<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED JUNE 30, 1995 COMMISSION FILE NUMBER 1-7516
KEANE, INC.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2437166
(State or other jurisdictions of (I.R.S. Employer
incorporation or organization) Identification Number)
Ten City Square, Boston, Massachusetts 02129
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 241-9200
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 reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No
----- -----
As of June 30, 1995, the number of issued and outstanding shares of Common Stock
(excluding 303,414 shares held in treasury) and Class B Common Stock are
15,809,754 and 288,288 shares, respectively.
1
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Keane, Inc. and Subsidiaries
TABLE OF CONTENTS
Part I - Financial Information
<TABLE>
<S> <C>
Consolidated Statements of Income for the three months and six months ended June 30, 1995
and 1994 (unaudited)............................................................................... 3
Consolidated Balance Sheets as of June 30, 1995 and December 31, 1994 (unaudited).................. 4
Consolidated Statements of Cash Flows for the six months ended June 30, 1995 and 1994 (unaudited).. 5
Notes to Unaudited Financial Statements............................................................ 6
Management's Discussion and Analysis of Financial Condition and Results of Operations.............. 8
Part II - Other Information........................................................................ 10
Signature Page..................................................................................... 12
</TABLE>
2
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KEANE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Total revenues $94,647 $85,560 $185,099 $171,725
Salaries, wages and other direct costs 61,790 55,882 120,753 111,766
Selling, general and administrative expenses 20,573 19,052 40,241 38,761
Amortization of goodwill and other intangible 3,002 2,956 5,951 5,736
assets
Operating income 9,282 7,670 18,154 15,462
Investment income 355 1 721 34
Interest expense 164 702 328 1,182
Other expenses, net 44 135 81 267
Income before income taxes 9,429 6,834 18,466 14,047
Provision for income taxes 4,054 2,795 7,940 6,041
Net income $ 5,375 $ 4,039 10,526 $ 8,006
Net income per share $.33 $.29 $.65 $.58
Weighted average shares outstanding 16,316 13,896 16,299 13,842
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
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KEANE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS)
JUNE 30, 1995 DECEMBER 31, 1994
<S> <C> <C>
Assets
Current:
Cash and cash equivalents $ 27,657 $ 26,288
Accounts receivable, net
Trade 72,657 69,046
Other 1,650 994
Prepaid expenses and other current assets 6,896 3,975
-------- --------
Total current assets 108,860 100,303
Property and equipment, net 10,953 11,600
Intangible assets, net (Note 3) 61,141 65,600
Other assets, net 2,061 1,499
-------- --------
183,015 179,002
======== ========
Liabilities
Current:
Accounts payable 2,826 3,490
Accrued compensation 6,368 6,852
Accrued expenses and other liabilities 3,464 9,250
Notes payable 4,507 4,400
Current capital lease obligations 442 435
-------- --------
Total current liabilities 17,607 24,427
Notes payable 7,169 6,941
Deferred federal and state income taxes 1,326 2,705
Long-term portion of capital lease
obligations 322 542
Stockholders' Equity:
Preferred Stock --- ---
Common Stock 1,611 1,599
Class B Common Stock 29 29
Additional paid-in capital 91,656 90,019
Foreign currency translation (45) (74)
Retained earnings 65,752 55,226
Less treasury stock (2,412) (2,412)
Total stockholders' equity 156,591 144,387
$183,015 $179,002
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
KEANE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS)
SIX MONTHS ENDED JUNE 30,
CASH FLOWS FROM OPERATING ACTIVITIES: 1995 1994
<S> <C> <C>
Net income $10,526 $8,006
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and amortization 8,521 8,064
Accrued interest on long term debt 328 100
Deferred income taxes (1,335) 206
Provision for doubtful accounts (256) (208)
Loss on disposal of fixed assets 58 50
Changes in assets and liabilities, net of effect from
purchase of acquisitions:
Decrease in refundable income taxes -- (810)
(Increase) in accounts receivable (3,391) (13,820)
(Increase) in prepaid expenses and other assets (2,900) (1,055)
Decrease in income taxes payable -- (2,780)
Decrease in accounts payable, (6,622) (8,033)
accrued expenses, and other current liabilities
NET CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES 4,929 (10,280)
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of short-term investments, net -- 4,868
Purchase of property and equipment (1,686) (2,607)
Proceeds from sale of assets 58 136
Payment for acquisitions (3,375) (44,242)
NET CASH USED FOR INVESTING ACTIVITIES (5,003) (41,845)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under long term debt -- 92,416
Payments under long term debt (206) (60,198)
Proceeds from issuance of common stock 1,649 943
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,443 33,161
Net increase (decrease) in cash and cash equivalents 1,369 (18,964)
Cash and cash equivalents, beginning of period 26,288 19,244
Cash and cash equivalents at end of period $27,657 $280
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE>
KEANE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED FINANCIAL STATEMENTS
Note 1. The accompanying unaudited consolidated financial statements have been
prepared in accordance with the accounting policies described in the
1994 Annual Report on Form 10-K and should be read in conjunction with
the disclosures therein. All financial figures are in thousands of
dollars, except per share amounts. Prior period amounts have been
restated to conform to current year presentation.
In the opinion of management, these interim financial statements
reflect all adjustments, consisting of normal recurring accruals,
necessary to present fairly the financial position, results of
operations and cash flows for the periods presented. Interim results
are not necessarily indicative of results for the full year.
On July 28, 1994, the Company declared a 3 for 2 stock split in the
form of a dividend that was distributed on September 7, 1994 to
shareholders of record as of August 12, 1994. All Common shares and
per share amounts included in these financial statements are given
retroactive effect to the extent required for this stock split. The
1995 share figures also reflect the sale of 2.3 million additional
shares as part of a secondary stock offering completed in November
1994.
Note 2. Computation of Earnings Per Share for quarters ending June 30, 1995
and 1994.
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Primary
Average shares outstanding
Common 15,773 13,203
Class B Common 289 291
Net effect of dilutive options-based on the
treasury
stock method using average market price
Common Stock 254 402
Total 16,316 13,896
Net income $5,375 $4,039
Per share amount $.33 $.29
</TABLE>
6
<PAGE>
KEANE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Fully Diluted
Average Shares outstanding
Common 15,773 13,203
Class B Common 289 291
Net effect of dilutive stock
options-based on the
treasury stock method using
higher of average market
price or period ending price
Common stock 259 402
Total 16,321 13,896
Net income $5,375 $4,039
Per share amount $.33 $.29
<CAPTION>
Note 3. Intangible assets consist of the following: 6/30/95 12/31/94
Goodwill $19,302 $19,302
Noncompetition agreements 22,735 21,985
Customer-based intangibles 37,640 37,464
Software 5,549 5,169
Other 294 294
-------- -------
85,520 84,214
Less accumulated amortization 24,379 18,614
-------- -------
$61,141 $65,600
</TABLE>
Note 4. During the first six months of 1995, there have been no material
changes in the contingencies described in Footnote L, Commitments and
Contingencies, of the Company's 1994 Annual Report.
7
<PAGE>
KEANE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results of Operations
---------------------
The Company's revenues for the Second Quarter were $94.6 million, a 10.6%
increase over the same period last year. Revenues for the first six months of
1995 were $185.1 million, a 7.8% increase over the same period last year. The
increase in revenue is primarily due to an improved economy over last year,
combined with the stabilization of branch offices acquired from the acquisition
of AGS. In the Company's experience, there is a 12-18 month period of
restructuring and then stabilizing the business and employees following an
acquisition.
