UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: October 31, 1997
Commission File Number: 0-3713
NATIONAL COMPUTER SYSTEMS, INC.
- --------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Minnesota 41-0850527
- ------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
11000 Prairie Lakes Drive
Eden Prairie, Minnesota 55344
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612)829-3000
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 and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date:
The number of shares of common stock, par value $.03 per share, outstanding on
November 30, 1997 was 15,399,353.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NATIONAL COMPUTER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
<TABLE>
<CAPTION>
Three Months
Ended October 31,
-------------------
1997 1996
------ ------
(In thousands, except
per share amounts)
<S> <C> <C>
REVENUES
Information services $ 56,821 $44,227
Product sales 45,846 34,351
Maintenance and support 12,720 10,205
-------- -------
Total revenues 115,387 88,783
COST OF REVENUES
Cost of information services 47,502 37,641
Cost of product sales 18,256 15,661
Cost of maintenance and support 8,886 6,836
-------- -------
Gross margin 40,743 28,645
OPERATING EXPENSES
Sales and marketing 14,993 10,331
Research and development 2,324 2,595
General and administrative 13,419 7,937
-------- ------
INCOME FROM OPERATIONS 10,007 7,782
Interest expense 330 232
Other (income) expense, net (449) (850)
-------- -------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 10,126 8,400
Income taxes 4,100 3,450
-------- -------
INCOME FROM CONTINUING OPERATIONS 6,026 4,950
-------- -------
Loss from discontinued operations - -
Gain on disposition - -
-------- -------
NET INCOME $ 6,026 $ 4,950
======== =======
EARNINGS PER SHARE
Continuing operations $0.38 $0.32
Discontinued operations - -
Gain on disposition - -
-------- -------
Net income $0.38 $0.32
======== =======
AVERAGE SHARES OUTSTANDING 15,795 15,463
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
NATIONAL COMPUTER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
<TABLE>
<CAPTION>
Nine Months
Ended October 31,
-------------------
1997 1996
------ ------
(In thousands, except
per share amounts)
<S> <C> <C>
REVENUES
Information services $136,173 $112,247
Product sales 118,740 98,256
Maintenance and support 35,474 29,751
-------- --------
Total revenues 290,387 240,254
COST OF REVENUES
Cost of information services 105,150 88,658
Cost of product sales 51,295 44,988
Cost of maintenance and support 24,321 19,937
-------- -------
Gross margin 109,621 86,671
OPERATING EXPENSES
Sales and marketing 41,119 30,440
Research and development 6,026 7,091
General and administrative 33,296 24,901
-------- ------
INCOME FROM OPERATIONS 29,180 24,239
Interest expense 965 1,425
Other (income) expense, net (270) (730)
-------- -------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 28,485 23,544
Income taxes 11,400 9,500
-------- -------
INCOME FROM CONTINUING OPERATIONS 17,085 14,044
-------- -------
Loss from discontinued operations,
net of tax benefit of $1,360 - (2,229)
Gain on disposition, net of taxes of $29,031 - 38,143
-------- -------
NET INCOME $ 17,085 $49,958
======== =======
EARNINGS PER SHARE
Continuing operations $1.09 $0.90
Discontinued operations - (0.14)
Gain on disposition - 2.44
------- -------
Net income $1.09 $3.20
======= =======
AVERAGE SHARES OUTSTANDING 15,637 15,575
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
NATIONAL COMPUTER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (unaudited)
<TABLE>
<CAPTION>
October 31, January 31,
1997 1997
----------- -----------
(In thousands)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 22,084 $ 58,079
Receivables 80,854 79,056
Inventories:
Finished products 5,331 4,765
Scoring services and work in process 13,082 9,221
Raw materials and purchased parts 3,431 4,190
-------- --------
Total inventories 21,844 18,176
Prepaid expenses and other 7,204 5,526
-------- --------
TOTAL CURRENT ASSETS 131,986 160,837
PROPERTY, PLANT AND EQUIPMENT
Land, buildings and improvements 55,386 51,741
Machinery and equipment 121,476 111,921
Accumulated depreciation (95,902) (87,353)
-------- --------
Net property, plant and equipment 80,960 76,309
OTHER ASSETS
Acquired and internally developed
software products, net 15,104 17,578
Assessment instruments and other assets, net 21,490 11,640
Goodwill, net 46,272 7,556
-------- --------
Total other assets 82,866 36,774
-------- --------
TOTAL ASSETS $295,812 $273,920
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
NATIONAL COMPUTER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (unaudited)
<TABLE>
<CAPTION>
October 31, January 31,
1997 1997
---------- -----------
(In thousands)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities $ 4,399 $ 3,819
Accounts payable 21,831 20,886
Accrued expenses 31,036 28,832
Deferred income 29,785 23,079
Income taxes 2,495 5,556
-------- --------
TOTAL CURRENT LIABILITIES 89,546 82,172
DEFERRED INCOME TAXES 6,645 5,385
LONG-TERM DEBT -- less current maturities 13,954 16,329
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY
Preferred stock - -
Common stock--issued and outstanding -
15,372 and 15,235 shares, respectively 461 457
Paid-in capital 2,227 -
Retained earnings 186,243 173,564
Deferred compensation (3,264) (3,987)
-------- --------
Total stockholders' equity 185,667 170,034
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $295,812 $273,920
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
NATIONAL COMPUTER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
October 31,
------------------
1997 1996
------- -------
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $17,085 $49,958
Less - gain on disposition - (38,143)
Depreciation, amortization and other
noncash expenses 21,628 20,344
Provision for deferred income taxes (406) (1,003)
Changes in operating assets and liabilities:
Accounts receivable 6,237 6,659
Inventory and other current assets (4,467) (1,272)
Accounts payable and accrued expenses (4,962) (438)
Deferred income 1,153 5,617
------- -------
Net cash provided by
operating activities 36,268 41,722
------- -------
INVESTING ACTIVITIES
Purchases of property, plant and equipment (15,378) (9,661)
Acquisitions, net (35,216) (4,350)
Net proceeds from disposition - 64,071
Other, net (3,730) (1,057)
------- -------
Net cash provided (used) in
investing activities (54,324) 49,003
------- -------
FINANCING ACTIVITIES
Repayment of secured notes - (15,000)
Net repayments of other borrowings (1,167) (466)
Repurchase of common stock, net (12,647) (3,752)
Dividends paid (4,125) (4,149)
------- -------
Net cash used by financing activities (17,939) (23,367)
------- -------
(Decrease) increase in cash (35,995) 67,358
CASH AND CASH EQUIVALENTS - beginning of period 58,079 5,174
------- -------
CASH AND CASH EQUIVALENTS - end of period $22,084 $72,532
======= =======
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
NATIONAL COMPUTER SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A - The accompanying unaudited Consolidated Financial Statements have been
prepared in accordance with the instructions to Form 10-Q and, therefore, do not
include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of operations and
cash flows for all periods presented have been made. The results of operations
for the period ended October 31, 1997, are not necessarily indicative of the
operating results that may be expected for the entire fiscal year ending January
31, 1998.
Note B - Earnings per share for the respective operating periods are computed
based on average shares outstanding and common stock equivalents.
Note C - The Company has 10,000,000 shares of $.01 par value Preferred Stock
authorized of which none is outstanding. 50,000,000 shares of $.03 par value
Common Stock are authorized.
Note D - On April 30, 1997, the Company was served with a summons and complaint
in a lawsuit from a former customer for expenses, alleged loan defaults, and
other damages related to performance under three loan processing and servicing
agreements. The Company has tendered the defense of this claim to its insurer,
and the insurer has accepted that defense subject to a reservation of rights.
The Company has carefully reviewed the claims set forth in the complaint, denies
such claims, and will vigorously defend against the lawsuit. In addition, the
Company has filed a counterclaim against the former customer and a corporate
affiliate seeking compensatory damages in an amount to be determined at the
trial. The Company does not believe that any adverse outcome in the lawsuit
would result in a material adverse effect on the Company's financial position or
results of operations.
