the address or facsimile number specified for notices on
the applicable signature page hereof; or, as directed to the Borrower or the
Bank, to such other address as shall be designated by such party in a written
notice to the other parties, and as directed to each other party, at such other
address as shall be designated by such party in a written notice to the Borrower
and the Bank.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next day) delivery, or transmitted by facsimile machine,
respectively, or if delivered, upon delivery, except that notices pursuant to
Section 2 or 8 shall not be effective until actually received by the Bank.
(c) The Borrower acknowledges and agrees that any agreement of
the Bank in Section 2 herein to receive certain notices by telephone and
facsimile is solely for the convenience and at the request of the Borrower. The
Bank shall be entitled to rely on the authority of any Person purporting to be a
Person authorized by the Borrower to give such notice and the Bank shall not
have any liability to the Borrower or other Person on account of any action
taken or not taken by the Bank in reliance upon such telephonic or facsimile
notice, provided that in no event shall the Bank act on telephonic or facsimile
notice requiring funds to be sent to any account other than an account
previously specified by the Borrower in writing in accordance with Section
2.3(a). The obligation of the Borrower to repay the Loans shall not be affected
in any way or to any extent by any failure by the
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<PAGE>
Bank to receive written confirmation of any telephonic or facsimile notice or
the receipt by the Bank of a confirmation which is at variance with the terms
understood by the Bank to be contained in the telephonic or facsimile notice.
8.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of the Bank, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.
8.4 COSTS AND EXPENSES. The Borrower shall, whether or not the
transactions contemplated hereby shall be consummated:
(a) pay or reimburse the Bank within five Business Days after
demand for all reasonable costs and expenses incurred by the Bank in connection
with the development, preparation, delivery, administration and execution of,
and any amendment, supplement, waiver or modification to (in each case, whether
or not consummated), this Agreement, any Loan Document and any other documents
prepared in connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, including the reasonable Attorney
Costs incurred by the Bank with respect thereto;
(b) pay or reimburse the Bank after demand for all reasonable
costs and expenses incurred by it in connection with the enforcement after a
Default or Event of Default, or preservation of any rights or remedies
(including in connection with any "workout" or restructuring regarding the
Loans, and including in any Insolvency Proceeding or appellate proceeding) under
this Agreement, any other Loan Document, and any such other documents, including
Attorney Costs incurred by the Bank; and
(c) pay or reimburse the Bank after demand for all reasonable
appraisal (including the allocated cost of internal appraisal services), audit
and environmental inspection and review costs (including the allocated cost of
such internal services), incurred after notice to the Borrower, and search and
filing costs, fees and expenses, incurred or sustained by the Bank in connection
with the matters referred to under Sections (a) and (b) of this Section.
8.5 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the Bank.
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<PAGE>
8.6 ASSIGNMENTS, PARTICIPATIONS, ETC.
(a) The Bank may at any time, upon notice to the Borrower,
assign and delegate to one or more banks or other financial institutions
reasonably acceptable to the Borrower (each an "ASSIGNEE") all, or any part of
all, of the Loans, the Commitment and the other rights and obligations of the
Bank in increments of not less than $5,000,000.
(b) From and after the date that the Bank notifies the Borrower,
(i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it, shall have the rights
and obligations of the Bank under the Loan Documents, and (ii) the assignor Bank
shall, to the extent that rights and obligations hereunder and under the other
Loan Documents have been assigned by it, relinquish its rights and be released
from its obligations under the Loan Documents.
(c) Promptly after its receipt of notice by the Bank that it has
assigned a portion of the Loans and Commitment to an Assignee, the Borrower
shall execute and deliver to the Assignee, if requested, a new Note evidencing
such Assignee's assigned Loans and Commitment and, if the assignor Bank has
retained a portion of its Loans and the Commitment and holds a Note, a
replacement Note in the principal amount of the Loans retained by the assignor
Bank (such Note to be in exchange for, but not in payment of, the Note held by
such Bank). Immediately upon the effectiveness of any such assignment, this
Agreement shall be deemed to be amended to the extent, but only to the extent,
necessary to reflect the addition of the Assignee and the resulting adjustment
of the Commitment arising therefrom. The Commitment allocated to each Assignee
shall reduce the Commitment of the assigning Bank PRO TANTO.
(d) The Bank may at any time sell to one or more commercial
banks or other Persons not Affiliates of the Borrower (a "PARTICIPANT")
participating interests in any Loans, the Commitment and the other interests of
the Bank hereunder and under the other Loan Documents; PROVIDED, HOWEVER, that
(i) the Bank's obligations under this Agreement shall remain unchanged, (ii) the
Bank shall remain solely responsible for the performance of such obligations,
(iii) the Borrower shall continue to deal solely and directly with the Bank in
connection with the Bank's rights and obligations under this Agreement and the
other Loan Documents and (iv) no participant shall have the right to enforce any
obligation of the Borrower hereunder and no consent of any participant shall be
required for any modification, waiver or amendment of this Agreement or any of
the Loan Documents, except that a participant's consent may be required to (a)
increase or extend the Commitment or reinstate the Commitment if terminated
pursuant to Section 7.2); (b) postpone or delay any date fixed by
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this Agreement or any other Loan Document for any payment of principal,
interest, fees or other amounts due to the Bank; (c) reduce the principal of, or
the rate of interest specified herein on any Loan, or any fees or other amounts
payable hereunder or under any other Loan Document any portion of which would be
distributed to the participant; (d) amend this Section or Sections 2.12 through
2.15. In the case of any such participation, the Participant shall be entitled
to the benefit of Sections 2.12 through 2.15 as though it were also the Bank
hereunder, and if amounts outstanding under this Agreement are due and unpaid,
or shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing under
this Agreement to the same extent as if the amount of its participating interest
were owing directly to it as the Bank under this Agreement.
(e) Notwithstanding anything else contained in this Section 8.6,
the Bank may assign its rights under this Agreement (including without
limitation rights to payment of principal and interest under any Note held by
it) to any of its Affiliates; or may pledge its rights under this Agreement
(including without limitation rights to payment of principal and interest under
any Note held by it) to any Federal Reserve Bank, provided that no pledge to a
Federal Reserve Bank shall release the Bank from its obligations hereunder, or
grant to such Federal Reserve Bank any rights of the Bank hereunder, absent
foreclosure of such pledge.
8.7 SET OFF. In addition to any rights and remedies of the Bank
provided by law, if an Event of Default exists, the Bank is authorized at any
time and from time to time, without prior notice to the Borrower, any such
notice being waived by the Borrower to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by, and other indebtedness at any time
owing to, the Bank to or for the credit or the account of the Borrower against
any and all Obligations owing to the Bank, or any of the Bank's Affiliates now
or hereafter existing, irrespective of whether or not the Bank shall have made
demand under this Agreement or any Loan Document and although such Obligations
may be contingent or unmatured and each such Affiliate ishereby irrevocably
authorized to permit such set off and application; PROVIDED, HOWEVER, that the
Bank will provide the Borrower with prompt notice after the Bank has exercised
its right of set off pursuant to this Section 8.7; PROVIDED, FURTHER, that the
failure to provide such notice shall not invalidate such set off.
8.8 AUTOMATIC DEBITS OF FEES. With respect to any commitment fee, or
other fee, or any other cost or expense
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(including Attorney Costs) due and payable to the Bank under the Loan Documents
and not paid within the applicable payment period, the Borrower hereby
irrevocably authorizes the Bank to debit any deposit account of the Borrower
with the Bank in an amount such that the aggregate amount debited from all such
deposit accounts does not exceed such fee or other cost or expense. If there
are insufficient funds in such deposit accounts to cover the amount of the fee
or other cost or expense then due, such debits will be reversed (in whole or in
part, in the Bank's sole discretion) and such amount not debited shall be deemed
to be unpaid. No such debit under this Section 8.8 shall be deemed a set off.
8.9 COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement in any number of separate counterparts, each of
which, when so executed, shall be deemed an original, and all of said
counterparts taken together shall be deemed to constitute but one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Borrower and the Bank.
8.10 SEVERABILITY. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
8.11 NO THIRD PARTIES BENEFITED. This Agreement is made and entered
into for the sole protection and legal benefit of the Borrower and the Bank, and
their permitted successors and assigns, and no other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any of the other Loan Documents.
The Bank shall not have any obligation to any Person not a party to this
Agreement or other Loan Documents.
8.12 TIME. Time is of the essence as to each term or provision of
this Agreement and each of the other Loan Documents.
8.13 GOVERNING LAW AND JURISDICTION.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA; PROVIDED THAT THE PARTIES
HERETO SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT AND ANY OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE
OF CALIFORNIA OR OF THE UNITED STATES FOR THE CENTRAL DISTRICT OF CALIFORNIA,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWER AND THE
BANK CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE Borrower AND THE BANK
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IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE BORROWER AND THE BANK
EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH
MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.
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8.14 ENTIRE AGREEMENT. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding between the Borrower
and the Bank, and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof, and any prior arrangements made with respect to the
payment by the Borrower of (or any indemnification for) any fees, costs or
expenses payable to or incurred (or to be incurred) by or on behalf of the Bank.
8.15 INTERPRETATION. This Agreement is the result of negotiations
between and has been reviewed by counsel to the Bank, the Borrower and other
parties, and is the product of all parties hereto. Accordingly, this Agreement
and the other Loan Documents shall not be construed against the Bank merely
because of the Bank's involvement in the preparation of such documents and
agreements.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
as of the day and year first above written.
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
By: /S/WILLIAM A. ROPER
-------------------------
William A. Roper
Senior Vice President and
Chief Financial Officer
By: /S/WARD REED
--------------------------
Ward Reed
Corporate Vice President and
Treasurer
Address:
10260 Campus Drive
San Diego, California 92121
Att: Ward Reed, Treasurer
Telephone: (619) 552-4620
Facsimile: (619) 552-4851
(Signatures continue)
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BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By: /S/LORI Y. KANNEGIETER
-------------------------
Lori Y. Kannegieter
Vice President
Lending Office (for borrowing,
conversion, continuation and payment
notices):
Global Payments Operations #5583
333 S. Beaudry Avenue
Los Angeles, California 90017
Ref: Science Applications
International
Att: Jorge Beliz
Telephone: (213) 345-6344
Facsimile: (213) 345-6550
For all other notices:
Bank of America National Trust and
Savings Association
555 South Flower Street, 11th Floor
Los Angeles, California 90071
Att: Lori Y. Kannegieter
Vice President
Credit Products #5618
Telephone: (213) 228-6379
Facsimile: (213) 228-2756
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EXHIBIT A
NOTE
$ April 7, 1995
------------------- Los Angeles, California
FOR VALUE RECEIVED, SCIENCE APPLICATIONS INTERNATIONAL CORPORATION, a
Delaware corporation (the "Borrower"), hereby promises to pay to the order of
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (the "Bank") at its
Lending Office the principal sum of $35,000,000 (or such lesser amount as shall
equal the aggregate unpaid principal amount of the Loans made by the Bank to the
Borrower under the Credit Agreement referred to below), in lawful money of the
United States of America and in immediately available funds, on the dates and in
the principal amounts provided in the Credit Agreement, and to pay interest on
the unpaid principal amount of each such Loan, at such office, in like money and
funds, for the period commencing on the date of such Loan until such Loan shall
be paid in full, at the rates per annum and on the dates provided in the Credit
Agreement.
The date, amount, type, interest rate and duration of Interest Period
(if applicable) of each Loan made by the Bank to the Borrower, and each payment
made on account of the principal of such Loan, shall be recorded by the Bank on
its books and, prior to any transfer of this Note, endorsed by the Bank on the
schedule attached to this Note or any continuation of such schedule, PROVIDED
that the failure of the Bank to make any such recordation or endorsement shall
not affect the obligations of the Borrower to make a payment when due of any
amount owing under the Credit Agreement or under this Note in respect of the
Loans made by the Bank.
This promissory note is the Note referred to in the Credit Agreement
dated as of April 7, 1995 (as extended, renewed, amended or restated and in
effect from time to time, the "Credit Agreement") between the Borrower and Bank.
Capitalized terms used but not defined in this Note have the respective meanings
assigned to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of
this Note upon the occurrence of certain events and for prepayments of Loans
upon the terms and conditions specified in the Credit Agreement.
Except as permitted by the Credit Agreement, this Note may not be
assigned by the Bank or the Borrower to any other Person.
A-1 - 1
<PAGE>
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED WITHIN
THE STATE OF CALIFORNIA.
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
By:
-------------------------
Title:
----------------------
A-1 - 2
<PAGE>
SCHEDULE OF LOANS
This Note evidences Loans made, continued or converted under the
Credit Agreement to the Borrower, on the dates, in the principal amounts, of the
types, bearing interest at the rates and having Interest Periods (if applicable)
of the durations set forth below, subject to the payments, continuations,
conversions and prepayments of principal set forth below:
Amount
Date Prin- Paid,
Made, cipal Duration Prepaid, Unpaid
Continued Amount Type of Continued Prin-
or of of Interest Interest or cipal Notation
Converted Loan Loan Rate Period Converted Amount Made By
- --------- ------ ---- -------- -------- --------- ------ --------
A-1 - 3
<PAGE>
EXHIBIT B
NOTICE OF BORROWING
Date: , 199
---------------- --
To: Bank of America National Trust
and Savings Association
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of April
7, 1995 (as extended, renewed, amended or restated and in effect from time to
time, the "Credit Agreement") between Science Applications International
Corporation and Bank of America National Trust and Savings Association ("Bank").
Unless otherwise defined herein, capitalized terms used herein have the
respective meanings assigned to them in the Credit Agreement.
Pursuant to Section 2.3 of the Credit Agreement, the Borrower gives
you notice of the requested borrowing specified below:
1. The Business Day of the proposed borrowing is
, 19 .
------------------------ ---
2. The amount of the proposed borrowing is $
--------------------
3. The borrowing is to be comprised of [$]__________ of [Base
Rate] [Offshore Rate] [CD Rate] [Money Market Rate] Loans.
4. The duration of the Interest Period for the [Offshore Rate
Loans] [CD Rate Loans] [Money Market Rate Loans] included in the
borrowing shall be _____ months/weeks/days.
5. The interest rate for the Money Market Rate Loans included in
the borrowing shall be _____ percent per annum (rate to be based upon
quotation from Bank).
The undersigned hereby certifies that the following statements are
true in all material respects on the date hereof, and will be true in all
material respects on the date of the proposed borrowing, before and after giving
effect thereto and to the application of the proceeds therefrom:
B - 1
<PAGE>
(a) Except for the representations and warranties set forth in
Section 4.11(b) and 4.13 (which shall be made solely as of the Closing Date, the
representations and warranties made by the Borrower contained in Section 4 are
true and correct in all material respects on and as of this borrowing date with
the same effect as if made on and as of this borrowing date;
(b) No Default or Event of Default shall exist or shall result
from such borrowing; and
(c) The aggregate amount outstanding under this Agreement and
the Bilateral Agreements does not exceed $150,000,000.
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
By:
-------------------------
Title:
----------------------
B - 2
<PAGE>
EXHIBIT C
NOTICE OF CONVERSION/CONTINUATION
Date: , 199
---------------- --
To: Bank of America National Trust
and Savings Association
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of April
7, 1995 (as extended, renewed, amended or restated and in effect from time to
time, the "Credit Agreement") between Science Applications International
Corporation and Bank of America National Trust and Savings Association ("Bank").
Unless otherwise defined herein, capitalized terms used herein have the
respective meanings assigned to them in the Credit Agreement.
Pursuant to Section 2.4 of the Credit Agreement, the Borrower gives
you notice of the requested conversion or continuation specified below:
1. The conversion or continuation date is , 19 .
------------ --
2. The aggregate amount of the Loans to be [converted]
[continued] is $ .
--------------
3. The Loans are to be [converted into] [continued as] [Offshore
Rate] [CD Rate] [Money Market Rate] [Base Rate] Loans.
4. [If applicable:] The duration of the Interest Period for the
Loans included in the [conversion] [continuation] shall be
----------
months/weeks/days.
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
By:
-------------------------
Title:
----------------------
C - 1
<PAGE>
EXHIBIT D
COMPLIANCE CERTIFICATE
Financial
Statement Date: , 199_
------------
Reference is made to that certain Credit Agreement dated as of April
7, 1995 (as extended, renewed, amended or restated and in effect from time to
time, the "CREDIT AGREEMENT") between Science Applications International
Corporation and Bank of America National Trust and Savings Association ("Bank").
Unless otherwise defined herein, capitalized terms used herein have the
respective meanings assigned to them in the Credit Agreement.
The undersigned Responsible Officer of the Borrower, hereby certifies
as of the date hereof that he/she is the __________________ of the Borrower, and
that, as such, is authorized to execute and deliver this certificate to the Bank
on the behalf of the Borrower and its consolidated Subsidiaries, and that:
1. Copies of the financial statements required by Section 5.1(a) or
5.1(b), as applicable, are attached.
2. The undersigned has reviewed and is familiar with the terms of
the Credit Agreement and has made, or has caused to be made under his/her
supervision, a review in reasonable detail of the transactions and conditions
(financial or otherwise) of the Borrower during the accounting period covered by
the attached financial statements.
3. To the best of the undersigned's knowledge, the Borrower, during
such period, has observed, performed or satisfied all of its covenants and other
agreements, and satisfied every condition in the Credit Agreement to be
observed, performed or satisfied by the Borrower, and the undersigned has no
knowledge of any Default or Event of Default as of the date hereof.
4. The following financial covenant analyses and information set
forth on SCHEDULE 1 attached hereto are true and accurate in all material
respects on and as of the date of this Certificate.
D - 1
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate as
of , 199 .
------------------- --
SCIENCE APPLICATIONS INTERNATIONAL
CORPORATION
a Delaware corporation
By:
-------------------------------
Name:
------------------------
Title:
-----------------------
D - 2
<PAGE>
As of ______________, 199__
SCHEDULE 1
----------
to the Compliance Certificate
COMPLIANCE WITH FINANCIAL COVENANTS
-----------------------------------
1. 6.7 MINIMUM CONSOLIDATED TANGIBLE NET WORTH.
-------------------------------------------
A. Consolidated Tangible Net Worth at :
---------
1. Assets of Borrower and Subsidiaries: $
---------
2. Liabilities of Borrower and
Subsidiaries: $
---------
3. Intangible Assets: unamortized debt
discount, goodwill, and other intangible
items: $
---------
4. PLUS or LESS Foreign Currency
Translation Adjustments $
---------
5. Consolidated Tangible Net Worth (Line A1
LESS Line A2 LESS Line A3 PLUS
or LESS Line A4, as applicable: $
---------
---------
B. 50% of cumulative consolidated net
income from February 1, 1994
(no reduction for losses): $
---------
C. 75% of the Net Issuance Proceeds
(excluding employees' and pension plans'
customary quarterly stock purchases): $
---------
D. Minimum requirement: Lines B+C+
$250,000,000: $
---------
---------
2. 6.8 LEVERAGE RATIO.
------------------
A. Consolidated Funded Debt as of above date:
1. Principal amount of all
Indebtedness for borrowed
money: $
---------
2. Principal portion of Capitalized
Lease Obligations: $
---------
<PAGE>
3. All Contingent Obligations: $
---------
4. Consolidated Funded Debt
(Lines A1+A2+A3): $
---------
---------
B. Consolidated Capital for the period ending on date of attached
financial statements ("Subject Period"):
1. Consolidated Funded Debt (Line A4): $
---------
2. Consolidated Tangible Net Worth
(Line 1A): $
---------
3. Consolidated Capital
(Lines B1+B2): $
---------
---------
C. Leverage Ratio (Line A4 divided
by Line B3): to 1:00
----
----
D. Maximum Permitted Leverage Ratio: 0.45 to 1.00
<PAGE>
SCHEDULE 4.5
LITIGATION
On February 15, 1994, the Company was served with search warrants and a subpoena
for documents and records associated with the performance by an operating unit
of the Company under three contracts with the DOD. The search warrants and the
subpoena state that the Government is seeking evidence regarding the making of
false statements and false claims to the DOD, as well as conspiracy to commit
such offenses. The search warrant and subpoena were based upon allegations
contained in a civil complaint that had been filed under seal on March 13, 1993,
by an employee of the Company's SAIT operating unit. The complaint was filed in
the U.S. District Court for the Southern District of California and it sought
damages on behalf of the U.S. Government under the federal False Claims Act. On
November 8, 1994, based on the Company's motion, the District Court dismissed
the employee who had originally filed the complaint from the lawsuit. The
employee has appealed the Court's order to the U.S. Court of Appeals for the
Ninth Circuit. The Company has engaged in a series of presentations and
submissions with the Department of Justice in response to issues raised by the
Department of Justice. At this stage of the proceedings, the Company is unable
to assess the impact, if any, of this investigation and lawsuit on its
consolidated financial position, results of operations or ability to conduct
business.
- 1 -
<PAGE>
SCHEDULE 4.7
ERISA PLANS
Qualified Plans:
SAIC:
Science Applications International Corporation Profit Sharing Retirement Plan
Science Applications International Corporation Employee Stock Ownership Plan
Science Applications International Corporation Cash or Deferred Arrangement
Science Applications International Corporation Frederick Employee Savings Plan
Science Applications International Corporation Frederick Retirement Plan *
Subsidiaries:
R.E. Wright Associates, Inc. Retirement Savings Plan
Syntonic Technology, Inc. Retirement Savings Plan
American Systems Engineering Corporation Employee Profit Sharing Plan
General Science Corporation Retirement Plan
Acquired Qualified Plans in process of termination:
JHK & Associates Employees' Retirement Plan
Systems Control Technology Inc. Tax Deferred Savings Plan
Applied Research Inc., Profit Sharing 401K Salary Deferral Plan
Network Solutions 401(k) Plan
The Fleming Group, Inc. 401(k) Profit Sharing Plan
* The SAIC Frederick Retirement Plan is the only defined benefit
plan maintained or sponsored by SAIC subject to Title IV of
ERISA. All of the other Qualified Plans are defined contribution
plans.
- 1 -
<PAGE>
SCHEDULE 4.12(b)
ENVIRONMENTAL MATTERS
1. On January 18, 1995, the Massachusetts Department of
Environmental Protection (DEP) issued a Notice of Non-compliance
to SAIC Engineering, a subsidiary of SAIC, relating to SAIC
Engineering's oversight of an underground storage tank removal
project. DEP has not fined or otherwise sanctioned SAIC in
connection with this matter.
2. In March, 1995, SAIC was issued a Notice of Violation (NOV) by
the San Diego Metropolitan Industrial Waste Program for exceeding
its industrial discharge limit for lead. SAIC is in the process
of appealing the Notice of Violation.
- 1 -
<PAGE>
SCHEDULE 4.13
SUBSIDIARIES
American Systems Engineering Corporation ("AMSEC")
Andrew Palmer & Associates Limited
Bull, Inc.
Campus Point Realty Corporation
Energy and Technology Management Corporation ("ETM") - inactive
General Science Corporation ("GSC")
Hicks & Associates, Inc.
JHK & Associates, Inc. ("JHK")
JMD Development Corporation ("JDA")
Network Solutions, Inc. ("NSI")
R.E. Wright Environmental, Inc.
Sachse Engineering Associates, Inc. - inactive
SAIC Columbia, Limitada
SAIC Commercial Enterprises, Inc.
SAIC de Mexico, S.A. de C.V.
SAIC Engineering, Inc.
SAIC Global Technology Corporation
SAIC in Novosibirsk
SAIC - MIR
SAIC Limited (formerly Topexpress, Ltd)
SAIC UK Limited
Science Applications International (Barbados) Corporation
Science Applications International Corporation (SAIC Canada)
Science Applications International, Europe S.A.
Science Applications International Technology
Syntonic Technology, Inc.
Systems Control Technology, Inc. ("SCT")
TST International Pty, Ltd ("TSTI")
Wright Laboratory Services, Inc.
- 1 -
<PAGE>
SCHEDULE 6.1
EXISTING LIENS
(1) A Deed of Trust between Campus Point Realty Corporation and The
Prudential Insurance Company of America granting a security
interest in real property in the City of San Diego. The real
property is commonly known as Campus Point Building III and the
deed of trust is security for a $12,800,000 (original principal
amount) note assumed by Campus Point Realty Corporation upon the
purchase of the property in 1990. The property purchase price
was $14,195,000.
(2) A Tri-Partite Agreement dated March 21, 1995 between SAIC, the
United State of America (the "Government") and First National
Bank of Maryland (the "Bank") granting the Government a lien upon
the credit balances of two bank accounts established by SAIC with
the Bank. The bank accounts are used exclusively to facilitate
payments of costs associated with an SAIC contract for operations
and technical support for the National Cancer Institute Frederick
Cancer Research and Development Center. The accounts are funded
by advance payments from the Government.
- 1 -
<PAGE>
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
between
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
and
CITICORP USA, INC.
Dated as of April 7, 1995
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
Page
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Interpretive Provisions . . . . . . . . . . . . . . . . . . 15
(a) Performance; Time . . . . . . . . . . . . . . . . . . . . . 15
(b) Captions . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.3 Accounting Principles . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2. THE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.1 The Commitment . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.2 Loan Accounts; Notes . . . . . . . . . . . . . . . . . . . . . . 16
2.3 Procedure for Borrowings . . . . . . . . . . . . . . . . . . . . 16
2.4 Conversion and Continuation Elections . . . . . . . . . . . . . . 17
2.5 Voluntary Termination or Reduction of Commitment . . . . . . . . 18
2.6 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.7 Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.8 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.9 Facility Fee . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.10 Computation of Fees and Interest . . . . . . . . . . . . . . . . 20
2.11 Payments by the Borrower . . . . . . . . . . . . . . . . . . . . 21
2.12 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.13 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.14 Increased Costs and Reduction of Return . . . . . . . . . . . . . 22
2.15 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.16 Inability to Determine Rates . . . . . . . . . . . . . . . . . . 24
SECTION 3. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . 24
3.1 Conditions of Closing . . . . . . . . . . . . . . . . . . . . . . 24
(a) Credit Agreement . . . . . . . . . . . . . . . . . . . . . . 24
(b) Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(c) Resolutions; Incumbency . . . . . . . . . . . . . . . . . . 24
(d) Articles of Incorporation; By-laws and Good Standing . . . . 25
(e) Certificate . . . . . . . . . . . . . . . . . . . . . . . . 25
(f) Compliance Certificate . . . . . . . . . . . . . . . . . . . 25
(g) Termination of Existing Agreements . . . . . . . . . . . . . 25
(h) Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . 25
(i) Other Documents . . . . . . . . . . . . . . . . . . . . . . 25
3.2 Conditions to All Borrowings . . . . . . . . . . . . . . . . . . 25
(a) Notice of Borrowing or Conversion/ Continuation . . . . . . 26
(b) Continuation of Representations and Warranties . . . . . . . 26
(c) No Existing Default . . . . . . . . . . . . . . . . . . . . 26
SECTION 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 26
4.1 Corporate Existence and Power . . . . . . . . . . . . . . . . . . 26
<PAGE>
Section Page
4.2 Corporate Authorization; No Contravention . . . . . . . . . . . . 26
4.3 Governmental Authorization . . . . . . . . . . . . . . . . . . . 27
4.4 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.6 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.7 ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . 28
4.8 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . 29
4.9 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . 29
4.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.11 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . 29
4.12 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . 29
4.13 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.14 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.15 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . 31
5.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 31
5.2 Certificates; Other Information . . . . . . . . . . . . . . . . . 31
5.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.4 Preservation of Corporate Existence, Etc . . . . . . . . . . . . 33
5.5 Maintenance of Property . . . . . . . . . . . . . . . . . . . . . 33
5.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.7 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . 34
5.8 Inspection of Property and Books and Records . . . . . . . . . . 34
5.9 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . 34
5.10 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . 35
6.1 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . 35
6.2 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . 37
6.3 Consolidations and Mergers . . . . . . . . . . . . . . . . . . . 38
6.4 Limitation on Contingent Obligations . . . . . . . . . . . . . . 38
6.5 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.6 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . 39
6.7 Consolidated Tangible Net Worth . . . . . . . . . . . . . . . . . 39
6.8 Consolidated Funded Debt to Capital Ratio . . . . . . . . . . . . 39
6.9 Accounting Changes . . . . . . . . . . . . . . . . . . . . . . . 39
6.10 Bilateral Agreement . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 7. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . 40
7.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . 40
(a) Non-Payment . . . . . . . . . . . . . . . . . . . . . . . . 40
(b) Representation or Warranty . . . . . . . . . . . . . . . . . 40
(c) Specific Defaults . . . . . . . . . . . . . . . . . . . . . 40
(d) Other Defaults . . . . . . . . . . . . . . . . . . . . . . . 40
(e) Cross Default to Bilateral Agreements . . . . . . . . . . . 41
- ii -
(4037704.04) 4/10/95
<PAGE>
Section Page
(f) Cross Default . . . . . . . . . . . . . . . . . . . . . . . 41
(g) Insolvency; Voluntary Proceedings . . . . . . . . . . . . . 41
(h) Involuntary Proceedings . . . . . . . . . . . . . . . . . . 41
(i) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(j) Monetary Judgments . . . . . . . . . . . . . . . . . . . . . 42
(k) Change in Control . . . . . . . . . . . . . . . . . . . . . 42
(l) Suspension . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.3 Rights Not Exclusive . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 8. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.1 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . 43
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . 44
8.4 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . 44
8.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 45
8.6 Assignments, Participations, etc. . . . . . . . . . . . . . . . . 45
8.7 Set off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.8 Automatic Debits of Fees . . . . . . . . . . . . . . . . . . . . 47
8.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.11 No Third Parties Benefited . . . . . . . . . . . . . . . . . . . 48
8.12 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.13 Governing Law and Jurisdiction . . . . . . . . . . . . . . . . . 48
8.14 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 48
8.15 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . 49
EXHIBITS
A Form of Note
B Notice of Borrowing
C Notice of Conversion/Continuation
D Form of Compliance Certificate
SCHEDULES
1.1 Existing Credit Facilities
4.5 Litigation
4.7 ERISA Plans
4.12(b) Environmental Matters
4.13 Subsidiaries
6.1 Existing Liens
- iii -
(4037704.04) 4/10/95
<PAGE>
CREDIT AGREEMENT
----------------
THIS CREDIT AGREEMENT dated as of April 7, 1995, between SCIENCE
APPLICATIONS INTERNATIONAL CORPORATION, a Delaware corporation (the "Borrower"),
and CITICORP USA, INC., a Delaware corporation (the "Bank").
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the following terms
will have the following meanings, unless the context otherwise requires:
"AFFILIATE" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract or otherwise. In no
event shall the Bank be deemed an "Affiliate" of the Borrower or of any
Subsidiary of the Borrower.
"AGREEMENT" means this Credit Agreement, as amended from time to time
in accordance with the terms hereof.
"ALTERNATE BASE RATE" means, at all times, a fluctuating rate per
annum equal to the highest of:
(a) the rate of interest announced publicly by Citibank, N.A. in
New York, New York, from time to time, as its base rate;
(b) the sum (adjusted to the nearest 1/4 of 1% or, if there is no
nearest 1/4 of 1%, to the next higher 1/4 of 1%) of (i) 1/2 of one percent per
annum, PLUS (ii) the rate obtained by dividing (A) the latest three-week moving
average of secondary market morning offering rates in the United States for
three-month certificates of deposit of major United States money market banks,
such three-week moving average (adjusted to the basis of a year of 360 days)
being determined weekly on each Monday (or, if such day is not a Business Day,
on the next succeeding Business Day) for the three-week period ended on the
previous Friday by Citibank, N.A. on the basis of such rates reported by
certificate of deposit dealers to and published by the Federal Reserve Bank of
New York or, if such publication shall be suspended or terminated, on the basis
of quotations for such rates received by
- 1 -
(4037704.04) 4/10/95
<PAGE>
Citibank, N.A. from three New York certificate of deposit dealers of recognized
standing selected by Citibank, N.A., by (B) a percentage equal to 100% minus the
average of the daily percentages specified during such three-week period by the
Board of Governors of the Federal Reserve system (or any successor) for
determining the maximum reserve requirement (including, but not limited to, any
emergency, supplemental, or other marginal reserve requirement) for Citibank,
N.A. with respect to liabilities consisting of or including (among other
liabilities) three-month non-personal time deposits in the United States, PLUS
(iii) the average during such three-week period of the annual assessment rates
estimated by Citibank, N.A. for determining the then current annual assessment
payable by it to the Federal Deposit Insurance Corporation (or any successor)
for insuring U.S. dollar deposits of Citibank, N.A. in the United States; and
(c) 1/2 of 1% per annum above the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the Next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by Citibank, N.A. from three Federal funds brokers of
recognized standing selected by it.