Salaries, wages and other direct costs for the Second Quarter were $61.8
million, or 65.3% of revenue compared to $55.9 million, or 65.3% of revenues,
during the same period last year. Salaries, wages and other direct costs for the
first six months of 1995 were $120.8 million, or 65.3% of revenues, compared to
$111.8 million, or 65.1% of revenues, during the same period last year. The
Company has continued to experience increases in its direct costs as a result of
customer demands to increase services and reduce costs. The Company has
responded in many situations by reducing customer costs in exchange for
increased volumes of business. The Company has been managing its selling,
general & administrative expenses through cost reductions and increases in
revenue volume to usually offset the increases in its direct cost percentage.
Selling, general and administrative expenses (SG&A) for the Second Quarter were
$20.6 million, or 21.7% of revenues, compared to $19.1 million, or 22.3% of
revenues, for the same period last year. Year-to-date SG&A expenses are $40.2
million, or 21.7% of revenue, compared to $38.8 million, or 22.6% of revenues
for the same period last year. The decrease in SG&A for the quarter and year to
date is primarily attributable to an increase in revenues that did not require a
proportionate increase in cost through careful management of discretionary
expenses.
Amortization of goodwill and capitalized acquisition costs for the Second
Quarters of 1995 and 1994 totaled $3.0 million, respectively. Amortization of
goodwill and capitalized acquisition costs for the first six months of 1995 were
$6.0 million compared to $5.7 million for the same period last year.
Interest and other related expenses for the Second Quarter were $208,000
compared to $837,000 for the same period last year. Interest and other related
expenses for the first six months were $409,000 compared to $1,449,000 for the
same period last year. The Company recognized investment income of $355,000 in
the Second Quarter and $721,000 year to date. As a result of the successful
stock offering completed in the Fourth Quarter of last year, the Company repaid
all
8
<PAGE>
outstanding bank debt. The shift from interest expense used to finance the AGS
acquisition to interest income earned with excess funds available from the
offering are reflected in the Second Quarter results of operations.
The Company's pre-tax income for the Second Quarter was $9.4 million, or 10.0%
of revenues (up 38%), compared to $6.8 million, or 8.0% of revenues for the same
period last year. Pre-tax income year-to-date was $18.5 million, or 10.0% of
revenues (up 31%), compared to $14.0 million, or 8.2% of revenue, for the same
period last year.
The Company's effective tax rate for both the Second Quarter of 1995 and 1994
was 43.0%.
Net Income
----------
Net income and earnings per share for the Second Quarter were $5.4 million and
$.33 per share, respectively, compared to $4.0 million and $ .29 per share,
respectively, for the same period last year. Net income and earnings per share
for the six months ended June 30, 1995 were $10.5 million and $ .65 per share,
respectively, compared to $8.0 million and $ .58 per share, respectively, for
the same period last year.
Liquidity and Capital Resources
-------------------------------
The Company has increased its cash balance by $1.4 million as of June 30, 1995
and ended the quarter with cash and equivalents totaling $27.7 million. The
Company has completed two new demand lines of credit divided with two major
Boston banks in the aggregate amount of $20 million, replacing the larger credit
agreement in place at the beginning of the year. The Company currently has no
outstanding bank debt. The Company believes that it will generate sufficient
cash flow from operations to meet its debt obligations and working capital
requirements.
9
<PAGE>
KEANE, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
--------------------------------------------------------------------------------
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders of the Company was held on May 31,
1995. The Stockholders approved the election of the four nominees named
below, and ratified the selection of Coopers & Lybrand, L.L.P. as the
Company's independent accountants for 1995. Set forth below is the
number of votes cast for, against or withheld, as well as the number of
abstentions and Broker non-votes as to each such matter, including a
separate tabulation with respect to each nominee for director:
Proposal #1 - To fix the number of directors at four and to elect the
following persons to serve as directors:
<TABLE>
<CAPTION>
BROKERS
FOR AGAINST ABSTAIN NON-VOTES
<S> <C> <C> <C> <C>
John F. Keane 15,495,364 18,632
John F. Rockhart 15,495,797 18,199
Robert Shafto 15,485,456 28,540
Winston Hindle 15,485,437 28,559
</TABLE>
Propose #2 - To ratify the selection of Coopers & Lybrand, L.L.P. as the
Company's independent accountants for 1995:
BROKER
FOR AGAINST ABSTAIN NON-VOTES
15,482,394 14,162 17,440
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - The following exhibits are filed as part of the
Quarterly Report on Form 10-Q.
10.19 Documents relating to the Demand Lines of Credit with
Shawmut Bank, N.A. and the First National Bank of Boston
(the "Banks").
10
<PAGE>
(a) Demand Money Market Promissory Note dated as of May
1, 1995, in the amount of $10,000,000, among the
Registrant and Shawmut Bank.
(b) Loan Agreement dated July 20, 1995, in the amount
of $10,000,000, among the Registrant and Bank of
Boston.
(b) Reports on Form 8-K - The Registrant filed no reports on
Form 8-K during the quarter ended June 30, 1995.
11
<PAGE>
SIGNATURES
--------------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
KEANE, INC.
(Registrant)
Date __________________________ ___________________________________
John F. Keane
President
Date __________________________ ___________________________________
Wallace A. Cataldo
Vice President, Finance
12
<PAGE>
EXHIBIT 10.19A
As of May 1, 1995
Keane, Inc.
Ten City Square
Boston, MA 02125
Attention: Wallace A. Cataldo, Vice President - Finance
Ladies and Gentlemen:
Shawmut Bank, N.A. (the "Bank") understands that Keane, Inc. (the
"Borrower") may from time to time request advances in an aggregate principal
amount of up to $10,000,000 at any one time outstanding.
The Bank, in its sole discretion, shall consider requests for advances
hereunder from the date hereof until April 30, 1996 (the "Termination Date"),
provided that (a) the Bank has determined that money market conditions are
favorable for it to acquire loan assets, (b) the Bank continues to be satisfied
with the Borrower's management, business and financial condition and has
received its most current quarterly and annual financial statements and any
other financial information regarding the Borrower which the Bank shall
reasonably request from time to time, and (c) the Borrower maintains a
satisfactory relationship with the Bank.
In the event that the Bank agrees to make an advance pursuant to any such
request by the Borrower, any such advance shall be payable on demand and
evidenced by a promissory note duly executed and delivered by the Borrower
substantially in the form appended to this letter (the "Note") and be subject to
the conditions therein contained, and such Note shall be accompanied by such
other documentation in form and substance satisfactory to the Bank.
In order to expedite future requests for advances, we have enclosed a Note
to be executed by a duly authorized officer of the Borrower and returned to the
Bank. The Bank may treat all signatures on the Note as genuine. The principal
amount set forth in the note is specified solely to expedite any advances as the
Bank may choose to make and is not a credit line. The Borrower may request
advances by telephone or in writing and the Bank may treat all requests
purported to be made on behalf of the Borrower to be duly authorized.
Any advance by the Bank hereunder shall be within the sole and absolute
discretion of the Bank. Neither this letter nor the Note constitutes a
commitment or in any way obligates the Bank to lend to the Borrower or to
continue any credit or loans to the Borrower and this letter is subject to
cancellation by the Bank in its sole discretion at any time without prior
notice. All amounts advanced by the Bank shall be payable on demand.
The Borrower by its acceptance of any advance hereunder represents and
warrants to the Bank that its making and performance hereof and making of
borrowings hereunder have been duly authorized by all necessary corporate
actions and not and will not violate any provision of its corporate charter, any
law or any contract, and that it will not use any proceeds of such advance in
violation of Federal Reserve Board Regulation U or any other law or regulation.