Note E - In October 1997, the Company acquired all of the common stock of School
Research and Service Corporation, a business specializing in school curriculum
products and services. The purchase price was approximately $3.0 million, net of
cash acquired, and was allocated principally to goodwill of $2.3 million.
In July 1997, the Company acquired the assets of two businesses from The
McGraw-Hill Companies for $29.5 million in cash. The acquisition included London
House, a pre-employment assessment business, and McGraw Hill School Systems, a
school administrative software business. The purchase price was allocated
primarily to goodwill, $19.8 million, and assessment instruments, included in
other assets, $9.3 million.
In April 1997, the Company acquired all of the common and preferred stock of
Virtual University Enterprises (VUE), an electronic course registration and
training administration company. The purchase price was approximately $14.6
million and consisted of stock of the Company and cash, and was allocated
principally to goodwill. Also, the Company's 51%-owned Australian subsidiary
acquired the assets of a local company in the quarter ended April 30, 1997. The
purchase price, which was approximately $2 million, was primarily allocated to
goodwill.
On the basis of an APB# 16 pro forma consolidation of all acquisitions since
January 31, 1997, as if the acquisitions had taken place at the beginning of the
fiscal year ended January 31, 1997, consolidated total revenue would have been
approximately $305 million and $269 million for the nine month periods ended
October 31, 1997 and 1996, respectively. These pro forma revenues do not purport
to be indicative of the revenues that would have occurred had the acquisitions
been made as of those dates, or future revenues. Pro forma operating results are
not presented, as the nature of the acquisitions and post-acquisition changes to
their operations and underlying cost and expense structures are collectively so
significant that such a presentation would not be meaningful.
Note F - The Company sold its Financial Systems segment in July 1996 for $95.0
million of cash. The gain on the sale, recorded in the second quarter 1996, was
$38.1 million. The segment's 1996 revenues through the sale date were $17.1
million, and the segment's loss was $2.2 million or $.14 per share.
Note G - New Accounting Standards - In June 1997, the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS)
No. 130, Reporting Comprehensive Income, which requires disclosure of
comprehensive income and its components in the Company's financial statements.
Additionally, the FASB also issued SFAS No. 131, Disclosures about Segments of
an Enterprise and Related Information. Both statements require additional
disclosure only, and as such, are not expected to impact net income or
shareholders' equity as previously reported by the Company. The statements are
effective for the Company's fiscal year ended January 31, 1999.
Currently, earnings per share calculations are performed pursuant to Accounting
Principles Board Opinion No. 15, "Earnings Per Share". Commencing with the
fourth quarter of fiscal 1997, the Company will be required to present earnings
per share data in accordance with SFAS No. 128, "Earnings Per Share". Statement
No. 128 will require the presentation of basic earnings per share and diluted
earnings per share. Basic earnings per share is calculated as net earnings
divided by the weighted average outstanding common shares. Diluted earnings per
share includes the effect of all outstanding dilutive securities, such as stock
options, and is calculated similarly to the current fully-diluted earnings per
share. While early adoption of Statement No. 128 is not permitted, the following
pro forma supplemental data is presented using the Statement No. 128 approach:
<PAGE>
Three months ended Nine months ended
October 31 October 31
------------------ -----------------
1997 1996 1997 1996
------ ------ ------ ------
Basic
Continuing operations $ .39 $ .32 $1.12 $ .92
Discontinued operations - - - (.15)
Gain on disposition - - - 2.48
----- ----- ----- -----
Net income $ .39 $ .32 $1.12 $3.25
===== ===== ===== =====
Diluted
Continuing operations $ .38 $ .32 $1.09 $ .90
Discontinued operations - - - (.14)
Gain on disposition - - - 2.45
----- ----- ----- -----
Net income $ .38 $ .32 $1.09 $3.21
===== ===== ===== =====
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
National Computer Systems, Inc. is a global information services company
providing systems and services for education, testing, assessment and complex
data management solutions. The Company markets these products and services
predominantly in the education market, but also in the business, government and
health care markets. The discussion below covers only the Company's continuing
operations and not the discontinued operations of its Financial Systems business
that was sold in July 1996.
Recap of 1997 Third Quarter Results
For the quarter ended October 31, 1997, total revenues were up by $26.6 million
or 30.0% from the quarter ended October 31, 1996, with slightly less than half
of the growth coming from acquisitions. The overall gross margin improved by 3.0
percentage points as a percent of revenue and gross margin dollars increased
$12.1 million or 42.2%. Operating expenses increased 3.1 percentage points as a
percent of revenue. Income from operations increased $2.2 million or 28.6%.
Because non-operating items, primarily interest income, were unfavorable to the
prior year, net income was 21.7% higher than the quarter ended October 31, 1996.
Earnings per share were up by 18.8%.
For the nine months ended October 31, 1997, revenues increased $50.1 million or
20.9% over the same period of the prior year, with approximately half the growth
coming from acquisitions. The gross margin percentage increased 1.7 percentage
points. Operating expenses increased by 28.8%, however, as a percent of revenue,
these expenses increased only 1.7 percentage points. Pre-tax income was 21.0%
higher than the nine months ended October 31, 1996 and earnings per share were
up 21.1%.
Revenues
Total revenues for the three and nine-month periods ended October 31, 1997 were
up 30.0% and 20.9%, respectively. By revenue category, 1997 compares to 1996 as
follows:
Quarter Year-to-date
------- ------------
Information services +28.5% +21.3%
Product sales +33.5% +20.8%
Maintenance and support +24.6% +19.2%
For the quarter ended October 31, 1997, increases in information services were
primarily as a result of higher educational assessment volumes (new business and
favorable timing of existing business), and incremental revenues from
acquisitions both international and domestic since July 31, 1996. The increases
in product sales were primarily due to higher education administrative software
and professional assessment sales resulting from internal growth as well as
incremental revenues attributable to the fourth quarter 1996 acquisition of
Macro Educational Systems, Inc. and, the second quarter 1997 acquisition of the
two businesses from The McGraw-Hill Companies, London House and McGraw Hill
School Systems. The growth in maintenance and support revenues follows the
growth in the education software product installed base. The overall quarterly
growth in revenues attributable to acquisitions is difficult to determine due to
the total integration of many of these operations into existing Company
operations, the elimination of duplicate or overlapping product lines, and the
packaging of existing and acquired offerings into new offerings, not previously
possible. However, the Company's estimation is that slightly less than half the
quarterly growth in total revenues is attributable to acquisitions completed
since last year's third quarter.
By market, substantially all the third quarter revenue growth was in the
education market (public and private). This is due to a strong seasonal peak of
state (K-12) assessment volumes as well as the fact that most of the acquisition
impact was education related.
On a year-to-date basis, increases in revenues were the result of essentially
the same factors. The revenue growth attributable to acquisitions is estimated
to be approximately half of the total revenue growth for the first nine months.
By market, revenues from Education, public and private, grew approximately 25%
on a year-to-date basis. Revenues from large-scale data management systems and
services outside of the education market increased approximately 11%.
Cost of Revenues and Gross Margins
For the quarter ended October 31, 1997, the Company's overall gross margin
improved by 3.0 percentage points to 35.3% from 32.3% for the same period in the
prior year. The gross margin improvement on information services revenues was
primarily the result of higher margins on student financial aid outsourcing
services in the Company's Iowa City service center. Gross margins on product
sales increased by 5.8 percentage points on a quarter-to-quarter basis as a
result of higher margins on education administrative software and professional
assessments. These higher margin offerings also make up a larger portion of
total product sales due to the aforementioned acquisitions. The gross margin on
maintenance and support revenues increased $.5 million, but decreased by 2.8
percentage points reflecting the general mix of revenues toward software support
as well as higher costs in that area related to the commencement of the school
year.
For the nine months ended October 31, 1997, gross margins increased $23.0
million, or 26.5%. As a percent of revenue, the gross margin improved 1.7
percentage points. The gross margin on information services revenues reflected
higher margins on testing and assessment services and student financial aid
outsourcing services. Changes in gross margins on product sales and maintenance
and support revenues were the result of the same factors mentioned above.