"ALTERNATE BASE RATE LOAN" means a Loan bearing interest at the rate
determined by reference to the Alternate Base Rate.
"APPLICABLE MARGIN" means the rates per annum, expressed in basis
points, set forth below:
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Leverage Ratio LESS THAN OR EQUAL TO 0.30:1.00 GREATER THAN 0.30:1.00
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Facility Fee 12.5 b.p. 15.0 b.p.
- --------------------------------------------------------------------------
Offshore Rate Margin 25.0 b.p. 28.0 b.p.
- --------------------------------------------------------------------------
CD Rate Margin 37.5 b.p. 40.0 b.p.
- --------------------------------------------------------------------------
Alternate Base Rate Margin 0 0
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
The Leverage Ratio shall be that reflected on the most recent
Compliance Certificate received by the Bank pursuant to Section 5.2(a). If the
Bank does not receive a Compliance Certificate by the date required by Section
5.2(a), the Applicable Margin shall, effective as of such date, be the highest
Applicable Margin, which shall remain in effect to but excluding the date the
Bank receives such certificate. Subject
(4037704.04) - 2 - 4/10/95
<PAGE>
to the foregoing, until the delivery of the first Compliance Certificate after
the Closing Date, the Applicable Margin shall be that indicated by the
certificate delivered pursuant to Section 3.1(f).
"ATTORNEY COSTS" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the allocated cost of
internal legal services and all disbursements of internal counsel.
"BANKRUPTCY CODE" means the Federal Bankruptcy Reform Act of 1978 (12
U.S.C. SECTION 101, ET SEQ.).
"BANK" means Citicorp USA, Inc., a Delaware corporation which is a
subsidiary of Citibank N.A., a national banking association, PROVIDED, that for
purposes of Sections 2.13, 2.14 and 8.7 and the definition of IBOR in Section
1.1, all references to "Bank" shall be deemed to include Citibank, N.A.
"BILATERAL AGREEMENT" means those certain credit agreements entered
into substantially concurrently with this Agreement and having terms and
conditions substantially the same as those contained herein between the Borrower
and each of Bank of America National Trust and Savings Association and Morgan
Guaranty Trust Company of New York.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which commercial banks in New York City or San Francisco are authorized
or required by law to close and, if the applicable Business Day relates to any
Offshore Rate Loan, means such a day on which dealings are carried on in the
applicable offshore dollar interbank market.
"CAPITAL ADEQUACY REGULATION" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other law
(provided that if such guideline, request or directive does not have the force
of law, compliance therewith is customary for banks regulated in a manner
similar to the Bank), rule or regulation, whether or not having the force of
law, in each case, regarding capital adequacy of the Bank or of any corporation
controlling the Bank.
"CAPITAL LEASE" has the meaning specified in the definition of Capital
Lease Obligations.
"CAPITAL LEASE OBLIGATIONS" means all monetary obligations of the
Borrower or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, is classified as a capital lease ("CAPITAL
LEASE").
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<PAGE>
"CD RATE" means, for each Interest Period in respect of a CD Rate
Loan, the rate of interest (rounded upward to the nearest 1/100th of 1%)
determined pursuant to the following formula:
CD Rate = Certificate of Deposit Rate + Assessment
---------------------------
1.0 - Reserve Percentage Rate
Where:
"ASSESSMENT RATE" means the net annual assessment rate applicable
to the Bank determined by the Bank to be in effect on the first day of
such Interest Period payable by banks to the Federal Deposit Insurance
Corporation, or any successor, for insuring time deposits made in
dollars at the offices of banks in the United States.
"CERTIFICATE OF DEPOSIT RATE" means for any Interest Period for a
CD Rate Loan, the rate of interest per annum determined by the Bank to
be the arithmetic mean (rounded upward to the nearest 1/100th of 1%)
of the rates notified to the Bank as the rates of interest bid by two
or more certificate of deposit dealers of recognized standing selected
by the Bank for the purchase at face value of dollar certificates of
deposit issued by major United States banks, for a maturity comparable
to such Interest Period and in the approximate amount of the CD Rate
Loan to be made, at the time selected by the Bank on the first day of
such Interest Period.
"RESERVE PERCENTAGE" means for any Interest Period for a CD Rate
Loan the maximum reserve percentage (expressed as a decimal, rounded
upward to the nearest 1/100th of 1%), as determined by the Bank, in
effect on the first day of such Interest Period (including any
ordinary, marginal, emergency, supplemental, special and other reserve
percentages) prescribed by the Federal Reserve Board for determining
the maximum reserves to be maintained by member banks of the Federal
Reserve System with deposits exceeding $1,000,000,000 for new
non-personal time deposits for a period comparable to such Interest
Period and in an amount of $100,000 or more.
"CD RATE LOAN" means a Loan bearing interest at the rate determined by
reference to the CD Rate.
(4037704.04) - 4 - 4/10/95
<PAGE>
"CERCLA" has the meaning specified in the definition of "Environmental
Laws."
"CLOSING DATE" means the the date on which all conditions precedent
set forth in Section 3.1 are satisfied or waived by the Bank.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITMENT" means $35,000,000, as such amount may be reduced pursuant
to Section 2.5.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of Exhibit D annexed hereto.
"CONSOLIDATED CAPITAL" means the sum of Consolidated Funded Debt and
Consolidated Tangible Net Worth.
"CONSOLIDATED FUNDED DEBT" means, for any period, for the Borrower and
its Subsidiaries on a consolidated basis in accordance with GAAP, an amount
equal to the sum of, without duplication, (a) all Indebtedness of such Person
for borrowed money or which has been incurred in connection with the acquisition
of assets (excluding therefrom deferred salary, accrued interest and policy
loans related to the cash value of life insurance policies purchased in
connection with the Keystaff Deferral Plan or similar executive compensation
programs) PLUS (b) the principal portion of all Capital Lease Obligations of
such Person PLUS (c) all Contingent Obligations of such Person with respect to
Consolidated Funded Debt of others.
"CONSOLIDATED TANGIBLE NET WORTH" means, at any date of determination,
the net worth of the Borrower and its Subsidiaries on a consolidated basis,
without giving effect to translation adjustments, and MINUS intangible assets,
all determined in conformity with GAAP. Consolidated Tangible Net Worth shall
include any amounts classified as temporary or mezzanine equity pursuant to the
limited put rights associated with Borrower shares held in the ESOP.
"CONTINGENT OBLIGATION" means, as applied to any Person, any direct or
indirect liability of that Person with respect to any Indebtedness, lease,
dividend, letter of credit or other obligation (the "primary obligations") of
another Person (the "primary obligor"), including any obligation of that Person,
whether or not contingent, (a) to purchase, repurchase or otherwise acquire
such primary obligations or any Property constituting direct or indirect
security therefor, or (b) to advance or provide funds (i) for the payment or
discharge of any such primary obligation, or (ii) to maintain working capital or
(4037704.04) - 5 - 4/10/95
<PAGE>
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition of
the primary obligor, or (c) to purchase Property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, or (d) otherwise to assure or hold harmless the holder of any such
primary obligation against loss in respect thereof. The amount of any
Contingent Obligation shall be deemed equal to the stated or determinable amount
of the primary obligation in respect of which such Contingent Obligation is made
or, if not stated or if indeterminable, the maximum reasonably anticipated
liability in respect thereof.
"CONTRACTUAL OBLIGATIONS" means, as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement to
which such Person is a party or by which it or any of its Property is bound.
"CONTROLLED GROUP" means the Borrower and all Persons (whether or not
incorporated) under common control or treated as a single employer with the
Borrower pursuant to Section 414(b), (c), (m) or (o) of the Code.
"DEFAULT" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
"EFFECTIVE DATE" means April 13, 1995.
"ENVIRONMENTAL CLAIMS" means all claims, however asserted, by any
Governmental Authority or other Person alleging liability or responsibility for
violation of any Environmental Law or for release or injury to the environment
or threat to public health, personal injury (including sickness, disease or
death), Property damage, natural resources damage, or otherwise alleging
liability or responsibility for damages (punitive or otherwise), cleanup,
removal, remedial or response costs, restitution, civil or criminal penalties,
injunctive relief, or other type of relief, resulting from or based upon (a) the
presence, placement, discharge, emission or release (including intentional and
unintentional, negligent and non-negligent, sudden or non-sudden, accidental or
non-accidental placement, spills, leaks, discharges, emissions or releases) of
any Hazardous Material at, in, or from Property, whether or not owned by the
Borrower, or (b) any other circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law.
(4037704.04) - 6 - 4/10/95
<PAGE>
"ENVIRONMENTAL LAWS" means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authorities, in each case
relating to environmental, health, safety and land use matters (excluding
matters relating to zoning and building permits); including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), the
Clean Air Act, the Federal Water Pollution Control Act of 1972, the Solid Waste
Disposal Act, the Federal Resource Conservation and Recovery Act, the Toxic
Substances Control Act, the Emergency Planning and Community Right-to-Know Act,
the California Hazardous Waste Control Law, the California Solid Waste
Management, Resource, Recovery and Recycling Act, the California Water Code and
the California Health and Safety Code.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control with the Borrower or any Subsidiary of the
Borrower within the meaning of Section 414(b), 414(c) or 414(m) of the Code.
"ERISA EVENT" means (a) a Reportable Event with respect to a Qualified
Plan or a Multiemployer Plan; (b) a withdrawal by any member of the Controlled
Group from a Qualified Plan subject to Section 4063 of ERISA during a plan year
in which it was a substantial employer (as defined in Section 4001(a)(2) of
ERISA); (c) a complete or partial withdrawal by any member of the Controlled
Group from a Multiemployer Plan; (d) the filing of a notice of intent to
terminate, the treatment of a plan amendment as a termination under Section 4041
or 4041A of ERISA or the commencement of proceedings by the PBGC to terminate a
Qualified Plan or Multiemployer Plan subject to Title IV of ERISA; (e) a failure
to make required contributions to a Qualified Plan or Multiemployer Plan; (f) an
event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Qualified Plan or Multiemployer Plan; (g) the
imposition of any liability under Title IV of ERISA, other than PBGC premiums
due but not delinquent under Section 4007 of ERISA, upon any member of the
Controlled Group; (h) an application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code with respect to any
Qualified Plan; (i) any member of the Controlled Group engages in or otherwise
becomes liable for a non-exempt prohibited transaction which would have a
Material Adverse Effect; or (j) a violation of the applicable requirements of
Section 404 or 405 of ERISA or the exclusive benefit rule under Section 401(a)
of the Code by any
(4037704.04) - 7 - 4/10/95
<PAGE>
fiduciary with respect to any Qualified Plan for which the Borrower or any of
its Subsidiaries may be directly or indirectly liable which would have a
Material Adverse Effect.
"EURODOLLAR RESERVE PERCENTAGE" has the meaning specified in the
definition of "Offshore Rate".
"EVENT OF DEFAULT" means any of the events or circumstances specified
in Section 7.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"EXISTING AGREEMENTS" means (a) that certain Credit Agreement dated as
of October 31, 1988 between the Borrower and the Bank; (b) that certain Credit
Agreement dated as of October 31, 1988 between the Borrower and Bank of America
National Trust and Savings Association and (c) that certain Credit Agreement
dated as of May 26, 1992 between the Borrower and Bank of America Illinois
(formerly named Continental Bank).
"FEDERAL FUNDS RATE" means the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day of determination
(or if such day of determination is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a Business Day, the average of the quotations
for such day on such transaction received by the Bank from three Federal funds
brokers of recognized standing selected by it.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System, or any successor thereto.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession), or in such other statements by such other entity as may be in
general use by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination.
"GOVERNMENTAL AUTHORITY" means (a) any international, foreign,
federal, state, county or municipal government, or political subdivision
thereof, (b) any governmental agency, authority, board, bureau, commission,
department or instrumentality, or (c) any court or administrative tribunal.
(4037704.04) - 8 - 4/10/95
<PAGE>
"HAZARDOUS MATERIALS" means all those substances which are regulated
by, or which may form the basis of liability under, any Environmental Law,
including all substances identified under any Environmental Law as a pollutant,
contaminant, hazardous waste, hazardous constituent, special waste, hazardous
substance, hazardous material, or toxic substance, or petroleum or petroleum
derived substance or waste.
"INDEBTEDNESS" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of Property or services (other than trade
payables entered into in the ordinary course of business pursuant to ordinary
terms); (c) all matured or drawn and unreimbursed reimbursement obligations with
respect to surety bonds, letters of credit, bankers' acceptances and similar
instruments (in each case, to the extent material or non-contingent); (d) all
obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition
of Property, assets or businesses; (e) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to Property acquired by the Person (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such Property); (f) all
Capital Lease Obligations; (g) all indebtedness referred to in clauses (a)
through (f) above secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any Lien upon or
in Property (including accounts and contracts rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Indebtedness; and (h) all Contingent Obligations in respect of indebtedness or
obligations of others of the kinds referred to in clauses (a) through (f) above.
Indebtedness shall not include life insurance policy loans secured by the
surrender value of such life insurance policy.
"INSOLVENCY PROCEEDING" means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; in the case of clause (a) and (b) undertaken under U.S. Federal,
State or foreign law, including the Bankruptcy Code.
"INTEREST PAYMENT DATE" means, (a) with respect to any Offshore Rate
Loan, CD Rate Loan or a Money Market Rate Loan, the
(4037704.04) - 9 - 4/10/95
<PAGE>
last Business Day of each Interest Period applicable to such Loan; (b) with
respect to any Alternate Base Rate Loan, the last Business Day of each calendar
quarter and each date a Alternate Base Rate Loan is converted into an Offshore
Rate Loan, CD Rate Loan or a Money Market Loan; and (c) with respect to all
Loans, the Maturity Date; PROVIDED, HOWEVER, that if (i) any Interest Period for
a Money Market Rate Loan or an Offshore Rate Loan exceeds three months, interest
shall also be paid on the date which falls three months after the beginning of
such Interest Period; and (b) if any Interest Period for a CD Rate Loan exceeds
90 days, interest shall also be paid on the date which falls 90 days after the
beginning of such Interest Period.
"INTEREST PERIOD" means, (a) with respect to any Offshore Rate Loan,
the period commencing on the Business Day the Offshore Rate Loan is disbursed or
continued or on the date on which a Loan is converted into a Offshore Rate Loan
and ending on the date one, two, three or six months thereafter, as selected by
the Borrower in its Notice of Borrowing or Notice of Conversion/Continuation;
(b) with respect to any CD Rate Loan, the period commencing on the Business Day
the CD Rate Loan is disbursed or continued or on the date on which a Loan is
converted to the CD Rate Loan and ending 30, 60, 90 or 180 days thereafter, as
selected by the Borrower in its Notice of Borrowing or Notice of
Conversion/Continuation; and (c) with respect to any Money Market Rate Loan, the
period commencing on the Business Day that the Money Market Rate Loan is
disbursed or continued or on the date on which a Loan is converted into a Money
Market Rate Loan and ending on the date which is (i) 1 to 7 days thereafter or
(ii) one or more weeks or one or more months thereafter but in no event
exceeding six months, in each case as selected by the Borrower in its Notice of
Borrowing; PROVIDED that:
(i) if any Interest Period pertaining to an Offshore Rate
Loan, CD Rate Loan or a Money Market Rate Loan would otherwise end on
a day which is not a Business Day, that Interest Period shall be
extended to the next succeeding Business Day unless, in the case of an
Offshore Rate Loan, the result of such extension would be to carry
such Interest Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding Business Day;
(ii) any Interest Period pertaining to a Offshore Rate
Loan or Money Market Rate Loan that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business
(4037704.04) - 10 - 4/10/95
<PAGE>
Day of the calendar month at the end of such Interest Period; and
(iii) no Interest Period for any Loan shall extend beyond
the Maturity Date.
"LENDING OFFICE" means, with respect to the Bank, the office or
offices of the Bank specified as its "Lending Office" or "Domestic Lending
Office" or "Offshore Lending Office", as the case may be, opposite its name on
the signature page hereto, or such other office or offices of the Bank as it may
from time to time notify the Borrower.
"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, lien (statutory or other) or other security interest or encumbrance
(including those created by, arising under or evidenced by any conditional sale
or other title retention agreement, the interest of a lessor under a Capital
Lease Obligation, any financing lease having substantially the same economic
effect as any of the foregoing, or the filing of any financing statement naming
the owner of the asset to which such lien relates as debtor, under the UCC or
any comparable law), but not including the interest of a lessor under an
Operating Lease.
"LOANS" means the Loans made by the Bank to the Borrower pursuant to
Section 2.1
"LOAN DOCUMENTS" means this Agreement, the Note if requested by the
Bank and all documents and instruments delivered from time to time in connection
therewith.
"MARGIN STOCK" means "margin stock" as such term is defined in
Regulation G, T, U or X of the Federal Reserve Board.
"MATERIAL ADVERSE EFFECT" means a material adverse change in, or a
material adverse effect upon, any of (a) the operations, business, Properties or
financial condition of the Borrower; (b) the ability of the Borrower to perform
under any Loan Document; or (c) the legality, validity, binding effect or
enforceability of any Loan Document.
"MATURITY DATE" means March 31, 2000.
"MONEY MARKET RATE" means the fixed rate of interest determined in
accordance with Section 2.3(a) for the applicable Interest Period.
"MONEY MARKET RATE LOAN" means a Loan bearing interest at the rate
determined by reference to the Money Market Rate.
(4037704.04) - 11 - 4/10/95
<PAGE>
"MULTIEMPLOYER PLAN" means a "multiemployer plan" (within the meaning
of Section 4001(a)(3) of ERISA) and to which any member of the Controlled Group
makes, is making, or is obligated to make contributions or has made, or been
obligated to make, contributions, but does not include (i) Multiemployer Plans
to which no member of the Controlled Group had withdrawal liability and an
obligation to contribute at all times following the enactment of the
Multiemployer Pension Plan Amendments Act of 1980, and (ii) Multiemployer Plans
as to which all members of the Controlled Group have both completely withdrawn
and paid the full amount of any withdrawal liability.
"NET ISSUANCE PROCEEDS" means, in respect of any issuance of equity,
the cash proceeds and non-cash proceeds received or receivable in connection
therewith, net of reasonable costs and expenses paid or incurred in connection
therewith in favor of any Person not an Affiliate of the Borrower.
"NOTE" means a promissory note executed by the Borrower to the order
of the Bank if the Bank has requested the Borrower to do so, substantially in
the form of Exhibit A annexed hereto evidencing the Loans.
"NOTICE OF BORROWING" means a notice substantially in the form of
Exhibit B annexed hereto with respect to a proposed committed borrowing.
"NOTICE OF CONVERSION/CONTINUATION" means a notice in substantially
the form of Exhibit C annexed hereto.
"NOTICE OF LIEN" means any "notice of lien" or similar document
intended to be filed or recorded with any court, registry, recorder's office,
central filing office or other Governmental Authority for the purpose of
evidencing, creating, perfecting or preserving the priority of a Lien securing
obligations owing to a Governmental Authority.
"OBLIGATIONS" means all obligations of every nature of the Borrower
from time to time owed to the Bank, whether for principal, interest, fees,
expenses, indemnification or otherwise, and whether absolute or contingent, due
or to become due, now existing or hereafter arising, pursuant to the terms of
any of the Loan Documents.
"OFFSHORE RATE" means, for each Interest Period in respect of an
Offshore Rate Loan, an interest rate per annum (rounded upward to the nearest
1/16th of 1%) determined pursuant to the following formula:
Offshore Rate = IBOR
----------------------------------
1.0 - Eurodollar Reserve Percentage
(4037704.04) - 12 - 4/10/95
<PAGE>
Where,
"EURODOLLAR RESERVE PERCENTAGE" means the reserve percentage
(expressed as a decimal, if any, rounded upward to the nearest 1/100th
of 1%) in effect on the date IBOR for such Interest Period is
determined applicable to the Bank under regulations issued from time
to time by the Federal Reserve Board for determining the reserve
requirement (including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities") having a term comparable to
such Interest Period; and
"IBOR" means the rate of interest per annum determined by the
Bank as the rate of interest at which dollar deposits in the
approximate amount of the amount of the Loan to be made or continued
as, or converted into, an Offshore Rate Loan and having a maturity
comparable to such Interest Period would be offered by the Bank to
major banks in the offshore Dollar interbank market at its request at
or about 11:00 a.m. (New York time) on the second Business Day prior
to the commencement of such Interest Period.
The Offshore Rate shall be adjusted automatically as of the
effective date of any change in the Eurodollar Reserve Percentage.
"OFFSHORE RATE LOAN" means a Loan bearing interest at the rate
determined by reference to the Offshore Rate.
"OPERATING LEASE" means, as applied to any Person, any lease of
Property which is not a Capital Lease other than any such lease under which that
Person is the lessor.
"ORDINARY COURSE OF BUSINESS" means, in respect of any transaction
involving the Borrower or any Subsidiary of the Borrower, the ordinary course of
such Person's business, as conducted by any such Person in accordance with past
practice.
"ORGANIZATION DOCUMENTS" means, for any corporation, the certificate
or articles of incorporation, the bylaws, any certificate of determination or
instrument relating to the rights of preferred shareholders of such corporation,
and all applicable resolutions of the board of directors (or any committee
thereof) of such corporation relating to the foregoing or the organization of
such corporation.
"PARTICIPANT" has the meaning specified in Section 8.6(d).
(4037704.04) - 13 - 4/10/95
<PAGE>
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERMITTED ACCOUNT RECEIVABLES FINANCING" means a sale or discount of
accounts receivable of the Borrower and its Subsidiaries (A) where such sale or
discount is not a sale or discounting of accounts receivable meeting a specified
credit criteria, and (B) that does not involve the creation of a Lien or
negative pledge on any accounts receivable not so sold or discounted.
"PERMITTED LIENS" has the meaning specified in Section 6.1.
"PERSON" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
limited liability company or Governmental Authority.
"PLAN" means an employee pension benefit plan (as defined in Section
3(2) of ERISA) which any member of the Controlled Group sponsors or maintains or
to which the Borrower or member of the Controlled Group makes or is obligated to
make contributions, and which is subject to the provisions of Title IV of ERISA.
"PROPERTY" means any estate or interest in any kind of property or
asset, whether real, personal or mixed, and whether tangible or intangible.
"QUALIFIED PLAN" means a pension plan (as defined in Section 3(2) of
ERISA) intended to be tax-qualified under Section 401(a) of the Code and which
any member of the Controlled Group sponsors, maintains, or to which it makes or
is obligated to make contributions, or in the case of a multiple employer plan
(as described in Section 4064(a) of ERISA) has made contributions at any time
during the immediately preceding period covering at least five (5) plan years,
but excluding any Multiemployer Plan.
"REPORTABLE EVENT" means any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder for which the requirement of 30-
day notice has not been waived, a withdrawal from a Plan described in Section
4063 of ERISA, or a cessation of operations described in Section 4062(e) of
ERISA.
"REQUIREMENT OF LAW" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its
(4037704.04) - 14 - 4/10/95
<PAGE>
Property or to which the Person or any of its Property is subject.
"RESPONSIBLE OFFICER" means the chief executive officer, the
president, the chief operating officer, the chief financial officer, the chief
legal officer, the treasurer or the controller of the Borrower.
"SUBSIDIARY" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than 50% of
the voting stock or other equity interests (in the case of Persons other than
corporations), is owned or controlled directly or indirectly by the Person, or
one or more of the Subsidiaries of the Person, or a combination thereof.
"UNFUNDED PENSION LIABILITIES" means with respect to a Plan, the
"amount of unfunded benefit liabilities" as defined in Section 4001(a)(18) of
ERISA.
1.2 OTHER INTERPRETIVE PROVISIONS.
(a) PERFORMANCE; TIME. Except as otherwise specifically
provided herein, whenever any performance obligation hereunder shall be stated
to be due or required to be satisfied on a day other than a Business Day, such
performance shall be made or satisfied on the next succeeding Business Day. In
the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including"; the words "to" and "until"
each mean "to but excluding", and the word "through" means "to and including."
If any provision of this Agreement refers to any action taken or to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be interpreted to encompass any and all means, direct or indirect, of taking, or
not taking, such action.
(b) CAPTIONS. The captions and headings of this Agreement are
for convenience of reference only and shall not affect the interpretation of
this Agreement.
1.3 ACCOUNTING PRINCIPLES. Unless the context otherwise clearly
requires, all accounting terms not expressly defined herein shall be construed,
and all financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied.
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<PAGE>
SECTION 2. THE LOANS
2.1 THE COMMITMENT. The Bank agrees, on the terms and conditions
hereinafter set forth, to make loans under the Commitment to the Borrower (each
such loan, a "Loan") from time to time on any Business Day from the Effective
Date to but excluding the Maturity Date; PROVIDED, HOWEVER, that, after giving
effect to the making of any Loans, the aggregate principal amount of the
outstanding Loans shall not exceed the Commitment. Within the limits of the
Commitment, and subject to the other terms and conditions hereof, the Borrower
may borrow under this Section 2.1, prepay pursuant to Section 2.6 and reborrow
pursuant to this Section 2.1.
2.2 LOAN ACCOUNTS; NOTES. (a) Subject to Section 2.2(b), the Loans
shall be evidenced by one or more loan accounts maintained by the Bank in the
ordinary course of business. The loan accounts maintained by the Bank shall be
prima facie evidence absent manifest error of the amount of the Loans made to
the Borrower and the interest and payments thereon. Any failure so to record or
any error in doing so shall not, however, limit or otherwise affect the
obligation of the Borrower hereunder to pay any amount owing with respect to the
Loans.
(b) Upon the request of the Bank, the Loans shall be evidenced
by a Note, instead of loan accounts. The Bank shall endorse on the schedules
annexed to the Note the date, amount and maturity of each Loan made by it and
the amount of each payment of principal made by the Borrower with respect
thereto. The Bank is irrevocably authorized by the Borrower to endorse the Note
and its record shall be prima facie absent manifest error; PROVIDED, HOWEVER,
that the failure of the Bank to make, or an error in making, a notation thereon
with respect to any Loan shall not limit or otherwise affect the obligations of
the Borrower hereunder or under the Note to the Bank.
2.3 PROCEDURE FOR BORROWINGS.
(a) Each Loan shall be made upon the Borrower's irrevocable
written notice in the form of a Notice of Borrowing delivered to the Bank in
accordance with Section 8.2 (which notice must be received by the Bank prior to
(i) 9:00 a.m. (San Francisco time) (A) three Business Days prior to the
requested borrowing date, in the case of an Offshore Rate Loan; (B) two Business
Days prior to the requested borrowing date, in the case of a CD Rate Loan, and
(C) on the requested borrowing date, in the case of a Alternate Base Rate Loan
and (ii) 11:00 a.m. (San Francisco time) on the requested borrowing date, in the
case of a Money Market Rate Loan. Each Notice of Borrowing shall specify: (v)
the amount of the Loan, which shall be in a minimum principal
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<PAGE>
amount of $1,000,000 and multiples thereof; (w) the requested borrowing date,
which shall be a Business Day; (x) whether the Loan is to be an Offshore Rate
Loan, CD Rate Loan, Alternate Base Rate Loan or Money Market Rate Loan; (y) if
an Offshore Rate Loan, CD Rate Loan or Money Market Rate Loan, the duration of
the Interest Period applicable to such Loan; and (z) if a Money Market Loan, the
interest rate therefor, determined in accordance with the next sentence. On any
day that the Borrower desires to request a Money Market Loan, the Borrower shall
notify the Bank in accordance with Section 8.2 not later than 10:00 a.m. (San
Francisco time) on such day, and the Bank shall quote to the Borrower the
available interest rate(s) for the requested Interest Period(s). If the
Borrower desires to borrow a Money Market Loan at an interest rate so quoted, it
shall submit a Notice of Borrowing on such day as provided above including such
interest rate. Any interest rate quoted by the Bank shall be good only on the
date quoted and only for the Interest Period specified. If a Notice of
Borrowing shall fail to specify the duration of the Interest Period for any CD
Rate Loan, Offshore Rate Loan or Money Market Loan, such Interest Period shall
be 90 days, three months or one day, respectively. The proceeds of the Loan
will then be made available to the Borrower by the Bank by crediting the account
of the Borrower on the books of Bank by wire transfer in accordance with written
instructions provided to the Bank by the Borrower.
(b) During the existence of a Default or Event of Default, the
Borrower may not elect to have a Loan be made as an Offshore Rate Loan, CD Rate
Loan or Money Market Rate Loan.
(c) After giving effect to any borrowing of Loans, there shall
not be more than ten different Interest Periods in effect.
2.4 CONVERSION AND CONTINUATION ELECTIONS.
(a) The Borrower may upon irrevocable written notice to the Bank
in accordance with Section 2.4(b): (i) elect to convert on any Business Day, any
Alternate Base Rate Loan (or any part thereof in an amount not less than
$1,000,000) into an Offshore Rate Loan, a CD Rate Loan or a Money Market Rate
Loan or; (ii) elect to convert on any Interest Payment Date any Offshore Rate
Loan, CD Rate Loan or Money Market Rate Loan maturing on such Interest Payment
Date (or any part thereof in an amount not less than $1,000,000) into a
Alternate Base Rate Loan; or (iii) elect to continue on any Interest Payment
Date any Offshore Rate Loan, CD Rate Loan or Money Market Rate Loan maturing on
such Interest Payment Date (or any part thereof in an amount not less than
$1,000,000); PROVIDED, HOWEVER, that a Money Market Rate Loan may be continued
only at the interest rate and
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<PAGE>
Interest Period quoted by the Bank in accordance with Section 2.4(b).
(b) The Borrower shall deliver a written notice in the form of a
Notice of Conversion/Continuation in accordance with Section 8.2 to be received
by the Bank not later than (i) 9:00 a.m. (San Francisco time) at least (A) three
Business Days in advance of the conversion or continuation date, if the Loan is
to be converted into or continued as an Offshore Rate Loan; (B) two Business
Days in advance of the conversion or continuation date, if the Loan is to be
converted into or continued as a CD Rate Loan; and (C) on the Business Day of
the conversion, if the Loan is to be converted into a Alternate Base Rate Loan
and (ii) 11:00 a.m. (San Francisco time) on the day of such conversion or
continuation date, if the Loan is to be converted into or continued as a Money
Market Rate Loan. Each Notice of Conversion/Continuation shall specify: (v)
the proposed conversion or continuation date; (w) the Loan to be converted or
continued; (x) the nature of the proposed conversion or continuation; (y) the
duration of the requested Interest Period, if applicable; and (z) if a Money
Market Loan, the interest rate therefor, determined in accordance with the
procedure set forth in Section 2.3(a).
(c) If upon the expiration of any Interest Period applicable to
a CD Rate Loan, an Offshore Rate Loan or a Money Market Rate Loan, the Borrower
has failed to select a new Interest Period to be applicable to such CD Rate
Loan, Offshore Rate Loan or Money Market Rate Loan, as the case may be, or if
any Default or Event of Default shall then exist, the Borrower shall be deemed
to have elected to convert such CD Rate Loan, Offshore Rate Loan or Money Market
Rate Loan into a Alternate Base Rate Loan effective as of the expiration date of
such current Interest Period.
(d) During the existence of a Default or Event of Default, the
Borrower may not elect to have a Loan converted into or continued as an Offshore
Rate Loan, a CD Rate Loan or a Money Market Rate Loan.
(e) Notwithstanding any other provision contained in this
Agreement, after giving effect to any conversion or continuation of any Loans,
there shall not be more than ten different Interest Periods for all Loans in
effect.
2.5 VOLUNTARY TERMINATION OR REDUCTION OF COMMITMENT. The Borrower
may, upon not less than three Business Days' prior notice to the Bank, terminate
or permanently reduce the Commitment by a minimum amount of $5,000,000; PROVIDED
that no such reduction or termination shall be permitted to the extent that,
after giving effect thereto and to any prepayments of the
(4037704.04) - 18 - 4/10/95
<PAGE>
Loans made on the effective date thereof, the then outstanding principal amount
of the Loans would exceed the Commitment then in effect; PROVIDED, FURTHER, that
once reduced in accordance with this Section 2.5, the Commitment only may be
increased by mutual agreement between Borrower and Bank. All accrued commitment
fees to, but not including the effective date of any reduction or termination of
the Commitment, shall be paid on the effective date of such reduction or
termination.