As long as this letter may remain in effect, the Borrower will not issue
evidences of indebtedness for borrowed money or create, assume, become
contingently liable for, or suffer to exist, any indebtedness for borrowed money
in addition to indebtedness to the Bank, indebtedness to The First National Bank
of Boston up to an aggregate amount not exceeding $10 million and other
indebtedness up to an aggregate amount not exceeding $10 million.
<PAGE>
As long as this letter may remain in effect, the Borrower will not grant or
suffer to exist any mortgage, pledge, security interest, lien, charge or
encumbrance with respect to any of its accounts or other rights to payment for
goods sold or leased or for services rendered, whether now owned or hereafter
acquired, or subject any of its accounts or other rights to payment for goods
sold or leased or for services rendered to the prior payment of any indebtedness
for borrowed money, or transfer in any manner any of such assets with the intent
or purpose, directly or indirectly, of subjecting such assets to the payment of
indebtedness for borrowed money.
This letter is solely for the information of the Borrower and is not be
shown to or relied upon by third parties.
This letter constitutes the entire understanding between the Bank and the
Borrower on the subject covered hereby.
This letter shall be governed by and construed in accordance with the law
of the Commonwealth of Massachusetts. Please evidence your agreement and your
acceptance to the terms hereof by signing and returning the enclosed copy hereof
together with the executed Note, whereupon this letter shall become effective.
Very truly yours,
SHAWMUT BANK, N.A.
By:_________________________________
Keith J. Collar
Vice President
Agreed to and accepted:
KEANE, INC.
By:_________________________________
Wallace A. Cataldo
Vice President - Finance
Witness:____________________________
<PAGE>
DEMAND MONEY MARKET PROMISSORY NOTE
$10,000,000 Date: As of May 1, 1995
ON DEMAND FOR VALUE RECEIVED, KEANE, INC. (the "Borrower"), a
Massachusetts corporation, hereby promises to pay to the order of Shawmut Bank,
N.A. (the "Bank") at the office of the Bank at One Federal Street, Boston,
Massachusetts 02211 or at such other address as the holder hereof may designate,
the principal sum of TEN MILLION DOLLARS ($10,000,000), or the aggregate unpaid
principal amount of all advances made by the Bank to the Borrower hereunder,
whichever is less, in lawful money of the United States and to pay interest on
each advance as set forth below and to pay all taxes levied or assessed upon
said advances against any holder of this Note and to pay all costs, including
reasonable attorneys' fees, costs relating to the appraisal and/or valuation of
assets and all costs incurred in the collection, defense, preservation,
administration, enforcement or protection of this Note or in any guaranty or
endorsement of this Note, or in any litigation arising out of the transactions
of which this Note or any guaranty or endorsement of this Note is a part. All
payments shall be applied first to the payment of interest on the unpaid
advances due under this Note and the balance on account of the principal due
under this Note.
This Note has been executed and delivered subject to the following terms
and conditions:
(1) ADVANCES. This is not a commitment to make advances and the Bank may
refuse, in its sole discretion, to make any advances requested by the Borrower.
The making of an advance (each an "Advance"), at any time, shall not be deemed a
waiver of, or consent, agreement or commitment by the Bank to the making of any
future Advance to the Borrower. If any Advance is made, the Bank may, at its
option, record on the books and records of the Bank or endorse on Schedule I
hereto, an appropriate notation evidencing any advance, the interest rate
applicable to such Advance, each repayment on account of the principal thereof,
and the amount of interest paid; and the Borrower authorizes the Bank to
maintain such records or make such notations and agrees that the amount shown on
the books and records or on said Schedule 1, as applicable, as outstanding from
time to time shall constitute the amount owing to the Bank pursuant to this
Note, absent manifest error. In the event the amount shown on Schedule I
conflicts with the amount noted as due pursuant to the books and records of the
Bank, the books and records of the Bank shall control the disposition of the
conflict.
(2) REPAYMENT OF ADVANCES. The Borrower shall repay the aggregate unpaid
principal amount of all Advances made by the Bank at the earlier of the date
demand is made or April 30, 1996 (as such date may be extended, in writing from
time to time, in the Bank's sole and absolute discretion, the "Termination
Date"). The Borrower and any endorser or guarantor of this Note acknowledges and
agrees that the Bank may make demand for payment of any Advance at any time but,
if not sooner demanded, demand shall be deemed made on the Termination Date. The
Bank is hereby authorized (but not required) to charge principal and interest
due on this Note and all other amounts due hereunder to any account of the
Borrower when and as it becomes due.
(3) INTEREST RATE; ADDITIONAL CHARGES; FEE.
(a) The Bank shall notify the Borrower of the interest rate
applicable to each Advance. Interest on each Advance shall be payable when and
as billed and upon payment of such Advance. Upon the failure to pay any Advance
on demand (by acceleration or otherwise as herein provided) or after
<PAGE>
judgment has been rendered on this Note, the unpaid principal balance of all
Advances shall, at the option of the Bank, bear interest at a rate which is four
(4) percentage points per annum greater than the Base Rate. As used herein, the
term "Base Rate" shall mean the interest rate announced by the Bank from time to
time as its Base Rate. Changes in the rate of interest resulting from changes in
the Base Rate shall take place immediately without notice or demand of any kind.
Interest on this Note shall be computed on the basis of a 360-day year and
actual days elapsed.
(b) If as a result of any change in applicable laws, rules or
regulations the Bank shall deem applicable to this Note (including, in each
case, any borrowed and any unused portion thereof), any requirement of any law
of the United States of America, any regulation, order, interpretation, ruling,
official directive or guideline (whether or not having the force of law) of the
Board of Governors of the Federal Reserve System, the Comptroller of the
Currency, the Federal Deposit Insurance Corporation or any other board or
governmental or administrative agency of the United States of America which
shall impose, increase, modify or make applicable to this Note or cause this
Note to be included in any reserve, special deposit, calculation used in the
computation of regulatory capital standards, assessment or other requirement
which imposes on the Bank any cost that is attributable to the maintenance
thereof, then, and in each such event, the Borrower shall promptly pay the Bank,
upon its demand, such amount as will compensate the Bank for any such cost,
which determination shall be based upon the Bank's reasonable allocation of the
aggregate of such costs resulting from such events. In the event any such cost
is a continuing cost, a fee payable to the Bank may be imposed upon the Borrower
periodically for so long as any such cost is deemed applicable to the Bank, in
an amount determined by the Bank to be necessary to compensate the Bank for any
such cost, which determination may be based upon the Bank's reasonable
allocation of the aggregate of such costs resulting from such events. The
determination by the Bank of the existence and amount of any such additional
costs shall, in the absence of manifest error, be conclusive.
(c) The Borrower agrees to pay to the Bank a review fee equal to
$20,000, as billed, for the purpose of defraying the Bank's expense involved in
continuing to review the condition of the Borrower and determining whether the
Bank will make requested advances to the Borrower.
(4) LATE CHARGE. The Bank may collect a late charge not to exceed five
(5) percent of any installment of interest or principal, or of any other amount
due to the Bank which is not paid or reimbursed within fifteen (15) days of the
due date thereof to defray the extra cost and expense involved in handling such
delinquent payment and the increased risk of non-collection. The minimum late
charge shall be $15.00.