Operating Expenses
Sales and marketing expenses increased $4.7 million or 45.1% in the quarter
ended October 31, 1997, over the prior year quarter. As a percentage of
revenues, sales and marketing expenses increased quarter-to-quarter by 1.4
percentage points. For the nine-month period ended October 31, 1997, these
expenses increased 35.1% and increased 1.5 percentage points as a percent of
revenues. Increases in spending, both in dollars and as a percentage of
revenues, were primarily due to acquisitions since July 31, 1996.
Research and development costs decreased $0.3 million in the quarter ended
October 31, 1997 as compared to the prior year quarter. Year-to-date
expenditures were also down $1.1 million. The reduction in these expenditures
reflects the Company's more recent approach of adding new offerings through
acquiring other companies, as opposed to developing new products and services
internally.
General and administrative expenses increased by $5.5 million and $8.4 million
for the three and nine-month periods ended October 31, 1997, respectively, from
the comparable prior year periods. As a percentage of revenues, these expenses
increased by 2.7 and 1.1 percentage points for the quarter and nine-month
periods, respectively. Increases in spending were primarily the result of
acquisitions, including the related amortization of goodwill, in addition to
increased spending for internal information systems.
Non-operating Expenses
Interest expense increased slightly for the quarter ended October 31, 1997, over
the prior year quarter. On a year-to-date basis, interest expense decreased by
$0.5 million as a result of lower average debt levels in fiscal 1997 than fiscal
1996. Other income and expense, net, for the three and nine month periods ended
October 31, 1997 compare unfavorably to the prior year periods principally as a
result of interest income earned on the proceeds of the sale of the Financial
Systems business in the 1996 periods.
Provision for Income Taxes
The Company is providing taxes at an estimated income tax rate of approximately
40% in 1997 as it did through the first nine months of 1996.
Liquidity and Capital Resources
For the nine-month period ended October 31, 1997, the Company generated $36.3
million of cash from operating activities as compared to $41.7 million in the
same period of the prior year. Cash on hand at the beginning of the year was
used to fund acquisitions of $35.2 million, investment in property, plant and
equipment of $15.4 million, stock repurchases (net) of $12.6 million as well as
to pay dividends of $4.1 million. The Company expects for the remainder of
fiscal 1997 that its positive cash flows from operations will be adequate to
fund its expected financing and investing activities. In the future, the Company
anticipates funding internal growth and acquisitions with its cash on hand,
excess cash flows from operations, and an available revolving credit facility.
The statements which are not historical facts or are "goals" or "expectations"
contained in this Quarterly Report constitute "forward-looking" information, as
defined in the Private Securities Litigation Reform Act of 1995. The Cautionary
Statements filed by the Company as Exhibit 99 to the Annual Report on Form 10-K
for the year ended January 31, 1997, are incorporated herein by reference, and
shareholders and prospective investors are specifically referred to such
Cautionary Statements for a discussion of factors which could affect the
Company's operations and forward-looking statements contained herein.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
4. Credit Agreement dated as of November 17, 1997
between National Computer Systems, Inc. and
The First National Bank of Chicago; Norwest Bank
Minnesota, National Association; SunTrust Bank,
Central Florida, National Association; and
The Bank of Tokyo - Mitsubishi, Ltd., Chicago Branch.
27. Financial Data Schedule
(b) There were no reports on Form 8-K filed for the three months ended
October 31, 1997.
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.
NATIONAL COMPUTER SYSTEMS, INC.
/s/ Jeffrey W. Taylor
---------------------------
Jeffrey W. Taylor
Vice President and
Chief Financial Officer
Dated: December 12, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements for National Computer Systems, Inc. and Subsidiaries, for
the fiscal year ended January 31, 1998, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> OCT-31-1997
<CASH> 22,084
<SECURITIES> 0
<RECEIVABLES> 80,854
<ALLOWANCES> 0
<INVENTORY> 21,844
<CURRENT-ASSETS> 131,986
<PP&E> 176,862
<DEPRECIATION> (95,902)
<TOTAL-ASSETS> 295,812
<CURRENT-LIABILITIES> 89,546
<BONDS> 13,954
0
0
<COMMON> 461
<OTHER-SE> 185,206
<TOTAL-LIABILITY-AND-EQUITY> 295,812
<SALES> 45,846
<TOTAL-REVENUES> 115,387
<CGS> 18,256
<TOTAL-COSTS> 74,644
<OTHER-EXPENSES> 30,736
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 330
<INCOME-PRETAX> 10,126
<INCOME-TAX> 4,100
<INCOME-CONTINUING> 6,026
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,026
<EPS-PRIMARY> 0.38
<EPS-DILUTED> 0.38
</TABLE>
CREDIT AGREEMENT
This Agreement, dated as of November 17, 1997, is among National
Computer Systems, Inc., the Lenders and The First National Bank of Chicago, as
Agent. The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Absolute Rate" means, with respect to an Absolute Rate Loan made by
a given Lender for the relevant Absolute Rate Interest Period, the rate of
interest per annum (rounded to the nearest 1/100 of 1%) offered by such Lender
and accepted by the Borrower.
"Absolute Rate Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Absolute Rate Loans made by some or all of the
Lenders to the Borrower at the same time and for the same Interest Period.
"Absolute Rate Auction" means a solicitation of Competitive Bid
Quotes setting forth Absolute Rates pursuant to Section 2.3.
"Absolute Rate Interest Period" means, with respect to an Absolute
Rate Advance, a period of not less than 7 and not more than 180 days commencing
on a Business Day selected by the Borrower pursuant to this Agreement. If such
Absolute Rate Interest Period would end on a day which is not a Business Day,
such Absolute Rate Interest Period shall end on the next succeeding Business
Day.
"Absolute Rate Loan" means a Loan which bears interest at the
Absolute Rate.
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Borrower or any of its Subsidiaries (i) acquires any going business or all or
substantially all of the assets of any Person, or division thereof, whether
through purchase of assets, merger or otherwise or (ii) directly or indirectly
acquires (in one transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes) of the securities of a
corporation which have ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency) or a majority (by percentage or voting power) of the outstanding
ownership interests of a partnership or limited liability company.
"Advance" means a borrowing hereunder (or conversion or continuation
thereof) consisting of the aggregate amount of the several Loans made on the
same Borrowing Date (or date of conversion or continuation) by some or all of
the Lenders to the Borrower at the same Rate Option (or on the same interest
basis in the case of Competitive Bid Advances) and, in the case of Fixed Rate
Advances, for the same Interest Period. For the avoidance of doubt, the term
"Advance" includes each Competitive Bid Advance and Swing Line Loan.
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control with such Person.
A Person shall be deemed to control another Person if the controlling Person
owns 10% or more of any class of voting securities (or other ownership
interests) of the controlled Person or possesses, directly or indirectly, the
power to direct or cause the direction of the management or policies of the
controlled Person, whether through ownership of stock, by contract or otherwise.
"Agent" means The First National Bank of Chicago in its capacity as
agent for the Lenders pursuant to Article X, and not in its individual capacity
as a Lender, and any successor Agent appointed pursuant to Article X.
"Aggregate Commitment" means the aggregate of the Commitments of all
the Lenders, as increased from time to time pursuant to Section 2.17 and as
reduced from time to time pursuant to the terms hereof.
"Agreement" means this credit agreement, as it may be amended or
modified and in effect from time to time.
"Agreement Accounting Principles" means generally accepted accounting
principles as in effect from time to time, applied in a manner consistent with
that used in preparing the financial statements referred to in Section 5.4.
"Alternate Base Rate" means, for any day, a rate of interest per
annum equal to the higher of (i) the Corporate Base Rate for such day and (ii)
the sum of Federal Funds Effective Rate for such day plus 1/2% per annum.
"Applicable Margin" - see the Pricing Schedule.
"Article" means an article of this Agreement unless another document
is specifically referenced.
"Authorized Officer" means any of the chief executive officer, chief
financial officer, treasurer or any assistant treasurer of the Borrower, acting
singly.