2.6 PREPAYMENTS. The Borrower may, at any time or from time to time,
prepay a Loan in whole or in part in minimum amount of $1,000,000 (a) upon at
least three Business Days' notice to the Bank in the case of a prepayment of an
Offshore Rate Loan; (b) upon at least two Business Days' notice to the Bank in
the case of a prepayment of a CD Rate Loan; and (c) with notice to the Bank on
the Business Day of such prepayment in the case of a Alternate Base Rate Loan or
a Money Market Rate Loan. Such notice of prepayment shall specify the date and
amount of such prepayment and whether such prepayment is of a Alternate Base
Rate Loan, CD Rate Loan, Offshore Rate Loan or Money Market Rate Loan, or any
combination thereof. Such notice shall not thereafter be revocable by the
Borrower. Any prepayment of a CD Rate Loan, Offshore Rate Loan or Money Market
Rate Loan hereunder shall be accompanied by accrued interest to the date of such
prepayment on the amount prepaid and any amounts required pursuant to Section
2.15.
2.7 REPAYMENT. The Borrower shall repay to the Bank in full on the
Maturity Date the aggregate principal amount of all Loans outstanding on the
Maturity Date; PROVIDED, HOWEVER, that unless converted or continued as set
forth in Section 2.4, each Money Market Rate Loan shall mature, and the
principal amount thereof shall be due and payable, on the last day of the
Interest Period applicable thereto, but in no event later than the Maturity
Date.
2.8 INTEREST.
(a) Subject to Section 2.8(b), each Loan shall bear interest on
the outstanding principal amount thereof from the date when made until it
becomes due at a rate per annum equal to (i) the CD Rate, the Offshore Rate or
the Alternate Base Rate, as the case may be, PLUS the Applicable Margin or (ii)
the Money Market Rate. Interest on each Loan shall be paid in arrears on each
Interest Payment Date. Interest shall also be paid on the date of any
prepayment of any CD Rate Loan, Offshore Rate Loan or Money Market Rate Loan
pursuant to Section 2.6 for the portion of the Loan so prepaid and upon payment
(including prepayment) in full of any Loan and, during the existence of any
Event of Default, interest shall be paid on demand.
(4037704.04) - 19 - 4/10/95
<PAGE>
(b) While any Event of Default exists or after acceleration, at
the Bank's option, the Borrower shall pay interest (after as well as before
entry of judgment thereon to the extent permitted by law) on the principal
amount of all Obligations then due and unpaid, at a rate per annum which is
determined by adding 2% per annum to the Applicable Margin then in effect for
such Loans or the interest rate applicable to any Money Market Rate Loan;
PROVIDED, HOWEVER, that, on and after the expiration of any Interest Period
applicable to any Offshore Rate Loan, CD Rate Loan or Money Market Rate Loan
outstanding on the date of occurrence of such Event of Default or acceleration,
at the Bank's option, the principal amount of such Loan shall, during the
continuation of such Event of Default or after acceleration, bear interest at a
rate per annum equal to the Alternate Base Rate plus 2%.
2.9 FACILITY FEE. The Borrower shall pay to the Bank a facility fee
on the average amount of the Commitment, regardless of usage, computed on a
quarterly basis in arrears on the last Business Day of each calendar quarter
equal to the Applicable Margin. Such facility fee shall accrue from the
Effective Date to the Maturity Date and shall be due and payable quarterly in
arrears on the last Business Day of each quarter commencing on June 30, 1995
through the Maturity Date, with the final payment to be made on the Maturity
Date; provided that, in connection with any reduction or termination of the
Commitment pursuant to Section 2.5, the accrued facility fee calculated for the
period ending on such date shall also be paid on the date of such reduction or
termination, with the next succeeding quarterly payment being calculated on the
basis of the period from the reduction or termination date to such quarterly
payment date. The facility fee provided in this Section shall accrue at all
times after the above-mentioned commencement date, including at any time during
which one or more conditions in Section 3 are not met.
2.10 COMPUTATION OF FEES AND INTEREST. All computations of interest
payable in respect of Alternate Base Rate Loans at the "Alternate Base Rate"
shall be made on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed. All other computations of fees and interest under this
Agreement shall be made on the basis of a 360-day year and actual days elapsed,
which results in more interest being paid than if computed on the basis of a
365-day year. Interest and fees shall accrue during each period during which
interest or such fees are computed from the first day thereof to the last day
thereof. Each determination of an interest rate by the Bank pursuant hereto
shall be conclusive and binding on the Borrower in the absence of manifest
error.
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<PAGE>
2.11 PAYMENTS BY THE BORROWER.
(a) All payments (including prepayments) to be made by the
Borrower on account of principal, interest, fees and other amounts required
hereunder shall be made without set-off, recoupment or counterclaim and shall,
except as otherwise expressly provided herein, be made to the Bank at the Bank's
Lending Office, in dollars and in immediately available funds, no later than
10:00 a.m. (San Francisco time) on the date specified herein. Any payment which
is received by the Bank later than such time shall be deemed to have been
received on the immediately succeeding Business Day and any applicable interest
or fee shall continue to accrue.
(b) Whenever any payment hereunder shall be stated to be due on
a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of interest or fees, as the case may be; subject to
the provisions set forth in the definition of "Interest Period" herein.
2.12 TAXES. Any and all payments by the Borrower to the Bank under
this Agreement shall be made free and clear of, and without deduction or
withholding for, any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding such taxes (including income taxes or franchise taxes) as are imposed
on or measured by the Bank's net income by the jurisdiction under the laws of
which the Bank is organized or maintains a Lending Office or any political
subdivision thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as "TAXES").
In addition, the Borrower shall pay any present or future stamp or documentary
taxes or any other excise or Property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other Loan
Documents (hereinafter referred to as "OTHER TAXES"). The Borrower shall
indemnify and hold harmless the Bank for the full amount of Taxes or Other Taxes
(including any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.12) paid by the Bank and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom or with
respect thereto. Payment under this indemnification shall be made within 30
days from the date the Bank makes written demand therefor, which demand shall
set forth in reasonable detail the calculation of the amount of Taxes or Other
Taxes being requested from the Borrower.
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<PAGE>
2.13 ILLEGALITY.
(a) If the Bank shall determine that the introduction of any
Requirement of Law after the date hereof, or any change in any Requirement of
Law or in the interpretation or administration thereof after the date hereof,
has made it unlawful, or that any central bank or other Governmental Authority
has asserted after the date hereof that it is unlawful, for the Bank or its
Lending Office to make Offshore Rate Loans, then, on notice thereof by the Bank
to the Borrower, the obligation of the Bank to make Offshore Rate Loans shall be
suspended until the Bank shall have notified the Borrower that the circumstances
giving rise to such determination no longer exists.
(b) If the Bank shall determine that it is unlawful to maintain
any Offshore Rate Loan, the Borrower shall prepay in full all Offshore Rate
Loans then outstanding, together with interest accrued thereon, either on the
last day of the Interest Period thereof if the Bank may lawfully continue to
maintain such Offshore Rate Loans to such day, or immediately, if the Bank may
not lawfully continue to maintain such Offshore Rate Loans, together with any
amounts required to be paid in connection therewith pursuant to Section 2.15.
2.14 INCREASED COSTS AND REDUCTION OF RETURN.
(a) If the Bank shall determine that, due to either (i) the
introduction of or any change (other than any change by way of imposition of or
increase in reserve requirements included in the calculation of the CD Rate or
the Offshore Rate) in or in the interpretation of any law or regulation or
(ii) the compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law, provided that if
such guideline or request does not have the force of law, compliance therewith
is customary for banks regulated in a manner similar to such Bank), after the
date hereof there shall be any increase in the cost to the Bank of agreeing to
make or making, funding or maintaining any Offshore Rate Loans or CD Rate Loans,
then the Borrower shall be liable for, and shall from time to time, within 10
Business Days after demand therefor by the Bank, pay to the Bank additional
amounts as are sufficient to compensate the Bank for such increased costs.
(b) If the Bank shall have determined that (i) the introduction
after the date hereof of any Capital Adequacy Regulation, (ii) any change after
the date hereof in any Capital Adequacy Regulation, (iii) any change after the
date hereof in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority
(4037704.04) - 22 - 4/10/95
<PAGE>
charged with the interpretation or administration thereof, or (iv) compliance by
the Bank (or its Lending Office) or any corporation controlling the Bank, with
any Capital Adequacy Regulation; affects or would affect the amount of capital
required or expected to be maintained by the Bank or any corporation controlling
the Bank and (taking into consideration the Bank's or such corporation's
policies with respect to capital adequacy and the Bank's desired return on
capital) determines that the amount of such capital is increased as a
consequence of its Commitment, loans, credits or obligations under this
Agreement, then, within 10 Business Days after demand of the Bank, the Borrower
shall upon demand pay to the Bank, from time to time as specified by the Bank,
additional amounts sufficient to compensate the Bank for such increase.
2.15 FUNDING LOSSES. The Borrower agrees to reimburse the Bank and to
hold the Bank harmless from any loss or expense which the Bank may sustain or
incur as a consequence of: (a) the failure of the Borrower to make any payment
or prepayment of principal of any Offshore Rate Loan, CD Rate Loan or Money
Market Rate Loan (including payments made after any acceleration thereof); (b)
the failure of the Borrower to borrow, continue or convert an Offshore Rate
Loan, CD Rate Loan or Money Market Rate after the Borrower has given a Notice of
Borrowing or a Notice of Conversion/Continuation; (c) the failure of the
Borrower to make any prepayment after the Borrower has given a notice in
accordance with Section 2.6; (d) the prepayment (including pursuant to
Section 2.6) of an Offshore Rate Loan, a CD Rate Loan or Money Market Rate Loan
on a day which is not the last day of the Interest Period with respect thereto;
or (e) the conversion pursuant to Section 2.4 of any Offshore Rate Loan, CD Rate
Loan or Money Market Rate Loan to a Alternate Base Rate Loan on a day that is
not the last day of the respective Interest Period; including any such loss or
expense arising from the liquidation or reemployment of funds obtained by it to
maintain its Offshore Rate Loans, CD Rate Loans or Money Market Rate Loans
hereunder or from fees payable to terminate the deposits from which such funds
were obtained. Solely for purposes of calculating amounts payable by the
Borrower to the Bank under this Section 2.15, (i) each Offshore Rate Loan (and
each related reserve, special deposit or similar requirement) shall be
conclusively deemed to have been funded at the IBOR used in determining the
Offshore Rate for such Offshore Rate Loan by a matching deposit or other
borrowing in the interbank eurodollar market for a comparable amount and for a
comparable period, whether or not such Offshore Rate Loan is in fact so funded,
(ii) each CD Rate Loan made by the Bank (and each related reserve, special
deposit or similar requirement) shall be conclusively deemed to have been funded
at the Certificate of Deposit Rate used in determining the CD Rate for such CD
Rate Loan by the issuance of its certificate of deposit in a comparable amount
and for a comparable period,
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<PAGE>
whether or not such CD Rate Loan is in fact so funded, and (iii) each Money
Market Rate Loan made by the Bank shall be conclusively deemed to have been
funded by the Bank in the manner which was the basis for the interest rate for
such Loan, whether or not such Money Market Rate Loan is in fact so funded.
2.16 INABILITY TO DETERMINE RATES. If the Bank shall have determined
that for any reason adequate and reasonable means do not exist for ascertaining
the Offshore Rate or the CD Rate for any requested Interest Period with respect
to a proposed Offshore Rate Loan or CD Rate Loan or that the Offshore Rate or
the CD Rate applicable pursuant to Section 2.8(a) for any requested Interest
Period with respect to a proposed Offshore Rate Loan or CD Rate Loan does not
adequately and fairly reflect the cost to the Bank of funding such Loan, the
Bank will forthwith give notice of such determination to the Borrower.
Thereafter, the obligation of the Bank to make or maintain CD Rate Loans or
Offshore Rate Loans, as the case may be, hereunder shall be suspended until the
Bank revokes such notice in writing; provided however that no outstanding CD
Rate Loan or Offshore Rate Loan shall be terminated prior to the expiration of
the Interest Period unless required by law. Upon receipt of such notice, the
Borrower may revoke any notice of borrowing or notice of conversion or
continuation then submitted by it. If the Borrower does not revoke such notice,
the Bank shall make, convert or continue the Loans, as proposed by the Borrower,
in the amount specified in the applicable notice submitted by the Borrower, but
such Loans shall be made, converted or continued as Alternate Base Rate Loans or
Money Market Rate Loans instead of CD Rate Loans or Offshore Rate Loans, as the
case may be.
SECTION 3. CONDITIONS PRECEDENT
3.1 CONDITIONS OF CLOSING. The obligation of the Bank to make its
initial Loan hereunder is subject to the condition that the Bank shall have
received on or before the Closing Date all of the following, in form and
substance satisfactory to the Bank:
(a) CREDIT AGREEMENT. This Agreement executed by the Borrower;
(b) NOTE. If requested by the Bank, a Note executed by the
Borrower.
(c) RESOLUTIONS; INCUMBENCY. (i) Copies of the resolutions of
the board of directors of the Borrower approving and authorizing the execution,
delivery and performance by the Borrower of this Agreement and the other Loan
Documents to be
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<PAGE>
delivered hereunder, and authorizing the borrowing of the Loans, certified as of
the Closing Date by the Secretary or an Assistant Secretary of the Borrower and
(ii) a certificate of the Secretary or Assistant Secretary of the Borrower
certifying the names and true signatures of the officers of the Borrower
authorized to execute, deliver and perform, as applicable, this Agreement, and
all other Loan Documents to be delivered hereunder;
(d) ARTICLES OF INCORPORATION; BY-LAWS AND GOOD STANDING. Each
of the following documents: (i) the articles or certificate of incorporation of
the Borrower as in effect on the Closing Date, certified by the Secretary of
State of the state of incorporation of the Borrower as of a recent date, and the
bylaws of the Borrower as in effect on the Closing Date, certified by the
Secretary or Assistant Secretary of the Borrower as of the Closing Date; and
(ii) a good standing certificate for the Borrower from the Secretary of State of
Delaware as of a recent date;
(e) CERTIFICATE. A certificate signed by a Responsible Officer,
dated as of the Closing Date, stating that: (i) the representations and
warranties contained in Section 4 are true and correct in all material respects
on and as of such date, as though made on and as of such date; (ii) no Default
or Event of Default exists; and (iii) there has occurred since January 31, 1994,
no event or circumstance that could reasonably be expected to result in a
Material Adverse Effect;
(f) COMPLIANCE CERTIFICATE. A Compliance Certificate dated as
of the Closing Date, the financial covenant portion of which shall be based on
the financial statements dated as of October 31, 1994.
(g) TERMINATION OF EXISTING AGREEMENTS. Evidence that the
Borrower has terminated, or concurrently with the initial funding hereunder will
be terminating, all Existing Agreements and shall have paid all amounts owing to
the banks thereunder.
(h) OPINION OF COUNSEL. An opinion of Aloma H. Park, Corporate
Counsel of the Borrower and addressed to the Bank.
(i) OTHER DOCUMENTS. Such other approvals, opinions or
documents as the Bank may reasonably request.
3.2 CONDITIONS TO ALL BORROWINGS. The obligation of the Bank to
make, continue or convert any Loan (including the initial Loan) is subject to
the satisfaction of the following conditions precedent on the relevant borrowing
date:
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<PAGE>
(a) NOTICE OF BORROWING OR CONVERSION/CONTINUATION. The Bank
shall have received a Notice of Borrowing or a Notice of
Conversion/Continuation;
(b) CONTINUATION OF REPRESENTATIONS AND WARRANTIES. Except for
the representations and warranties set forth in Section 4.11(b) and 4.13 (which
shall be made solely as of the Closing Date, the representations and warranties
made by the Borrower contained in Section 4 shall be true and correct in all
material respects on and as of such borrowing date with the same effect as if
made on and as of such borrowing date; and
(c) NO EXISTING DEFAULT. No Default or Event of Default shall
exist or shall result from such borrowing, conversion or continuation.
Each Notice of Borrowing and Notice of Conversion/Continuation submitted by the
Borrower hereunder shall constitute a representation and warranty by the
Borrower hereunder, as of the date of each such notice and as of the date of
each borrowing, conversion or continuation that the conditions in this Section
3.2 are satisfied.
SECTION 4. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Bank that:
4.1 CORPORATE EXISTENCE AND POWER. The Borrower and each of its
corporate Subsidiaries: (a) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation;
(b) has the corporate power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its business
and execute, deliver, and perform its obligations under, the Loan Documents; (c)
is duly qualified as a foreign corporation, licensed and in good standing under
the laws of each jurisdiction where its ownership, lease or operation of
Property or the conduct of its business requires such qualification, except
where the failure to be so qualified or in good standing would not have a
Material Adverse Effect; and (d) is in compliance with all Requirements of Law
except where such noncompliance would not have a Material Adverse Effect.
4.2 CORPORATE AUTHORIZATION; NO CONTRAVENTION. The execution,
delivery and performance by the Borrower of each Loan Document to which it is a
party, have been duly authorized by all necessary corporate action, and do not
and will not: (a) contravene the terms of any of the Borrower's Organization
Documents; (b) conflict with or result in any breach or
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contravention of, or the creation of any Lien under, any document evidencing any
Contractual Obligation to which the Borrower is a party or any order,
injunction, writ or decree of any Governmental Authority to which the Borrower
or its Property is subject; or (c) violate any Requirement of Law applicable to
the Borrower.
4.3 GOVERNMENTAL AUTHORIZATION. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Borrower of
this Agreement or any other Loan Document, other than routine filings required
to be made by the Borrower in the ordinary course of business after the date
hereof.
4.4 BINDING EFFECT. This Agreement and each other Loan Document to
which the Borrower is a party constitute the legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.
4.5 LITIGATION. Except as set forth in Schedule 4.5, there are no
actions, suits, proceedings, claims or disputes pending, or to the best
knowledge of the Borrower, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, against the Borrower, its
Subsidiaries or any of their respective Properties which: (a) purport to affect
or pertain to this Agreement, or any other Loan Document, or any of the
transactions contemplated hereby or thereby; or (b) would reasonably be expected
to result in liability in excess of $10,000,000. No injunction, writ, temporary
restraining order or any order of any nature has been issued by any court or
other Governmental Authority against the Borrower purporting to enjoin or
restrain the execution, delivery and performance of this Agreement or any other
Loan Document, or directing that the transactions provided for herein or therein
not be consummated as herein or therein provided.
4.6 NO DEFAULT. No Default or Event of Default exists or would
result from the incurring of any Obligations by the Borrower. Neither the
Borrower nor any of its Subsidiaries is in default under or with respect to any
Contractual Obligation in any respect which, individually or together with all
such defaults, would reasonably be expected to have a Material Adverse Effect or
that could, if such default had occurred after the Closing Date, create an Event
of Default under Section 7.1(e) or (f).
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4.7 ERISA COMPLIANCE.
(a) Schedule 4.7 lists all Plans maintained or sponsored by the
Borrower or to which it is obligated to contribute, and separately identifies
Plans intended to be Qualified Plans and Multiemployer Plans. Each Plan other
than a Multiemployer Plan is in compliance, and, with respect to each
Multiemployer Plan, the Borrower has no knowledge that such Multiemployer Plan
is not in compliance, in all material respects with the applicable provisions of
ERISA, the Code and other Federal or applicable state law that is not preempted
by ERISA. Each Qualified Plan has been determined by the Internal Revenue
Service ("IRS") to qualify under Section 401 of the Code, and the trusts created
thereunder have been determined to be exempt from tax under the provisions of
Section 501 of the Code, and to the best knowledge of the Borrower nothing has
occurred which would cause the loss of such qualification or tax-exempt status.
(b) There is no outstanding liability (excluding PBGC premiums
due but not delinquent under Section 4001 of ERISA) under Title IV of ERISA with
respect to any Plan maintained or sponsored by the Borrower or any ERISA
Affiliate (as to which the Borrower is or may reasonably be expected to be
liable), nor with respect to any Plan to which the Borrower or any ERISA
Affiliate (wherein the Borrower is or may be liable) contributes or is obligated
to contribute, which would reasonably be expected to have a Material Adverse
Effect. None of the Qualified Plans has Unfunded Pension Liabilities as to
which the Borrower is or may be liable, and which would reasonably be expected
to have a Material Adverse Effect.
(c) No ERISA Event has occurred or is reasonably expected to
occur with respect to any Plan maintained or sponsored by the Borrower or to
which the Borrower is obligated to contribute and as to which the Borrower is or
may reasonably be expected to be liable, and which would reasonably be expected
to have a Material Adverse Effect. There are no pending or, to the best
knowledge of the Borrower, threatened claims, actions or lawsuits, other than
routine claims for benefits in the usual and ordinary course, asserted or
instituted against (i) any Plan maintained or sponsored by the Borrower or its
assets, (ii) any member of the Controlled Group with respect to any Qualified
Plan of the Borrower, or (iii) any fiduciary with respect to any Plan for which
the Borrower may be directly or indirectly liable, through indemnification
obligations or otherwise which in each case would reasonably be expected to have
a Material Adverse Effect. The Borrower has not transferred any Unfunded
Pension Liability outside of the Controlled Group or otherwise engaged in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA which has
a reasonable likelihood of having a Material Adverse Effect.
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<PAGE>
4.8 USE OF PROCEEDS; MARGIN REGULATIONS. The proceeds of the Loans
are intended to be and shall be used solely for the purposes set forth in and
permitted by Section 5.10, and are intended to be and shall be used in
compliance with Section 6.5.
4.9 TITLE TO PROPERTIES. The Borrower and each of its Subsidiaries
has good record and marketable title in fee simple to, or valid leasehold
interests in, all real Property necessary or used in the ordinary conduct of its
business, except for such defects in title as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. As of the
Closing Date, the Property of the Borrower and its Subsidiaries is subject to no
Liens, other than Permitted Liens.
4.10 TAXES. The Borrower and its Subsidiaries have filed all Federal
and other material tax returns and reports required to be filed, and have paid
all Federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their Properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP and no Notice of Lien has been filed or recorded.
4.11 FINANCIAL CONDITION.
(a) The audited consolidated financial statements of financial
condition of the Borrower and its Subsidiaries dated January 31, 1994, and the
related consolidated statements of operations, shareholders' equity and cash
flows for the fiscal year ended on that date: (i) were prepared in accordance
with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; (ii) are complete and accurate in all
material respects and fairly present the financial condition of the Borrower and
its consolidated Subsidiaries as of the date thereof and results of operations
for the period covered thereby; and (iii) show all material indebtedness and
other liabilities, direct or contingent of the Borrower and its consolidated
Subsidiaries as of the date thereof, including liabilities for taxes and
material commitments.
(b) Since January 31, 1994, there has been no Material Adverse
Effect.
4.12 ENVIRONMENTAL MATTERS.
(a) To the knowledge of the Responsible Officers of Borrower,
the on-going operations of the Borrower and each of its Subsidiaries comply in
all respects with all Environmental Laws, except such non-compliance which would
not reasonably be
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<PAGE>
likely to result in a Material Adverse Effect. To the knowledge of the
Responsible Officers of the Borrower, the Borrower and each of its Subsidiaries
have obtained all licenses, permits, authorizations and registrations required
under any Environmental Law ("ENVIRONMENTAL PERMITS") necessary for its ordinary
course operations, all such Environmental Permits are in good standing, and the
Borrower and each of its Subsidiaries are in compliance with all material terms
and conditions of such Environmental Permits, except where the failure to obtain
or maintain such Environmental Permits or such noncompliance would not have a
Material Adverse Effect.
(b) Excpet as set forth in Schedule 4.12(b), none of the
Borrower or any of its Subsidiaries or any of their respective present real
Property or operations is subject to any outstanding written order from or
agreement with any Governmental Authority nor subject to any judicial or
docketed administrative proceeding, respecting any Environmental Law,
Environmental Claim or Hazardous Material.
(c) to the knowledge of the Responsible Officers of the
Borrower, there are no conditions or circumstances which would reasonably be
expected to give rise to any Environmental Claims arising from the operations of
Borrower, its Subsidiaries which would be reasonably likely to result in a
Material Adverse Effect.
4.13 SUBSIDIARIES. As of the Closing Date, the Borrower has no
Subsidiaries other than those specifically disclosed in Schedule 4.13 annexed
hereto.
4.14 INSURANCE. The material real Properties of the Borrower and its
Subsidiaries are insured with financially sound and reputable insurance
companies (except to the extent self-insurance is permitted pursuant to Section
5.6), in such amounts, with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses and owning
similar Properties in localities where the Borrower or such Subsidiary operates.
4.15 FULL DISCLOSURE. None of the representations or warranties made
by the Borrower in the Loan Documents as of the date such representations and
warranties are made or deemed made, and none of the statements contained in each
exhibit or any certificate furnished by or on behalf of the Borrower or any of
its Subsidiaries in connection with the Loan Documents, contains any untrue
statement of a material fact or omits any material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading.
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<PAGE>
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, so long as the Bank shall have
any Commitment hereunder, or any Loan or other Obligation shall remain unpaid or
unsatisfied:
5.1 FINANCIAL STATEMENTS. The Borrower shall deliver to the Bank in
form and detail satisfactory to the Bank:
(a) as soon as available, but not later than 120 days after the
end of each fiscal year, a copy of the audited consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such year and the related
statement of income and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous year, and accompanied by
the opinion of Price Waterhouse or another nationally-recognized independent
public accounting firm which report shall state that such consolidated financial
statements present fairly the financial position of the Borrower and its
Subsidiaries for the periods indicated in conformity with GAAP applied on a
basis consistent with prior years. Such opinion shall not be qualified or
limited because of a restricted or limited examination by such accountant of any
material portion of the Borrower's or any Subsidiary's records;
(b) as soon as available, but not later than 45 days after the
end of each of the first three fiscal quarters of each year, a copy of the
unaudited consolidated balance sheet of the Borrower and its Subsidiaries as of
the end of such quarter and the related consolidated statements of income and
cash flows for the period commencing on the first day and ending on the last day
of such quarter, setting forth the financial position and the results of
operations of the Borrower and its Subsidiaries in conformity with GAAP applied
on a basis consistent with prior years, subject to changes resulting from audit
and normal year-end adjustments;
5.2 CERTIFICATES; OTHER INFORMATION. The Borrower shall furnish to
the Bank:
(a) concurrently with the delivery of the financial statements
referred to in Sections 5.1(a) and (b) above, a Compliance Certificate signed by
a Responsible Officer (i) stating that, to the best of such officer's knowledge,
the Borrower, during such period, has observed and performed all of its
covenants and other agreements, and satisfied every condition contained in this
Agreement to be observed, performed or satisfied by it, and that such officer
has obtained no knowledge of any Default or Event of Default except as specified
(by applicable Section reference) in such certificate, and (ii)
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<PAGE>
showing in detail the calculations supporting such statement in respect of
Sections 6.7 and 6.8; and
(b) promptly, such additional business, financial, corporate
affairs and other information as the Bank, at the request of the Bank, may from
time to time reasonably request.
5.3 NOTICES. Promptly upon a Responsible Officer of the Borrower
becoming aware of the same, the Borrower shall promptly notify the Bank:
(a) of the occurrence of any Default or Event of Default;
(b) of (i) any breach or non-performance of, or any default
under, any Contractual Obligation of the Borrower or any of its Subsidiaries
which would reasonably be expected to result in a Material Adverse Effect; and
(ii) any dispute, litigation, investigation, proceeding or suspension which may
exist at any time between the Borrower or any of its Subsidiaries and any
Governmental Authority which would reasonably be expected to have a Material
Adverse Effect;
(c) of the commencement of, or of any material development in,
any litigation or proceeding affecting the Borrower or any Subsidiary which
would reasonably be expected to have a Material Adverse Effect;
(d) upon, but in no event later than 10 days after, a
Responsible Officer becoming aware of (i) any and all enforcement, cleanup,
removal or other governmental or regulatory actions instituted, completed or
threatened against the Borrower, any of its Subsidiaries or any of their
respective Properties pursuant to any applicable Environmental Laws, and (ii)
any other material Environmental Claims, which in the case of clauses (i) and
(ii) would reasonably be expected to have a Material Adverse Effect;
(e) of any ERISA Event affecting the Borrower or any member of
its Controlled Group (but in no event more than ten days after such ERISA Event)
together with (i) a copy of any notice with respect to such ERISA Event that may
be required to be filed with the PBGC and (ii) any notice delivered by the PBGC
to the Borrower or any member or its Controlled Group with respect to such ERISA
Event;
(f) of any Material Adverse Effect (of which the Borrower has
knowledge) subsequent to the date of the most recent audited financial
statements of the Borrower delivered to the Bank pursuant to Section 5.1(a); and
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<PAGE>
(g) of any material change in accounting policies or financial
reporting practices by the Borrower.
Each notice pursuant to this Section shall be accompanied by a
written statement by a Responsible Officer of the Borrower setting forth details
of the occurrence referred to therein, and stating what action (if any is
required) the Borrower proposes to take with respect thereto.
5.4 PRESERVATION OF CORPORATE EXISTENCE, ETC. The Borrower shall
preserve and maintain in full force and effect its corporate existence and good
standing under the laws of its state or jurisdiction of incorporation and
preserve and maintain in full force and effect all rights, privileges,
qualifications, permits, licenses and franchises necessary or desirable in the
normal conduct of its business the non-preservation of which would reasonably be
expected to have a Material Adverse Effect; provided that nothing herein shall
prevent to the extent not otherwise prohibited by the provisions of Section 6.2
or 6.3, a consolidation or merger of Borrower or any of its Subsidiaries, or the
sale, transfer or disposition of all or a substantial part of the Property or
assets of, or the abandonment or termination of the corporate existence, rights
and franchises of, any Subsidiary of the Borrower if, in the reasonable opinion
of the Borrower's Board of Directors, such abandonment or termination is in the
best interests of the Borrower and is not prejudicial to the Bank in any
material respect.
5.5 MAINTENANCE OF PROPERTY. The Borrower shall maintain, and shall
cause each of its Subsidiaries to maintain, and preserve all its Property which
is used or useful in its business in good working order and condition, ordinary
wear and tear excepted, the non-maintenance or non-preservation of which would
reasonably be expected to have a Material Adverse Effect; provided that nothing
in this Section 5.5 shall require the making of any repair or replacement of or
to any particular Property that would not be required in the exercise of sound
business judgment.
5.6 INSURANCE. The Borrower shall maintain, and shall cause each of
its Subsidiaries to maintain, with financially sound and reputable independent
insurers, insurance with respect to its Properties and business against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons; including workers'
compensation insurance, public liability and Property and casualty insurance;
provided that the Borrower or any of its Subsidiaries may self-insure to the
extent that it maintains adequate reserves therefor and self-insurance is
customary and prudent in its business judgment. Upon request
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<PAGE>
of the Bank, the Borrower shall furnish the Bank at reasonable intervals (but
not more than once per calendar year) a certificate of a Responsible Officer of
the Borrower (and, if requested by the Bank, any insurance broker of the
Borrower) setting forth the nature and extent of all insurance maintained by the
Borrower and its Subsidiaries in accordance with this Section 5.6 (and which, in
the case of a certificate of a broker, were placed through such broker).
5.7 COMPLIANCE WITH LAWS. The Borrower shall comply, and shall cause
each of its Subsidiaries to comply, in all material respects with all
Requirements of Law of any Governmental Authority having jurisdiction over it or
its business (including the Federal Fair Labor Standards Act), except such as
may be contested in good faith or as to which a bona fide dispute may exist, the
non-compliance with which would reasonably be expected to have a Material
Adverse Effect.
5.8 INSPECTION OF PROPERTY AND BOOKS AND RECORDS. The Borrower shall
maintain and shall cause each of its Subsidiaries to maintain proper books of
record and account, in which full, true and correct entries in conformity with
GAAP consistently applied shall be made of all financial transactions and
matters involving the assets and business of the Borrower and such Subsidiaries.