(5) PREPAYMENTS; CHARGES. The Borrower may prepay any Advance at any time
in whole or in part without penalty or premium. If, at any time, the aggregate
principal amount of all Advances outstanding under this Note shall exceed the
maximum amount permitted by this Note, the Borrower shall immediately prepay so
much of the outstanding principal balance, together with accrued interest on the
portion of principal so prepaid, as shall be necessary in order that the unpaid
principal balance, after giving effect to such prepayments, shall not be in
excess of the maximum amount permitted by this Note. All such prepayments shall
be applied first to the payment of all interest accrued to the date of
prepayment and the remainder to the principal balances as instructed by the
Borrower.
<PAGE>
(6) FINANCIAL STATEMENTS; NOTICE OF DEFAULT. The Borrower shall deliver
to the Bank (a) within forty-five (45) days after close of each of the first
three quarters of each fiscal year of the Borrower, a balance sheet of the
Borrower as of the close of each quarter and statements of income and cash flows
for that portion of the fiscal year-to-date then ended, prepared in conformity
with generally accepted accounting principles, applied on a basis consistent
with that of the preceding period or containing disclosure of the effect on
financial position or results of operations of any change in the application of
generally accepted accounting principles during the period, and certified by the
president or chief financial officer of the Borrower as accurate, true and
complete; (b) within ninety (90) days after the close of each fiscal year of the
Borrower, financial statements, including a balance sheet as of the close of
such fiscal year and statements of income and retained earnings and cash flows
for the year then ended, prepared in conformity with generally accepted
accounting principles, applied on a basis consistent with that of the preceding
year or containing disclosure of the effect on financial position or results of
operations of any change in the application of accounting principles during the
year and accompanied by a report thereon, containing an opinion, unqualified as
to scope, of a firm of independent certified public accountants selected by the
Borrower and acceptable to the Bank; (c) simultaneously with the delivery of the
financial statements required in paragraph 6(a) and 6(b) above, a Certificate of
Compliance certifying that, as at the end of the applicable period, the Borrower
is in full compliance with all covenants set forth in this Note and in any
document, instrument or agreement governing, evidencing or securing this Note
and certified by the president or chief financial officer of the Borrower as
accurate, true and complete; and (d) promptly upon the Bank's written request,
such other information about the financial condition. business and operations of
the Borrower or any Guarantor as the Bank may, from time to time, reasonably
request.
(7) DEMAND; ACCELERATION. All Advances are payable on demand (whether or
not scheduled payments have been made), together with accrued interest thereon,
at the option of the Bank.
(8) LIEN AND SET OFF. The Borrower hereby give the Bank a lien and right
of set off for all of the Borrower's liabilities and obligations to the Bank
upon and against all the deposits, credits, collateral and property of the
Borrower and each Guarantor, now or hereafter in the possession, custody,
safekeeping or control of the Bank or any entity under the control of Shawmut
National Corporation or any successor thereof or in transit to any of them. At
any time, without demand or notice, Bank may set off the same or any part
thereof and apply the same to any liability or obligation of the Borrower or any
Guarantor even though unmatured.
(9) WAIVER OF TRIAL BY JURY. THE BANK, THE BORROWER AND EACH GUARANTOR
IRREVOCABLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY PROCEEDING HEREAFTER
INSTITUTED BY OR AGAINST THE BANK, THE BORROWER OR ANY GUARANTOR IN RESPECT OF
THIS NOTE OR ARISING OUT OF ANY DOCUMENT, INSTRUMENT OR AGREEMENT EVIDENCING,
GOVERNING OR SECURING THIS NOTE.
(10) WAIVERS, BINDING EFFECT, MISCELLANEOUS.
(a) Except for notice of demand for payment, the Borrower waives
presentment, demand, notice, protest, notice of acceptance of this Note, notice
of advances made, credit extended, notice of nonpayment or other action taken in
reliance hereon. With respect to its liabilities, the Borrower assents to any
extension or postponement of the time of payment or any other
<PAGE>
indulgence, to the addition or release of any party or person primarily or
secondarily liable, to the acceptance of partial payments terms and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as the Bank may deem advisable.
(b) The Bank shall not be deemed to have waived any of its rights
unless such waiver is in writing and signed by the Bank. This Note is the
final, complete and exclusive statement of the terms governing this Note. No
delay or omission on the part of the Bank in exercising any right shall operate
as a waiver of such right or any other right. A waiver on any one occasion
shall not be construed as a bar to or waiver of any right on any future
occasion. All rights and remedies of the Bank hereunder, under any document,
instrument or agreement evidencing, governing or securing this Note or under all
applicable laws shall be cumulative and may be exercised singularly or
concurrently.
(c) The provisions of this Note shall bind the successors and assigns
of the Borrower and shall inure to the benefit of the Bank, its successors and
assigns.
(d) This Note shall be governed and construed under the laws of the
Commonwealth of Massachusetts.
(e) If any provision of this Note shall to any extent be held invalid
or unenforceable, then only such provision shall be deemed ineffective and the
remainder of this Note shall not be affected.
(11) ACKNOWLEDGMENT OF BORROWER. The Borrower acknowledges receipt of a
copy of this Note, attests that each advance is to be used for general
commercial purposes and that no part of such proceeds will be used, in whole or
in part, for the purpose of purchasing or carrying any "margin stock" as such
term is defined in Regulation U of the Board of Governors of the Federal Reserve
System.
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed
as a sealed instrument.
KEANE, INC.
Witness:
_____________________________ By:_____________________________________
Wallace A. Cataldo, Vice President -
Finance
<PAGE>
EXHIBIT 10.19B
LOAN AGREEMENT
THIS LOAN AGREEMENT is made as of this 20th day of July, 1995 between
Keane, Inc., a Massachusetts corporation having its principal place of business
and Chief Executive Offices at Ten City Square, Boston, Massachusetts 02129 (the
"Borrower") and THE FIRST NATIONAL BANK OF BOSTON (the "Lender"), a national
bank with its head office at 100 Federal Street, Boston, Massachusetts 02110.
SECTION 1. DEFINITIONS. As used herein -
1.1 "Base Rate" shall mean that rate of interest announced from time to
time by the Lender at its head office as its Base Rate.
1.2 "Business Day" shall mean any day on which the head office of the
Lender is open for transactions of its normal and customary business.
1.3 "Event of Default" shall have the meaning set forth in Section 7.1
hereof.
1.4 "GAAP" means generally accepted accounting principles consistently
applied.
1.5 "Insolvent" or "Insolvency" shall mean that there shall have occurred
one or more of the following events with respect to either of the Borrower or
the Guarantors or any other entity: dissolution; termination of existence;
insolvency within the meaning of the United States Bankruptcy Code or other
applicable statutes; such person's inability to pay its debts as they become
due; appointment of a receiver of any part of the property of, execution of a
trust mortgage or an assignment for the benefit of creditors by, or the filing
of a petition in bankruptcy or the commencement of any proceedings under any
bankruptcy or insolvency laws, or any laws relating to the relief of debtors,
readjustment of indebtedness, reorganization of debtors, or the offering of a
plan to creditors for composition or extension, except for an involuntary
proceeding commenced against such person or entity which is dismissed within 45
days after the commencement thereof without the entry of an order for relief or
the appointment of a trustee.
1.6 "Loan Account" shall mean the account on the books of the Lender in
which will be recorded loans and advances made by the Lender to the Borrower
pursuant to this Agreement, payments made on such loans and other appropriate
debits and credits as provided by this Agreement.
1.7 "Material Adverse Effect" shall mean a material adverse effect on the
business, properties, assets or condition, financial or otherwise, of the
Borrower or on the ability of the Borrower to carry out the Obligations.