"Borrower" means National Computer Systems, Inc., a Minnesota
corporation, and its successors and assigns.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Business Day" means (i) with respect to any borrowing, payment or
rate selection of Eurodollar Ratable Advances or Eurodollar Bid Rate Advances, a
day (other than a Saturday or Sunday) on which banks generally are open in
Chicago and New York for the conduct of substantially all of their commercial
lending activities and on which dealings in United States dollars are carried on
in the London interbank market and (ii) for all other purposes, a day (other
than a Saturday or Sunday) on which banks generally are open in Chicago for the
conduct of substantially all of their commercial lending activities.
"Capital Expenditures" means, for any period, the net additions to
property, plant and equipment and other capital expenditures of the Borrower and
its Subsidiaries for such period including any such addition by way of
acquisition of or investment in a Person (to the extent reflected as an addition
to property, plant and equipment), as the same are or would be set forth in a
consolidated statement of cash flows of the Borrower and its Subsidiaries for
such period.
"Capitalized Lease" of a Person means any lease of Property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.
"Change in Control" means the acquisition by any Person, or two or
more Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 20% or more of the outstanding shares of voting stock
of the Borrower; provided, however, that for purposes of this definition of
"Change in Control," "Person" shall not include the Borrower or any Subsidiary
or any employee benefit plan of the Borrower or any Subsidiary or any entity
organized, appointed or established for or pursuant to such plan.
"Code" means the Internal Revenue Code of 1986, as amended, reformed
or otherwise modified from time to time.
"Commitment" means, for each Lender, the obligation of such Lender to
make Loans (other than Swing Line Loans) not exceeding the amount set forth
opposite its signature below or as set forth in any Notice of Assignment
relating to any assignment that has become effective pursuant to Section 12.3.2,
as such amount may be modified from time to time pursuant to the terms hereof.
"Commitment Date" is defined in Section 2.17(b).
"Commitment Increase" is defined in Section 2.17(a).
"Competitive Bid Advance" means a borrowing hereunder consisting of
the aggregate amount of the several Competitive Bid Loans made by some or all of
the Lenders to the Borrower at the same time and for the same Interest Period.
"Competitive Bid Borrowing Notice" is defined in Section 2.3.6.
"Competitive Bid Loan" means a Eurodollar Bid Rate Loan or an
Absolute Rate Loan, or both, as the case may be.
"Competitive Bid Margin" means the margin above or below the
applicable Eurodollar Base Rate offered for a Eurodollar Bid Rate Loan,
expressed as a percentage (rounded to the nearest 1/100 of 1%) to be added or
subtracted from such Eurodollar Base Rate.
"Competitive Bid Quote" means a Competitive Bid Quote substantially
in the form of Exhibit "E" hereto completed and delivered by a Lender to the
Agent in accordance with Section 2.3.4.
"Competitive Bid Quote Request" means a Competitive Bid Quote Request
substantially in the form of Exhibit "C" hereto completed and delivered by the
Borrower to the Agent in accordance with Section 2.3.2.
"Condemnation" is defined in Section 7.8.
"Consolidated EBITDA" means consolidated net income of the Borrower
and its Subsidiaries (a) plus, to the extent deducted from revenues in
determining consolidated net income, (i) consolidated interest expense, (ii)
taxes provided for, (iii) depreciation and (iv) amortization and (b) excluding,
to the extent reflected in determining consolidated net income, extraordinary
gains and losses, in each case calculated for the Borrower and its Subsidiaries
on a consolidated basis. With respect to any Acquisition permitted under this
Agreement, the calculation of Consolidated EBITDA for the purpose of determining
compliance with the financial covenants will be made on a pro forma basis
(including the assets or entities acquired) as if such Acquisition had occurred
at the beginning of the most recent four-quarter period ending prior to such
Acquisition, and the calculation of Consolidated Indebtedness for the purpose of
determining compliance with the financial covenants will be made on a pro forma
basis assuming that any Indebtedness incurred, issued or assumed in connection
with such Acquisition had been incurred, issued or assumed on the first day of,
and had remained outstanding throughout, such four-quarter period.
"Consolidated Indebtedness" means at any time the Indebtedness of the
Borrower and its Subsidiaries calculated on a consolidated basis as of such
time, but excluding the ESOP Loan.
"Consolidated Total Assets" means at any time the total amount of all
consolidated assets of the Borrower and its Subsidiaries determined in
accordance with generally accepted accounting principles as set forth in the
last set of financial statements delivered by the Borrower pursuant to Section
6.1(i).
"Contingent Obligation" of a Person means any agreement, undertaking
or arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person
(other than endorsements of negotiable instruments in the ordinary course of
business), or agrees to maintain the net worth or working capital or other
financial condition of any other Person, or otherwise assures any creditor of
such other person against loss, including, without limitation, any comfort
letter, operating agreement or take-or-pay contract.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower or any of its Subsidiaries, are
treated as a single employer under Section 414 of the Code.
"Corporate Base Rate" means a rate per annum equal to the corporate
base rate of interest announced by First Chicago from time to time, changing
when and as said corporate base rate changes.
"Default" means an event described in Article VII.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating to
(i) the protection of the environment, (ii) the effect of the environment on
human health, (iii) emissions, discharges or releases of pollutants,
contaminants, hazardous substances or wastes into surface water, ground water or
land or (iv) the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, hazardous
substances or wastes or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"ESOP Loan" means the loan made to the National Computer Systems,
Inc. Employee Stock Ownership Plan Trust due May 1, 1999, and guaranteed by the
Borrower, the outstanding principal amount of which on the date hereof is
$1,999,631, without giving effect to any increase to such amount, to any
amendment or other modification to the terms governing such loan from those in
effect on the date hereof (to the extent that any such amendment or modification
could be adverse to the Lenders) or to any extension, refinancing or replacement
of such loan.
"Eurodollar Auction" means a solicitation of Competitive Bid Quotes
setting forth Competitive Bid Margins pursuant to Section 2.3.
"Eurodollar Base Rate" means, with respect to a Eurodollar Ratable
Advance or a Eurodollar Bid Rate Advance for the relevant Eurodollar Interest
Period, the applicable London interbank offered rate for deposits in U.S.
dollars appearing on Telerate Page 3750 as of 11:00 a.m. (London time) two
Business Days prior to the first day of such Eurodollar Interest Period, and
having a maturity approximately equal to such Eurodollar Interest Period. If no
London interbank offered rate of such maturity then appears on Telerate Page
3750, then the Eurodollar Base Rate shall be equal to the London interbank
offered rate for deposits in U.S. dollars maturing immediately before or
immediately after such maturity, whichever is higher, as determined by the Agent
from Telerate Page 3750. If Telerate Page 3750 is not available, the applicable
Eurodollar Base Rate for the relevant Eurodollar Interest Period shall be the
rate determined by the Agent to be the rate at which the Agent offers to place
deposits in U.S. dollars with first-class banks in the London interbank market
at approximately 11:00 a.m. (London time) two Business Days prior to the first
day of such Eurodollar Interest Period, in the approximate amount of the Agent's
relevant Eurodollar Ratable Loan, or, in the case of a Eurodollar Bid Rate
Advance, the amount of the Eurodollar Bid Rate Advance requested by the
Borrower, and having a maturity approximately equal to such Eurodollar Interest
Period.
"Eurodollar Bid Rate" means, with respect to a Eurodollar Bid Rate
Loan made by a given Lender for the relevant Eurodollar Interest Period, the sum
of (i) the Eurodollar Base Rate and (ii) the Competitive Bid Margin offered by
such Lender and accepted by the Borrower.
"Eurodollar Bid Rate Advance" means a Competitive Bid Advance which
bears interest at a Eurodollar Bid Rate.
"Eurodollar Bid Rate Loan" means a Loan which bears interest at the
Eurodollar Bid Rate.
"Eurodollar Interest Period" means, with respect to a Eurodollar
Ratable Advance or a Eurodollar Bid Rate Advance, a period of one, two, three or
six months commencing on a Business Day selected by the Borrower pursuant to
this Agreement. Such Eurodollar Interest Period shall end on the day which
corresponds numerically to such date one, two, three or six months thereafter;
provided, however, that if there is no such numerically corresponding day in
such next, second, third or sixth succeeding month, such Eurodollar Interest
Period shall end on the last Business Day of such next, second, third or sixth
succeeding month. If a Eurodollar Interest Period would otherwise end on a day
which is not a Business Day, such Eurodollar Interest Period shall end on the
next succeeding Business Day; provided, however, that if said next succeeding
Business Day falls in a new calendar month, such Eurodollar Interest Period
shall end on the immediately preceding Business Day.