The Borrower shall permit, and shall cause each of its Subsidiaries to permit,
representatives and independent contractors of the Bank to visit and inspect any
of their respective Properties, to examine their respective corporate, financial
and operating records, and make copies thereof or abstracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
directors, officers, and independent public accountants (provided that the
Borrower may, if it chooses, be present at any such discussions) at such
reasonable times during normal business hours and as often as may be reasonably
desired, upon reasonable advance notice to the Borrower; provided that the
foregoing shall be subject to compliance with applicable security regulations of
any Governmental Authority and shall not require the Borrower to permit
inspection of any Properties or financial or operating records to an extent that
would require the Borrower or any of its Subsidiaries to reveal any of its trade
secrets, research data or proprietary information which its management in good
faith believes to be irrelevant to this Agreement.
5.9 ENVIRONMENTAL LAWS. The Borrower shall, and shall cause each of
its Subsidiaries to, conduct its operations and keep and maintain its Properties
in compliance with all Environmental Laws, except for such non-compliance as
would not reasonably be expected to have a Material Adverse Effect. Upon the
written request of the Bank, the Borrower shall submit and cause each of its
Subsidiaries to submit, at the Borrower's sole
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<PAGE>
cost and expense, at reasonable intervals, a report providing an update of the
status of any environmental, health or safety compliance, hazard or liability
issue identified in any notice or report required pursuant to Section 5.3(d).
5.10 USE OF PROCEEDS. The Borrower shall use the proceeds of the Loans
for working capital and other general corporate purposes not in contravention of
any Requirement of Law.
5.11 FURTHER ASSURANCES. The Borrower shall ensure that all written
information, exhibits and reports furnished to the Bank by the Borrower do not
and will not contain any untrue statement of a material fact and do not and will
not omit to state any material fact or any fact necessary to make the statements
contained therein not misleading in light of the circumstances in which made,
and will promptly disclose to the Bank and correct any defect or error that may
be discovered by a Responsible Officer of the Borrower therein or in any Loan
Document or in the execution, acknowledgement or recordation thereof.
SECTION 6. NEGATIVE COVENANTS
The Borrower hereby covenants and agrees that, so long as the Bank
shall have any Commitment hereunder, or any Loan or other Obligation shall
remain unpaid or unsatisfied:
6.1 LIMITATION ON LIENS. The Borrower shall not, and shall not
suffer or permit any of its Subsidiaries to, directly or indirectly, make,
create, incur, assume or suffer to exist any Lien upon or with respect to any
part of their respective Properties, whether now owned or hereafter acquired,
other than the following ("PERMITTED LIENS"):
(a) any Lien securing Indebtedness existing on the Closing Date
and, in the case of Liens securing Indebtedness in excess of $100,000, set forth
in Schedule 6.1 annexed hereto, and any Lien securing any Indebtedness permitted
hereunder that replaces any such Lien provided that such replacement Lien does
not encumber any additional Property;
(b) Liens for taxes, fees, assessments or other governmental
charges which are not delinquent or remain payable without penalty, or to the
extent that non-payment thereof is permitted by Section 5.7, provided that no
Notice of Lien has been filed or recorded under the Code;
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<PAGE>
(c) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the Ordinary Course
of Business which are not delinquent or remain payable without penalty or which
are being contested in good faith and by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the Property
subject thereto or which do not in the aggregate with respect to any one
Property so encumbered have a Material Adverse Effect;
(d) Liens (other than any Lien imposed by ERISA) incurred or
pledges or deposits required in the Ordinary Course of Business in connection
with workers' compensation, unemployment insurance and other social security
legislation;
(e) Liens consisting of judgment or judicial attachment liens,
provided that the enforcement of such Liens is effectively stayed and all such
liens in the aggregate at any time outstanding for the Borrower and its
Subsidiaries do not exceed $1,000,000;
(f) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the Ordinary Course of Business which do not in any
case materially detract from the value of the Property subject thereto or
interfere with the ordinary conduct of the businesses of the Borrower and its
Subsidiaries;
(g) Liens arising solely by virtue of any statutory or common
law provision relating to banker's liens, rights of set-off or similar rights
and remedies as to deposit accounts or other funds maintained with a creditor
depository institution; PROVIDED that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Borrower in excess of those set forth by regulations promulgated
by the Federal Reserve Board, and (ii) such deposit account is not intended by
the Borrower or any of its Subsidiaries to provide collateral to the depository
institution;
(h) Liens on the Property of the Borrower securing (i) the
performance of bids, trade contracts (other than borrowed money), leases,
statutory obligations, and (ii) obligations on surety and appeal bonds, and
(iii) other obligations of a like nature incurred in the ordinary course of
business listed on Schedule 6.1 annexed hereto, provided all such Liens in the
aggregate do not secure Indebtedness exceeding $10,000,000;
(i) Liens associated with a Permitted Accounts Receivable
Financing involving the sale or discount of accounts
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<PAGE>
receivable having a book value not exceeding the lesser of (i) $25,000,000 and
(ii) 35% of Borrower's gross accounts receivable;
(j) Liens (i) on the assets of a single purpose Subsidiary
formed solely for the purpose of entering into outsourcing contracts and (ii) on
assets of the Borrower or any of its Subsidiaries incurred in connection with
and related solely to the toll collection business (including assignments of
toll receipts), not exceeding $50,000,000 in asset value in the aggregate.
(k) Liens on Property or assets of a Subsidiary of the Borrower
to secure indebtedness of such Subsidiary to the Borrower or its Subsidiaries;
(l) Liens securing financing for all or a portion of the
purchase or construction cost of real Property acquired after the Closing Date
to be used in the Ordinary Course of the Business (provided that any such Lien
shall not encumber any other Property of the Borrower or its Subsidiaries),
including the ownership by third parties of assets capitalized as finance leases
under GAAP;
(m) Liens arising from purchase money financing of equipment,
including the ownership by third parties of assets capitalized as finance leases
under GAAP;
(n) Liens arising in the Ordinary Course of Business in favor of
a customer, which Liens are inherent in the government contracting process; and
(o) other Liens provided that the aggregate amount of
indebtedness secured by such other Liens permitted by this clause (o) does not
at any time exceed an amount equal to 10% of Consolidated Tangible Net Worth.
6.2 DISPOSITION OF ASSETS. The Borrower shall not, and shall not
suffer or permit any of its Subsidiaries to, directly or indirectly, sell,
assign, lease, convey, transfer or otherwise dispose of (whether in one or a
series of transactions) any Property (including accounts and notes receivable,
with or without recourse) or enter into any agreement to do any of the
foregoing, except:
(a) dispositions of inventory, or used, worn-out or surplus
equipment, all in the Ordinary Course of Business;
(b) sales of accounts receivable in connection with Permitted
Accounts Receivable Financings to the extent permitted by Section 6.1(i);
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<PAGE>
(c) the sale of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar replacement
equipment, or the proceeds of such sale are reasonably promptly applied to the
purchase price of such replacement equipment;
(d) the sale, assignment, lease, conveyance, transfer or other
disposition of any Property owned by a Subsidiary to the Borrower or any of its
other Subsidiaries; and
(e) dispositions not otherwise permitted hereunder which are
made for fair market value in the Ordinary Course of Business; PROVIDED, that at
the time of any disposition, no Event of Default shall exist or shall result
from such disposition.
6.3 CONSOLIDATIONS AND MERGERS. The Borrower shall not, and shall
not suffer or permit any of its Subsidiaries to, merge, consolidate with or
into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions all or substantially all of its
assets (whether now owned or hereafter acquired) to or in favor of any Person,
except:
(a) any Subsidiary may merge with the Borrower, provided that
the Borrower shall be the continuing or surviving corporation, or with any one
or more Subsidiaries of the Borrower, provided that if any transaction shall be
between a Subsidiary and a wholly-owned Subsidiary, the wholly-owned Subsidiary
shall be the continuing or surviving corporation;
(b) any Subsidiary of the Borrower may sell all or substantially
all of its assets (upon voluntary liquidation or otherwise), to the Borrower or
a wholly-owned Subsidiary of the Borrower; and
(c) the Borrower may merge with another corporation, provided
that the Borrower shall be the surviving corporation, and that after giving
effect to such merger, no Default or Event of Default shall then have occurred
or exist.
6.4 LIMITATION ON CONTINGENT OBLIGATIONS. The Borrower shall not,
and shall not suffer or permit any of its Subsidiaries to, create, incur,
assume, suffer to exist, or otherwise become or remain directly or indirectly
liable with respect to, any Contingent Obligations, except Contingent
Obligations not exceeding 15% of Consolidated Tangible Net Worth; provided that
in addition to such 15% limitation, the Borrower may be liable for the
Contingent Obligations consisting of the $12,250,000 loan guarantee described in
its 1994 Annual Report and up to $5,000,000 in guarantees of employee loans
secured by
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<PAGE>
the Borrower's common stock. The Contingent Obligations limited by this Section
6.4 shall not include claims for refunds or the imposition of charges made by
customers of the Borrower and its Subsidiaries based on unsatisfactory work by
the Borrower or any of its Subsidiaries in the Ordinary Course of Business,
except that such claims shall be included, and shall be taken into account, with
respect to the other covenants set forth in this Section 6 when recognized as
liabilities on the Borrower's balance sheet in accordance with GAAP.
6.5 USE OF PROCEEDS. The Borrower shall not use any portion of the
Loan proceeds, directly or indirectly, (i) to purchase or carry Margin Stock,
(ii) to repay or otherwise refinance indebtedness of the Borrower or others
incurred to purchase or carry Margin Stock, (iii) to extend credit for the
purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any
security in any transaction that is subject to Section 13 or 14 of the Exchange
Act.
6.6 COMPLIANCE WITH ERISA. To the extent an event or condition
specified in this Section 6.6 has a reasonable likelihood of having a Material
Adverse Effect, the Borrower shall not directly or indirectly and shall not
permit any ERISA Affiliate directly or indirectly (i) to terminate any Plan
subject to Title IV of ERISA, (ii) to permit to exist any ERISA Event, (iii) to
enter into any new Plan or modify any existing Plan so as to increase its
obligations thereunder except in the ordinary course of business consistent with
past practice or (iv) permit the existence of Unfunded Pension Liabilities.
6.7 CONSOLIDATED TANGIBLE NET WORTH. The Borrower shall not permit
its Consolidated Tangible Net Worth at any time to be less than $250,000,000
PLUS 50% of each quarter's consolidated net income commencing February 1, 1994
(but without reduction for any losses) PLUS 75% of the Net Issuance Proceeds of
any equity securities issued by the Borrower (other than from Net Issuance
Proceeds received from employees' and pension plans' customary quarterly stock
purchases).
6.8 CONSOLIDATED FUNDED DEBT TO CAPITAL RATIO. The Borrower shall not
at any time permit its ratio of Consolidated Funded Debt to Consolidated Capital
to be greater than 0.45 to 1.00.
6.9 ACCOUNTING CHANGES. The Borrower shall not, and shall not suffer
or permit any of its Subsidiaries to, make any significant change in accounting
treatment or reporting practices, except as required or permitted by GAAP, or
change the fiscal year of the Borrower or of any of its consolidated
Subsidiaries; PROVIDED, HOWEVER, that if any change GAAP would affect the
computation of any covenants herein, the parties will
(4037704.04) - 39 - 4/10/95
<PAGE>
enter into good faith negotiations to adjust such covenants in order to
implement the original intent of the parties with respect to such covenants,
and, until such adjustments are agreed upon by the Borrower and the Bank, the
prior version of GAAP shall be used in computing compliance with such covenants.
6.10 BILATERAL AGREEMENTS. The Borrower shall not enter into any
waiver, amendment, extension, renewal or other modification to any Bilateral
Agreement without concurrently offering the Bank the right to similarly waive,
amend, extend, renew or otherwise modify this Agreement with all, but not less
than all, of the terms and conditions of such waiver, amendment, extension,
renewal or other modification. The Bank shall have the right to accept or
reject such waiver, amendment, extension, renewal or other modification to this
Agreement in its sole discretion.
SECTION 7. EVENTS OF DEFAULT
7.1 EVENTS OF DEFAULT. Any of the following shall constitute an
"Event of Default":
(a) NON-PAYMENT. The Borrower fails to pay, (i) within one day
after the same shall become due, any amount of principal of any Loan, or (ii)
within five days after the same shall become due, any interest on any Loan, fee
or any other amount payable hereunder or pursuant to any other Loan Document; or
(b) REPRESENTATION OR WARRANTY. Any material representation or
warranty by the Borrower made or deemed made herein, in any Loan Document, or
which is contained in any certificate, document or financial or other statement
by the Borrower, any of its Subsidiaries, or their respective Responsible
Officers, furnished at any time under this Agreement, or in or under any Loan
Document, shall prove to have been incorrect in any material respect on or as of
the date made or deemed made; or
(c) SPECIFIC DEFAULTS. The Borrower fails to perform or observe
any term, covenant or agreement contained in Section 6.3, 6.5, 6.7 or 6.8; or
(d) OTHER DEFAULTS. The Borrower fails to perform or observe
any other term, covenant or agreement contained in any Loan Document not
specifically mentioned in this Section 7.1 and, such default shall continue
unremedied for a period of 30 days after notice by the Bank thereof; or
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<PAGE>
(e) CROSS DEFAULT TO BILATERAL AGREEMENTS. The Borrower (i)
fails to make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) under any Bilateral Agreement;
or (ii) fails to perform or observe any other condition or covenant, or any
other event shall occur or condition exist, under any Bilateral Agreement, if
the effect of such failure, event or condition is to cause, or to permit the
holder or holders of Indebtedness thereunder to cause such Indebtedness to be
declared to be due and payable prior to its stated maturity; or
(f) CROSS DEFAULT. The Borrower or any of its Subsidiaries (i)
fails to make any payment in respect of any Indebtedness or Contingent
Obligation owing to any Person (other than the Obligations hereunder) when due
(whether by scheduled maturity, required prepayment, acceleration, demand,
or otherwise) having an aggregate principal amount (including undrawn committed
or available amounts and including amounts owing to all creditors under any
combined or syndicated credit arrangement) of more than $10,000,000; or (ii)
fails to perform or observe any other condition or covenant, or any other event
shall occur or condition exist, under any agreement or instrument relating to
any such Indebtedness or Contingent Obligation having an aggregate principal
amount (including undrawn committed or available amounts and including amounts
owing to all creditors under any combined or syndicated credit arrangement) of
more than $10,000,000, if the effect of such failure, event or condition is to
cause, or to permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause such Indebtedness to
be declared to be due and payable prior to its stated maturity, or such
Contingent Obligation to become payable or cash collateral in respect thereof to
be demanded; or
(g) INSOLVENCY; VOLUNTARY PROCEEDINGS. The Borrower or any of
its Subsidiaries, (i) ceases or fails to be solvent, or generally fails to pay,
or admits in writing its inability to pay, its debts as they become due, subject
to applicable grace periods, if any, whether at stated maturity or otherwise;
(ii) voluntarily ceases to conduct its business in the ordinary course; (iii)
commences any Insolvency Proceeding with respect to itself; or (iv) takes any
action to effectuate or authorize any of the foregoing; or
(h) INVOLUNTARY PROCEEDINGS. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Borrower or any of its
Subsidiaries, or any writ, judgment, warrant of attachment, execution or similar
process, is issued or levied against a substantial part of the Borrower's or any
Subsidiary's Properties, and any such proceeding or petition shall not be
(4037704.04) - 41 - 4/10/95
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dismissed, or such writ, judgment, warrant of attachment, execution or similar
process shall not be released, vacated or fully bonded within 60 days after
commencement, filing or levy; (ii) the Borrower or any of its Subsidiaries
admits the material allegations of a petition against it in any Insolvency
Proceeding, or an order for relief (or similar order under non-U.S. law) is
ordered in any Insolvency Proceeding; or (iii) the Borrower or any of its
Subsidiaries acquiesces in the appointment of a receiver, trustee, custodian,
conservator, liquidator, mortgagee in possession (or agent therefor), or other
similar Person for itself or a substantial portion of its Property or business;
or
(i) ERISA. Any of the following events or conditions occurs or
exists which has a reasonable likelihood of having a Material Adverse Effect:
(i) the Borrower or an ERISA Affiliate shall fail to pay when due, after the
expiration of any applicable grace period, any installment payment with respect
to its withdrawal liability under a Multiemployer Plan; (ii) the Borrower or an
ERISA Affiliate shall fail to satisfy its contribution requirements under
Section 412(c)(11) of the Code, whether or not it has sought a waiver under
Section 412(d) of the Code; (iii) an ERISA Event; (iv) a Plan that is intended
to be qualified under Section 401(a) of the Code shall lose its qualification;
or (v) the occurrence of any combination of events listed in clauses (iii)
through (iv) that involves a net increase in aggregate Unfunded Pension
Liabilities and other liabilities; or
(j) MONETARY JUDGMENTS. One or more final (non-interlocutory)
judgments, orders or decrees shall be entered against the Borrower or any of its
Subsidiaries, involving in the aggregate a liability (not fully covered by
independent third-party insurance and for which the relevant insurer has
acknowledged liability) as to any single or related series of transactions,
incidents or conditions, of $500,000 or more, and the same shall remain
unsatisfied, unvacated and unstayed pending appeal for a period of 30 days after
the entry thereof or such later time as may be provided for the filing of an
appeal; or
(k) CHANGE IN CONTROL. (i) Any Person (other than a Plan or
Plans) or two or more Persons (other than a Plan or Plans) acting in concert
shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under the Securities and Exchange Act of
1934, as amended), directly or indirectly, of securities of the Borrower (or
other securities convertible into such securities) representing 20% or more of
the combined voting power of all securities of the Borrower entitled to vote in
the election of directors, other than securities having such power only by
reason of the happening of a contingency; or (ii) individuals who at the
(4037704.04) - 42 - 4/10/95
<PAGE>
beginning of any two year period constituted the Borrower's Board of Directors
cease for any reason to constitute a majority of directors then in office; or
(l) SUSPENSION. Any Governmental Authority shall notify or
otherwise advise the Borrower or any of its Subsidiaries in writing or verbally
to the effect that the Borrower or any of its Subsidiaries is ineligible or
disqualified in any respect as a present or future contractor to a Governmental
Authority and such ineligibility or disqualification constitutes a Material
Adverse Effect.
7.2 REMEDIES. Upon the occurrence of any Event of Default described
in Section 7.1(g) or 7.1(h) the Commitment will be terminated automatically
without any affirmative action on the part of the Bank, and the Loans (with
accrued interest thereon) and all other amounts owing under this Agreement shall
become due and payable, without presentment, demand, protest or other notice of
any kind, all of which are hereby expressly waived, anything contained herein to
the contrary notwithstanding. Upon the occurrence of any other Event of Default
the Bank may, by written notice to the Borrower (x) terminate the Commitment
and/or (y) declare the Loans (with accrued interest thereon) and all other
amounts owing under this Agreement to be due and payable, forthwith, whereupon
the same will immediately become due and payable, without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived,
anything contained herein to the contrary notwithstanding.
7.3 RIGHTS NOT EXCLUSIVE. The rights provided for in this Agreement
and the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
SECTION 8. MISCELLANEOUS
8.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision
of this Agreement or any other Loan Document, and no consent with respect to any
departure by the Borrower therefrom, shall be effective unless the same shall be
in writing and signed by the Bank and the Borrower.
8.2 NOTICES.
(a) All notices, requests and other communications provided for
hereunder shall be in writing (including, unless the context expressly otherwise
provides, by
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<PAGE>
facsimile transmission, provided that any matter transmitted by the Borrower by
facsimile (i) shall be immediately confirmed by a telephone call to the
recipient at the number specified on the applicable signature page hereof, and
(ii) shall be followed promptly by a hard copy original thereof) and mailed,
faxed or delivered, to the address or facsimile number specified for notices on
the applicable signature page hereof; or, as directed to the Borrower or the
Bank, to such other address as shall be designated by such party in a written
notice to the other parties, and as directed to each other party, at such other
address as shall be designated by such party in a written notice to the Borrower
and the Bank.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next day) delivery, or transmitted by facsimile machine,
respectively, or if delivered, upon delivery, except that notices pursuant to
Section 2 or 8 shall not be effective until actually received by the Bank.
(c) The Borrower acknowledges and agrees that any agreement of
the Bank in Section 2 herein to receive certain notices by telephone and
facsimile is solely for the convenience and at the request of the Borrower. The
Bank shall be entitled to rely on the authority of any Person purporting to be a
Person authorized by the Borrower to give such notice and the Bank shall not
have any liability to the Borrower or other Person on account of any action
taken or not taken by the Bank in reliance upon such telephonic or facsimile
notice, provided that in no event shall the Bank act on telephonic or facsimile
notice requiring funds to be sent to any account other than an account
previously specified by the Borrower in writing in accordance with Section
2.3(a). The obligation of the Borrower to repay the Loans shall not be affected
in any way or to any extent by any failure by the Bank to receive written
confirmation of any telephonic or facsimile notice or the receipt by the Bank of
a confirmation which is at variance with the terms understood by the Bank to be
contained in the telephonic or facsimile notice.
8.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of the Bank, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.
8.4 COSTS AND EXPENSES. The Borrower shall, whether or not the
transactions contemplated hereby shall be consummated:
(4037704.04) - 44 - 4/10/95
<PAGE>
(a) pay or reimburse the Bank within five Business Days after
demand for all reasonable costs and expenses incurred by the Bank in connection
with the development, preparation, delivery, administration and execution of,
and any amendment, supplement, waiver or modification to (in each case, whether
or not consummated), this Agreement, any Loan Document and any other documents
prepared in connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, including the reasonable Attorney
Costs incurred by the Bank with respect thereto;
(b) pay or reimburse the Bank after demand for all reasonable
costs and expenses incurred by it in connection with the enforcement after a
Default or Event of Default, or preservation of any rights or remedies
(including in connection with any "workout" or restructuring regarding the
Loans, and including in any Insolvency Proceeding or appellate proceeding) under
this Agreement, any other Loan Document, and any such other documents, including
Attorney Costs incurred by the Bank; and
(c) pay or reimburse the Bank after demand for all reasonable
appraisal (including the allocated cost of internal appraisal services), audit
and environmental inspection and review costs (including the allocated cost of
such internal services), incurred after notice to the Borrower, and search and
filing costs, fees and expenses, incurred or sustained by the Bank in connection
with the matters referred to under Sections (a) and (b) of this Section.
8.5 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the Bank.
8.6 ASSIGNMENTS, PARTICIPATIONS, ETC.
(a) The Bank may at any time, upon notice to the Borrower,
assign and delegate to one or more banks or other financial institutions
reasonably acceptable to the Borrower (each an "ASSIGNEE") all, or any part of
all, of the Loans, the Commitment and the other rights and obligations of the
Bank in increments of not less than $5,000,000.
(b) From and after the date that the Bank notifies the Borrower,
(i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it, shall have the rights
and obligations of the Bank under the Loan Documents, and (ii) the assignor Bank
shall, to the extent that rights and obligations
(4037704.04) - 45 - 4/10/95
<PAGE>
hereunder and under the other Loan Documents have been assigned by it,
relinquish its rights and be released from its obligations under the Loan
Documents.
(c) Promptly after its receipt of notice by the Bank that it has
assigned a portion of the Loans and Commitment to an Assignee, the Borrower
shall execute and deliver to the Assignee, if requested, a new Note evidencing
such Assignee's assigned Loans and Commitment and, if the assignor Bank has
retained a portion of its Loans and the Commitment and holds a Note, a
replacement Note in the principal amount of the Loans retained by the assignor
Bank (such Note to be in exchange for, but not in payment of, the Note held by
such Bank). Immediately upon the effectiveness of any such assignment, this
Agreement shall be deemed to be amended to the extent, but only to the extent,
necessary to reflect the addition of the Assignee and the resulting adjustment
of the Commitment arising therefrom. The Commitment allocated to each Assignee
shall reduce the Commitment of the assigning Bank PRO TANTO.
(d) The Bank may at any time sell to one or more commercial
banks or other Persons not Affiliates of the Borrower (a "PARTICIPANT")
participating interests in any Loans, the Commitment and the other interests of
the Bank hereunder and under the other Loan Documents; PROVIDED, HOWEVER, that
(i) the Bank's obligations under this Agreement shall remain unchanged, (ii) the
Bank shall remain solely responsible for the performance of such obligations,
(iii) the Borrower shall continue to deal solely and directly with the Bank in
connection with the Bank's rights and obligations under this Agreement and the
other Loan Documents and (iv) no participant shall have the right to enforce any
obligation of the Borrower hereunder and no consent of any participant shall be
required for any modification, waiver or amendment of this Agreement or any of
the Loan Documents, except that a participant's consent may be required to (a)
increase or extend the Commitment or reinstate the Commitment if terminated
pursuant to Section 7.2); (b) postpone or delay any date fixed by this Agreement
or any other Loan Document for any payment of principal, interest, fees or other
amounts due to the Bank; (c) reduce the principal of, or the rate of interest
specified herein on any Loan, or any fees or other amounts payable hereunder or
under any other Loan Document any portion of which would be distributed to the
participant; (d) amend this Section or Sections 2.12 through 2.15. In the case
of any such participation, the Participant shall be entitled to the benefit of
Sections 2.12 through 2.15 as though it were also the Bank hereunder, and if
amounts outstanding under this Agreement are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this
(4037704.04) - 46 - 4/10/95
<PAGE>
Agreement to the same extent as if the amount of its participating interest were
owing directly to it as the Bank under this Agreement.
(e) Notwithstanding anything else contained in this Section 8.6,
the Bank may assign its rights under this Agreement (including without
limitation rights to payment of principal and interest under any Note held by
it) to any of its Affiliates; or may pledge its rights under this Agreement
(including without limitation rights to payment of principal and interest under
any Note held by it) to any Federal Reserve Bank, provided that no pledge to a
Federal Reserve Bank shall release the Bank from its obligations hereunder, or
grant to such Federal Reserve Bank any rights of the Bank hereunder, absent
foreclosure of such pledge.
8.7 SET OFF. In addition to any rights and remedies of the Bank
provided by law, if an Event of Default exists, the Bank is authorized at any
time and from time to time, without prior notice to the Borrower, any such
notice being waived by the Borrower to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by, and other indebtedness at any time
owing to, the Bank to or for the credit or the account of the Borrower against
any and all Obligations owing to the Bank, or any of the Bank's Affiliates now
or hereafter existing, irrespective of whether or not the Bank shall have made
demand under this Agreement or any Loan Document and although such Obligations
may be contingent or unmatured and each such Affiliate is hereby irrevocably
authorized to permit such set off and application; PROVIDED, HOWEVER, that the
Bank will provide the Borrower with prompt notice after the Bank has exercised
its right of set off pursuant to this Section 8.7; PROVIDED, FURTHER, that the
failure to provide such notice shall not invalidate such set off.
8.8 AUTOMATIC DEBITS OF FEES. With respect to any commitment fee, or
other fee, or any other cost or expense (including Attorney Costs) due and
payable to the Bank under the Loan Documents and not paid within the applicable
payment period, the Borrower hereby irrevocably authorizes the Bank to debit any
deposit account of the Borrower with the Bank in an amount such that the
aggregate amount debited from all such deposit accounts does not exceed such fee
or other cost or expense. If there are insufficient funds in such deposit
accounts to cover the amount of the fee or other cost or expense then due, such
debits will be reversed (in whole or in part, in the Bank's sole discretion) and
such amount not debited shall be deemed to be unpaid. No such debit under this
Section 8.8 shall be deemed a setoff.
(4037704.04) - 47 - 4/10/95
<PAGE>
8.9 COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement in any number of separate counterparts, each of
which, when so executed, shall be deemed an original, and all of said
counterparts taken together shall be deemed to constitute but one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Borrower and the Bank.
8.10 SEVERABILITY. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
8.11 NO THIRD PARTIES BENEFITED. This Agreement is made and entered
into for the sole protection and legal benefit of the Borrower and the Bank, and
their permitted successors and assigns, and no other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any of the other Loan Documents.
The Bank shall not have any obligation to any Person not a party to this
Agreement or other Loan Documents.
8.12 TIME. Time is of the essence as to each term or provision of
this Agreement and each of the other Loan Documents.
8.13 GOVERNING LAW AND JURISDICTION.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA; PROVIDED THAT THE PARTIES
HERETO SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT AND ANY OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE
OF CALIFORNIA OR OF THE UNITED STATES FOR THE CENTRAL DISTRICT OF CALIFORNIA,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWER AND THE
BANK CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE Borrower AND THE BANK IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE BORROWER AND THE BANK EACH WAIVE
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE
BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.
8.14 ENTIRE AGREEMENT. This Agreement, together with the other Loan
Documents, embodies the entire agreement and
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<PAGE>
understanding between the Borrower and the Bank, and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof, and any prior
arrangements made with respect to the payment by the Borrower of (or any
indemnification for) any fees, costs or expenses payable to or incurred (or to
be incurred) by or on behalf of the Bank.
8.15 INTERPRETATION. This Agreement is the result of negotiations
between and has been reviewed by counsel to the Bank, the Borrower and other
parties, and is the product of all parties hereto. Accordingly, this Agreement
and the other Loan Documents shall not be construed against the Bank merely
because of the Bank's involvement in the preparation of such documents and
agreements.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
as of the day and year first above written.
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
By: /S/WILLIAM A. ROPER
------------------------------
William A. Roper
Senior Vice President and
Chief Financial Officer
By: /S/WARD REED
------------------------------
Ward Reed
Corporate Vice President and
Treasurer
Address:
10260 Campus Drive
San Diego, California 92121
Att: Ward Reed, Treasurer
Telephone: (619) 552-4620
Facsimile: (619) 552-4851
CITICORP USA, INC., a Delaware
corporation
By: /S/EDWARD LETTIERI
------------------------------
Vice President
(4037704.04) - 49 - 4/10/95
<PAGE>
Lending Office:
c/o Citicorp North America, Inc.
725 South Figueroa Street
Los Angeles, California 90017
Att: Antje Kicinski-Pardi
Telephone: (213) 239-2076
Facsimile: (213) 623-3592
Domestic Lending Office:
399 Park Avenue
New York, New York 10043
Eurodollar Lending Office:
399 Park Avenue
New York, New York 10043
For all other notices:
725 South Figueroa Street, Fifth Floor
Los Angeles, California 90017
Telephone: (213) 239-2075
Facsimile: (213)
(4037704.04) - 50 - 4/10/95
<PAGE>
EXHIBIT A
NOTE
$ April 7, 1995
------------------------ Los Angeles, California
FOR VALUE RECEIVED, SCIENCE APPLICATIONS INTERNATIONAL CORPORATION, a
Delaware corporation (the "Borrower"), hereby promises to pay to the order of
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (the "Bank") at its
Lending Office the principal sum of $35,000,000 (or such lesser amount as shall
equal the aggregate unpaid principal amount of the Loans made by the Bank to the
Borrower under the Credit Agreement referred to below), in lawful money of the
United States of America and in immediately available funds, on the dates and in
the principal amounts provided in the Credit Agreement, and to pay interest on
the unpaid principal amount of each such Loan, at such office, in like money and
funds, for the period commencing on the date of such Loan until such Loan shall
be paid in full, at the rates per annum and on the dates provided in the Credit
Agreement.
The date, amount, type, interest rate and duration of Interest Period
(if applicable) of each Loan made by the Bank to the Borrower, and each payment
made on account of the principal of such Loan, shall be recorded by the Bank on
its books and, prior to any transfer of this Note, endorsed by the Bank on the
schedule attached to this Note or any continuation of such schedule, PROVIDED
that the failure of the Bank to make any such recordation or endorsement shall
not affect the obligations of the Borrower to make a payment when due of any
amount owing under the Credit Agreement or under this Note in respect of the
Loans made by the Bank.
This promissory note is the Note referred to in the Credit Agreement
dated as of April 7, 1995 (as extended, renewed, amended or restated and in
effect from time to time, the "Credit Agreement") between the Borrower and Bank.
Capitalized terms used but not defined in this Note have the respective meanings
assigned to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of
this Note upon the occurrence of certain events and for prepayments of Loans
upon the terms and conditions specified in the Credit Agreement.
Except as permitted by the Credit Agreement, this Note may not be
assigned by the Bank or the Borrower to any other Person.
(4037704.04) A-1 - 1 4/10/95
<PAGE>
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED WITHIN
THE STATE OF CALIFORNIA.