1.8 "Maximum Amount" shall mean $10,000,000.
-1-
<PAGE>
1.9 "Obligations" shall mean any and all obligations of the Borrower or
the Guarantors or any of them to the Lender of every kind and description,
direct or indirect, absolute or contingent, primary or secondary, due or to
become due, now existing or hereafter arising, regardless of how they arise or
by what agreement or instrument they may be evidenced or whether evidenced by
any agreement or instrument, and includes obligations to perform acts and
refrain from taking action as well as obligations to pay money.
1.10 "Permitted Liens" shall mean:
1.10.1 Existing liens and security interests described in Schedule 1;
----------
1.10.2 Purchase money security interests (which term shall include
mortgages, conditional sale contracts, capitalized leases and all other title
retention or deferred purchase devises) to secure the purchase price of
machinery, equipment, fixtures and real estate acquired hereafter by the
Borrower, or to secure indebtedness incurred solely for the purpose of financing
such acquisitions; provided, however, that no such purchase money security
-------- -------
interests shall extend to or cover any property other than the property the
purchase price of which is secured by it, and that the principal amount of
Indebtedness (whether or not assumed) with respect to each item of property
subject to such a security interest shall not exceed the fair value of such item
on the date of its acquisition;
1.10.3 Deposits or pledges made in connection with, or to secure
payment of, workers compensation, unemployment insurance, old age pensions or
other social security obligations; liens in respect of judgments or awards to
the extent such judgments or awards are permitted hereunder; and liens for
taxes, assessments or governmental charges or levies and liens to secure claims
for labor, material or supplies to the extent that payment thereof shall not at
the time be required to be made;
1.10.4 Encumbrances in the nature of zoning restrictions, easements,
and rights or restrictions of record on the use of real property which do not
materially detract from the value of such property or impair its use in the
business of the owner or lessee;
1.10.5 Liens (other than judgments and awards) created by or
resulting from any litigation or legal proceeding, provided the execution or
other enforcement thereof is effectively stayed and the claims secured thereby
are being actively contested in good faith by appropriate proceedings;
1.10.6 Liens arising by operation of law to secure landlords, lessors
or renters under leases or rental agreements made in the ordinary course of
business and confined to the premises or property rented;
1.10.7 Liens in favor of the Lender; and
1.10.8 Other involuntary liens which do not have a Material Adverse
Effect and which are discharged within five days after notice from the Lender,
so long as the Borrower has notified the Lender within five days of becoming
aware of such lien.
-2-
<PAGE>
1.11 "Subsidiary" shall mean any corporation, association, joint stock
company, business trust or other similar organization of whose voting stock the
Borrower owns or controls more than 50% thereof or any partnership or other
entity in which the Borrower has more than a 50% interest or which is controlled
by the Borrower.
SECTION 2. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Borrower represents,
warrants and covenants as follows:
2.1 Organization and Qualification. The Borrower is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of
Massachusetts; has all requisite corporate power and authority to own its
property and conduct its business as now conducted and as presently
contemplated; and is duly qualified and in good standing in each jurisdiction in
which the failure to so qualify would have a materially adverse effect on the
operations or financial condition of the Borrower where the nature of its
properties or its business (present or proposed) requires such qualification.
2.2 Corporate Authority. The execution, delivery and performance of this
-------------------
Agreement and the transactions contemplated hereby are within Borrower's
corporate authority, have been duly authorized by all necessary corporate
proceedings on the part of Borrower, and does not and will not contravene any
provision of law, its charter document or its by-laws, or contravene any
provisions of, or constitute an Event of Default hereunder or a default under,
or an event which with the lapse of time or the giving of notice, or both, would
constitute an Event of Default hereunder or a default under, any other
agreement, instrument, judgment, order, decree, permit, license or undertaking
binding upon or applicable to the Borrower or any of its properties, or result
in the creation of any mortgage, pledge, security interest, lien, encumbrance or
charge upon any of the properties or assets of the Borrower.
2.3 Valid Obligations. This Agreement and all of its terms and provisions
-----------------
are valid and binding Obligations of the Borrower, enforceable in accordance
with their terms.
2.4 Approvals. The execution, delivery and performance of this Agreement
---------
and the transactions and other documents contemplated hereby do not require any
approval or consent of, or filing or registration with, any governmental or
other agency or authority or any other person.
2.5 Title to Borrower's Property. As of the date of this Agreement the
----------------------------
Borrower has good and marketable title to all of its properties, assets and
rights of every name and nature now purported to be owned by it, including,
without limitation, the Accounts Receivable, inventory, equipment and general
intangibles and all real property owned by the Borrower or any of its
Subsidiaries.
2.6 Absence of Liens. At all times that there is any Obligation
----------------
outstanding the Borrower and all its Subsidiaries shall keep all of their
respective assets and rights of every name and nature now purported to be owned
by it, including, without limitation, the Accounts Receivable, inventory,
equipment and general intangibles and all real property owned by the Borrower or
any of its Subsidiaries, free from all liens, charges and encumbrances
whatsoever other than Permitted Liens.
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<PAGE>
2.7 Location of Records. The Borrower shall give the Lender written
-------------------
notice of each location at which the records of Borrower pertaining to are kept.
2.8 Financial Information. Subject to any limitations stated therein or
---------------------
in connection therewith, all balance sheets, earnings statements and other
financial data which have been or may hereafter be furnished to the Lender to
induce it to enter into this Agreement or otherwise in connection herewith, do
or shall fairly present the financial condition of the Borrower as of the dates
and the results of its operations for the periods for which the same are
furnished (such balance sheets and earnings statements to be prepared in
accordance with GAAP), and all other information, reports and other papers and
data furnished to the Lender or obtained by the Lender pursuant hereto are or
shall be at the time the same are so furnished accurate and correct in all
material respects and complete insofar as completeness may be necessary to give
the Lender true and accurate knowledge of the subject matter. Interim
statements may be subject to year end adjustments.
2.9 Financial Reporting.
-------------------
2.9.1 As soon as available, and in any event within forty-five (45)
days after the end of each of the first three quarters of each fiscal year of
the Borrower, the Borrower shall furnish each Lender with (i) consolidated and
consolidating balance sheets of the Borrower and its Subsidiaries as of the end
of such quarter and consolidated and consolidating statements of income,
STOCKHOLDERS' EQUITY and cash flows of the Borrower and its Subsidiaries for
such quarter and for the period commencing at the end of the previous fiscal
year and ending with the end of such quarter, setting forth in each case in
comparative form the corresponding figures for the corresponding period of the
preceding fiscal year, all in reasonable detail certified by the chief financial
officer of the Borrower.
2.9.2 As soon as available, but in any event within ninety (90) days
after the end of each fiscal year of the Borrower, the Borrower shall furnish to
the Lender (a) consolidated and consolidating balance sheets of the Borrower and
its Subsidiaries as of the end of such fiscal year and consolidated and
consolidating statements of income, stockholders' equity and cash flows of the
Borrower and its Subsidiaries for such fiscal year, in the case of such
consolidated financial statements reported on by Coopers & Lybrand, or other
independent certified public accountants of recognized national standing
acceptable to the Lender, which report shall express, without reliance upon
other auditors, a positive opinion regarding the fairness of the presentation of
such financial statements in accordance with generally accepted accounting
principles consistently applied, said report to be without qualification, except
in cases of unresolved litigation and accounting changes with which such
accountants concur.