"Eurodollar Loan" means a Loan which bears interest at a Eurodollar
Rate.
"Eurodollar Rate" means, with respect to a Eurodollar Ratable Advance
for the relevant Eurodollar Interest Period, the sum of (i) the quotient of (a)
the Eurodollar Base Rate applicable to such Eurodollar Interest Period, divided
by (b) one minus the Reserve Requirement (expressed as a decimal) applicable to
such Eurodollar Interest Period plus (ii) the Applicable Margin. The Eurodollar
Rate shall be rounded to the next higher multiple of 1/16 of 1% if the rate is
not such a multiple.
"Eurodollar Ratable Advance" means an Advance which bears interest at
a Eurodollar Rate requested by the Borrower pursuant to Section 2.2.
"Eurodollar Ratable Loan" means a Loan which bears interest at a
Eurodollar Rate requested by the Borrower pursuant to Section 2.2.
"Facility Fee Rate" - see the Pricing Schedule.
"Federal Funds Effective Rate" means, for any day, an interest rate
per annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately 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 at approximately 10:00 a.m. (Chicago
time) on such day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by the Agent in its sole
discretion.
"First Chicago" means The First National Bank of Chicago in its
individual capacity, and its successors.
"Fixed Charge Coverage Ratio" means, at any time, the ratio of (i)
Consolidated EBITDA plus Rentals of the Borrower and its Subsidiaries less
Capital Expenditures, all for the most recently ended four fiscal quarter
period, to (ii) the sum of payments by the Borrower and its Subsidiaries of
interest expense, Rentals and scheduled principal payments on all Funded
Indebtedness all for the most recently ended four fiscal quarter period.
"Fixed Rate" means the Eurodollar Rate, the Eurodollar Bid Rate or
the Absolute Rate.
"Fixed Rate Advance" means an Advance which bears interest at a Fixed
Rate.
"Fixed Rate Loan" means a Loan which bears interest at a Fixed Rate.
"Floating Rate" means, for any day, a rate per annum equal to the
Alternate Base Rate plus the Applicable Margin for such day, changing when and
as the Alternate Base Rate changes.
"Floating Rate Advance" means an Advance which bears interest at the
Floating Rate.
"Floating Rate Loan" means a Loan which bears interest at the
Floating Rate.
"Friendly Acquisition" means an Acquisition approved by the entity
(or its board of directors or similar body) to be acquired at or prior to the
time of the Acquisition.
"Funded Indebtedness" means, as to any Person, all Indebtedness of
such Person that matures more than one year from the date of its creation or
matures within one year from such date but is renewable or extendible, at the
option of such Person, to a date more than one year from such date or arises
under a revolving credit or similar agreement that obligates the lender or
lenders during a period of more than one year from such date, including, without
limitation, all current maturities and current sinking fund payments in respect
of such Indebtedness and, in the case of the Borrower, the Obligations;
provided, however, that "Funded Indebtedness" shall not include the ESOP Loan.
"Increase Date" is defined in Section 2.17(a).
"Increasing Lender" is defined in Section 2.17(c).
"Indebtedness" of a Person means such Person's (i) obligations for
borrowed money, (ii) obligations representing the deferred purchase price of
property or services (other than accounts payable arising in the ordinary course
of such Person's business payable on terms customary in the trade), (iii)
obligations, whether or not assumed, secured by Liens or payable out of the
proceeds or production from property now or hereafter owned or acquired by such
Person, (iv) obligations which are evidenced by notes, acceptances or other
instruments, (v) obligations of such Person to purchase securities or other
property arising out of or in connection with the sale of the same or
substantially similar securities or property, (vi) Capitalized Lease Obligations
of such Person, (vii) Contingent Obligations of such Person, (viii) obligations
of such Person in respect of Letters of Credit, (ix) Off-Balance Sheet
Liabilities of such Person and (x) any other obligation for borrowed money which
in accordance with Agreement Accounting Principles would be shown as a liability
on the consolidated balance sheet of such Person.
"Interest Period" means a Eurodollar Interest Period or an Absolute
Rate Interest Period.
"Investment" of a Person means any loan, advance (other than
commission, travel and similar advances to officers and employees made in the
ordinary course of business), extension of credit (other than accounts
receivable arising in the ordinary course of business on terms customary in the
trade) or contribution of capital by such Person; stocks, bonds, mutual funds,
partnership interests, notes, debentures or other securities owned by such
Person; any deposit accounts and certificate of deposit owned by such Person;
and structured notes, derivative financial instruments and other similar
instruments or contracts owned by such Person.
"Invitation for Competitive Bid Quotes" means an Invitation for
Competitive Bid Quotes substantially in the form of Exhibit "D" hereto,
completed and delivered by the Agent to the Lenders in accordance with Section
2.3.3.
"Lenders" means the lending institutions listed on the signature
pages of this Agreement and their respective successors and assigns, and any New
Lenders.
"Lending Installation" means, with respect to a Lender or the Agent,
any office, branch, subsidiary or affiliate of such Lender or the Agent.
"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.
"Leverage Ratio" means, at any date, the ratio of (x) all
Consolidated Indebtedness of the Borrower and its Subsidiaries as of such date
to (y) Consolidated EBITDA for the four fiscal quarters ended on such date.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"Loan" means, with respect to a Lender, such Lender's loan made
pursuant to Article II (or any conversion or continuation thereof).
"Loan Documents" means this Agreement and the Notes and the other
documents and agreements contemplated hereby and executed by the Borrower in
favor of the Agent or any Lender.
"Material Adverse Effect" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), results of operations,
or prospects of the Borrower and its Subsidiaries taken as a whole, (ii) the
ability of the Borrower to perform its obligations under the Loan Documents or
(iii) the validity or enforceability of any of the Loan Documents or the rights
or remedies of the Agent or the Lenders thereunder.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.
"Net Worth" shall mean the Borrower's consolidated stockholders'
equity, determined in accordance with Agreement Accounting Principles.
"New Lender" is defined in Section 2.17(e).
"Notes" means, collectively, the Revolving Notes and the Swing Line
Note; and "Note" means any one of the Notes.
"Notice of Assignment" is defined in Section 12.3.2.
"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Notes, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Borrower to the Lenders
or to any Lender, the Agent or any indemnified party hereunder arising under the
Loan Documents.
"Off-Balance Sheet Liability" of a Person means (i) any repurchase
obligation or liability of such person with respect to accounts or notes
receivable sold by such Person, (ii) any liability under any sale and leaseback
transaction which does not create a liability on the balance sheet of such
Person, (iii) any liability under any financing lease or so called "synthetic
lease" transaction entered into by such Person or (iv) any obligation arising
with respect to any other transaction which is the functional equivalent of or
takes the place of borrowing but which does not constitute a liability on the
balance sheets of such Person, but excluding operating leases.
"Participants" is defined in Section 12.2.1.
"Payment Date" means the last day of each fiscal quarter of the
Borrower.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Person" means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code as to which the Borrower or any member of the Controlled Group may
have any liability.
"Pricing Schedule" means the Pricing Schedule attached hereto.
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets owned,
leased or operated by such Person.
"Purchasers" is defined in Section 12.3.1.
"Ratable Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Ratable Loans made by the Lenders to the
Borrower at the same time, at the same Rate Option and for the same Interest
Period.
"Ratable Borrowing Notice" is defined in Section 2.2.3.
"Ratable Loan" means a Loan made by a Lender pursuant to Section 2.2
hereof.
"Rate Hedging Agreement" means an agreement, device or arrangement
providing for payments which are related to fluctuations of interest rates,
exchange rates or forward rates, including, but not limited to,
dollar-denominated or cross-currency interest rate exchange agreements, forward
currency exchange agreements, interest rate cap or collar protection agreements,
forward rate currency or interest rate options, puts and warrants.