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
By:
-------------------------
Title:
----------------------
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A-1 - 2
<PAGE>
SCHEDULE OF LOANS
This Note evidences Loans made, continued or converted under the
Credit Agreement to the Borrower, on the dates, in the principal amounts, of the
types, bearing interest at the rates and having Interest Periods (if applicable)
of the durations set forth below, subject to the payments, continuations,
conversions and prepayments of principal set forth below:
Amount
Date Prin- Paid,
Made, cipal Duration Prepaid, Unpaid
Continued Amount Type of Continued Prin-
or of of Interest Interest or cipal Notation
Converted Loan Loan Rate Period Converted Amount Made by
- --------- ------ ---- -------- -------- --------- ------ --------
(4037704.04) 4/10/95
A-1 - 3
<PAGE>
EXHIBIT B
NOTICE OF BORROWING
Date: , 199
---------------- --
To: Bank of America National Trust
and Savings Association
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of April
7, 1995 (as extended, renewed, amended or restated and in effect from time to
time, the "Credit Agreement") between Science Applications International
Corporation and Bank of America National Trust and Savings Association ("Bank").
Unless otherwise defined herein, capitalized terms used herein have the
respective meanings assigned to them in the Credit Agreement.
Pursuant to Section 2.3 of the Credit Agreement, the Borrower gives
you notice of the requested borrowing specified below:
1. The Business Day of the proposed borrowing is
, 19 .
------------------------ ---
2. The amount of the proposed borrowing is $
-------------------
3. The borrowing is to be comprised of [$]__________ of [Base
Rate] [Offshore Rate] [CD Rate] [Money Market Rate] Loans.
4. The duration of the Interest Period for the [Offshore Rate
Loans] [CD Rate Loans] [Money Market Rate Loans] included in the
borrowing shall be _____ months/weeks/days.
5. The interest rate for the Money Market Rate Loans included in
the borrowing shall be _____ percent per annum (rate to be based upon
quotation from Bank).
The undersigned hereby certifies that the following statements are
true in all material respects on the date hereof, and will be true in all
material respects on the date of the proposed borrowing, before and after giving
effect thereto and to the application of the proceeds therefrom:
(4037704.04) 4/10/95
B - 1
<PAGE>
(a) Except for the representations and warranties set forth in
Section 4.11(b) and 4.13 (which shall be made solely as of the Closing Date, the
representations and warranties made by the Borrower contained in Section 4 are
true and correct in all material respects on and as of this borrowing date with
the same effect as if made on and as of this borrowing date;
(b) No Default or Event of Default shall exist or shall result
from such borrowing; and
(c) The aggregate amount outstanding under this Agreement and
the Bilateral Agreements does not exceed $150,000,000.
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
By:
-------------------------
Title:
----------------------
(4037704.04) 4/10/95
B - 2
<PAGE>
EXHIBIT C
NOTICE OF CONVERSION/CONTINUATION
Date: , 199
---------------- --
To: Bank of America National Trust
and Savings Association
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of April
7, 1995 (as extended, renewed, amended or restated and in effect from time to
time, the "Credit Agreement") between Science Applications International
Corporation and Bank of America National Trust and Savings Association ("Bank").
Unless otherwise defined herein, capitalized terms used herein have the
respective meanings assigned to them in the Credit Agreement.
Pursuant to Section 2.4 of the Credit Agreement, the Borrower gives
you notice of the requested conversion or continuation specified below:
1. The conversion or continuation date is , 19 .
------------ --
2. The aggregate amount of the Loans to be [converted]
[continued] is $ .
--------------
3. The Loans are to be [converted into] [continued as] [Offshore
Rate] [CD Rate] [Money Market Rate] [Base Rate] Loans.
4. [If applicable:] The duration of the Interest Period for the
Loans included in the [conversion] [continuation] shall be ___
months/weeks/days.
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
By:
-------------------------
Title:
----------------------
(4037704.04) 4/10/95
C - 1
<PAGE>
EXHIBIT D
COMPLIANCE CERTIFICATE
Financial
Statement Date: , 199_
------------
Reference is made to that certain Credit Agreement dated as of April
7, 1995 (as extended, renewed, amended or restated and in effect from time to
time, the "CREDIT AGREEMENT") between Science Applications International
Corporation and Bank of America National Trust and Savings Association ("Bank").
Unless otherwise defined herein, capitalized terms used herein have the
respective meanings assigned to them in the Credit Agreement.
The undersigned Responsible Officer of the Borrower, hereby certifies
as of the date hereof that he/she is the __________________ of the Borrower, and
that, as such, is authorized to execute and deliver this certificate to the Bank
on the behalf of the Borrower and its consolidated Subsidiaries, and that:
1. Copies of the financial statements required by Section 5.1(a) or
5.1(b), as applicable, are attached.
2. The undersigned has reviewed and is familiar with the terms of
the Credit Agreement and has made, or has caused to be made under his/her
supervision, a review in reasonable detail of the transactions and conditions
(financial or otherwise) of the Borrower during the accounting period covered by
the attached financial statements.
3. To the best of the undersigned's knowledge, the Borrower, during
such period, has observed, performed or satisfied all of its covenants and other
agreements, and satisfied every condition in the Credit Agreement to be
observed, performed or satisfied by the Borrower, and the undersigned has no
knowledge of any Default or Event of Default as of the date hereof.
4. The following financial covenant analyses and information set
forth on SCHEDULE 1 attached hereto are true and accurate in all material
respects on and as of the date of this Certificate.
(4037704.04) 4/10/95
D - 1
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate as
of , 199 .
------------------- --
SCIENCE APPLICATIONS INTERNATIONAL
CORPORATION
a Delaware corporation
By:
-------------------------------
Name:
------------------------
Title:
-----------------------
(4037704.04) 4/10/95
D - 2
<PAGE>
As of ______________, 199__
SCHEDULE 1
----------
to the Compliance Certificate
COMPLIANCE WITH FINANCIAL COVENANTS
-----------------------------------
1. 6.7 MINIMUM CONSOLIDATED TANGIBLE NET WORTH.
-------------------------------------------
A. Consolidated Tangible Net Worth at :
---------
1. Assets of Borrower and Subsidiaries: $
---------
2. Liabilities of Borrower and
Subsidiaries: $
---------
3. Intangible Assets: unamortized debt
discount, goodwill, and other intangible
items: $
---------
4. PLUS or LESS Foreign Currency
Translation Adjustments $
---------
5. Consolidated Tangible Net Worth (Line A1
LESS Line A2 LESS Line A3 PLUS
or LESS Line A4, as applicable: $
---------
---------
B. 50% of cumulative consolidated net
income from February 1, 1994
(no reduction for losses): $
---------
C. 75% of the Net Issuance Proceeds
(excluding employees' and pension plans'
customary quarterly stock purchases): $
---------
D. Minimum requirement: Lines B+C+
$250,000,000: $
---------
---------
2. 6.8 LEVERAGE RATIO.
------------------
A. Consolidated Funded Debt as of above date:
1. Principal amount of all
Indebtedness for borrowed
money: $
---------
2. Principal portion of Capitalized
(4037704.04) 4/10/95
<PAGE>
Lease Obligations: $
---------
3. All Contingent Obligations: $
---------
4. Consolidated Funded Debt
(Lines A1+A2+A3): $
---------
---------
B. Consolidated Capital for the period ending on date of attached
financial statements ("Subject Period"):
1. Consolidated Funded Debt (Line A4): $
---------
2. Consolidated Tangible Net Worth
(Line 1A): $
---------
3. Consolidated Capital
(Lines B1+B2): $
---------
---------
C. Leverage Ratio (Line A4 divided
by Line B3): to 1:00
----
----
D. Maximum Permitted Leverage Ratio: 0.45 to 1.00
(4037704.04) 4/10/95
<PAGE>
SCHEDULE 4.5
LITIGATION
On February 15, 1994, the Company was served with search warrants and a subpoena
for documents and records associated with the performance by an operating unit
of the Company under three contracts with the DOD. The search warrants and the
subpoena state that the Government is seeking evidence regarding the making of
false statements and false claims to the DOD, as well as conspiracy to commit
such offenses. The search warrant and subpoena were based upon allegations
contained in a civil complaint that had been filed under seal on March 13, 1993,
by an employee of the Company's SAIT operating unit. The complaint was filed in
the U.S. District Court for the Southern District of California and it sought
damages on behalf of the U.S. Government under the federal False Claims Act. On
November 8, 1994, based on the Company's motion, the District Court dismissed
the employee who had originally filed the complaint from the lawsuit. The
employee has appealed the Court's order to the U.S. Court of Appeals for the
Ninth Circuit. The Company has engaged in a series of presentations and
submissions with the Department of Justice in response to issues raised by the
Department of Justice. At this stage of the proceedings, the Company is unable
to assess the impact, if any, of this investigation and lawsuit on its
consolidated financial position, results of operations or ability to conduct
business.
(4037704.04) 4/10/95
-1-
<PAGE>
SCHEDULE 4.7
ERISA PLANS
Qualified Plans:
SAIC:
Science Applications International Corporation Profit Sharing Retirement Plan
Science Applications International Corporation Employee Stock Ownership Plan
Science Applications International Corporation Cash or Deferred Arrangement
Science Applications International Corporation Frederick Employee Savings Plan
Science Applications International Corporation Frederick Retirement Plan *
Subsidiaries:
R.E. Wright Associates, Inc. Retirement Savings Plan
Syntonic Technology, Inc. Retirement Savings Plan
American Systems Engineering Corporation Employee Profit Sharing Plan
General Science Corporation Retirement Plan
Acquired Qualified Plans in process of termination:
JHK & Associates Employees' Retirement Plan
Systems Control Technology Inc. Tax Deferred Savings Plan
Applied Research Inc., Profit Sharing 401K Salary Deferral Plan
Network Solutions 401(k) Plan
The Fleming Group, Inc. 401(k) Profit Sharing Plan
* The SAIC Frederick Retirement Plan is the only defined benefit
plan maintained or sponsored by SAIC subject to Title IV of
ERISA. All of the other Qualified Plans are defined contribution
plans.
(4037704.04) - 1 - 4/10/95
<PAGE>
SCHEDULE 4.12(b)
ENVIRONMENTAL MATTERS
1. On January 18, 1995, the Massachusetts Department of
Environmental Protection (DEP) issued a Notice of Non-compliance
to SAIC Engineering, a subsidiary of SAIC, relating to SAIC
Engineering's oversight of an underground storage tank removal
project. DEP has not fined or otherwise sanctioned SAIC in
connection with this matter.
2. In March, 1995, SAIC was issued a Notice of Violation (NOV) by
the San Diego Metropolitan Industrial Waste Program for exceeding
its industrial discharge limit for lead. SAIC is in the process
of appealing the Notice of Violation.
(4037704.04) - 1 - 4/10/95
<PAGE>
SCHEDULE 4.13
SUBSIDIARIES
American Systems Engineering Corporation ("AMSEC")
Andrew Palmer & Associates Limited
Bull, Inc.
Campus Point Realty Corporation
Energy and Technology Management Corporation ("ETM") - inactive
General Science Corporation ("GSC")
Hicks & Associates, Inc.
JHK & Associates, Inc. ("JHK")
JMD Development Corporation ("JDA")
Network Solutions, Inc. ("NSI")
R.E. Wright Environmental, Inc.
Sachse Engineering Associates, Inc. - inactive
SAIC Columbia, Limitada
SAIC Commercial Enterprises, Inc.
SAIC de Mexico, S.A. de C.V.
SAIC Engineering, Inc.
SAIC Global Technology Corporation
SAIC in Novosibirsk
SAIC - MIR
SAIC Limited (formerly Topexpress, Ltd)
SAIC UK Limited
Science Applications International (Barbados) Corporation
Science Applications International Corporation (SAIC Canada)
Science Applications International, Europe S.A.
Science Applications International Technology
Syntonic Technology, Inc.
Systems Control Technology, Inc. ("SCT")
TST International Pty, Ltd ("TSTI")
Wright Laboratory Services, Inc.
(4037704.04) - 1 - 4/10/95
<PAGE>
SCHEDULE 6.1
EXISTING LIENS
(1) A Deed of Trust between Campus Point Realty Corporation and The
Prudential Insurance Company of America granting a security
interest in real property in the City of San Diego. The real
property is commonly known as Campus Point Building III and the
deed of trust is security for a $12,800,000 (original principal
amount) note assumed by Campus Point Realty Corporation upon the
purchase of the property in 1990. The property purchase price
was $14,195,000.
(2) A Tri-Partite Agreement dated March 21, 1995 between SAIC, the
United State of America (the "Government") and First National
Bank of Maryland (the "Bank") granting the Government a lien upon
the credit balances of two bank accounts established by SAIC with
the Bank. The bank accounts are used exclusively to facilitate
payments of costs associated with an SAIC contract for operations
and technical support for the National Cancer Institute Frederick
Cancer Research and Development Center. The accounts are funded
by advance payments from the Government.
(4037704.04) - 1 - 4/10/95
<PAGE>
CREDIT AGREEMENT
between
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
and
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
Dated as of April 7, 1995
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Interpretive Provisions. . . . . . . . . . . . . . . . . . . 14
(a) Performance; Time . . . . . . . . . . . . . . . . . . . . . . 14
(b) Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.3 Accounting Principles. . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2. THE LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.1 The Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.2 Loan Accounts; Notes . . . . . . . . . . . . . . . . . . . . . . . 15
2.3 Procedure for Borrowings . . . . . . . . . . . . . . . . . . . . . 15
2.4 Conversion and Continuation Elections. . . . . . . . . . . . . . . 16
2.5 Voluntary Termination or Reduction of Commitment . . . . . . . . . 17
2.6 Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.7 Repayment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.8 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.9 Facility Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.10 Computation of Fees and Interest . . . . . . . . . . . . . . . . . 19
2.11 Payments by the Borrower . . . . . . . . . . . . . . . . . . . . . 19
2.12 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.13 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.14 Increased Costs and Reduction of Return. . . . . . . . . . . . . . 21
2.15 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.16 Inability to Determine Rates . . . . . . . . . . . . . . . . . . . 22
SECTION 3. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . 23
3.1 Conditions of Closing. . . . . . . . . . . . . . . . . . . . . . . 23
(a) Credit Agreement. . . . . . . . . . . . . . . . . . . . . . . 23
(b) Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(c) Resolutions; Incumbency . . . . . . . . . . . . . . . . . . . 23
(d) Articles of Incorporation; By-laws and Good Standing. . . . . 23
(e) Certificate . . . . . . . . . . . . . . . . . . . . . . . . . 23
(f) Compliance Certificate. . . . . . . . . . . . . . . . . . . . 24
(g) Termination of Existing Agreements. . . . . . . . . . . . . . 24
(h) Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . . 24
(i) Other Documents . . . . . . . . . . . . . . . . . . . . . . . 24
3.2 Conditions to All Borrowings . . . . . . . . . . . . . . . . . . . 24
(a) Notice of Borrowing or Conversion/ Continuation . . . . . . . 24
(b) Continuation of Representations and Warranties. . . . . . . . 24
(c) No Existing Default . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 25
4.1 Corporate Existence and Power. . . . . . . . . . . . . . . . . . . 25
- i -
<PAGE>
Section Page
4.2 Corporate Authorization; No Contravention. . . . . . . . . . . . . 25
4.3 Governmental Authorization . . . . . . . . . . . . . . . . . . . . 25
4.4 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.6 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.7 ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.8 Use of Proceeds; Margin Regulations. . . . . . . . . . . . . . . . 27
4.9 Title to Properties. . . . . . . . . . . . . . . . . . . . . . . . 27
4.10 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.11 Financial Condition. . . . . . . . . . . . . . . . . . . . . . . . 28
4.12 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . 28
4.13 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.14 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.15 Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . 29
5.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 29
5.2 Certificates; Other Information. . . . . . . . . . . . . . . . . . 30
5.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.4 Preservation of Corporate Existence, Etc . . . . . . . . . . . . . 31
5.5 Maintenance of Property. . . . . . . . . . . . . . . . . . . . . . 32
5.6 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.7 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . 32
5.8 Inspection of Property and Books and Records . . . . . . . . . . . 32
5.9 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . 33
5.10 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 33
6.1 Limitation on Liens. . . . . . . . . . . . . . . . . . . . . . . . 34
6.2 Disposition of Assets. . . . . . . . . . . . . . . . . . . . . . . 36
6.3 Consolidations and Mergers . . . . . . . . . . . . . . . . . . . . 36
6.4 Limitation on Contingent Obligations . . . . . . . . . . . . . . . 37
6.5 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.6 Compliance with ERISA. . . . . . . . . . . . . . . . . . . . . . . 37
6.7 Consolidated Tangible Net Worth. . . . . . . . . . . . . . . . . . 38
6.8 Consolidated Funded Debt to Capital Ratio. . . . . . . . . . . . . 38
6.9 Accounting Changes . . . . . . . . . . . . . . . . . . . . . . . . 38
6.10 Bilateral Agreement. . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . 38
7.1 Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . 38
(a) Non-Payment . . . . . . . . . . . . . . . . . . . . . . . . . 38
(b) Representation or Warranty. . . . . . . . . . . . . . . . . . 39
(c) Specific Defaults . . . . . . . . . . . . . . . . . . . . . . 39
(d) Other Defaults. . . . . . . . . . . . . . . . . . . . . . . . 39
(e) Cross Default to Bilateral Agreements . . . . . . . . . . . . 39
- ii -
<PAGE>
Section Page
(f) Cross Default . . . . . . . . . . . . . . . . . . . . . . . . 39
(g) Insolvency; Voluntary Proceedings . . . . . . . . . . . . . . 40
(h) Involuntary Proceedings . . . . . . . . . . . . . . . . . . . 40
(i) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(j) Monetary Judgments. . . . . . . . . . . . . . . . . . . . . . 40
(k) Change in Control . . . . . . . . . . . . . . . . . . . . . . 41
(l) Suspension. . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.3 Rights Not Exclusive . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.1 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . 42
8.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . 43
8.4 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . 43
8.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . 43
8.6 Assignments, Participations, etc.. . . . . . . . . . . . . . . . . 44
8.7 Set off. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.8 Automatic Debits of Fees . . . . . . . . . . . . . . . . . . . . . 45
8.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.11 No Third Parties Benefited . . . . . . . . . . . . . . . . . . . . 46
8.12 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.13 Governing Law and Jurisdiction . . . . . . . . . . . . . . . . . . 46
8.14 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.15 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . 47
EXHIBITS
A Form of Note
B Notice of Borrowing
C Notice of Conversion/Continuation
D Form of Compliance Certificate
SCHEDULES
1.1 Existing Credit Facilities
4.5 Litigation
4.7 ERISA Plans
4.12(b) Environmental Matters
4.13 Subsidiaries
6.1 Existing Liens
- iii -
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of April 7, 1995, between SCIENCE
APPLICATIONS INTERNATIONAL CORPORATION, a Delaware corporation (the "Borrower"),
and MORGAN GUARANTY TRUST COMPANY OF NEW YORK (the "Bank").
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the following terms
will have the following meanings, unless the context otherwise requires:
"AFFILIATE" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract or otherwise. In no
event shall the Bank be deemed an "Affiliate" of the Borrower or of any
Subsidiary of the Borrower.
"AGREEMENT" means this Credit Agreement, as amended from time to time
in accordance with the terms hereof.
"APPLICABLE MARGIN" means the rates per annum, expressed in basis
points, set forth below:
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Leverage Ratio LESS THAN OR EQUAL TO 0.30:1.00 GREATER THAN 0.30:1.00
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Facility Fee 12.5 b.p. 15.0 b.p.
- -----------------------------------------------------------------------------
Offshore Rate Margin 25.0 b.p. 28.0 b.p.
- -----------------------------------------------------------------------------
CD Rate Margin 37.5 b.p. 40.0 b.p.
- -----------------------------------------------------------------------------
Base Rate Margin 0 0
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
The Leverage Ratio shall be that reflected on the most recent
Compliance Certificate received by the Bank pursuant to Section 5.2(a). If the
Bank does not receive a Compliance Certificate by the date required by Section
5.2(a), the Applicable Margin shall, effective as of such date, be the highest
Applicable Margin, which shall remain in effect to but excluding the date the
Bank receives such certificate. Subject to the foregoing, until the delivery of
the first Compliance Certificate after the Closing Date, the Applicable Margin
shall
- 1 -
<PAGE>
be that indicated by the certificate delivered pursuant to Section 3.1(f).
"ATTORNEY COSTS" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the allocated cost of
internal legal services and all disbursements of internal counsel.
"BANKRUPTCY CODE" means the Federal Bankruptcy Reform Act of 1978 (12
U.S.C. section 101, ET SEQ.).
"BASE RATE" means the higher of: (a) the rate of interest publicly
announced from time to time by the Bank in New York, New York as its "reference
rate," which is a rate set by the Bank based upon various factors including the
Bank's costs and desired return, general economic conditions and other factors,
and is used as a reference point for pricing some loans, which may be priced at,
above, or below such announced rate; and (b) one-half percent per annum above
the Federal Funds Rate. Any change in the reference rate announced by the Bank
shall take effect at the opening of business on the day specified in the public
announcement of such change.
"BASE RATE LOAN" means a Loan bearing interest at the rate determined
by reference to the Base Rate.
"BILATERAL AGREEMENT" means those certain credit agreements entered
into substantially concurrently with this Agreement and having terms and
conditions substantially the same as those contained herein between the Borrower
and each of Citicorp USA, Inc. and Bank of America National Trust and Savings
Association.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which commercial banks in New York City or San Francisco are authorized
or required by law to close and, if the applicable Business Day relates to any
Offshore Rate Loan, means such a day on which dealings are carried on in the
applicable offshore dollar interbank market.
"CAPITAL ADEQUACY REGULATION" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other law
(provided that if such guideline, request or directive does not have the force
of law, compliance therewith is customary for banks regulated in a manner
similar to the Bank), rule or regulation, whether or not having the force of
law, in each case, regarding capital adequacy of the Bank or of any corporation
controlling the Bank.
"CAPITAL LEASE" has the meaning specified in the definition of Capital
Lease Obligations.
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<PAGE>
"CAPITAL LEASE OBLIGATIONS" means all monetary obligations of the
Borrower or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, is classified as a capital lease ("CAPITAL
LEASE").
"CD RATE" means, for each Interest Period in respect of a CD Rate
Loan, the rate of interest (rounded upward to the nearest 1/100th of 1%)
determined pursuant to the following formula:
CD Rate = Certificate of Deposit Rate + Assessment
---------------------------
1.0 - Reserve Percentage Rate
Where:
"ASSESSMENT RATE" means the net annual assessment rate applicable
to the Bank determined by the Bank to be in effect on the first day of
such Interest Period payable by banks to the Federal Deposit Insurance
Corporation, or any successor, for insuring time deposits made in
dollars at the offices of banks in the United States.
"CERTIFICATE OF DEPOSIT RATE" means for any Interest Period for a
CD Rate Loan, the rate of interest per annum determined by the Bank to
be the arithmetic mean (rounded upward to the nearest 1/100th of 1%)
of the rates notified to the Bank as the rates of interest bid by two
or more certificate of deposit dealers of recognized standing selected
by the Bank for the purchase at face value of dollar certificates of
deposit issued by major United States banks, for a maturity comparable
to such Interest Period and in the approximate amount of the CD Rate
Loan to be made, at the time selected by the Bank on the first day of
such Interest Period.
"RESERVE PERCENTAGE" means for any Interest Period for a CD Rate
Loan the maximum reserve percentage (expressed as a decimal, rounded
upward to the nearest 1/100th of 1%), as determined by the Bank, in
effect on the first day of such Interest Period (including any
ordinary, marginal, emergency, supplemental, special and other reserve
percentages) prescribed by the Federal Reserve Board for determining
the maximum reserves to be maintained by member banks of the Federal
Reserve System with deposits exceeding $1,000,000,000 for new
non-personal time deposits for a period comparable to such Interest
Period and in an amount of $100,000 or more.
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<PAGE>
"CD RATE LOAN" means a Loan bearing interest at the rate determined by
reference to the CD Rate.
"CERCLA" has the meaning specified in the definition of "Environmental
Laws."
"CLOSING DATE" means the date on which all conditions precedent set
forth in Section 3.1 are satisfied or waived by the Bank.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITMENT" means $35,000,000, as such amount may be reduced pursuant
to Section 2.5.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of Exhibit D annexed hereto.
"CONSOLIDATED CAPITAL" means the sum of Consolidated Funded Debt and
Consolidated Tangible Net Worth.
"CONSOLIDATED FUNDED DEBT" means, for any period, for the Borrower and
its Subsidiaries on a consolidated basis in accordance with GAAP, an amount
equal to the sum of, without duplication, (a) all Indebtedness of such Person
for borrowed money or which has been incurred in connection with the acquisition
of assets (excluding therefrom deferred salary, accrued interest and policy
loans related to the cash value of life insurance policies purchased in
connection with the Keystaff Deferral Plan or similar executive compensation
programs) PLUS (b) the principal portion of all Capital Lease Obligations of
such Person PLUS (c) all Contingent Obligations of such Person with respect to
Consolidated Funded Debt of others.
"CONSOLIDATED TANGIBLE NET WORTH" means, at any date of determination,
the net worth of the Borrower and its Subsidiaries on a consolidated basis,
without giving effect to translation adjustments, and MINUS intangible assets,
all determined in conformity with GAAP. Consolidated Tangible Net Worth shall
include any amounts classified as temporary or mezzanine equity pursuant to the
limited put rights associated with Borrower shares held in the ESOP.
"CONTINGENT OBLIGATION" means, as applied to any Person, any direct or
indirect liability of that Person with respect to any Indebtedness, lease,
dividend, letter of credit or other obligation (the "primary obligations") of
another Person (the "primary obligor"), including any obligation of that Person,
whether or not contingent, (a) to purchase, repurchase or otherwise acquire
such primary obligations or any Property constituting direct or indirect
security therefor, or (b) to
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<PAGE>
advance or provide funds (i) for the payment or discharge of any such primary
obligation, or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
item, level of income or financial condition of the primary obligor, or (c) to
purchase Property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, or (d) otherwise to assure or hold
harmless the holder of any such primary obligation against loss in respect
thereof. The amount of any Contingent Obligation shall be deemed equal to the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or if indeterminable, the
maximum reasonably anticipated liability in respect thereof.
"CONTRACTUAL OBLIGATIONS" means, as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement to
which such Person is a party or by which it or any of its Property is bound.
"CONTROLLED GROUP" means the Borrower and all Persons (whether or not
incorporated) under common control or treated as a single employer with the
Borrower pursuant to Section 414(b), (c), (m) or (o) of the Code.
"DEFAULT" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
"EFFECTIVE DATE" means April 13, 1995.
"ENVIRONMENTAL CLAIMS" means all claims, however asserted, by any
Governmental Authority or other Person alleging liability or responsibility for
violation of any Environmental Law or for release or injury to the environment
or threat to public health, personal injury (including sickness, disease or
death), Property damage, natural resources damage, or otherwise alleging
liability or responsibility for damages (punitive or otherwise), cleanup,
removal, remedial or response costs, restitution, civil or criminal penalties,
injunctive relief, or other type of relief, resulting from or based upon (a) the
presence, placement, discharge, emission or release (including intentional and
unintentional, negligent and non-negligent, sudden or non-sudden, accidental or
non-accidental placement, spills, leaks, discharges, emissions or releases) of
any Hazardous Material at, in, or from Property, whether or not owned by the
Borrower, or (b) any other circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law.
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<PAGE>
"ENVIRONMENTAL LAWS" means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authorities, in each case
relating to environmental, health, safety and land use matters (excluding
matters relating to zoning and building permits); including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), the
Clean Air Act, the Federal Water Pollution Control Act of 1972, the Solid Waste
Disposal Act, the Federal Resource Conservation and Recovery Act, the Toxic
Substances Control Act, the Emergency Planning and Community Right-to-Know Act,
the California Hazardous Waste Control Law, the California Solid Waste
Management, Resource, Recovery and Recycling Act, the California Water Code and
the California Health and Safety Code.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control with the Borrower or any Subsidiary of the
Borrower within the meaning of Section 414(b), 414(c) or 414(m) of the Code.
"ERISA EVENT" means (a) a Reportable Event with respect to a Qualified
Plan or a Multiemployer Plan; (b) a withdrawal by any member of the Controlled
Group from a Qualified Plan subject to Section 4063 of ERISA during a plan year
in which it was a substantial employer (as defined in Section 4001(a)(2) of
ERISA); (c) a complete or partial withdrawal by any member of the Controlled
Group from a Multiemployer Plan; (d) the filing of a notice of intent to
terminate, the treatment of a plan amendment as a termination under Section 4041
or 4041A of ERISA or the commencement of proceedings by the PBGC to terminate a
Qualified Plan or Multiemployer Plan subject to Title IV of ERISA; (e) a failure
to make required contributions to a Qualified Plan or Multiemployer Plan; (f) an
event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Qualified Plan or Multiemployer Plan; (g) the
imposition of any liability under Title IV of ERISA, other than PBGC premiums
due but not delinquent under Section 4007 of ERISA, upon any member of the
Controlled Group; (h) an application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code with respect to any
Qualified Plan; (i) any member of the Controlled Group engages in or otherwise
becomes liable for a non-exempt prohibited transaction which would have a
Material Adverse Effect; or (j) a violation of the applicable requirements of
Section 404 or 405 of ERISA or the exclusive benefit rule under Section 401(a)
of the Code by any fiduciary with respect to any Qualified Plan for which the
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<PAGE>
Borrower or any of its Subsidiaries may be directly or indirectly liable which
would have a Material Adverse Effect.
"EURODOLLAR RESERVE PERCENTAGE" has the meaning specified in the
definition of "Offshore Rate".
"EVENT OF DEFAULT" means any of the events or circumstances specified
in Section 7.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"EXISTING AGREEMENTS" means (a) that certain Credit Agreement dated as
of October 31, 1988 between the Borrower and Bank of America National Trust and
Savings Association; (b) that certain Credit Agreement dated as of October 31,
1988 between the Borrower and Citicorp USA, Inc. and (c) that certain Credit
Agreement dated as of May 26, 1992 between the Borrower and Bank of America
Illinois (formerly named Continental Bank).
"FEDERAL FUNDS RATE" means the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day of determination
(or if such day of determination is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a Business Day, the average of the quotations
for such day on such transaction received by the Bank from three Federal funds
brokers of recognized standing selected by it.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System, or any successor thereto.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession), or in such other statements by such other entity as may be in
general use by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination.
"GOVERNMENTAL AUTHORITY" means (a) any international, foreign,
federal, state, county or municipal government, or political subdivision
thereof, (b) any governmental agency, authority, board, bureau, commission,
department or instrumentality, or (c) any court or administrative tribunal.
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<PAGE>
"HAZARDOUS MATERIALS" means all those substances which are regulated
by, or which may form the basis of liability under, any Environmental Law,
including all substances identified under any Environmental Law as a pollutant,
contaminant, hazardous waste, hazardous constituent, special waste, hazardous
substance, hazardous material, or toxic substance, or petroleum or petroleum
derived substance or waste.
"INDEBTEDNESS" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of Property or services (other than trade
payables entered into in the ordinary course of business pursuant to ordinary
terms); (c) all matured or drawn and unreimbursed reimbursement obligations with
respect to surety bonds, letters of credit, bankers' acceptances and similar
instruments (in each case, to the extent material or non-contingent); (d) all
obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition
of Property, assets or businesses; (e) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to Property acquired by the Person (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such Property); (f) all
Capital Lease Obligations; (g) all indebtedness referred to in clauses (a)
through (f) above secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any Lien upon or
in Property (including accounts and contracts rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Indebtedness; and (h) all Contingent Obligations in respect of indebtedness or
obligations of others of the kinds referred to in clauses (a) through (f) above.
Indebtedness shall not include life insurance policy loans secured by the
surrender value of such life insurance policy.
"INSOLVENCY PROCEEDING" means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; in the case of clause (a) and (b) undertaken under U.S. Federal,
State or foreign law, including the Bankruptcy Code.
"INTEREST PAYMENT DATE" means, (a) with respect to any Offshore Rate
Loan, CD Rate Loan or a Money Market Rate Loan, the last Business Day of each
Interest Period applicable to such
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<PAGE>
Loan; (b) with respect to any Base Rate Loan, the last Business Day of each
calendar quarter and each date a Base Rate Loan is converted into an Offshore
Rate Loan, CD Rate Loan or a Money Market Loan; and (c) with respect to all
Loans, the Maturity Date; PROVIDED, HOWEVER, that if (i) any Interest Period for
a Money Market Rate Loan or an Offshore Rate Loan exceeds three months, interest
shall also be paid on the date which falls three months after the beginning of
such Interest Period; and (b) if any Interest Period for a CD Rate Loan exceeds
90 days, interest shall also be paid on the date which falls 90 days after the
beginning of such Interest Period.