2.9.3 Communication with Others. The Borrower shall furnish the Lender
-------------------------
with copies of all regular, periodic and special reports on Form 10-K, 10-Q and
8-K and all registration statements on Form S-1, S-2, S-3 and S-4 which the
Borrower files with the Securities and Exchange Commission or any governmental
authority which may be substituted therefor, or with any national or regional
securities exchange, and, at the Lender's request, copies of any other filings
made with such governmental authorities and exchanges.
-4-
<PAGE>
2.9.4 Reports to Other Creditors. Promptly after filing the same,
--------------------------
Borrower shall furnish to the Lender copies of any compliance certificate
and other information furnished to any other holder of the securities of the
Borrower or any Subsidiary pursuant to the terms of any indenture, loan or
credit or similar agreement in excess of $250,000 and not otherwise required to
be furnished to the Lender pursuant to any other provision of this Agreement.
2.9.5 Promptly after the receipt thereof, the Borrower shall furnish
to the Lender copies of any written recommendations concerning the management,
finances, financial controls, or operations of the Borrower and its Subsidiaries
received from the Borrower's independent public accountants.
2.10 Taxes. The Borrower will pay all taxes, assessments or governmental
-----
charges on or against it or any of its properties prior to such taxes becoming
delinquent, including, without limitation, any excise, sales or other tax or
charge which may become due and payable with respect to any sale or other
transaction giving rise to an Account or other right to the payment of money, or
with respect to the collection thereof, except for any tax, assessment or charge
which is being contested in good faith by proper legal proceedings and with
respect to which adequate reserves have been established and are being
maintained.
2.11 Permits. The Borrower has, and will continue to have, all material
-------
permits, approvals, authorizations, consents, licenses, franchises,
registrations and other rights and privileges (including patents, trademarks,
trade names and copyrights) necessary to allow it to own and operate its
business without any violation of law or the rights of others; and the Borrower
and each of its premises are, and will continue to be, duly authorized,
qualified and licensed under and in compliance with all laws, regulations,
authorizations and orders of public authorities in which the failure to be so
authorized, qualified and licensed would have a materially adverse effect on the
operations or financial condition of the Borrower (including, without
limitation, all federal, state and local laws, rules, orders and regulations
relating to hazardous materials, hazardous wastes or pollution control) to the
extent that the same are necessary or applicable to its business.
2.12 Termination of Former Loan Agreement The Borrower has terminated
------------------------------------
that certain Credit Agreement dated as of January 5, 1994 by and among the
Borrower, Shawmut Bank, N.A. and the Lender and such Credit Agreement is of no
further force or effect.
SECTION 3. BORROWER'S LOAN ACCOUNT. DISCRETIONARY LOANS.
3.1 Loans. Insofar as the Borrower may request and the Lender may be
-----
willing in its sole discretion to make loans to the Borrower, the Lender shall
enter such loans as debits in the Loan Account. Lender shall also record in the
Loan Account all payments made by the Borrower on account of indebtedness
evidenced by the Loan Account and all proceeds of Collateral which are finally
paid to the Lender at its office in cash or solvent credits, and may record
therein, in accordance with customary accounting practice, other debits and
credits, including all charges and expenses properly chargeable to the Borrower
and any other obligation. The debit balance of the Loan Account shall reflect
the amount of the Borrower's indebtedness to the Lender from time to time by
reason of loans and other appropriate charges
-5-
<PAGE>
hereunder. At least once each month the Lender shall render a statement of
account showing as of its date the debit balance of the Loan Account which,
unless within 60 days of such date notice to the contrary is received by the
Lender from the Borrower, shall be considered correct and accepted by the
Borrower and prima facie evidence of the status of the Loan Account. The Lender
recognizes that the Borrower may enter into credit facilities with other lending
institutions.
3.2 Maximum Loan Amount. Although it will be within the discretion of the
-------------------
Lender whether it makes loans under this Agreement, the Borrower understands
that the Lender will not advance loans which cause the debit balance in the Loan
Account to exceed the Maximum Amount. The Borrower agrees that if at any time
the debit balance of the Loan Account shall exceed the Maximum Amount, the
Borrower shall pledge, assign and transfer to the Lender additional Collateral
or pay cash to the Lender to be credited to the Loan Account in such amount as
may be necessary to eliminate the excess. Failure to eliminate any such
overadvance immediately shall be an Event of Default hereunder.
3.3 Demand Note. The Borrower has executed a Demand Note in the form
-----------
appended hereto as Exhibit A, upon which the Lender shall note loans made to the
Borrower.
SECTION 4. PROMISES TO PAY.
4.1 Payment. The Borrower promises to pay to the Lender ON DEMAND or,
-------
without demand, after any Event of Default or upon termination of this Agreement
in accordance with Section 9.12:
4.1.1 The current amount of the debit balance of the Loan Account;
4.1.2 Interest on loans computed on the daily debit balance in the
Loan Account at a rate per annum which at all times shall be the Base Rate
calculated on the basis of a 360 day year for the actual number of days elapsed
and in any event interest shall be due and payable monthly in arrears on the
first business day of each month unless otherwise demanded; provided, however,
that if any loan or interest thereon is not paid when due or upon demand, then
the entire debit balance of the Loan Account shall bear interest, to the extent
permitted by law, compounded monthly at an interest rate equal to 3% above the
Base Rate in effect on the first business day after such loan becomes overdue
until such overdue amount, with interest, is paid in full to the Lender. Any
change in the Base Rate shall become effective as of the beginning of the day
during which such change in the Base Rate occurs;
4.1.3 Upon the execution of this Agreement, all legal fees and
expenses of the Lender related to the drafting, execution and recording of this
Agreement and the related documents;
4.1.4 From time to time any and all charges reasonably and
customarily made by the Lender against Borrower including without limitation
cost of one commercial finance examination conducted by the Lender of the
Borrower prior to an Event of Default or Demand and all such examinations
conducted after an Event of Default or Demand; and
-6-
<PAGE>
4.1.5 All taxes (other than taxes on the income of the Lender),
charges and expenses of every kind or description, including reasonable
attorneys' fees and expenses, incurred or expended by the Lender in connection
with the preparation, execution, delivery, amendment or enforcement of this
Agreement, the making of any loans hereunder and the protection or enforcement
of the Lender's rights hereunder.
4.2 Authorization of Borrower. The Borrower authorizes the Lender to
-------------------------
charge the interest, fees, charges, taxes and expenses provided for in
Subsection 5.1.2 through 5.1.6 to the Loan Account or to any deposit account
which the Borrower may maintain with the Lender; provided that the Lender shall
notify the Borrower of such charge prior to making such charge; provided that
the Lender may charge periodic interest without prior notice to the Borrower and
set off against such accounts as provided in Section 9.10 hereof.
SECTION 5. INSURANCE; INSPECTION OF RECORDS.
5.1 Insurance. The Borrower shall maintain and insure all of its property
---------
both real and personal in amounts and with such coverages as is customary in its
industry and at any time an Obligation is outstanding such insurance must be
reasonably satisfactory to the Lender. The Borrower shall notify the Lender of
any changes in coverage or lapses in coverage. The Borrower's failure to
continue satisfactory insurance on any material portion of its real or personal
property shall be an Event of Default hereunder.
5.2 Inspection. The Borrower shall at all reasonable times and from time
----------
to time allow the Lender, by or through any of its officers, agents, attorneys
or accountants, to visit and inspect properties of the Borrower, to examine,
inspect and make extracts from the Borrower's books and records, and those of
any related company; shall furnish to the Lender upon request additional
statements of any Base Account, together with all notes or other papers
evidencing the same and any guaranty, securities or other documents or
information relating thereto; and shall do, make, execute and deliver all such
additional and further acts, things, deeds, assurances, and instruments as the
Lender may reasonably require to more completely carry into effect the
provisions and intent of this Agreement.