"Rate Hedging Obligations" of a Person means any and all obligations
of such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all Rate
Hedging Agreements and (ii) any and all cancellations, buy backs, reversals,
terminations or assignments of any Rate Hedging Agreement.
"Rate Option" means the Eurodollar Rate or the Floating Rate.
"Rate Option Notice" is defined in Section 2.2.4.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
or other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to member banks of the Federal
Reserve System.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.
"Rentals" of a Person means the aggregate fixed amounts payable by
such Person under any lease of property having an original term (including any
required renewals or any renewals at the option of the lessor or lessee) of one
year or more but does not include any amounts payable under Capitalized Leases
of such Person.
"Reportable Event" means a reportable event as defined in Section
4043 of ERISA and the regulations issued under such section, with respect to a
Plan, excluding, however, such events as to which the PBGC by regulation waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event; provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.
"Required Lenders" means Lenders in the aggregate having at least
66-2/3 % of the Aggregate Commitment or, if the Aggregate Commitment has been
terminated, Lenders in the aggregate holding at least 66-2/3 % of the aggregate
unpaid principal amount of the outstanding Advances.
"Reserve Requirement" means, with respect to a Eurodollar Interest
Period, the maximum aggregate reserve requirement (including all basic,
supplemental, marginal and other reserves) which is imposed under Regulation D
on Eurocurrency liabilities.
"Revolving Note" means a promissory note, in substantially the form
of Exhibit "A" hereto, duly executed by the Borrower and payable to the order of
a Lender, including any amendment, modification, renewal or replacement of such
promissory note.
"Sale and Leaseback Transaction" means any sale or other transfer of
Property by any Person with the intent to lease such Property as lessee.
"Section" means a numbered section of this Agreement, unless the
context otherwise requires.
"Single Employer Plan" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.
"Subsidiary" of a Person means (i) any corporation more than 50% of
the outstanding securities having ordinary voting power of which shall at the
time be owned or controlled, directly or indirectly, by such Person or by one or
more of its Subsidiaries or by such Person and one or more of its Subsidiaries,
or (ii) any partnership, limited liability company, association, joint venture
or similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Subsidiary"
shall mean a Subsidiary of the Borrower.
"Substantial Portion" means, with respect to the Property of the
Borrower and its Subsidiaries, Property which (i) represents more than 10% of
the consolidated assets of the Borrower and its Subsidiaries as would be shown
in the consolidated financial statements of the Borrower and its Subsidiaries as
at the end of the four fiscal quarter period most recently completed prior to
the time at which such determination is made or (ii) is responsible for more
than 10% of the consolidated net sales or of the consolidated net income of the
Borrower and its Subsidiaries as reflected in the financial statements referred
to in clause (i) above.
"Swing Line Bank" means First Chicago or any other Lender as a
successor Swing Line Bank.
"Swing Line Commitment" means the obligation of the Swing Line Bank
to make Swing Line Loans up to an amount at any one time outstanding not to
exceed the lesser of (a) $5,000,000 or (b) the Aggregate Commitment.
"Swing Line Loan" means a Loan made available to the Borrower by the
Swing Line Bank pursuant to Section 2.4 hereof.
"Swing Line Note" means a promissory note, in substantially the form
of Exhibit "B" hereto, duly executed by the Borrower and payable to the order of
the Swing Line Bank in the amount of its Swing Line Commitment, including any
amendment, modification, renewal or replacement of such note and evidencing such
Lender's Swing Line Loans.
"Swing Line Rate" means either (i) a per annum rate of interest
agreed upon between the Borrower and the Swing Line Bank with respect to a
particular Swing Line Loan at the time such Swing Line Loan is made, or, (ii) if
no such rate of interest is agreed upon, the Floating Rate.
"Termination Date" means November 1, 2002 or any earlier date on
which the Aggregate Commitment is reduced to zero or otherwise terminated
pursuant to the terms hereof.
"Termination Value" means, in respect of any one or more Rate Hedging
Agreements, after taking into account the effect of any legally enforceable
netting agreement relating to such Rate Hedging Agreements, (a) for any date on
or after the date such Rate Hedging Agreements have been closed out and
termination value(s) determined in accordance therewith, such termination
value(s), and (b) for any date prior to the date referenced in clause (a) the
amount(s) determined as the mark-to-market value(s) for such Rate Hedging
Agreements, as determined based upon one or more readily available quotations
provided by any recognized dealer in such Rate Hedging Agreements.
"Transferee" is defined in Section 12.4.
"Unfunded Liabilities" means the amount (if any) by which the present
value of all vested and unvested accrued benefits under all Single Employer
Plans exceeds the fair market value of all such Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans using PBGC actuarial assumptions for single employer plan terminations.
"United States" means the United States of America.
"Unmatured Default" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default.
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of
the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more Wholly-Owned
Subsidiaries of such Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person or (ii) any partnership, limited liability company,
association, joint venture or similar business organization 100% of the
ownership interests having ordinary voting power of which shall at the time be
so owned or controlled.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
ARTICLE II
THE FACILITY
2.1. The Facility.
2.1.1. Description of Facility. The Lenders grant to the Borrower a
revolving credit facility pursuant to which, and upon the terms and
subject to the conditions herein set out:
(i) each Lender severally agrees to make Ratable Loans to the
Borrower in accordance with Section 2.2; and
(ii) each Lender may, in its sole discretion, make bids to make
Competitive Bid Loans to the Borrower in accordance with
Section 2.3.
2.1.2. Amount of Facility. In no event may the aggregate principal amount
of all outstanding Advances (including both the Ratable Advances
and the Competitive Bid Advances) and the outstanding Swing Line
Loans exceed the Aggregate Commitment.
2.1.3. Availability of Facility. Subject to the terms hereof, the facility
is available from the date hereof to the Termination Date. Subject
to the terms of this Agreement, the Borrower may borrow, repay and
reborrow at any time prior to the Termination Date. The Commitments
to lend hereunder shall expire on the Termination Date.
2.1.4. Repayment of Facility. Any outstanding Advances and all other
unpaid Obligations shall be paid in full by the Borrower on the
Termination Date.
2.1.5. Revolving Notes. All Ratable Advances and Competitive Bid Advances
shall be evidenced by the Revolving Notes.
2.2. Ratable Advances
2.2.1. Ratable Advances. Each Ratable Advance hereunder shall consist of
borrowings made from the several Lenders ratably in proportion to
the amounts of their respective Commitments. The aggregate
outstanding amount of Competitive Bid Advances shall reduce each
Lender's Commitment ratably in the proportion such Lender's
Commitment bears to the Aggregate Commitment regardless of which
Lender or Lenders make such Competitive Bid Advances.
2.2.2. Ratable Advance Rate Options. The Ratable Advances may be Floating
Rate Advances or Eurodollar Ratable Advances, or a combination
thereof, selected by the Borrower in accordance with Section 2.2.3.
No Ratable Advance may mature after the Termination Date.
2.2.3. Method of Selecting Rate Options and Interest Periods for Ratable
Advances. The Borrower shall select the Rate Option and, in the
case of each Fixed Rate Advance, the Interest Period applicable
thereto, from time to time. The Borrower shall give the Agent
irrevocable notice (a "Ratable Borrowing Notice") not later than
10:00 a.m. (Chicago time) at least one Business Day before the
Borrowing Date of each Floating Rate Advance and at least three
Business Days before the Borrowing Date for each Eurodollar Ratable
Advance. Notwithstanding the foregoing, a Ratable Borrowing Notice
for a Floating Rate Advance may be given not later than 15 minutes
after the time which the Borrower is required to reject one or more
bids offered in connection with an Absolute Rate Auction pursuant
to Section 2.3.6 and a Ratable Borrowing Notice for a Eurodollar
Ratable Advance may be given not later than 15 minutes after the
time the Borrower is required to reject one or more bids offered in
connection with a Eurodollar Auction pursuant to Section 2.3.6. A
Ratable Borrowing Notice shall specify:
(i) the Borrowing Date, which shall be a Business Day, of such
Ratable Advance,
(ii) the aggregate amount of such Ratable Advance,
(iii) the Rate Option selected for such Ratable Advance and
(iv) in the case of each Fixed Rate Advance, the Interest Period
applicable thereto (which may not end after the Termination
Date).