"INTEREST PERIOD" means, (a) with respect to any Offshore Rate Loan,
the period commencing on the Business Day the Offshore Rate Loan is disbursed or
continued or on the date on which a Loan is converted into a Offshore Rate Loan
and ending on the date one, two, three or six months thereafter, as selected by
the Borrower in its Notice of Borrowing or Notice of Conversion/Continuation;
(b) with respect to any CD Rate Loan, the period commencing on the Business Day
the CD Rate Loan is disbursed or continued or on the date on which a Loan is
converted to the CD Rate Loan and ending 30, 60, 90 or 180 days thereafter, as
selected by the Borrower in its Notice of Borrowing or Notice of
Conversion/Continuation; and (c) with respect to any Money Market Rate Loan, the
period commencing on the Business Day that the Money Market Rate Loan is
disbursed or continued or on the date on which a Loan is converted into a Money
Market Rate Loan and ending on the date which is (i) 1 to 7 days thereafter or
(ii) one or more weeks or one or more months thereafter but in no event
exceeding six months, in each case as selected by the Borrower in its Notice of
Borrowing; PROVIDED that:
(i) if any Interest Period pertaining to an Offshore Rate
Loan, CD Rate Loan or a Money Market Rate Loan would otherwise end on
a day which is not a Business Day, that Interest Period shall be
extended to the next succeeding Business Day unless, in the case of an
Offshore Rate Loan, the result of such extension would be to carry
such Interest Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding Business Day;
(ii) any Interest Period pertaining to a Offshore Rate
Loan or Money Market Rate Loan that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at
the end of such Interest Period; and
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<PAGE>
(iii) no Interest Period for any Loan shall extend beyond
the Maturity Date.
"LENDING OFFICE" means, with respect to the Bank, the office or
offices of the Bank specified as its "Lending Office" or "Domestic Lending
Office" or "Offshore Lending Office", as the case may be, opposite its name on
the signature page hereto, or such other office or offices of the Bank as it may
from time to time notify the Borrower.
"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, lien (statutory or other) or other security interest or encumbrance
(including those created by, arising under or evidenced by any conditional sale
or other title retention agreement, the interest of a lessor under a Capital
Lease Obligation, any financing lease having substantially the same economic
effect as any of the foregoing, or the filing of any financing statement naming
the owner of the asset to which such lien relates as debtor, under the UCC or
any comparable law), but not including the interest of a lessor under an
Operating Lease.
"LOANS" means the Loans made by the Bank to the Borrower pursuant to
Section 2.1
"LOAN DOCUMENTS" means this Agreement, the Note if requested by the
Bank and all documents and instruments delivered from time to time in connection
therewith.
"MARGIN STOCK" means "margin stock" as such term is defined in
Regulation G, T, U or X of the Federal Reserve Board.
"MATERIAL ADVERSE EFFECT" means a material adverse change in, or a
material adverse effect upon, any of (a) the operations, business, Properties or
financial condition of the Borrower; (b) the ability of the Borrower to perform
under any Loan Document; or (c) the legality, validity, binding effect or
enforceability of any Loan Document.
"MATURITY DATE" means March 31, 2000.
"MONEY MARKET RATE" means the fixed rate of interest determined in
accordance with Section 2.3(a) for the applicable Interest Period.
"MONEY MARKET RATE LOAN" means a Loan bearing interest at the rate
determined by reference to the Money Market Rate.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" (within the meaning
of Section 4001(a)(3) of ERISA) and to which any member of the Controlled Group
makes, is making, or is obligated to make contributions or has made, or been
obligated to
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<PAGE>
make, contributions, but does not include (i) Multiemployer Plans to which no
member of the Controlled Group had withdrawal liability and an obligation to
contribute at all times following the enactment of the Multiemployer Pension
Plan Amendments Act of 1980, and (ii) Multiemployer Plans as to which all
members of the Controlled Group have both completely withdrawn and paid the full
amount of any withdrawal liability.
"NET ISSUANCE PROCEEDS" means, in respect of any issuance of equity,
the cash proceeds and non-cash proceeds received or receivable in connection
therewith, net of reasonable costs and expenses paid or incurred in connection
therewith in favor of any Person not an Affiliate of the Borrower.
"NOTE" means a promissory note executed by the Borrower to the order
of the Bank if the Bank has requested the Borrower to do so, substantially in
the form of Exhibit A annexed hereto evidencing the Loans.
"NOTICE OF BORROWING" means a notice substantially in the form of
Exhibit B annexed hereto with respect to a proposed committed borrowing.
"NOTICE OF CONVERSION/CONTINUATION" means a notice in substantially
the form of Exhibit C annexed hereto.
"NOTICE OF LIEN" means any "notice of lien" or similar document
intended to be filed or recorded with any court, registry, recorder's office,
central filing office or other Governmental Authority for the purpose of
evidencing, creating, perfecting or preserving the priority of a Lien securing
obligations owing to a Governmental Authority.
"OBLIGATIONS" means all obligations of every nature of the Borrower
from time to time owed to the Bank, whether for principal, interest, fees,
expenses, indemnification or otherwise, and whether absolute or contingent, due
or to become due, now existing or hereafter arising, pursuant to the terms of
any of the Loan Documents.
"OFFSHORE RATE" means, for each Interest Period in respect of an
Offshore Rate Loan, an interest rate per annum (rounded upward to the nearest
1/16th of 1%) determined pursuant to the following formula:
Offshore Rate = IBOR
-----------------------------------
1.0 - Eurodollar Reserve Percentage
Where,
"EURODOLLAR RESERVE PERCENTAGE" means the reserve percentage
(expressed as a decimal, if any, rounded
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<PAGE>
upward to the nearest 1/100th of 1%) in effect on the date IBOR for
such Interest Period is determined applicable to the Bank under
regulations issued from time to time by the Federal Reserve Board for
determining the reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to
Eurocurrency funding (currently referred to as "Eurocurrency
liabilities") having a term comparable to such Interest Period; and
"IBOR" means the rate of interest per annum determined by the
Bank as the rate of interest at which dollar deposits in the
approximate amount of the amount of the Loan to be made or continued
as, or converted into, an Offshore Rate Loan and having a maturity
comparable to such Interest Period would be offered by the Bank to
major banks in the offshore Dollar interbank market at its request at
or about 11:00 a.m. (New York time) on the second Business Day prior
to the commencement of such Interest Period.
The Offshore Rate shall be adjusted automatically as of the
effective date of any change in the Eurodollar Reserve Percentage.
"OFFSHORE RATE LOAN" means a Loan bearing interest at the rate
determined by reference to the Offshore Rate.
"OPERATING LEASE" means, as applied to any Person, any lease of
Property which is not a Capital Lease other than any such lease under which that
Person is the lessor.
"ORDINARY COURSE OF BUSINESS" means, in respect of any transaction
involving the Borrower or any Subsidiary of the Borrower, the ordinary course of
such Person's business, as conducted by any such Person in accordance with past
practice.
"ORGANIZATION DOCUMENTS" means, for any corporation, the certificate
or articles of incorporation, the bylaws, any certificate of determination or
instrument relating to the rights of preferred shareholders of such corporation,
and all applicable resolutions of the board of directors (or any committee
thereof) of such corporation relating to the foregoing or the organization of
such corporation.
"PARTICIPANT" has the meaning specified in Section 8.6(d).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
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<PAGE>
"PERMITTED ACCOUNT RECEIVABLES FINANCING" means a sale or discount of
accounts receivable of the Borrower and its Subsidiaries (A) where such sale or
discount is not a sale or discounting of accounts receivable meeting a specified
credit criteria, and (B) that does not involve the creation of a Lien or
negative pledge on any accounts receivable not so sold or discounted.
"PERMITTED LIENS" has the meaning specified in Section 6.1.
"PERSON" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
limited liability company or Governmental Authority.
"PLAN" means an employee pension benefit plan (as defined in Section
3(2) of ERISA) which any member of the Controlled Group sponsors or maintains or
to which the Borrower or member of the Controlled Group makes or is obligated to
make contributions, and which is subject to the provisions of Title IV of ERISA.
"PROPERTY" means any estate or interest in any kind of property or
asset, whether real, personal or mixed, and whether tangible or intangible.
"QUALIFIED PLAN" means a pension plan (as defined in Section 3(2) of
ERISA) intended to be tax-qualified under Section 401(a) of the Code and which
any member of the Controlled Group sponsors, maintains, or to which it makes or
is obligated to make contributions, or in the case of a multiple employer plan
(as described in Section 4064(a) of ERISA) has made contributions at any time
during the immediately preceding period covering at least five (5) plan years,
but excluding any Multiemployer Plan.
"REPORTABLE EVENT" means any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder for which the requirement of 30-
day notice has not been waived, a withdrawal from a Plan described in Section
4063 of ERISA, or a cessation of operations described in Section 4062(e) of
ERISA.
"REQUIREMENT OF LAW" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its Property or to which the Person or any of its Property is subject.
"RESPONSIBLE OFFICER" means the chief executive officer, the
president, the chief operating officer, the chief
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<PAGE>
financial officer, the chief legal officer, the treasurer or the controller of
the Borrower.
"SUBSIDIARY" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than 50% of
the voting stock or other equity interests (in the case of Persons other than
corporations), is owned or controlled directly or indirectly by the Person, or
one or more of the Subsidiaries of the Person, or a combination thereof.
"UNFUNDED PENSION LIABILITIES" means with respect to a Plan, the
"amount of unfunded benefit liabilities" as defined in Section 4001(a)(18) of
ERISA.
1.2 OTHER INTERPRETIVE PROVISIONS.
(a) PERFORMANCE; TIME. Except as otherwise specifically
provided herein, whenever any performance obligation hereunder shall be stated
to be due or required to be satisfied on a day other than a Business Day, such
performance shall be made or satisfied on the next succeeding Business Day. In
the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including"; the words "to" and "until"
each mean "to but excluding", and the word "through" means "to and including."
If any provision of this Agreement refers to any action taken or to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be interpreted to encompass any and all means, direct or indirect, of taking, or
not taking, such action.
(b) CAPTIONS. The captions and headings of this Agreement are
for convenience of reference only and shall not affect the interpretation of
this Agreement.
1.3 ACCOUNTING PRINCIPLES. Unless the context otherwise clearly
requires, all accounting terms not expressly defined herein shall be construed,
and all financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied.
SECTION 2. THE LOANS
2.1 THE COMMITMENT. The Bank agrees, on the terms and conditions
hereinafter set forth, to make loans under the Commitment to the Borrower (each
such loan, a "Loan") from time to time on any Business Day from the Effective
Date to but excluding the Maturity Date; PROVIDED, HOWEVER, that, after giving
effect to the making of any Loans, the aggregate principal amount of the
outstanding Loans shall not exceed the Commitment.
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<PAGE>
Within the limits of the Commitment, and subject to the other terms and
conditions hereof, the Borrower may borrow under this Section 2.1, prepay
pursuant to Section 2.6 and reborrow pursuant to this Section 2.1.
2.2 LOAN ACCOUNTS; NOTES. (a) Subject to Section 2.2(b), the Loans
shall be evidenced by one or more loan accounts maintained by the Bank in the
ordinary course of business. The loan accounts maintained by the Bank shall be
prima facie evidence absent manifest error of the amount of the Loans made to
the Borrower and the interest and payments thereon. Any failure so to record or
any error in doing so shall not, however, limit or otherwise affect the
obligation of the Borrower hereunder to pay any amount owing with respect to the
Loans.
(b) Upon the request of the Bank, the Loans shall be evidenced
by a Note, instead of loan accounts. The Bank shall endorse on the schedules
annexed to the Note the date, amount and maturity of each Loan made by it and
the amount of each payment of principal made by the Borrower with respect
thereto. The Bank is irrevocably authorized by the Borrower to endorse the Note
and its record shall be prima facie absent manifest error; PROVIDED, HOWEVER,
that the failure of the Bank to make, or an error in making, a notation thereon
with respect to any Loan shall not limit or otherwise affect the obligations of
the Borrower hereunder or under the Note to the Bank.
2.3 PROCEDURE FOR BORROWINGS.
(a) Each Loan shall be made upon the Borrower's irrevocable
written notice in the form of a Notice of Borrowing delivered to the Bank in
accordance with Section 8.2 (which notice must be received by the Bank prior to
(i) 9:00 a.m. (San Francisco time) (A) three Business Days prior to the
requested borrowing date, in the case of an Offshore Rate Loan; (B) two Business
Days prior to the requested borrowing date, in the case of a CD Rate Loan, and
(C) on the requested borrowing date, in the case of a Base Rate Loan and (ii)
11:00 a.m. (San Francisco time) on the requested borrowing date, in the case of
a Money Market Rate Loan. Each Notice of Borrowing shall specify: (v) the
amount of the Loan, which shall be in a minimum principal amount of $1,000,000
and multiples thereof; (w) the requested borrowing date, which shall be a
Business Day; (x) whether the Loan is to be an Offshore Rate Loan, CD Rate Loan,
Base Rate Loan or Money Market Rate Loan; (y) if an Offshore Rate Loan, CD Rate
Loan or Money Market Rate Loan, the duration of the Interest Period applicable
to such Loan; and (z) if a Money Market Loan, the interest rate therefor,
determined in accordance with the next sentence. On any day that the Borrower
desires to request a Money Market Loan, the Borrower shall notify the Bank in
accordance with Section 8.2 not later than 10:00 a.m. (San Francisco time) on
such day, and the Bank shall quote to the
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Borrower the available interest rate(s) for the requested Interest Period(s).
If the Borrower desires to borrow a Money Market Loan at an interest rate so
quoted, it shall submit a Notice of Borrowing on such day as provided above
including such interest rate. Any interest rate quoted by the Bank shall be
good only on the date quoted and only for the Interest Period specified. If a
Notice of Borrowing shall fail to specify the duration of the Interest Period
for any CD Rate Loan, Offshore Rate Loan or Money Market Loan, such Interest
Period shall be 90 days, three months or one day, respectively. The proceeds of
the Loan will then be made available to the Borrower by the Bank by crediting
the account of the Borrower on the books of Bank by wire transfer in accordance
with written instructions provided to the Bank by the Borrower.
(b) During the existence of a Default or Event of Default, the
Borrower may not elect to have a Loan be made as an Offshore Rate Loan, CD Rate
Loan or Money Market Rate Loan.
(c) After giving effect to any borrowing of Loans, there shall
not be more than ten different Interest Periods in effect.
2.4 CONVERSION AND CONTINUATION ELECTIONS.
(a) The Borrower may upon irrevocable written notice to the Bank
in accordance with Section 2.4(b): (i) elect to convert on any Business Day, any
Base Rate Loan (or any part thereof in an amount not less than $1,000,000) into
an Offshore Rate Loan, a CD Rate Loan or a Money Market Rate Loan or; (ii) elect
to convert on any Interest Payment Date any Offshore Rate Loan, CD Rate Loan or
Money Market Rate Loan maturing on such Interest Payment Date (or any part
thereof in an amount not less than $1,000,000) into a Base Rate Loan; or (iii)
elect to continue on any Interest Payment Date any Offshore Rate Loan, CD Rate
Loan or Money Market Rate Loan maturing on such Interest Payment Date (or any
part thereof in an amount not less than $1,000,000); PROVIDED, HOWEVER, that a
Money Market Rate Loan may be continued only at the interest rate and Interest
Period quoted by the Bank in accordance with Section 2.4(b).
(b) The Borrower shall deliver a written notice in the form of a
Notice of Conversion/Continuation in accordance with Section 8.2 to be received
by the Bank not later than (i) 9:00 a.m. (San Francisco time) at least (A) three
Business Days in advance of the conversion or continuation date, if the Loan is
to be converted into or continued as an Offshore Rate Loan; (B) two Business
Days in advance of the conversion or continuation date, if the Loan is to be
converted into or continued as a CD Rate Loan; and (C) on the Business Day of
the conversion, if the Loan is to be converted into a Base Rate Loan and (ii)
11:00 a.m. (San Francisco time) on the day of such conversion or
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continuation date, if the Loan is to be converted into or continued as a Money
Market Rate Loan. Each Notice of Conversion/Continuation shall specify: (v)
the proposed conversion or continuation date; (w) the Loan to be converted or
continued; (x) the nature of the proposed conversion or continuation; (y) the
duration of the requested Interest Period, if applicable; and (z) if a Money
Market Loan, the interest rate therefor, determined in accordance with the
procedure set forth in Section 2.3(a).
(c) If upon the expiration of any Interest Period applicable to
a CD Rate Loan, an Offshore Rate Loan or a Money Market Rate Loan, the Borrower
has failed to select a new Interest Period to be applicable to such CD Rate
Loan, Offshore Rate Loan or Money Market Rate Loan, as the case may be, or if
any Default or Event of Default shall then exist, the Borrower shall be deemed
to have elected to convert such CD Rate Loan, Offshore Rate Loan or Money Market
Rate Loan into a Base Rate Loan effective as of the expiration date of such
current Interest Period.
(d) During the existence of a Default or Event of Default, the
Borrower may not elect to have a Loan converted into or continued as an Offshore
Rate Loan, a CD Rate Loan or a Money Market Rate Loan.
(e) Notwithstanding any other provision contained in this
Agreement, after giving effect to any conversion or continuation of any Loans,
there shall not be more than ten different Interest Periods for all Loans in
effect.
2.5 VOLUNTARY TERMINATION OR REDUCTION OF COMMITMENT. The Borrower
may, upon not less than three Business Days' prior notice to the Bank, terminate
or permanently reduce the Commitment by a minimum amount of $5,000,000; PROVIDED
that no such reduction or termination shall be permitted to the extent that,
after giving effect thereto and to any prepayments of the Loans made on the
effective date thereof, the then outstanding principal amount of the Loans would
exceed the Commitment then in effect; PROVIDED, FURTHER, that once reduced in
accordance with this Section 2.5, the Commitment only may be increased by mutual
agreement between Borrower and Bank. All accrued commitment fees to, but not
including the effective date of any reduction or termination of the Commitment,
shall be paid on the effective date of such reduction or termination.
2.6 PREPAYMENTS. The Borrower may, at any time or from time to time,
prepay a Loan in whole or in part in minimum amount of $1,000,000 (a) upon at
least three Business Days' notice to the Bank in the case of a prepayment of an
Offshore Rate Loan; (b) upon at least two Business Days' notice to the Bank in
the case of a prepayment of a CD Rate Loan; and (c) with notice to
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the Bank on the Business Day of such prepayment in the case of a Base Rate Loan
or a Money Market Rate Loan. Such notice of prepayment shall specify the date
and amount of such prepayment and whether such prepayment is of a Base Rate
Loan, CD Rate Loan, Offshore Rate Loan or Money Market Rate Loan, or any
combination thereof. Such notice shall not thereafter be revocable by the
Borrower. Any prepayment of a CD Rate Loan, Offshore Rate Loan or Money Market
Rate Loan hereunder shall be accompanied by accrued interest to the date of such
prepayment on the amount prepaid and any amounts required pursuant to Section
2.15.
2.7 REPAYMENT. The Borrower shall repay to the Bank in full on the
Maturity Date the aggregate principal amount of all Loans outstanding on the
Maturity Date; PROVIDED, HOWEVER, that unless converted or continued as set
forth in Section 2.4, each Money Market Rate Loan shall mature, and the
principal amount thereof shall be due and payable, on the last day of the
Interest Period applicable thereto, but in no event later than the Maturity
Date.
2.8 INTEREST.
(a) Subject to Section 2.8(b), each Loan shall bear interest on
the outstanding principal amount thereof from the date when made until it
becomes due at a rate per annum equal to (i) the CD Rate, the Offshore Rate or
the Base Rate, as the case may be, PLUS the Applicable Margin or (ii) the Money
Market Rate. Interest on each Loan shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the date of any prepayment of any
CD Rate Loan, Offshore Rate Loan or Money Market Rate Loan pursuant to Section
2.6 for the portion of the Loan so prepaid and upon payment (including
prepayment) in full of any Loan and, during the existence of any Event of
Default, interest shall be paid on demand.
(b) While any Event of Default exists or after acceleration, at
the Bank's option, the Borrower shall pay interest (after as well as before
entry of judgment thereon to the extent permitted by law) on the principal
amount of all Obligations then due and unpaid, at a rate per annum which is
determined by adding 2% per annum to the Applicable Margin then in effect for
such Loans or the interest rate applicable to any Money Market Rate Loan;
PROVIDED, HOWEVER, that, on and after the expiration of any Interest Period
applicable to any Offshore Rate Loan, CD Rate Loan or Money Market Rate Loan
outstanding on the date of occurrence of such Event of Default or acceleration,
at the Bank's option, the principal amount of such Loan shall, during the
continuation of such Event of Default or after acceleration, bear interest at a
rate per annum equal to the Base Rate plus 2%.
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2.9 FACILITY FEE. The Borrower shall pay to the Bank a facility fee
on the average amount of the Commitment, regardless of usage, computed on a
quarterly basis in arrears on the last Business Day of each calendar quarter
equal to the Applicable Margin. Such facility fee shall accrue from the
Effective Date to the Maturity Date and shall be due and payable quarterly in
arrears on the last Business Day of each quarter commencing on June 30, 1995
through the Maturity Date, with the final payment to be made on the Maturity
Date; provided that, in connection with any reduction or termination of the
Commitment pursuant to Section 2.5, the accrued facility fee calculated for the
period ending on such date shall also be paid on the date of such reduction or
termination, with the next succeeding quarterly payment being calculated on the
basis of the period from the reduction or termination date to such quarterly
payment date. The facility fee provided in this Section shall accrue at all
times after the above-mentioned commencement date, including at any time during
which one or more conditions in Section 3 are not met.
2.10 COMPUTATION OF FEES AND INTEREST. All computations of interest
payable in respect of Base Rate Loans at all times as the Base Rate is
determined by the Bank's "reference rate" shall be made on the basis of a year
of 365 or 366 days, as the case may be, and actual days elapsed. All other
computations of fees and interest under this Agreement shall be made on the
basis of a 360-day year and actual days elapsed, which results in more interest
being paid than if computed on the basis of a 365-day year. Interest and fees
shall accrue during each period during which interest or such fees are computed
from the first day thereof to the last day thereof. Each determination of an
interest rate by the Bank pursuant hereto shall be conclusive and binding on the
Borrower in the absence of manifest error.
2.11 PAYMENTS BY THE BORROWER.
(a) All payments (including prepayments) to be made by the
Borrower on account of principal, interest, fees and other amounts required
hereunder shall be made without set-off, recoupment or counterclaim and shall,
except as otherwise expressly provided herein, be made to the Bank at the Bank's
Lending Office, in dollars and in immediately available funds, no later than
10:00 a.m. (San Francisco time) on the date specified herein. Any payment which
is received by the Bank later than such time shall be deemed to have been
received on the immediately succeeding Business Day and any applicable interest
or fee shall continue to accrue.
(b) Whenever any payment hereunder shall be stated to be due on
a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the
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computation of interest or fees, as the case may be; subject to the provisions
set forth in the definition of "Interest Period" herein.
2.12 TAXES. Any and all payments by the Borrower to the Bank under
this Agreement shall be made free and clear of, and without deduction or
withholding for, any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding such taxes (including income taxes or franchise taxes) as are imposed
on or measured by the Bank's net income by the jurisdiction under the laws of
which the Bank is organized or maintains a Lending Office or any political
subdivision thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as "TAXES").
In addition, the Borrower shall pay any present or future stamp or documentary
taxes or any other excise or Property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other Loan
Documents (hereinafter referred to as "OTHER TAXES"). The Borrower shall
indemnify and hold harmless the Bank for the full amount of Taxes or Other Taxes
(including any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.12) paid by the Bank and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom or with
respect thereto. Payment under this indemnification shall be made within 30
days from the date the Bank makes written demand therefor, which demand shall
set forth in reasonable detail the calculation of the amount of Taxes or Other
Taxes being requested from the Borrower.
2.13 ILLEGALITY.
(a) If the Bank shall determine that the introduction of any
Requirement of Law after the date hereof, or any change in any Requirement of
Law or in the interpretation or administration thereof after the date hereof,
has made it unlawful, or that any central bank or other Governmental Authority
has asserted after the date hereof that it is unlawful, for the Bank or its
Lending Office to make Offshore Rate Loans, then, on notice thereof by the Bank
to the Borrower, the obligation of the Bank to make Offshore Rate Loans shall be
suspended until the Bank shall have notified the Borrower that the circumstances
giving rise to such determination no longer exists.
(b) If the Bank shall determine that it is unlawful to maintain
any Offshore Rate Loan, the Borrower shall prepay in full all Offshore Rate
Loans then outstanding, together with interest accrued thereon, either on the
last day of the Interest Period thereof if the Bank may lawfully continue to
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maintain such Offshore Rate Loans to such day, or immediately, if the Bank may
not lawfully continue to maintain such Offshore Rate Loans, together with any
amounts required to be paid in connection therewith pursuant to Section 2.15.
2.14 INCREASED COSTS AND REDUCTION OF RETURN.
(a) If the Bank shall determine that, due to either (i) the
introduction of or any change (other than any change by way of imposition of or
increase in reserve requirements included in the calculation of the CD Rate or
the Offshore Rate) in or in the interpretation of any law or regulation or
(ii) the compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law, provided that if
such guideline or request does not have the force of law, compliance therewith
is customary for banks regulated in a manner similar to such Bank), after the
date hereof there shall be any increase in the cost to the Bank of agreeing to
make or making, funding or maintaining any Offshore Rate Loans or CD Rate Loans,
then the Borrower shall be liable for, and shall from time to time, within 10
Business Days after demand therefor by the Bank, pay to the Bank additional
amounts as are sufficient to compensate the Bank for such increased costs.
(b) If the Bank shall have determined that (i) the introduction
after the date hereof of any Capital Adequacy Regulation, (ii) any change after
the date hereof in any Capital Adequacy Regulation, (iii) any change after the
date hereof in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by the Bank (or its
Lending Office) or any corporation controlling the Bank, with any Capital
Adequacy Regulation; affects or would affect the amount of capital required or
expected to be maintained by the Bank or any corporation controlling the Bank
and (taking into consideration the Bank's or such corporation's policies with
respect to capital adequacy and the Bank's desired return on capital) determines
that the amount of such capital is increased as a consequence of its Commitment,
loans, credits or obligations under this Agreement, then, within 10 Business
Days after demand of the Bank, the Borrower shall upon demand pay to the Bank,
from time to time as specified by the Bank, additional amounts sufficient to
compensate the Bank for such increase.
2.15 FUNDING LOSSES. The Borrower agrees to reimburse the Bank and to
hold the Bank harmless from any loss or expense which the Bank may sustain or
incur as a consequence of: (a) the failure of the Borrower to make any payment
or prepayment of principal of any Offshore Rate Loan, CD Rate Loan or Money
Market Rate Loan (including payments made after any acceleration
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thereof); (b) the failure of the Borrower to borrow, continue or convert an
Offshore Rate Loan, CD Rate Loan or Money Market Rate after the Borrower has
given a Notice of Borrowing or a Notice of Conversion/Continuation; (c) the
failure of the Borrower to make any prepayment after the Borrower has given a
notice in accordance with Section 2.6; (d) the prepayment (including pursuant to
Section 2.6) of an Offshore Rate Loan, a CD Rate Loan or Money Market Rate Loan
on a day which is not the last day of the Interest Period with respect thereto;
or (e) the conversion pursuant to Section 2.4 of any Offshore Rate Loan, CD Rate
Loan or Money Market Rate Loan to a Base Rate Loan on a day that is not the last
day of the respective Interest Period; including any such loss or expense
arising from the liquidation or reemployment of funds obtained by it to maintain
its Offshore Rate Loans, CD Rate Loans or Money Market Rate Loans hereunder or
from fees payable to terminate the deposits from which such funds were obtained.
Solely for purposes of calculating amounts payable by the Borrower to the Bank
under this Section 2.15, (i) each Offshore Rate Loan (and each related reserve,
special deposit or similar requirement) shall be conclusively deemed to have
been funded at the IBOR used in determining the Offshore Rate for such Offshore
Rate Loan by a matching deposit or other borrowing in the interbank eurodollar
market for a comparable amount and for a comparable period, whether or not such
Offshore Rate Loan is in fact so funded, (ii) each CD Rate Loan made by the Bank
(and each related reserve, special deposit or similar requirement) shall be
conclusively deemed to have been funded at the Certificate of Deposit Rate used
in determining the CD Rate for such CD Rate Loan by the issuance of its
certificate of deposit in a comparable amount and for a comparable period,
whether or not such CD Rate Loan is in fact so funded, and (iii) each Money
Market Rate Loan made by the Bank shall be conclusively deemed to have been
funded by the Bank in the manner which was the basis for the interest rate for
such Loan, whether or not such Money Market Rate Loan is in fact so funded.
2.16 INABILITY TO DETERMINE RATES. If the Bank shall have determined
that for any reason adequate and reasonable means do not exist for ascertaining
the Offshore Rate or the CD Rate for any requested Interest Period with respect
to a proposed Offshore Rate Loan or CD Rate Loan or that the Offshore Rate or
the CD Rate applicable pursuant to Section 2.8(a) for any requested Interest
Period with respect to a proposed Offshore Rate Loan or CD Rate Loan does not
adequately and fairly reflect the cost to the Bank of funding such Loan, the
Bank will forthwith give notice of such determination to the Borrower.
Thereafter, the obligation of the Bank to make or maintain CD Rate Loans or
Offshore Rate Loans, as the case may be, hereunder shall be suspended until the
Bank revokes such notice in writing; provided however that no outstanding CD
Rate Loan or Offshore Rate Loan shall be terminated prior to the expiration of
the Interest Period unless required by law. Upon receipt of such
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notice, the Borrower may revoke any notice of borrowing or notice of conversion
or continuation then submitted by it. If the Borrower does not revoke such
notice, the Bank shall make, convert or continue the Loans, as proposed by the
Borrower, in the amount specified in the applicable notice submitted by the
Borrower, but such Loans shall be made, converted or continued as Base Rate
Loans or Money Market Rate Loans instead of CD Rate Loans or Offshore Rate
Loans, as the case may be.
SECTION 3. CONDITIONS PRECEDENT
3.1 CONDITIONS OF CLOSING. The obligation of the Bank to make its
initial Loan hereunder is subject to the condition that the Bank shall have
received on or before the Closing Date all of the following, in form and
substance satisfactory to the Bank:
(a) CREDIT AGREEMENT. This Agreement executed by the Borrower;
(b) NOTE. If requested by the Bank, a Note executed by the
Borrower.
(c) RESOLUTIONS; INCUMBENCY. (i) Copies of the resolutions of
the board of directors of the Borrower approving and authorizing the execution,
delivery and performance by the Borrower of this Agreement and the other Loan
Documents to be delivered hereunder, and authorizing the borrowing of the Loans,
certified as of the Closing Date by the Secretary or an Assistant Secretary of
the Borrower and (ii) a certificate of the Secretary or Assistant Secretary of
the Borrower certifying the names and true signatures of the officers of the
Borrower authorized to execute, deliver and perform, as applicable, this
Agreement, and all other Loan Documents to be delivered hereunder;
(d) ARTICLES OF INCORPORATION; BY-LAWS AND GOOD STANDING. Each
of the following documents: (i) the articles or certificate of incorporation of
the Borrower as in effect on the Closing Date, certified by the Secretary of
State of the state of incorporation of the Borrower as of a recent date, and the
bylaws of the Borrower as in effect on the Closing Date, certified by the
Secretary or Assistant Secretary of the Borrower as of the Closing Date; and
(ii) a good standing certificate for the Borrower from the Secretary of State of
Delaware as of a recent date;
(e) CERTIFICATE. A certificate signed by a Responsible Officer,
dated as of the Closing Date, stating that: (i) the representations and
warranties contained in Section 4 are true and correct in all material respects
on and as of such
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date, as though made on and as of such date; (ii) no Default or Event of Default
exists; and (iii) there has occurred since January 31, 1994, no event or
circumstance that could reasonably be expected to result in a Material Adverse
Effect;
(f) COMPLIANCE CERTIFICATE. A Compliance Certificate dated as
of the Closing Date, the financial covenant portion of which shall be based on
the financial statements dated as of October 31, 1994.