SECTION 6. EVENTS OF DEFAULT. ACCELERATION.
6.1 Events of Default. Without in any way limiting the demand nature of
-----------------
the Obligations hereunder, any or all of the Obligations of the Borrower to the
Lender shall, at the option of the Lender and notwithstanding the provisions of
any instrument evidencing an Obligation, be immediately due and payable without
notice or demand upon the occurrence of any of the following events of default
(individually, an "Event of Default"): (i) default in the payment or
performance, when due or payable, of any Obligation by the Borrower or the
Guarantors; (ii) failure of the Borrower to pay when due any tax not being
contested in good faith; (iii) the making by the Borrower of any material
misrepresentation to the Lender contained in this Agreement or otherwise,
whether or not for the purpose of obtaining credit or an extension of credit;
(iv) issuance of an injunction or attachment against property of the Borrower or
the Guarantor in excess of $250,000 in the aggregate which is discharged within
45 days of the filing
-7-
<PAGE>
thereof; (v) calling of a meeting of creditors, appointment of a committee of
creditors or liquidating agents or offering of a composition or extension to
creditors by, for or of the Borrower or the Guarantors; (vi) Insolvency of the
Borrower or the Guarantors; (vii) the occurrence of any default under or breach
of any agreement, note or other instrument evidencing or relating to any
obligation of the Borrower to any other person or entity for the payment of
money in excess of $250,000 in the aggregate continuing beyond the applicable
cure period; or (viii) the occurrence of any material change in the condition or
affairs (financial or otherwise) of the Borrower or the Guarantors which causes
the Lender to deem itself insecure.
6.2 After the Event of Default the unpaid principal amount of all loans
together with accrued interest and all other Obligations hereunder shall become
immediately due and payable, including the unpaid principal amount of any loan
subject to an exercised LIBOR Option together with the related LIBOR Premium in
the same manner as though the Borrower had exercised its right to prepayment
pursuant to Section 3.5 of this Agreement, without presentment, demand, protest
or further notice of any kind, all of which are hereby expressly waived.
SECTION 7. WAIVERS. Except for notices specifically provided for herein, the
Borrower waives demand, notice, protest, notice of acceptance of this Agreement,
notice of loans made, credit extended or other action taken in reliance hereon,
and all other demands and notices of any description. With respect to both
Obligations, the Borrower assents to any extension or postponement of the time
of payment or any other indulgence, to the addition or release of any party or
person primarily or secondarily liable, to the acceptance of partial payments
thereon and the settlement, compromising or adjusting of any thereof, all in
such manner and at such time or times as the Lender may deem advisable. The
Lender shall not be deemed to have waived any of its rights upon or under
Obligations unless such waiver be in writing and signed by the Lender. No delay
or omission on the part of the Lender in exercising any other right shall
operate as a waiver of such right or any other right. A waiver on any one
occasion shall not be construed as a bar to or waiver of any right on any future
occasion. All rights and remedies of the Lender on Obligations, whether
evidenced hereby or by any other instrument or papers, shall be cumulative, may
be exercised separately or concurrently and are not exclusive of any rights or
remedies otherwise provided by law.
SECTION 8. GENERAL.
8.1 Written Notices. Any notices, expressly required by this Agreement to
---------------
be in writing, to any party hereto shall be deemed to have been given when
delivered by hand, when sent by telex or when delivered to any overnight
delivery service freight pre-paid or 3 days after deposit in the mails, postage
prepaid, and addressed to such party at its address given at the beginning of
this Agreement or at any other address specified in writing. Written notices to
the Borrower shall be sent to Keane, Inc. attention Wallace A. Cataldo, Vice
President-Finance with a copy thereof to John D. Sigel, Hale & Dorr, 60 State
Street, Boston, MA 02109 and written notices to the Lender shall be sent to the
attention of Timothy G. Clifford, Assistant Vice President, or such other
officer as may be designated by the Lender. Any notice, unless otherwise
specified, may be given orally or in writing.
-8-
<PAGE>
8.2 Governing Law. This Agreement shall be deemed to be a contract made
-------------
under seal and shall be construed in accordance with and governed by the laws of
the Commonwealth of Massachusetts (without regard to principles of conflicts of
laws). Any legal action or proceeding arising out of or relating to this
Agreement or any Obligation may be instituted in the courts of the Commonwealth
of Massachusetts or of the United States of America for the District of
Massachusetts, and the Borrower hereby irrevocably submits to the jurisdiction
of each such court in any such action or proceeding; provided, however, that the
foregoing shall not limit the Lender's rights to bring any legal action or
proceeding in any other appropriate jurisdiction in which event, at the Lender's
option, the laws of such jurisdiction or of the Commonwealth of Massachusetts
shall apply.
8.3 Payments in Immediately Available Funds. All payments required of the
---------------------------------------
Borrower hereunder shall be made in funds immediately available to the recipient
thereof at the prescribed place of payment.
8.4 Amendments, Waivers, Etc. This Agreement and any provision hereof may
------------------------
be amended, waived or discharged only by an instrument in writing signed by the
Lender and Borrower.
8.5 Binding Effect of Agreement. This Agreement shall be binding upon and
---------------------------
inure to the benefit of the Borrower and both of them and the Lender and their
respective successors and assigns; provided that the Borrower may not assign or
transfer its rights hereunder.
8.6 Computation of Interest and Fees. Interest and all fees and charges
--------------------------------
shall be computed daily on the basis of a year of 360 days and paid for the
actual number of days for which due. If the due date for any payment of
principal is extended by operation of law, interest shall be payable for such
extended time. If any payment required by this Agreement becomes due on a day on
which banks in the city of the head office of the Lender are required or
permitted by law or an appropriate authority to remain closed, such payment may
be made on the next succeeding day on which such banks are open, and such
extension shall be included in computing interest in connection with such
payment.
8.7 Captions. The captions for the sections of this Agreement are for
--------
ease of reference only and are not an integral part of this Agreement.
8.8 WAIVER OF JURY TRIAL. THE BORROWER HEREBY IRREVOCABLY WAIVES TRIAL BY
--------------------
JURY IN ANY JURISDICTION AND IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH,
OR ARISING OUT OF THIS AGREEMENT, THE OBLIGATIONS, OR ANY INSTRUMENT OR DOCUMENT
DELIVERED PURSUANT HERETO OR THERETO, OR ANY CLAIM OR DISPUTE HOWSOEVER ARISING,
BETWEEN THE BORROWER AND THE LENDER. THIS WAIVER OF JURY TRIAL SHALL BE
EFFECTIVE FOR EACH AND EVERY DOCUMENT EXECUTED BY THE BORROWER OR THE LENDER AND
DELIVERED TO THE LENDER OR THE BORROWER, AS THE CASE MAY BE, WHETHER OR NOT SUCH
DOCUMENT SHALL CONTAIN A WAIVER OF JURY TRIAL. THE BORROWER FURTHER ACKNOWLEDGES
THAT ALL DOCUMENTS DELIVERED BY THE LENDER OR THE BORROWER ARE SUBJECT TO THIS
WAIVER OF JURY TRIAL AS TO ANY ACTION THAT MAY BE BROUGHT AS TO ANY OF
-9-
<PAGE>
SUCH DOCUMENTS, INSTRUMENTS OR LETTERS OR THE LIKE. THE BORROWER FURTHER
CONFIRMS THAT THE FOREGOING WAIVERS ARE INFORMED AND FREELY MADE.