2.2.4. Conversion and Continuation of Outstanding Ratable Advances.
Floating Rate Advances shall continue as Floating Rate Advances
unless and until such Floating Rate Advances are either converted
into Eurodollar Ratable Advances in accordance with this Section
2.2.4 or are prepaid in accordance with Section 2.8. Each
Eurodollar Ratable Advance shall continue as a Eurodollar Ratable
Advance until the end of the then applicable Eurodollar Interest
Period therefor, at which time such Eurodollar Ratable Advance
shall be automatically converted into a Floating Rate Advance
unless such Eurodollar Ratable Advance shall have been either (a)
prepaid in accordance with Section 2.8 or (b) continued as a
Eurodollar Ratable Advance for another Eurodollar Interest Period
in accordance with this Section 2.2.4. Subject to the terms of
Section 2.7, the Borrower may elect from time to time to convert
and/or continue the Rate Option applicable to all or any part of a
Ratable Advance into another Rate Option; provided, that any
conversion or continuation of any Eurodollar Ratable Advance shall
be made on, and only on, the last day of the Eurodollar Interest
Period applicable thereto. The Borrower shall give the Agent
irrevocable notice (a "Rate Option Notice") of each conversion of a
Floating Rate Advance into a Eurodollar Ratable Advance, or
continuation of a Eurodollar Ratable Advance, not later than 10:00
a.m. (Chicago time) at least three Business Days prior to the date
of the requested conversion or continuation, specifying:
(i) the requested date, which shall be a Business Day, of such
conversion or continuation,
(ii) the aggregate amount and Rate Option applicable to the
Ratable Advance which is to be converted or continued and
(iii) the amount and Rate Option(s) of Ratable Advance(s) into
which such Ratable Advance is to be converted or continued
and, in the case of a conversion into or continuation of a
Eurodollar Ratable Advance, the duration of the Eurodollar
Interest Period applicable thereto.
2.3. Competitive Bid Advances.
2.3.1. Competitive Bid Option. In addition to Ratable Advances pursuant to
Section 2.2, but subject to the terms and conditions of this
Agreement (including, without limitation, the limitation set forth
in Section 2.1.2 as to the maximum aggregate principal amount of
all outstanding Advances hereunder), the Borrower may, as set forth
in this Section 2.3, request the Lenders, prior to the Termination
Date, to make offers to make Competitive Bid Advances to the
Borrower. Each Lender may, but shall have no obligation to, make
such offers and the Borrower may, but shall have no obligation to,
accept any such offers in the manner set forth in this Section 2.3.
There shall be no more than five Competitive Bid Advances
outstanding at any one time.
2.3.2. Competitive Bid Quote Request. When the Borrower wishes to request
offers to make Competitive Bid Loans under this Section 2.3, it
shall transmit to the Agent by telex or telecopy a Competitive Bid
Quote Request substantially in the form of Exhibit "C" hereto so as
to be received no later than (i) 10:00 a.m. (Chicago time) at least
four Business Days prior to the Borrowing Date proposed therein, in
the case of a Eurodollar Auction or (ii) 10:00 a.m. (Chicago time)
at least one Business Day prior to the Borrowing Date proposed
therein, in the case of an Absolute Rate Auction specifying:
(a) the proposed Borrowing Date, which shall be a Business Day,
for the proposed Competitive Bid Advance,
(b) the aggregate principal amount of such Competitive Bid
Advance,
(c) whether the Competitive Bid Quotes requested are to set forth
a Eurodollar Bid Rate or an Absolute Rate and
(d) the Interest Period applicable thereto (which may not end
after the Termination Date).
The Borrower may request offers to make Competitive Bid Loans for
more than one Interest Period in a single Competitive Bid Quote
Request. No Competitive Bid Quote Request shall be given within 5
Business Days (or such other number of days as the Borrower and the
Agent may agree) of any other Competitive Bid Quote Request. A
Competitive Bid Quote Request that does not conform substantially
to the format of Exhibit "C" hereto shall be rejected, and the
Agent shall promptly notify the Borrower of such rejection by telex
or telecopy.
2.3.3. Invitation for Competitive Bid Quotes. Promptly and in any event
before the close of business on the same Business Day of receipt of
a Competitive Bid Quote Request that is not rejected pursuant to
Section 2.3.2, the Agent shall send to each of the Lenders by telex
or telecopy an Invitation for Competitive Bid Quotes substantially
in the form of Exhibit "D" hereto, which shall constitute an
invitation by the Borrower to each Lender to submit Competitive Bid
Quotes offering to make the Competitive Bid Loans to which such
Competitive Bid Quote Request relates in accordance with this
Section 2.3.
2.3.4. Submission and Contents of Competitive Bid Quotes. (i) Each Lender
may, in its sole discretion, submit a Competitive Bid Quote
containing an offer or offers to make Competitive Bid Loans in
response to any Invitation for Competitive Bid Quotes. Each
Competitive Bid Quote must comply with the requirements of this
Section 2.3.4 and must be submitted to the Agent by telex or
telecopy at its offices specified in or pursuant to Article XIII
not later than (a) 9:00 a.m. (Chicago time) at least three Business
Days prior to the proposed Borrowing Date, in the case of a
Eurodollar Auction or (b) 9:00 a.m. (Chicago time) on the proposed
Borrowing Date, in the case of an Absolute Rate Auction (or, in
either case upon reasonable prior notice to the Lenders, such other
time and date as the Borrower and the Agent may agree); provided
that Competitive Bid Quotes submitted by a Lender which is also the
Agent may only be submitted if the Agent notifies the Borrower of
the terms of the offer or offers contained therein not later than
15 minutes prior to the latest time at which the relevant
Competitive Bid Quotes must be submitted by the other Lenders.
Subject to Articles IV and VIII, any Competitive Bid Quote so made
shall be irrevocable except with the written consent of the Agent
given on the instructions of the Borrower.
(ii) Each Competitive Bid Quote shall be in substantially the form
of Exhibit "E" hereto and shall in any case specify:
(a) the proposed Borrowing Date, which shall be the same as
that set forth in the applicable Invitation for
Competitive Bid Quotes,
(b) the principal amount of the Competitive Bid Loan for
which each such offer is being made, which principal
amount (1) may be greater than, less than or equal to the
Commitment of the quoting Lender, (2) must be at least
$5,000,000 and an integral multiple of $1,000,000 and (3)
may not exceed the principal amount of Competitive Bid
Loans for which offers were requested,
(c) in the case of a Eurodollar Auction, the Competitive Bid
Margin offered for each such Competitive Bid Loan,
(d) the minimum amount, if any, of the Competitive Bid Loan
which may be accepted by the Borrower,
(e) in the case of an Absolute Rate Auction, the Absolute
Rate offered for each such Competitive Bid Loan,
(f) the maximum aggregate amount, if any, of Competitive Bid
Loans offered by the quoting Lender which may be accepted
by the Borrower and
(g) the identity of the quoting Lender.
(iii) The Agent shall reject any Competitive Bid Quote that:
(a) is not substantially in the form of Exhibit "E" hereto or
does not specify all of the information required by this
Section 2.3.4(ii);
(b) contains qualifying, conditional or similar language,
other than any such language contained in Exhibit "E"
hereto;
(c) proposes terms other than or in addition to those set
forth in the applicable Invitation for Competitive Bid
Quotes; or
(d) arrives after the time set forth in Section 2.3.4(i).
If any Competitive Bid Quote shall be rejected pursuant to this
Section 2.3.4(iii), then the Agent shall notify the relevant Lender
of such rejection as soon as practicable.
2.3.5. Notice to Borrower. The Agent shall promptly (but in any event by
9:30 a.m. (Chicago time) on the date of receipt of any Competitive
Bid Quote timely submitted under Section 2.3.4) notify the Borrower
of the terms (i) of any Competitive Bid Quote submitted by a Lender
that is in accordance with Section 2.3.4 and (ii) of any
Competitive Bid Quote that amends, modifies or is otherwise
inconsistent with a previous Competitive Bid Quote submitted by
such Lender with respect to the same Competitive Bid Quote Request.