(g) TERMINATION OF EXISTING AGREEMENTS. Evidence that the
Borrower has terminated, or concurrently with the initial funding hereunder will
be terminating, all Existing Agreements and shall have paid all amounts owing to
the banks thereunder.
(h) OPINION OF COUNSEL. An opinion of Aloma H. Park, Corporate
Counsel of the Borrower and addressed to the Bank.
(i) OTHER DOCUMENTS. Such other approvals, opinions or
documents as the Bank may reasonably request.
3.2 CONDITIONS TO ALL BORROWINGS. The obligation of the Bank to
make, continue or convert any Loan (including the initial Loan) is subject to
the satisfaction of the following conditions precedent on the relevant borrowing
date:
(a) NOTICE OF BORROWING OR CONVERSION/ CONTINUATION. The Bank
shall have received a Notice of Borrowing or a Notice of
Conversion/Continuation;
(b) CONTINUATION OF REPRESENTATIONS AND WARRANTIES. Except for
the representations and warranties set forth in Section 4.11(b) and 4.13 (which
shall be made solely as of the Closing Date, the representations and warranties
made by the Borrower contained in Section 4 shall be true and correct in all
material respects on and as of such borrowing date with the same effect as if
made on and as of such borrowing date; and
(c) NO EXISTING DEFAULT. No Default or Event of Default shall
exist or shall result from such borrowing, conversion or continuation.
Each Notice of Borrowing and Notice of Conversion/Continuation submitted by the
Borrower hereunder shall constitute a representation and warranty by the
Borrower hereunder, as of the date of each such notice and as of the date of
each borrowing, conversion or continuation that the conditions in this Section
3.2 are satisfied.
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SECTION 4. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Bank that:
4.1 CORPORATE EXISTENCE AND POWER. The Borrower and each of its
corporate Subsidiaries: (a) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation;
(b) has the corporate power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its business
and execute, deliver, and perform its obligations under, the Loan Documents; (c)
is duly qualified as a foreign corporation, licensed and in good standing under
the laws of each jurisdiction where its ownership, lease or operation of
Property or the conduct of its business requires such qualification, except
where the failure to be so qualified or in good standing would not have a
Material Adverse Effect; and (d) is in compliance with all Requirements of Law
except where such noncompliance would not have a Material Adverse Effect.
4.2 CORPORATE AUTHORIZATION; NO CONTRAVENTION. The execution,
delivery and performance by the Borrower of each Loan Document to which it is a
party, have been duly authorized by all necessary corporate action, and do not
and will not: (a) contravene the terms of any of the Borrower's Organization
Documents; (b) conflict with or result in any breach or contravention of, or the
creation of any Lien under, any document evidencing any Contractual Obligation
to which the Borrower is a party or any order, injunction, writ or decree of any
Governmental Authority to which the Borrower or its Property is subject; or (c)
violate any Requirement of Law applicable to the Borrower.
4.3 GOVERNMENTAL AUTHORIZATION. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Borrower of
this Agreement or any other Loan Document, other than routine filings required
to be made by the Borrower in the ordinary course of business after the date
hereof.
4.4 BINDING EFFECT. This Agreement and each other Loan Document to
which the Borrower is a party constitute the legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.
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4.5 LITIGATION. Except as set forth in Schedule 4.5, there are no
actions, suits, proceedings, claims or disputes pending, or to the best
knowledge of the Borrower, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, against the Borrower, its
Subsidiaries or any of their respective Properties which: (a) purport to affect
or pertain to this Agreement, or any other Loan Document, or any of the
transactions contemplated hereby or thereby; or (b) would reasonably be expected
to result in liability in excess of $10,000,000. No injunction, writ, temporary
restraining order or any order of any nature has been issued by any court or
other Governmental Authority against the Borrower purporting to enjoin or
restrain the execution, delivery and performance of this Agreement or any other
Loan Document, or directing that the transactions provided for herein or therein
not be consummated as herein or therein provided.
4.6 NO DEFAULT. No Default or Event of Default exists or would
result from the incurring of any Obligations by the Borrower. Neither the
Borrower nor any of its Subsidiaries is in default under or with respect to any
Contractual Obligation in any respect which, individually or together with all
such defaults, would reasonably be expected to have a Material Adverse Effect or
that could, if such default had occurred after the Closing Date, create an Event
of Default under Section 7.1(e) or (f).
4.7 ERISA COMPLIANCE.
(a) Schedule 4.7 lists all Plans maintained or sponsored by the
Borrower or to which it is obligated to contribute, and separately identifies
Plans intended to be Qualified Plans and Multiemployer Plans. Each Plan other
than a Multiemployer Plan is in compliance, and, with respect to each
Multiemployer Plan, the Borrower has no knowledge that such Multiemployer Plan
is not in compliance, in all material respects with the applicable provisions of
ERISA, the Code and other Federal or applicable state law that is not preempted
by ERISA. Each Qualified Plan has been determined by the Internal Revenue
Service ("IRS") to qualify under Section 401 of the Code, and the trusts created
thereunder have been determined to be exempt from tax under the provisions of
Section 501 of the Code, and to the best knowledge of the Borrower nothing has
occurred which would cause the loss of such qualification or tax-exempt status.
(b) There is no outstanding liability (excluding PBGC premiums
due but not delinquent under Section 4001 of ERISA) under Title IV of ERISA with
respect to any Plan maintained or sponsored by the Borrower or any ERISA
Affiliate (as to which the Borrower is or may reasonably be expected to be
liable), nor with respect to any Plan to which the Borrower or any ERISA
Affiliate (wherein the Borrower is or may be liable) contributes or is
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obligated to contribute, which would reasonably be expected to have a Material
Adverse Effect. None of the Qualified Plans has Unfunded Pension Liabilities as
to which the Borrower is or may be liable, and which would reasonably be
expected to have a Material Adverse Effect.
(c) No ERISA Event has occurred or is reasonably expected to
occur with respect to any Plan maintained or sponsored by the Borrower or to
which the Borrower is obligated to contribute and as to which the Borrower is or
may reasonably be expected to be liable, and which would reasonably be expected
to have a Material Adverse Effect. There are no pending or, to the best
knowledge of the Borrower, threatened claims, actions or lawsuits, other than
routine claims for benefits in the usual and ordinary course, asserted or
instituted against (i) any Plan maintained or sponsored by the Borrower or its
assets, (ii) any member of the Controlled Group with respect to any Qualified
Plan of the Borrower, or (iii) any fiduciary with respect to any Plan for which
the Borrower may be directly or indirectly liable, through indemnification
obligations or otherwise which in each case would reasonably be expected to have
a Material Adverse Effect. The Borrower has not transferred any Unfunded
Pension Liability outside of the Controlled Group or otherwise engaged in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA which has
a reasonable likelihood of having a Material Adverse Effect.
4.8 USE OF PROCEEDS; MARGIN REGULATIONS. The proceeds of the Loans
are intended to be and shall be used solely for the purposes set forth in and
permitted by Section 5.10, and are intended to be and shall be used in
compliance with Section 6.5.
4.9 TITLE TO PROPERTIES. The Borrower and each of its Subsidiaries
has good record and marketable title in fee simple to, or valid leasehold
interests in, all real Property necessary or used in the ordinary conduct of its
business, except for such defects in title as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. As of the
Closing Date, the Property of the Borrower and its Subsidiaries is subject to no
Liens, other than Permitted Liens.
4.10 TAXES. The Borrower and its Subsidiaries have filed all Federal
and other material tax returns and reports required to be filed, and have paid
all Federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their Properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP and no Notice of Lien has been filed or recorded.
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4.11 FINANCIAL CONDITION.
(a) The audited consolidated financial statements of financial
condition of the Borrower and its Subsidiaries dated January 31, 1994, and the
related consolidated statements of operations, shareholders' equity and cash
flows for the fiscal year ended on that date: (i) were prepared in accordance
with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; (ii) are complete and accurate in all
material respects and fairly present the financial condition of the Borrower and
its consolidated Subsidiaries as of the date thereof and results of operations
for the period covered thereby; and (iii) show all material indebtedness and
other liabilities, direct or contingent of the Borrower and its consolidated
Subsidiaries as of the date thereof, including liabilities for taxes and
material commitments.
(b) Since January 31, 1994, there has been no Material Adverse
Effect.
4.12 ENVIRONMENTAL MATTERS.
(a) To the knowledge of the Responsible Officers of Borrower,
the on-going operations of the Borrower and each of its Subsidiaries comply in
all respects with all Environmental Laws, except such non-compliance which would
not reasonably be likely to result in a Material Adverse Effect. To the
knowledge of the Responsible Officers of the Borrower, the Borrower and each of
its Subsidiaries have obtained all licenses, permits, authorizations and
registrations required under any Environmental Law ("ENVIRONMENTAL PERMITS")
necessary for its ordinary course operations, all such Environmental Permits are
in good standing, and the Borrower and each of its Subsidiaries are in
compliance with all material terms and conditions of such Environmental Permits,
except where the failure to obtain or maintain such Environmental Permits or
such noncompliance would not have a Material Adverse Effect.
(b) Except as set forth in Schedule 4.12(b), none of the
Borrower or any of its Subsidiaries or any of their respective present real
Property or operations is subject to any outstanding written order from or
agreement with any Governmental Authority nor subject to any judicial or
docketed administrative proceeding, respecting any Environmental Law,
Environmental Claim or Hazardous Material.
(c) to the knowledge of the Responsible Officers of the
Borrower, there are no conditions or circumstances which would reasonably be
expected to give rise to any Environmental Claims arising from the operations of
Borrower, its Subsidiaries
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which would be reasonably likely to result in a Material Adverse Effect.
4.13 SUBSIDIARIES. As of the Closing Date, the Borrower has no
Subsidiaries other than those specifically disclosed in Schedule 4.13 annexed
hereto.
4.14 INSURANCE. The material real Properties of the Borrower and its
Subsidiaries are insured with financially sound and reputable insurance
companies (except to the extent self-insurance is permitted pursuant to Section
5.6), in such amounts, with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses and owning
similar Properties in localities where the Borrower or such Subsidiary operates.
4.15 FULL DISCLOSURE. None of the representations or warranties made
by the Borrower in the Loan Documents as of the date such representations and
warranties are made or deemed made, and none of the statements contained in each
exhibit or any certificate furnished by or on behalf of the Borrower or any of
its Subsidiaries in connection with the Loan Documents, contains any untrue
statement of a material fact or omits any material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, so long as the Bank shall have
any Commitment hereunder, or any Loan or other Obligation shall remain unpaid or
unsatisfied:
5.1 FINANCIAL STATEMENTS. The Borrower shall deliver to the Bank in
form and detail satisfactory to the Bank:
(a) as soon as available, but not later than 120 days after the
end of each fiscal year, a copy of the audited consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such year and the related
statement of income and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous year, and accompanied by
the opinion of Price Waterhouse or another nationally-recognized independent
public accounting firm which report shall state that such consolidated financial
statements present fairly the financial position of the Borrower and its
Subsidiaries for the periods indicated in conformity with GAAP applied on a
basis consistent with prior years. Such opinion shall not be qualified or
limited because of a restricted or
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limited examination by such accountant of any material portion of the Borrower's
or any Subsidiary's records;
(b) as soon as available, but not later than 45 days after the
end of each of the first three fiscal quarters of each year, a copy of the
unaudited consolidated balance sheet of the Borrower and its Subsidiaries as of
the end of such quarter and the related consolidated statements of income and
cash flows for the period commencing on the first day and ending on the last day
of such quarter, setting forth the financial position and the results of
operations of the Borrower and its Subsidiaries in conformity with GAAP applied
on a basis consistent with prior years, subject to changes resulting from audit
and normal year-end adjustments;
5.2 CERTIFICATES; OTHER INFORMATION. The Borrower shall furnish to
the Bank:
(a) concurrently with the delivery of the financial statements
referred to in Sections 5.1(a) and (b) above, a Compliance Certificate signed by
a Responsible Officer (i) stating that, to the best of such officer's knowledge,
the Borrower, during such period, has observed and performed all of its
covenants and other agreements, and satisfied every condition contained in this
Agreement to be observed, performed or satisfied by it, and that such officer
has obtained no knowledge of any Default or Event of Default except as specified
(by applicable Section reference) in such certificate, and (ii) showing in
detail the calculations supporting such statement in respect of Sections 6.7 and
6.8; and
(b) promptly, such additional business, financial, corporate
affairs and other information as the Bank, at the request of the Bank, may from
time to time reasonably request.
5.3 NOTICES. Promptly upon a Responsible Officer of the Borrower
becoming aware of the same, the Borrower shall promptly notify the Bank:
(a) of the occurrence of any Default or Event of Default;
(b) of (i) any breach or non-performance of, or any default
under, any Contractual Obligation of the Borrower or any of its Subsidiaries
which would reasonably be expected to result in a Material Adverse Effect; and
(ii) any dispute, litigation, investigation, proceeding or suspension which may
exist at any time between the Borrower or any of its Subsidiaries and any
Governmental Authority which would reasonably be expected to have a Material
Adverse Effect;
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(c) of the commencement of, or of any material development in,
any litigation or proceeding affecting the Borrower or any Subsidiary which
would reasonably be expected to have a Material Adverse Effect;
(d) upon, but in no event later than 10 days after, a
Responsible Officer becoming aware of (i) any and all enforcement, cleanup,
removal or other governmental or regulatory actions instituted, completed or
threatened against the Borrower, any of its Subsidiaries or any of their
respective Properties pursuant to any applicable Environmental Laws, and (ii)
any other material Environmental Claims, which in the case of clauses (i) and
(ii) would reasonably be expected to have a Material Adverse Effect;
(e) of any ERISA Event affecting the Borrower or any member of
its Controlled Group (but in no event more than ten days after such ERISA Event)
together with (i) a copy of any notice with respect to such ERISA Event that may
be required to be filed with the PBGC and (ii) any notice delivered by the PBGC
to the Borrower or any member or its Controlled Group with respect to such ERISA
Event;
(f) of any Material Adverse Effect (of which the Borrower has
knowledge) subsequent to the date of the most recent audited financial
statements of the Borrower delivered to the Bank pursuant to Section 5.1(a); and
(g) of any material change in accounting policies or financial
reporting practices by the Borrower.
Each notice pursuant to this Section shall be accompanied by a
written statement by a Responsible Officer of the Borrower setting forth details
of the occurrence referred to therein, and stating what action (if any is
required) the Borrower proposes to take with respect thereto.
5.4 PRESERVATION OF CORPORATE EXISTENCE, ETC. The Borrower shall
preserve and maintain in full force and effect its corporate existence and good
standing under the laws of its state or jurisdiction of incorporation and
preserve and maintain in full force and effect all rights, privileges,
qualifications, permits, licenses and franchises necessary or desirable in the
normal conduct of its business the non-preservation of which would reasonably be
expected to have a Material Adverse Effect; provided that nothing herein shall
prevent to the extent not otherwise prohibited by the provisions of Section 6.2
or 6.3, a consolidation or merger of Borrower or any of its Subsidiaries, or the
sale, transfer or disposition of all or a substantial part of the Property or
assets of, or the abandonment or termination of the corporate existence, rights
and franchises of, any Subsidiary of the Borrower if, in the reasonable opinion
of the
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Borrower's Board of Directors, such abandonment or termination is in the best
interests of the Borrower and is not prejudicial to the Bank in any material
respect.
5.5 MAINTENANCE OF PROPERTY. The Borrower shall maintain, and shall
cause each of its Subsidiaries to maintain, and preserve all its Property which
is used or useful in its business in good working order and condition, ordinary
wear and tear excepted, the non-maintenance or non-preservation of which would
reasonably be expected to have a Material Adverse Effect; provided that nothing
in this Section 5.5 shall require the making of any repair or replacement of or
to any particular Property that would not be required in the exercise of sound
business judgment.
5.6 INSURANCE. The Borrower shall maintain, and shall cause each of
its Subsidiaries to maintain, with financially sound and reputable independent
insurers, insurance with respect to its Properties and business against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons; including workers'
compensation insurance, public liability and Property and casualty insurance;
provided that the Borrower or any of its Subsidiaries may self-insure to the
extent that it maintains adequate reserves therefor and self-insurance is
customary and prudent in its business judgment. Upon request of the Bank, the
Borrower shall furnish the Bank at reasonable intervals (but not more than once
per calendar year) a certificate of a Responsible Officer of the Borrower (and,
if requested by the Bank, any insurance broker of the Borrower) setting forth
the nature and extent of all insurance maintained by the Borrower and its
Subsidiaries in accordance with this Section 5.6 (and which, in the case of a
certificate of a broker, were placed through such broker).
5.7 COMPLIANCE WITH LAWS. The Borrower shall comply, and shall cause
each of its Subsidiaries to comply, in all material respects with all
Requirements of Law of any Governmental Authority having jurisdiction over it or
its business (including the Federal Fair Labor Standards Act), except such as
may be contested in good faith or as to which a bona fide dispute may exist, the
non-compliance with which would reasonably be expected to have a Material
Adverse Effect.
5.8 INSPECTION OF PROPERTY AND BOOKS AND RECORDS. The Borrower shall
maintain and shall cause each of its Subsidiaries to maintain proper books of
record and account, in which full, true and correct entries in conformity with
GAAP consistently applied shall be made of all financial transactions and
matters involving the assets and business of the Borrower and such Subsidiaries.
The Borrower shall permit, and shall cause each of
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its Subsidiaries to permit, representatives and independent contractors of the
Bank to visit and inspect any of their respective Properties, to examine their
respective corporate, financial and operating records, and make copies thereof
or abstracts therefrom, and to discuss their respective affairs, finances and
accounts with their respective directors, officers, and independent public
accountants (provided that the Borrower may, if it chooses, be present at any
such discussions) at such reasonable times during normal business hours and as
often as may be reasonably desired, upon reasonable advance notice to the
Borrower; provided that the foregoing shall be subject to compliance with
applicable security regulations of any Governmental Authority and shall not
require the Borrower to permit inspection of any Properties or financial or
operating records to an extent that would require the Borrower or any of its
Subsidiaries to reveal any of its trade secrets, research data or proprietary
information which its management in good faith believes to be irrelevant to this
Agreement.
5.9 ENVIRONMENTAL LAWS. The Borrower shall, and shall cause each of
its Subsidiaries to, conduct its operations and keep and maintain its Properties
in compliance with all Environmental Laws, except for such non-compliance as
would not reasonably be expected to have a Material Adverse Effect. Upon the
written request of the Bank, the Borrower shall submit and cause each of its
Subsidiaries to submit, at the Borrower's sole cost and expense, at reasonable
intervals, a report providing an update of the status of any environmental,
health or safety compliance, hazard or liability issue identified in any notice
or report required pursuant to Section 5.3(d).
5.10 USE OF PROCEEDS. The Borrower shall use the proceeds of the
Loans for working capital and other general corporate purposes not in
contravention of any Requirement of Law.
5.11 FURTHER ASSURANCES. The Borrower shall ensure that all written
information, exhibits and reports furnished to the Bank by the Borrower do not
and will not contain any untrue statement of a material fact and do not and will
not omit to state any material fact or any fact necessary to make the statements
contained therein not misleading in light of the circumstances in which made,
and will promptly disclose to the Bank and correct any defect or error that may
be discovered by a Responsible Officer of the Borrower therein or in any Loan
Document or in the execution, acknowledgement or recordation thereof.
SECTION 6. NEGATIVE COVENANTS
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The Borrower hereby covenants and agrees that, so long as the Bank
shall have any Commitment hereunder, or any Loan or other Obligation shall
remain unpaid or unsatisfied:
6.1 LIMITATION ON LIENS. The Borrower shall not, and shall not
suffer or permit any of its Subsidiaries to, directly or indirectly, make,
create, incur, assume or suffer to exist any Lien upon or with respect to any
part of their respective Properties, whether now owned or hereafter acquired,
other than the following ("PERMITTED LIENS"):
(a) any Lien securing Indebtedness existing on the Closing Date
and, in the case of Liens securing Indebtedness in excessof $100,000, set forth
in Schedule 6.1 annexed hereto, and any Lien securing any Indebtedness permitted
hereunder that replaces any such Lien provided that such replacement Lien does
not encumber any additional Property;
(b) Liens for taxes, fees, assessments or other governmental
charges which are not delinquent or remain payable without penalty, or to the
extent that non-payment thereof is permitted by Section 5.7, provided that no
Notice of Lien has been filed or recorded under the Code;
(c) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the Ordinary Course
of Business which are not delinquent or remain payable without penalty or which
are being contested in good faith and by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the Property
subject thereto or which do not in the aggregate with respect to any one
Property so encumbered have a Material Adverse Effect;
(d) Liens (other than any Lien imposed by ERISA) incurred or
pledges or deposits required in the Ordinary Course of Business in connection
with workers' compensation, unemployment insurance and other social security
legislation;
(e) Liens consisting of judgment or judicial attachment liens,
provided that the enforcement of such Liens is effectively stayed and all such
liens in the aggregate at any time outstanding for the Borrower and its
Subsidiaries do not exceed $1,000,000;
(f) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the Ordinary Course of Business which do not in any
case materially detract from the value of the Property subject thereto or
interfere with the ordinary conduct of the businesses of the Borrower and its
Subsidiaries;
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(g) Liens arising solely by virtue of any statutory or common
law provision relating to banker's liens, rights of set-off or similar rights
and remedies as to deposit accounts or other funds maintained with a creditor
depository institution; PROVIDED that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Borrower in excess of those set forth by regulations promulgated
by the Federal Reserve Board, and (ii) such deposit account is not intended by
the Borrower or any of its Subsidiaries to provide collateral to the depository
institution;
(h) Liens on the Property of the Borrower securing (i) the
performance of bids, trade contracts (other than borrowed money), leases,
statutory obligations, and (ii) obligations on surety and appeal bonds, and
(iii) other obligations of a like nature incurred in the ordinary course of
business listed on Schedule 6.1 annexed hereto, provided all such Liens in the
aggregate do not secure Indebtedness exceeding $10,000,000;
(i) Liens associated with a Permitted Accounts Receivable
Financing involving the sale or discount of accounts receivable having a book
value not exceeding the lesser of (i) $25,000,000 and (ii) 35% of Borrower's
gross accounts receivable;
(j) Liens (i) on the assets of a single purpose Subsidiary
formed solely for the purpose of entering into outsourcing contracts and (ii) on
assets of the Borrower or any of its Subsidiaries incurred in connection with
and related solely to the toll collection business (including assignments of
toll receipts), not exceeding $50,000,000 in asset value in the aggregate.
(k) Liens on Property or assets of a Subsidiary of the Borrower
to secure indebtedness of such Subsidiary to the Borrower or its Subsidiaries;
(l) Liens securing financing for all or a portion of the
purchase or construction cost of real Property acquired after the Closing Date
to be used in the Ordinary Course of the Business (provided that any such Lien
shall not encumber any other Property of the Borrower or its Subsidiaries),
including the ownership by third parties of assets capitalized as finance leases
under GAAP;
(m) Liens arising from purchase money financing of equipment,
including the ownership by third parties of assets capitalized as finance leases
under GAAP;
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<PAGE>
(n) Liens arising in the Ordinary Course of Business in favor of
a customer, which Liens are inherent in the government contracting process; and
(o) other Liens provided that the aggregate amount of
indebtedness secured by such other Liens permitted by this clause (o) does not
at any time exceed an amount equal to 10% of Consolidated Tangible Net Worth.
6.2 DISPOSITION OF ASSETS. The Borrower shall not, and shall not
suffer or permit any of its Subsidiaries to, directly or indirectly, sell,
assign, lease, convey, transfer or otherwise dispose of (whether in one or a
series of transactions) any Property (including accounts and notes receivable,
with or without recourse) or enter into any agreement to do any of the
foregoing, except:
(a) dispositions of inventory, or used, worn-out or surplus
equipment, all in the Ordinary Course of Business;
(b) sales of accounts receivable in connection with Permitted
Accounts Receivable Financings to the extent permitted by Section 6.1(i);
(c) the sale of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar replacement
equipment, or the proceeds of such sale are reasonably promptly applied to the
purchase price of such replacement equipment;
(d) the sale, assignment, lease, conveyance, transfer or other
disposition of any Property owned by a Subsidiary to the Borrower or any of its
other Subsidiaries; and
(e) dispositions not otherwise permitted hereunder which are
made for fair market value in the Ordinary Course of Business; PROVIDED, that at
the time of any disposition, no Event of Default shall exist or shall result
from such disposition.
6.3 CONSOLIDATIONS AND MERGERS. The Borrower shall not, and shall
not suffer or permit any of its Subsidiaries to, merge, consolidate with or
into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions all or substantially all of its
assets (whether now owned or hereafter acquired) to or in favor of any Person,
except:
(a) any Subsidiary may merge with the Borrower, provided that
the Borrower shall be the continuing or surviving corporation, or with any one
or more Subsidiaries of the Borrower, provided that if any transaction shall be
between a
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Subsidiary and a wholly-owned Subsidiary, the wholly-owned Subsidiary shall be
the continuing or surviving corporation;
(b) any Subsidiary of the Borrower may sell all or substantially
all of its assets (upon voluntary liquidation or otherwise), to the Borrower or
a wholly-owned Subsidiary of the Borrower; and
(c) the Borrower may merge with another corporation, provided
that the Borrower shall be the surviving corporation, and that after giving
effect to such merger, no Default or Event of Default shall then have occurred
or exist.
6.4 LIMITATION ON CONTINGENT OBLIGATIONS. The Borrower shall not,
and shall not suffer or permit any of its Subsidiaries to, create, incur,
assume, suffer to exist, or otherwise become or remain directly or indirectly
liable with respect to, any Contingent Obligations, except Contingent
Obligations not exceeding 15% of Consolidated Tangible Net Worth; provided that
in addition to such 15% limitation, the Borrower may be liable for the
Contingent Obligations consisting of the $12,250,000 loan guarantee described in
its 1994 Annual Report and up to $5,000,000 in guarantees of employee loans
secured by the Borrower's common stock. The Contingent Obligations limited by
this Section 6.4 shall not include claims for refunds or the imposition of
charges made by customers of the Borrower and its Subsidiaries based on
unsatisfactory work by the Borrower or any of its Subsidiaries in the Ordinary
Course of Business, except that such claims shall be included, and shall be
taken into account, with respect to the other covenants set forth in this
Section 6 when recognized as liabilities on the Borrower's balance sheet in
accordance with GAAP.
6.5 USE OF PROCEEDS. The Borrower shall not use any portion of the
Loan proceeds, directly or indirectly, (i) to purchase or carry Margin Stock,
(ii) to repay or otherwise refinance indebtedness of the Borrower or others
incurred to purchase or carry Margin Stock, (iii) to extend credit for the
purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any
security in any transaction that is subject to Section 13 or 14 of the Exchange
Act.
6.6 COMPLIANCE WITH ERISA. To the extent an event or condition
specified in this Section 6.6 has a reasonable likelihood of having a Material
Adverse Effect, the Borrower shall not directly or indirectly and shall not
permit any ERISA Affiliate directly or indirectly (i) to terminate any Plan
subject to Title IV of ERISA, (ii) to permit to exist any ERISA Event, (iii) to
enter into any new Plan or modify any existing Plan so as to increase its
obligations thereunder except in the ordinary course of business consistent with
past practice or (iv) permit the existence of Unfunded Pension Liabilities.
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6.7 CONSOLIDATED TANGIBLE NET WORTH. The Borrower shall not permit
its Consolidated Tangible Net Worth at any time to be less than $250,000,000
PLUS 50% of each quarter's consolidated net income commencing February 1, 1994
(but without reduction for any losses) PLUS 75% of the Net Issuance Proceeds of
any equity securities issued by the Borrower (other than from Net Issuance
Proceeds received from employees' and pension plans' customary quarterly stock
purchases).
6.8 CONSOLIDATED FUNDED DEBT TO CAPITAL RATIO. The Borrower shall not
at any time permit its ratio of Consolidated Funded Debt to Consolidated Capital
to be greater than 0.45 to 1.00.
6.9 ACCOUNTING CHANGES. The Borrower shall not, and shall not suffer
or permit any of its Subsidiaries to, make any significant change in accounting
treatment or reporting practices, except as required or permitted by GAAP, or
change the fiscal year of the Borrower or of any of its consolidated
Subsidiaries; PROVIDED, HOWEVER, that if any change GAAP would affect the
computation of any covenants herein, the parties will enter into good faith
negotiations to adjust such covenants in order to implement the original intent
of the parties with respect to such covenants, and, until such adjustments are
agreed upon by the Borrower and the Bank, the prior version of GAAP shall be
used in computing compliance with such covenants.
6.10 BILATERAL AGREEMENTS. The Borrower shall not enter into any
waiver, amendment, extension, renewal or other modification to any Bilateral
Agreement without concurrently offering the Bank the right to similarly waive,
amend, extend, renew or otherwise modify this Agreement with all, but not less
than all, of the terms and conditions of such waiver, amendment, extension,
renewal or other modification. The Bank shall have the right to accept or
reject such waiver, amendment, extension, renewal or other modification to this
Agreement in its sole discretion.
SECTION 7. EVENTS OF DEFAULT
7.1 EVENTS OF DEFAULT. Any of the following shall constitute an
"Event of Default":
(a) NON-PAYMENT. The Borrower fails to pay, (i) within one day
after the same shall become due, any amount of principal of any Loan, or (ii)
within five days after the same shall become due, any interest on any Loan, fee
or any other amount payable hereunder or pursuant to any other Loan Document; or
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(b) REPRESENTATION OR WARRANTY. Any material representation or
warranty by the Borrower made or deemed made herein, in any Loan Document, or
which is contained in any certificate, document or financial or other statement
by the Borrower, any of its Subsidiaries, or their respective Responsible
Officers, furnished at any time under this Agreement, or in or under any Loan
Document, shall prove to have been incorrect in any material respect on or as of
the date made or deemed made; or
(c) SPECIFIC DEFAULTS. The Borrower fails to perform or observe
any term, covenant or agreement contained in Section 6.3, 6.5, 6.7 or 6.8; or
(d) OTHER DEFAULTS. The Borrower fails to perform or observe
any other term, covenant or agreement contained in any Loan Document not
specifically mentioned in this Section 7.1 and, such default shall continue
unremedied for a period of 30 days after notice by the Bank thereof; or
(e) CROSS DEFAULT TO BILATERAL AGREEMENTS. The Borrower (i)
fails to make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) under any Bilateral Agreement;
or (ii) fails to perform or observe any other condition or covenant, or any
other event shall occur or condition exist, under any Bilateral Agreement, if
the effect of such failure, event or condition is to cause, or to permit the
holder or holders of Indebtedness thereunder to cause such Indebtedness to be
declared to be due and payable prior to its stated maturity; or
(f) CROSS DEFAULT. The Borrower or any of its Subsidiaries (i)
fails to make any payment in respect of any Indebtedness or Contingent
Obligation owing to any Person (other than the Obligations hereunder) when due
(whether by scheduled maturity, required prepayment, acceleration, demand,
or otherwise) having an aggregate principal amount (including undrawn committed
or available amounts and including amounts owing to all creditors under any
combined or syndicated credit arrangement) of more than $10,000,000; or (ii)
fails to perform or observe any other condition or covenant, or any other event
shall occur or condition exist, under any agreement or instrument relating to
any such Indebtedness or Contingent Obligation having an aggregate principal
amount (including undrawn committed or available amounts and including amounts
owing to all creditors under any combined or syndicated credit arrangement) of
more than $10,000,000, if the effect of such failure, event or condition is to
cause, or to permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause such Indebtedness to
be declared to be due and payable prior to its stated maturity, or
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<PAGE>
such Contingent Obligation to become payable or cash collateral in respect
thereof to be demanded; or
(g) INSOLVENCY; VOLUNTARY PROCEEDINGS. The Borrower or any of
its Subsidiaries, (i) ceases or fails to be solvent, or generally fails to pay,
or admits in writing its inability to pay, its debts as they become due, subject
to applicable grace periods, if any, whether at stated maturity or otherwise;
(ii) voluntarily ceases to conduct its business in the ordinary course; (iii)
commences any Insolvency Proceeding with respect to itself; or (iv) takes any
action to effectuate or authorize any of the foregoing; or
(h) INVOLUNTARY PROCEEDINGS. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Borrower or any of its
Subsidiaries, or any writ, judgment, warrant of attachment, execution or similar
process, is issued or levied against a substantial part of the Borrower's or any
Subsidiary's Properties, and any such proceeding or petition shall not be
dismissed, or such writ, judgment, warrant of attachment, execution or similar
process shall not be released, vacated or fully bonded within 60 days after
commencement, filing or levy; (ii) the Borrower or any of its Subsidiaries
admits the material allegations of a petition against it in any Insolvency
Proceeding, or an order for relief (or similar order under non-U.S. law) is
ordered in any Insolvency Proceeding; or (iii) the Borrower or any of its
Subsidiaries acquiesces in the appointment of a receiver, trustee, custodian,
conservator, liquidator, mortgagee in possession (or agent therefor), or other
similar Person for itself or a substantial portion of its Property or business;
or
(i) ERISA. Any of the following events or conditions occurs or
exists which has a reasonable likelihood of having a Material Adverse Effect:
(i) the Borrower or an ERISA Affiliate shall fail to pay when due, after the
expiration of any applicable grace period, any installment payment with respect
to its withdrawal liability under a Multiemployer Plan; (ii) the Borrower or an
ERISA Affiliate shall fail to satisfy its contribution requirements under
Section 412(c)(11) of the Code, whether or not it has sought a waiver under
Section 412(d) of the Code; (iii) an ERISA Event; (iv) a Plan that is intended
to be qualified under Section 401(a) of the Code shall lose its qualification;
or (v) the occurrence of any combination of events listed in clauses (iii)
through (iv) that involves a net increase in aggregate Unfunded Pension
Liabilities and other liabilities; or
(j) MONETARY JUDGMENTS. One or more final (non-interlocutory)
judgments, orders or decrees shall be entered against the Borrower or any of its
Subsidiaries, involving in the aggregate a liability (not fully covered by
independent third-
- 40-
<PAGE>
party insurance and for which the relevant insurer has acknowledged liability)
as to any single or related series of transactions, incidents or conditions, of
$500,000 or more, and the same shall remain unsatisfied, unvacated and unstayed
pending appeal for a period of 30 days after the entry thereof or such later
time as may be provided for the filing of an appeal; or
(k) CHANGE IN CONTROL. (i) Any Person (other than a Plan or
Plans) or two or more Persons (other than a Plan or Plans) acting in concert
shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under the Securities and Exchange Act of
1934, as amended), directly or indirectly, of securities of the Borrower (or
other securities convertible into such securities) representing 20% or more of
the combined voting power of all securities of the Borrower entitled to vote in
the election of directors, other than securities having such power only by
reason of the happening of a contingency; or (ii) individuals who at the
beginning of any two year period constituted the Borrower's Board of Directors
cease for any reason to constitute a majority of directors then in office; or
(l) SUSPENSION. Any Governmental Authority shall notify or
otherwise advise the Borrower or any of its Subsidiaries in writing or verbally
to the effect that the Borrower or any of its Subsidiaries is ineligible or
disqualified in any respect as a present or future contractor to a Governmental
Authority and such ineligibility or disqualification constitutes a Material
Adverse Effect.