8.9 Counterparts. This Agreement may be signed in any number of
------------
counterparts with the same effect as if the signatures hereto and thereto were
upon the same instrument.
8.10 Set Off. Any deposits or other sums at any time credited by or due
-------
from the Lender to the Borrower may at any time after demand or the occurrence
of an Event of Default be applied to or set off against Obligations.
8.11 Transfers. If at any time or times by assignment or otherwise, the
---------
Lender transfers any Loans, Obligations or any other interest hereunder or any
participation in the Loans hereunder, such transfer or participation shall carry
with it the Lender's powers and rights under this Agreement with respect to the
Loans, Obligations and other such interest in this Agreement so assigned or
participated and the assignee or Participant shall become vested with said
powers and rights whether or not they are specifically referred to in the
assignment or participation.
8.12 Termination. Either the Borrower or the Lender may terminate this
-----------
Agreement at any time upon written notice to the other party of such
termination. Any such termination shall in no way affect any transactions
entered into or rights created or obligations incurred prior to the receipt of
such notice by the other party, as to which transactions, rights and obligations
this Agreement shall be fully operative until the same are fully disposed of,
concluded or liquidated; provided that the Borrower hereby agrees that the
Lender shall make no further Loans after the effective date of any termination,
either by notice or automatically, and all Obligations shall be due and payable
without notice or demand on the effective date of any such termination. Except
as provided in this Section 9.12 this shall be a continuing agreement until all
Obligations are paid in full.
8.13 Severability. The provisions of this Agreement are severable, and if
------------
any of these
-10-
<PAGE>
provisions shall be held by any court of competent jurisdiction to be
unenforceable, such holding shall not affect or impair any other provision
hereof.
WITNESS the execution of this Agreement under seal on the day and year
first above written.
Witness: KEANE, INC.
[Corporate Seal]
________________________ By____________________
Title:
THE FIRST NATIONAL BANK OF BOSTON
By____________________
Title:
-11-
<PAGE>
SCHEDULE 1
----------
EXISTING LIENS
--------------
-12-
<PAGE>
EXHIBIT A
---------
FORM OF DEMAND NOTE
-------------------
$10,000,000 July 20, 1995
Boston, Massachusetts
FOR VALUE RECEIVED, the undersigned, KEANE, INC., a Massachusetts
corporation (the "Borrower"), hereby promises to pay to the order of The First
National Bank of Boston (the "Lender") on demand the principal sum of TEN
MILLION DOLLARS ($10,000,000) or, if less, the aggregate unpaid principal amount
of all loans advances made by the Lender to the Borrower pursuant to the Loan
Agreement (defined below), together with interest thereon or on such portion
thereof as may be from time to time outstanding at such rates and payable at
such times and in such manner as are provided in the Loan Agreement (defined
below).
Payments of principal, interest and all other amounts due under this Note
shall be made at the times and in the manner specified in the Loan Agreement
(defined below) and shall be payable, in immediately available funds, at the
offices of The First National Bank of Boston, N.A., 100 Federal Street, Boston,
Massachusetts 02210, or at such other address as the holder of this note may
from time to time designate in writing to the Borrower. The Lender may note on
Schedule I to this Note loans made, repayment of loans and the interest rate;
provided that the books and records of the Lender (the Loan Account as defined
in the Loan Agreement) shall govern the amounts due hereunder regardless of such
notations.
This Note is issued under the Loan Agreement dated as of July 20, 1995 (the
"Loan Agreement") among the Borrower, the Lender and is subject to the terms and
conditions of the Loan Agreement and may be prepaid in whole or in part all upon
the terms and conditions specified in the Loan Agreement. Under certain
circumstances, as specified in the Loan Agreement, the principal of this Note
may be declared due and payable in the manner and with the effect provided in
the Loan Agreement. Capitalized terms used and not otherwise defined herein
shall have the meanings set forth in the Loan Agreement.
The Borrower and every endorser and guarantor waives presentment, demand,
notice, protest and all other demands and notices (other than notices required
to be delivered under the Loan Agreement) in connection with the delivery,
acceptance, performance, default or enforcement of this Note or of any
collateral, and assents to any extension or postponement of the time of payment
or any other indulgence under this Note or the addition or release of any other
party primarily or secondarily liable hereunder.
No delay or omission on the part of the holder of this Note in exercising
any right hereunder shall operate as a waiver of such right or of any other
right under this Note, and a waiver, delay or omission on any one occasion shall
not be construed as a bar to or waiver of any such right on any future occasion.
-13-
<PAGE>
Any deposits or other sums at any time credited by or due from the Lender
to the undersigned and any securities or other property of the Borrower now or
hereafter in the possession of the Lender for any purpose shall constitute
collateral security for payment of the Note. Any deposits or other sums credited
or due from the Lender may be applied to or set off against the obligations of
the Borrower under this Note in accordance with the provisions of the Loan
Agreement.
The Borrower hereby agrees to pay on demand all costs and expenses
(including reasonable attorneys' fees and disbursements) paid or incurred by the
holder in enforcing this Note on default or in connection with any bankruptcy,
reorganization, receivership or other insolvency proceeding involving the
undersigned.
THE LENDER AND THE UNDERSIGNED MAKER AGREE THAT NEITHER OF THEM NOR ANY
ASSIGNEE OR SUCCESSOR SHALL (A) SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING,
COUNTERCLAIM OR ANY OTHER ACTION BASED UPON, OR ARISING OUT OF, THIS NOTE, THE
LOAN AGREEMENT, ANY RELATED INSTRUMENTS, ANY COLLATERAL OR THE DEALINGS OR THE
RELATIONSHIP BETWEEN OR AMONG ANY OF THEM, OR (B) SEEK TO CONSOLIDATE ANY SUCH
ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT OR HAS NOT BEEN
WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE LENDER
AND THE UNDERSIGNED MAKER, AND THESE PROVISIONS SHALL BE SUBJECT TO NO
EXCEPTIONS. NEITHER THE Lender NOR THE UNDERSIGNED MAKER HAS AGREED WITH OR
REPRESENTED TO THE OTHER THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE
ENFORCED IN ALL INSTANCES.
This note shall take effect as a sealed instrument, and all rights and
obligations hereunder shall be governed by the laws of The Commonwealth of
Massachusetts.
Witness KEANE. INC.
By:___________________________
_______________________________ Title:________________________
-14-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-START> APR-01-1995 JAN-01-1995
<PERIOD-END> JUN-30-1995 JUN-30-1995
<CASH> 0 27,657
<SECURITIES> 0 0
<RECEIVABLES> 0 74,307
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 108,861
<PP&E> 0 24,360
<DEPRECIATION> 0 13,407
<TOTAL-ASSETS> 0 183,015
<CURRENT-LIABILITIES> 0 17,606
<BONDS> 0 0
<COMMON> 0 1,640
0 0
0 0
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 0 183,015
<SALES> 0 0
<TOTAL-REVENUES> 94,647 185,099
<CGS> 0 0
<TOTAL-COSTS> 85,452 167,032
<OTHER-EXPENSES> 44 81
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 164 328
<INCOME-PRETAX> 9,429 18,466
<INCOME-TAX> 4,054 7,940
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 5,375 10,526
<EPS-PRIMARY> .33 .65
<EPS-DILUTED> .33 .65
</TABLE>