7.2 REMEDIES. Upon the occurrence of any Event of Default described
in Section 7.1(g) or 7.1(h) the Commitment will be terminated automatically
without any affirmative action on the part of the Bank, and the Loans (with
accrued interest thereon) and all other amounts owing under this Agreement shall
become due and payable, without presentment, demand, protest or other notice of
any kind, all of which are hereby expressly waived, anything contained herein to
the contrary notwithstanding. Upon the occurrence of any other Event of Default
the Bank may, by written notice to the Borrower (x) terminate the Commitment
and/or (y) declare the Loans (with accrued interest thereon) and all other
amounts owing under this Agreement to be due and payable, forthwith, whereupon
the same will immediately become due and payable, without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived,
anything contained herein to the contrary notwithstanding.
7.3 RIGHTS NOT EXCLUSIVE. The rights provided for in this Agreement
and the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other
- 41-
<PAGE>
instrument, document or agreement now existing or hereafter arising.
SECTION 8. MISCELLANEOUS
8.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision
of this Agreement or any other Loan Document, and no consent with respect to any
departure by the Borrower therefrom, shall be effective unless the same shall be
in writing and signed by the Bank and the Borrower.
8.2 NOTICES.
(a) All notices, requests and other communications provided for
hereunder shall be in writing (including, unless the context expressly otherwise
provides, by facsimile transmission, provided that any matter transmitted by the
Borrower by facsimile (i) shall be immediately confirmed by a telephone call to
the recipient at the number specified on the applicable signature page hereof,
and (ii) shall be followed promptly by a hard copy original thereof) and mailed,
faxed or delivered, to the address or facsimile number specified for notices on
the applicable signature page hereof; or, as directed to the Borrower or the
Bank, to such other address as shall be designated by such party in a written
notice to the other parties, and as directed to each other party, at such other
address as shall be designated by such party in a written notice to the Borrower
and the Bank.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next day) delivery, or transmitted by facsimile machine,
respectively, or if delivered, upon delivery, except that notices pursuant to
Section 2 or 8 shall not be effective until actually received by the Bank.
(c) The Borrower acknowledges and agrees that any agreement of
the Bank in Section 2 herein to receive certain notices by telephone and
facsimile is solely for the convenience and at the request of the Borrower. The
Bank shall be entitled to rely on the authority of any Person purporting to be a
Person authorized by the Borrower to give such notice and the Bank shall not
have any liability to the Borrower or other Person on account of any action
taken or not taken by the Bank in reliance upon such telephonic or facsimile
notice, provided that in no event shall the Bank act on telephonic or facsimile
notice requiring funds to be sent to any account other than an account
previously specified by the Borrower in writing in accordance with Section
2.3(a). The obligation of the Borrower to repay the Loans shall not be affected
in any way or to any extent by any failure by the
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<PAGE>
Bank to receive written confirmation of any telephonic or facsimile notice or
the receipt by the Bank of a confirmation which is at variance with the terms
understood by the Bank to be contained in the telephonic or facsimile notice.
8.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of the Bank, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.
8.4 COSTS AND EXPENSES. The Borrower shall, whether or not the
transactions contemplated hereby shall be consummated:
(a) pay or reimburse the Bank within five Business Days after
demand for all reasonable costs and expenses incurred by the Bank in connection
with the development, preparation, delivery, administration and execution of,
and any amendment, supplement, waiver or modification to (in each case, whether
or not consummated), this Agreement, any Loan Document and any other documents
prepared in connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, including the reasonable Attorney
Costs incurred by the Bank with respect thereto;
(b) pay or reimburse the Bank after demand for all reasonable
costs and expenses incurred by it in connection with the enforcement after a
Default or Event of Default, or preservation of any rights or remedies
(including in connection with any "workout" or restructuring regarding the
Loans, and including in any Insolvency Proceeding or appellate proceeding) under
this Agreement, any other Loan Document, and any such other documents, including
Attorney Costs incurred by the Bank; and
(c) pay or reimburse the Bank after demand for all reasonable
appraisal (including the allocated cost of internal appraisal services), audit
and environmental inspection and review costs (including the allocated cost of
such internal services), incurred after notice to the Borrower, and search and
filing costs, fees and expenses, incurred or sustained by the Bank in connection
with the matters referred to under Sections (a) and (b) of this Section.
8.5 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the Bank.
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<PAGE>
8.6 ASSIGNMENTS, PARTICIPATIONS, ETC.
(a) The Bank may at any time, upon notice to the Borrower,
assign and delegate to one or more banks or other financial institutions
reasonably acceptable to the Borrower (each an "ASSIGNEE") all, or any part of
all, of the Loans, the Commitment and the other rights and obligations of the
Bank in increments of not less than $5,000,000.
(b) From and after the date that the Bank notifies the Borrower,
(i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it, shall have the rights
and obligations of the Bank under the Loan Documents, and (ii) the assignor Bank
shall, to the extent that rights and obligations hereunder and under the other
Loan Documents have been assigned by it, relinquish its rights and be released
from its obligations under the Loan Documents.
(c) Promptly after its receipt of notice by the Bank that it has
assigned a portion of the Loans and Commitment to an Assignee, the Borrower
shall execute and deliver to the Assignee, if requested, a new Note evidencing
such Assignee's assigned Loans and Commitment and, if the assignor Bank has
retained a portion of its Loans and the Commitment and holds a Note, a
replacement Note in the principal amount of the Loans retained by the assignor
Bank (such Note to be in exchange for, but not in payment of, the Note held by
such Bank). Immediately upon the effectiveness of any such assignment, this
Agreement shall be deemed to be amended to the extent, but only to the extent,
necessary to reflect the addition of the Assignee and the resulting adjustment
of the Commitment arising therefrom. The Commitment allocated to each Assignee
shall reduce the Commitment of the assigning Bank PRO TANTO.
(d) The Bank may at any time sell to one or more commercial
banks or other Persons not Affiliates of the Borrower (a "PARTICIPANT")
participating interests in any Loans, the Commitment and the other interests of
the Bank hereunder and under the other Loan Documents; PROVIDED, HOWEVER, that
(i) the Bank's obligations under this Agreement shall remain unchanged, (ii) the
Bank shall remain solely responsible for the performance of such obligations,
(iii) the Borrower shall continue to deal solely and directly with the Bank in
connection with the Bank's rights and obligations under this Agreement and the
other Loan Documents and (iv) no participant shall have the right to enforce any
obligation of the Borrower hereunder and no consent of any participant shall be
required for any modification, waiver or amendment of this Agreement or any of
the Loan Documents, except that a participant's consent may be required to (a)
increase or extend the Commitment or reinstate the Commitment if terminated
pursuant to Section 7.2); (b) postpone or delay any date fixed by
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<PAGE>
this Agreement or any other Loan Document for any payment of principal,
interest, fees or other amounts due to the Bank; (c) reduce the principal of,
or the rate of interest specified herein on any Loan, or any fees or other
amounts payable hereunder or under any other Loan Document any portion of which
would be distributed to the participant; (d) amend this Section or Sections 2.12
through 2.15. In the case of any such participation, the Participant shall be
entitled to the benefit of Sections 2.12 through 2.15 as though it were also the
Bank hereunder, and if amounts outstanding under this Agreement are due and
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall be deemed to have
the right of set-off in respect of its participating interest in amounts owing
under this Agreement to the same extent as if the amount of its participating
interest were owing directly to it as the Bank under this Agreement.
(e) Notwithstanding anything else contained in this Section 8.6,
the Bank may assign its rights under this Agreement (including without
limitation rights to payment of principal and interest under any Note held by
it) to any of its Affiliates; or may pledge its rights under this Agreement
(including without limitation rights to payment of principal and interest under
any Note held by it) to any Federal Reserve Bank, provided that no pledge to a
Federal Reserve Bank shall release the Bank from its obligations hereunder, or
grant to such Federal Reserve Bank any rights of the Bank hereunder, absent
foreclosure of such pledge.
8.7 SET OFF. In addition to any rights and remedies of the Bank
provided by law, if an Event of Default exists, the Bank is authorized at any
time and from time to time, without prior notice to the Borrower, any such
notice being waived by the Borrower to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by, and other indebtedness at any time
owing to, the Bank to or for the credit or the account of the Borrower against
any and all Obligations owing to the Bank, or any of the Bank's Affiliates now
or hereafter existing, irrespective of whether or not the Bank shall have made
demand under this Agreement or any Loan Document and although such Obligations
may be contingent or unmatured and each such Affiliate is hereby irrevocably
authorized to permit such set off and application; PROVIDED, HOWEVER, that the
Bank will provide the Borrower with prompt notice after the Bank has exercised
its right of set off pursuant to this Section 8.7; PROVIDED, FURTHER, that the
failure to provide such notice shall not invalidate such set off.
8.8 AUTOMATIC DEBITS OF FEES. With respect to any commitment fee, or
other fee, or any other cost or expense
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<PAGE>
(including Attorney Costs) due and payable to the Bank under the Loan Documents
and not paid within the applicable payment period, the Borrower hereby
irrevocably authorizes the Bank to debit any deposit account of the Borrower
with the Bank in an amount such that the aggregate amount debited from all such
deposit accounts does not exceed such fee or other cost or expense. If there
are insufficient funds in such deposit accounts to cover the amount of the fee
or other cost or expense then due, such debits will be reversed (in whole or in
part, in the Bank's sole discretion) and such amount not debited shall be deemed
to be unpaid. No such debit under this Section 8.8 shall be deemed a setoff.
8.9 COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement in any number of separate counterparts, each of
which, when so executed, shall be deemed an original, and all of said
counterparts taken together shall be deemed to constitute but one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Borrower and the Bank.
8.10 SEVERABILITY. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
8.11 NO THIRD PARTIES BENEFITED. This Agreement is made and entered
into for the sole protection and legal benefit of the Borrower and the Bank, and
their permitted successors and assigns, and no other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any of the other Loan Documents.
The Bank shall not have any obligation to any Person not a party to this
Agreement or other Loan Documents.
8.12 TIME. Time is of the essence as to each term or provision of
this Agreement and each of the other Loan Documents.
8.13 GOVERNING LAW AND JURISDICTION.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA; PROVIDED THAT THE PARTIES
HERETO SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT AND ANY OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE
OF CALIFORNIA OR OF THE UNITED STATES FOR THE CENTRAL DISTRICT OF CALIFORNIA,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWER AND THE
BANK CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE Borrower AND THE BANK
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<PAGE>
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE BORROWER AND THE BANK
EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH
MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.
8.14 ENTIRE AGREEMENT. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding between the Borrower
and the Bank, and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof, and any prior arrangements made with respect to the
payment by the Borrower of (or any indemnification for) any fees, costs or
expenses payable to or incurred (or to be incurred) by or on behalf of the Bank.
8.15 INTERPRETATION. This Agreement is the result of negotiations
between and has been reviewed by counsel to the Bank, the Borrower and other
parties, and is the product of all parties hereto. Accordingly, this Agreement
and the other Loan Documents shall not be construed against the Bank merely
because of the Bank's involvement in the preparation of such documents and
agreements.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
as of the day and year first above written.
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
By: /S/WILLIAM A. ROPER
-------------------------
William A. Roper
Senior Vice President and
Chief Financial Officer
By: /S/WARD REED
-------------------------
Ward Reed
Corporate Vice President and
Treasurer
Address:
10260 Campus Drive
San Diego, California 92121
Att: Ward Reed, Treasurer
Telephone: (619) 552-4620
Facsimile: (619) 552-4851
(Signatures continue)
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<PAGE>
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /S/ROBERT M. OSIESKI
-------------------------
Vice President
Domestic Lending Office:
Morgan Guaranty Trust Company
of New York
c/o J.P. Morgan Services Inc.
500 Stanton-Christiana Road
Newark, Delaware 19713
Att: Credit Administration
Facsimile: (302) 634-4222
Offshore Lending Office:
Morgan Guaranty Trust Company
of New York
Nassau, Bahamas Office
c/o J.P. Morgan Services Inc.
500 Stanton-Christiana Road
Newark, Delaware 19713
Att: Credit Administration
Facsimile: (302) 634-4222
Address of Notices:
Robert M. Osieski
Vice President
Morgan Guaranty Trust Copany
of New York
60 Wall Street
New York, New York 10260
Telephone: (212) 648-7173
Facsimile: (212) 648-5014
For all other notices:
60 Wall Street
New York, New York 10260
Ref: Science Applications
International
Att: Robert Osieski
Vice President
Telephone: (212) 648-7173
Facsimile: (212)
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<PAGE>
EXHIBIT A
NOTE
$_________________ April 7, 1995
Los Angeles, California
FOR VALUE RECEIVED, SCIENCE APPLICATIONS INTERNATIONAL
CORPORATION, a Delaware corporation (the "Borrower"), hereby
promises to pay to the order of BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION (the "Bank") at its Lending Office the
principal sum of $35,000,000 (or such lesser amount as shall
equal the aggregate unpaid principal amount of the Loans made by
the Bank to the Borrower under the Credit Agreement referred to
below), in lawful money of the United States of America and in
immediately available funds, on the dates and in the principal
amounts provided in the Credit Agreement, and to pay interest on
the unpaid principal amount of each such Loan, at such office,
in like money and funds, for the period commencing on the date
of such Loan until such Loan shall be paid in full, at the rates
per annum and on the dates provided in the Credit Agreement.
The date, amount, type, interest rate and duration of
Interest Period (if applicable) of each Loan made by the Bank to
the Borrower, and each payment made on account of the principal
of such Loan, shall be recorded by the Bank on its books and,
prior to any transfer of this Note, endorsed by the Bank on the
schedule attached to this Note or any continuation of such
schedule, PROVIDED that the failure of the Bank to make any such
recordation or endorsement shall not affect the obligations of
the Borrower to make a payment when due of any amount owing
under the Credit Agreement or under this Note in respect of the
Loans made by the Bank.
This promissory note is the Note referred to in the
Credit Agreement dated as of April 7, 1995 (as extended,
renewed, amended or restated and in effect from time to time,
the "Credit Agreement") between the Borrower and Bank.
Capitalized terms used but not defined in this Note have the
respective meanings assigned to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of
the maturity of this Note upon the occurrence of certain events
and for prepayments of Loans upon the terms and conditions
specified in the Credit Agreement.
Except as permitted by the Credit Agreement, this Note
may not be assigned by the Bank or the Borrower to any other
Person.
A-1 - 1
<PAGE>
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA APPLICABLE
TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF CALIFORNIA.
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
By:
-------------------------
Title:
----------------------
A-1 - 2
<PAGE>
SCHEDULE OF LOANS
This Note evidences Loans made, continued or converted
under the Credit Agreement to the Borrower, on the dates, in the
principal amounts, of the types, bearing interest at the rates
and having Interest Periods (if applicable) of the durations set
forth below, subject to the payments, continuations, conversions
and prepayments of principal set forth below:
Amount
Date Prin- Paid,
Made, cipal Duration Prepaid, Unpaid
Continued Amount Type of Continued Prin-
or of of Interest Interest or cipal Notation
Converted Loan Loan Rate Period Converted Amount Made by
- --------- ------ ---- -------- -------- --------- ------ --------
A-1 - 3
<PAGE>
EXHIBIT B
NOTICE OF BORROWING
Date: , 199
---------------- --
To: Bank of America National Trust
and Savings Association
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of
April 7, 1995 (as extended, renewed, amended or restated and in effect
from time to time, the "Credit Agreement") between Science
Applications International Corporation and Bank of America National
Trust and Savings Association ("Bank"). Unless otherwise defined
herein, capitalized terms used herein have the respective meanings
assigned to them in the Credit Agreement.
Pursuant to Section 2.3 of the Credit Agreement, the Borrower
gives you notice of the requested borrowing specified below:
1. The Business Day of the proposed borrowing is
, 19 .
------------------------ ---
2. The amount of the proposed borrowing is $_______________
____.
3. The borrowing is to be comprised of [$]_______ of [Base
Rate] [Offshore Rate] [CD Rate] [Money Market Rate] Loans.
4. The duration of the Interest Period for the [Offshore
Rate Loans] [CD Rate Loans] [Money Market Rate Loans] included in
the borrowing shall be _____ months/weeks/days.
5. The interest rate for the Money Market Rate Loans
included in the borrowing shall be _____ percent per annum (rate
to be based upon quotation from Bank).
The undersigned hereby certifies that the following statements
are true in all material respects on the date hereof, and will be true
in all material respects on the date of the proposed borrowing, before
and after giving effect thereto and to the application of the proceeds
therefrom:
B - 1
<PAGE>
(a) Except for the representations and warranties set forth
in Section 4.11(b) and 4.13 (which shall be made solely as of the
Closing Date, the representations and warranties made by the Borrower
contained in Section 4 are true and correct in all material respects
on and as of this borrowing date with the same effect as if made on
and as of this borrowing date;
(b) No Default or Event of Default shall exist or shall
result from such borrowing; and
(c) The aggregate amount outstanding under this Agreement
and the Bilateral Agreements does not exceed $150,000,000.
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
By: _________________________
Title: ______________________
B - 2
<PAGE>
EXHIBIT C
NOTICE OF CONVERSION/CONTINUATION
Date: ________________, 199__
To: Bank of America National Trust
and Savings Association
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement dated as of
April 7, 1995 (as extended, renewed, amended or restated and in effect
from time to time, the "Credit Agreement") between Science
Applications International Corporation and Bank of America National
Trust and Savings Association ("Bank"). Unless otherwise defined
herein, capitalized terms used herein have the respective meanings
assigned to them in the Credit Agreement.
Pursuant to Section 2.4 of the Credit Agreement, the Borrower
gives you notice of the requested conversion or continuation specified
below:
1. The conversion or continuation date is _______________,
19__.
2. The aggregate amount of the Loans to be [converted]
[continued] is $______________.
3. The Loans are to be [converted into] [continued as]
[Offshore Rate] [CD Rate] [Money Market Rate] [Base Rate] Loans.
4. [If applicable:] The duration of the Interest Period
for the Loans included in the [conversion] [continuation] shall
be ____ months/weeks/days.
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
By: _________________________
Title: ______________________
C - 1
<PAGE>
EXHIBIT D
COMPLIANCE CERTIFICATE
Financial
Statement Date: ____________, 199_
Reference is made to that certain Credit Agreement dated as of
April 7, 1995 (as extended, renewed, amended or restated and in effect
from time to time, the "CREDIT AGREEMENT") between Science
Applications International Corporation and Bank of America National
Trust and Savings Association ("Bank"). Unless otherwise defined
herein, capitalized terms used herein have the respective meanings
assigned to them in the Credit Agreement.
The undersigned Responsible Officer of the Borrower, hereby
certifies as of the date hereof that he/she is the __________________
of the Borrower, and that, as such, is authorized to execute and
deliver this certificate to the Bank on the behalf of the Borrower and
its consolidated Subsidiaries, and that:
1. Copies of the financial statements required by
Section 5.1(a) or 5.1(b), as applicable, are attached.
2. The undersigned has reviewed and is familiar with the terms
of the Credit Agreement and has made, or has caused to be made under
his/her supervision, a review in reasonable detail of the transactions
and conditions (financial or otherwise) of the Borrower during the
accounting period covered by the attached financial statements.
3. To the best of the undersigned's knowledge, the Borrower,
during such period, has observed, performed or satisfied all of its
covenants and other agreements, and satisfied every condition in the
Credit Agreement to be observed, performed or satisfied by the
Borrower, and the undersigned has no knowledge of any Default or Event
of Default as of the date hereof.
4. The following financial covenant analyses and information
set forth on SCHEDULE 1 attached hereto are true and accurate in all
material respects on and as of the date of this Certificate.
D - 1
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate
as of ___________________, 199__.
SCIENCE APPLICATIONS INTERNATIONAL
CORPORATION
a Delaware corporation
By: _______________________________
Name: ________________________
Title: _______________________
D - 2
<PAGE>
As of ______________, 199__
SCHEDULE 1
to the Compliance Certificate
COMPLIANCE WITH FINANCIAL COVENANTS
1. 6.7 MINIMUM CONSOLIDATED TANGIBLE NET WORTH.
A. Consolidated Tangible Net Worth at _________:
1. Assets of Borrower and Subsidiaries: $_________
2. Liabilities of Borrower and
Subsidiaries: $_________
3. Intangible Assets: unamortized debt
discount, goodwill, and other intangible
items: $_________
4. PLUS or LESS Foreign Currency
Translation Adjustments $_________
5. Consolidated Tangible Net Worth (Line A1
LESS Line A2 LESS Line A3 PLUS
or LESS Line A4, as applicable: $_________
B. 50% of cumulative consolidated net
income from February 1, 1994
(no reduction for losses): $_________
C. 75% of the Net Issuance Proceeds
(excluding employees' and pension plans'
customary quarterly stock purchases): $_________
D. Minimum requirement: Lines B+C+
$250,000,000: $_________
_________
2. 6.8 LEVERAGE RATIO.
A. Consolidated Funded Debt as of above date:
1. Principal amount of all
Indebtedness for borrowed
money: $_________
2. Principal portion of Capitalized
Lease Obligations: $_________
<PAGE>
3. All Contingent Obligations: $_________
4. Consolidated Funded Debt
(Lines A1+A2+A3): $_________
_________
B. Consolidated Capital for the period ending on date of
attached financial statements ("Subject Period"):
1. Consolidated Funded Debt (Line A4): $_________
2. Consolidated Tangible Net Worth
(Line 1A): $_________
3. Consolidated Capital
(Lines B1+B2): $_________
_________
C. Leverage Ratio (Line A4 divided
by Line B3): ____ to 1:00
____
D. Maximum Permitted Leverage Ratio: 0.45 to 1.00
<PAGE>
SCHEDULE 4.5
LITIGATION
On February 15, 1994, the Company was served with search warrants and
a subpoena for documents and records associated with the performance
by an operating unit of the Company under three contracts with the
DOD. The search warrants and the subpoena state that the Government
is seeking evidence regarding the making of false statements and false
claims to the DOD, as well as conspiracy to commit such offenses. The
search warrant and subpoena were based upon allegations contained in a
civil complaint that had been filed under seal on March 13, 1993, by
an employee of the Company's SAIT operating unit. The complaint was
filed in the U.S. District Court for the Southern District of
California and it sought damages on behalf of the U.S. Government
under the federal False Claims Act. On November 8, 1994, based on the
Company's motion, the District Court dismissed the employee who had
originally filed the complaint from the lawsuit. The employee has
appealed the Court's order to the U.S. Court of Appeals for the Ninth
Circuit. The Company has engaged in a series of presentations and
submissions with the Department of Justice in response to issues
raised by the Department of Justice. At this stage of the
proceedings, the Company is unable to assess the impact, if any, of
this investigation and lawsuit on its consolidated financial position,
results of operations or ability to conduct business.
- 1 -
<PAGE>
SCHEDULE 4.7
ERISA PLANS
Qualified Plans:
SAIC:
Science Applications International Corporation Profit Sharing
Retirement Plan
Science Applications International Corporation Employee Stock
Ownership Plan
Science Applications International Corporation Cash or Deferred
Arrangement
Science Applications International Corporation Frederick Employee
Savings Plan
Science Applications International Corporation Frederick Retirement
Plan *
Subsidiaries:
R.E. Wright Associates, Inc. Retirement Savings Plan
Syntonic Technology, Inc. Retirement Savings Plan
American Systems Engineering Corporation Employee Profit Sharing Plan
General Science Corporation Retirement Plan
Acquired Qualified Plans in process of termination:
JHK & Associates Employees' Retirement Plan
Systems Control Technology Inc. Tax Deferred Savings Plan
Applied Research Inc., Profit Sharing 401K Salary Deferral Plan
Network Solutions 401(k) Plan
The Fleming Group, Inc. 401(k) Profit Sharing Plan
* The SAIC Frederick Retirement Plan is the only defined
benefit plan maintained or sponsored by SAIC subject to
Title IV of ERISA. All of the other Qualified Plans are
defined contribution plans.
- 1 -
<PAGE>
SCHEDULE 4.12(b)
ENVIRONMENTAL MATTERS
1. On January 18, 1995, the Massachusetts Department of
Environmental Protection (DEP) issued a Notice of Non-
compliance to SAIC Engineering, a subsidiary of SAIC,
relating to SAIC Engineering's oversight of an underground
storage tank removal project. DEP has not fined or
otherwise sanctioned SAIC in connection with this matter.
2. In March, 1995, SAIC was issued a Notice of Violation (NOV)
by the San Diego Metropolitan Industrial Waste Program for
exceeding its industrial discharge limit for lead. SAIC is
in the process of appealing the Notice of Violation.
- 1 -
<PAGE>
SCHEDULE 4.13
SUBSIDIARIES
American Systems Engineering Corporation ("AMSEC")
Andrew Palmer & Associates Limited
Bull, Inc.
Campus Point Realty Corporation
Energy and Technology Management Corporation ("ETM") - inactive
General Science Corporation ("GSC")
Hicks & Associates, Inc.
JHK & Associates, Inc. ("JHK")
JMD Development Corporation ("JDA")
Network Solutions, Inc. ("NSI")
R.E. Wright Environmental, Inc.
Sachse Engineering Associates, Inc. - inactive
SAIC Columbia, Limitada
SAIC Commercial Enterprises, Inc.
SAIC de Mexico, S.A. de C.V.
SAIC Engineering, Inc.
SAIC Global Technology Corporation
SAIC in Novosibirsk
SAIC - MIR
SAIC Limited (formerly Topexpress, Ltd)
SAIC UK Limited
Science Applications International (Barbados) Corporation
Science Applications International Corporation (SAIC Canada)
Science Applications International, Europe S.A.
Science Applications International Technology
Syntonic Technology, Inc.
Systems Control Technology, Inc. ("SCT")
TST International Pty, Ltd ("TSTI")
Wright Laboratory Services, Inc.
- 1 -
<PAGE>
SCHEDULE 6.1
EXISTING LIENS
(1) A Deed of Trust between Campus Point Realty Corporation and
The Prudential Insurance Company of America granting a
security interest in real property in the City of San Diego.
The real property is commonly known as Campus Point Building
III and the deed of trust is security for a $12,800,000
(original principal amount) note assumed by Campus Point
Realty Corporation upon the purchase of the property in
1990. The property purchase price was $14,195,000.
(2) A Tri-Partite Agreement dated March 21, 1995 between SAIC,
the United State of America (the "Government") and First
National Bank of Maryland (the "Bank") granting the
Government a lien upon the credit balances of two bank
accounts established by SAIC with the Bank. The bank
accounts are used exclusively to facilitate payments of
costs associated with an SAIC contract for operations and
technical support for the National Cancer Institute
Frederick Cancer Research and Development Center. The
accounts are funded by advance payments from the Government.
- 1 -
<PAGE>
EXHIBIT 11
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
EXHIBIT TO CONSOLIDATED FINANCIAL STATEMENTS
COMPUTATION OF PER SHARE EARNINGS
(Unaudited, in thousands, except per-share amounts)
<TABLE>
<CAPTION>
Three months ended
-----------------------------------
April 30, 1995 April 30, 1994
---------------- ----------------
PRIMARY:
<S> <C> <C>
Net Income $ 12,792 $ 9,649
Reduction of interest expense, net of
income tax expense on assumed retirement
of short-term and long-term debt 345 194
Interest earned, net of income tax expense
on assumed investment of U.S. government
securities or commercial paper -- 31
---------------- ----------------
Adjusted net income $ 13,137 $ 9,874
---------------- ----------------
---------------- ----------------
Weighted average shares outstanding 47,294 46,216
Dilutive stock options, based on the modified
treasury stock method, using average fair value 3,790 2,953
---------------- ----------------
Total average shares outstanding 51,084 49,169
---------------- ----------------
---------------- ----------------
Per Share Amount $ .26 $ .20
---------------- ----------------
---------------- ----------------
FULLY DILUTED:
Net Income $ 12,792 $ 9,649
Reduction of interest expense, net of
income tax expense on assumed retirement
of short-term and long-term debt 309 194
Interest earned, net of income tax expense
on assumed investment of U.S. government
securities or commercial paper -- 25
---------------- ----------------
Adjusted net income $ 13,101 $ 9,868
---------------- ----------------
---------------- ----------------
Weighted average shares outstanding 47,294 46,216
Dilutive stock options, based on the modified
treasury stock method, using quarter-end or
exercise date established price if higher
than average fair value 3,790 2,953
---------------- ----------------
Total average shares outstanding 51,084 49,169
---------------- ----------------
---------------- ----------------
Per Share Amount $ .26 $ .20
---------------- ----------------
---------------- ----------------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the consolidated balance sheet and related consolidated statement of
income and cash flows for the three months ended April 30, 1995 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> FEB-01-1995
<PERIOD-END> APR-30-1995
<CASH> 12,300
<SECURITIES> 20,036
<RECEIVABLES> 439,130
<ALLOWANCES> 0
<INVENTORY> 19,504
<CURRENT-ASSETS> 509,667
<PP&E> 261,771
<DEPRECIATION> 116,506
<TOTAL-ASSETS> 751,775
<CURRENT-LIABILITIES> 309,608
<BONDS> 30,808
<COMMON> 478
0
0
<OTHER-SE> 410,881
<TOTAL-LIABILITY-AND-EQUITY> 751,775
<SALES> 0
<TOTAL-REVENUES> 476,839
<CGS> 0
<TOTAL-COSTS> 417,501
<OTHER-EXPENSES> 35,527
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 969
<INCOME-PRETAX> 22,842
<INCOME-TAX> 10,050
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,792
<EPS-PRIMARY> .26
<EPS-DILUTED> .26
</TABLE>