Any such subsequent Competitive Bid Quote shall be disregarded by
the Agent unless such subsequent Competitive Bid Quote specifically
states that it is submitted solely to correct a manifest error in
such former Competitive Bid Quote. The Agent's notice to the
Borrower shall specify the aggregate principal amount of
Competitive Bid Loans for which offers have been received for each
Interest Period specified in the related Competitive Bid Quote
Request and the respective principal amounts and Eurodollar Bid
Rates or Absolute Rates, as the case may be, so offered.
2.3.6. Acceptance and Notice by Borrower. Not later than (i) 10:00 a.m.
(Chicago time) at least three Business Days prior to the proposed
Borrowing Date, in the case of a Eurodollar Auction or (ii) 10:00
a.m. (Chicago time) on the proposed Borrowing Date, in the case of
an Absolute Rate Auction (or, in either case upon reasonable prior
notice to the Lenders, such other time and date as the Borrower and
the Agent may agree), the Borrower shall notify the Agent of its
acceptance or rejection of the offers so notified to it pursuant to
Section 2.3.5; provided, however, that the failure by the Borrower
to give such notice to the Agent shall be deemed to be a rejection
of all such offers. In the case of acceptance, such notice (a
"Competitive Bid Borrowing Notice") shall specify the aggregate
principal amount of offers for each Interest Period that are
accepted. The Borrower may accept any Competitive Bid Quote in
whole or in part (subject to the terms of Section 2.3.4(ii)(d));
provided that:
(a) the aggregate principal amount of each Competitive Bid
Advance may not exceed the applicable amount set forth in the
related Competitive Bid Quote Request,
(b) acceptance of offers may only be made on the basis of
ascending Eurodollar Bid Rates or Absolute Rates, as the case
may be and
(c) the Borrower may not accept any offer that is described in
Section 2.3.4(iii) or that otherwise fails to comply with the
requirements of this Agreement.
2.3.7. Allocation by Agent. If offers are made by two or more Lenders with
the same Eurodollar Bid Rates or Absolute Rates, as the case may
be, for a greater aggregate principal amount than the amount in
respect of which offers are accepted for the related Interest
Period, the principal amount of Competitive Bid Loans in respect of
which such offers are accepted shall be allocated by the Agent
among such Lenders as nearly as possible (in such multiples, not
greater than $1,000,000, as the Agent may deem appropriate) in
proportion to the aggregate principal amount of such offers;
provided, however, that no Lender shall be allocated a portion of
any Competitive Bid Advance which is less than the minimum amount
which such Lender has indicated that it is willing to accept.
Allocations by the Agent of the amounts of Competitive Bid Loans
shall be conclusive in the absence of manifest error. The Agent
shall promptly, but in any event on the same Business Day, notify
each Lender of its receipt of a Competitive Bid Borrowing Notice
and the aggregate principal amount of such Competitive Bid Advance
allocated to each participating Lender.
2.4. Swing Line Loans. In addition to Advances pursuant to Section
2.1.1, but subject to the terms and conditions of this Agreement
(including but not limited to those limitations set forth in
Section 2.1.2 as to the maximum aggregate principal amount of all
outstanding Advances hereunder), the Swing Line Bank agrees to make
Swing Line Loans to the Borrower in accordance with this Section
2.4 up to the amount of the Swing Line Commitment. Amounts borrowed
under this Section 2.4 may be borrowed, repaid and reborrowed to,
but not including, the Termination Date. All outstanding Swing Line
Loans shall be paid in full on the Termination Date.
2.4.1. Swing Line Request. The Borrower may request a Swing Line Loan from
the Swing Line Bank on any Business Day before the Termination Date
by giving the Agent and the Swing Line Bank notice by 12:00 noon
(Chicago time) on such Borrowing Date specifying the aggregate
amount of such Swing Line Loan, which shall be an amount not less
than $100,000. The Agent shall promptly notify each Lender of such
request. Each Swing Line Loan shall bear interest at the Swing Line
Rate.
2.4.2. Making of Swing Line Loans. The Swing Line Bank shall, no later
than 2:00 p.m. (Chicago time) on such Borrowing Date, make the
funds for such Swing Line Loan available to the Borrower at the
Agent's address or at such other place as indicated in written
money transfer instructions from the Borrower in form and substance
satisfactory to the Swing Line Bank.
2.4.3. Swing Line Note. The Swing Line Loans shall be evidenced by the
Swing Line Note and each Swing Line Loan shall be paid in full by
the Borrower on or before the fifth Business Day after the
Borrowing Date for such Swing Line Loan.
2.4.4. Repayment of Swing Line Loans. The Borrower may at any time pay,
without penalty or premium, all outstanding Swing Line Loans, or,
in a minimum amount of $100,000, any portion of the outstanding
Swing Line Loans upon notice to the Agent and the Swing Line Bank.
In addition, the Agent shall: (i) at any time at the request of the
Swing Line Bank and (ii) on the fifth Business Day after the
Borrowing Date for such Swing Line Loan, require the Lenders
(including First Chicago) to make a Ratable Advance bearing
interest at the Floating Rate in an amount up to the amount of
Swing Line Loans outstanding on such date for the purpose of
repaying Swing Line Loans; provided, however, that the obligation
of each Lender to make any such Advance is subject to the condition
that the Swing Line Bank believed in good faith that all conditions
under Section 4.2 were satisfied at the time the Swing Line Loan
was made. If the Swing Line Bank receives notice from any Lender
that a condition under Section 4.2 has not been satisfied, no Swing
Line Loans shall be made until (a) such notice is withdrawn by that
Lender or (b) the Required Lenders have waived satisfaction of any
such condition. The Lenders shall deliver the proceeds of such
Ratable Advance to the Agent by 12:00 noon (Chicago time) on the
applicable Borrowing Date for application to the Swing Line Bank's
outstanding Swing Line Loans. Subject to the proviso contained in
the second sentence of this Section 2.4.4, each Lender's obligation
to make available its proportionate share of the Ratable Advance
referred to in this Section shall be absolute and unconditional and
shall not be affected by any circumstance, including without
limitation, (i) any set-off, counterclaim, recoupment, defense or
other right which such Lender may have against the Swing Line Bank
or anyone else, (ii) the occurrence or continuance of a Default or
Unmatured Default, (iii) any adverse change in the condition
(financial or otherwise) of the Borrower, (iv) any termination of
the Commitments or (v) any other circumstance, happening or event
whatsoever. If for any reason a Lender does not make available its
proportionate share of the foregoing Ratable Advance, such Lender
shall be deemed to have unconditionally and irrevocably purchased
from the Swing Line Bank, without recourse or warranty, an
undivided interest and participation in each Swing Line Loan then
being repaid, equal to its proportionate share of all such Swing
Line Loans being repaid, so long as such purchase would not cause
such Lender to exceed its Commitment. If any portion of any amount
paid (or deemed paid) to the Agent should be recovered by or on
behalf of the Borrower from the Agent in bankruptcy or otherwise,
the loss of the amount so recovered shall be shared ratably among
all Lenders.
2.5. Method of Borrowing. Not later than noon (Chicago time) on each
Borrowing Date, each Lender shall make available its Loan or Loans,
in funds immediately available in Chicago to the Agent at its
address specified pursuant to Article XIII. The Agent will make the
funds so received from the Lenders available to the Borrower at the
Agent's aforesaid address. Notwithstanding the foregoing provisions
of this Section 2.5, to the extent that a Loan made by a Lender
matures on the Borrowing Date of a requested Loan, such Lender
shall apply the proceeds of the Loan it is then making to the
repayment of principal of the maturing Loan.
2.6. Facility Fee; Reduction in Aggregate Commitment. The Borrower
agrees to pay to the Agent for the account of each Lender a
facility fee equal to the Facility Fee Rate on the average daily
amount of such Lender's Commitment (whether used or unused) from
the date hereof to and including the Termination Date, payable on
each Payment Date hereafter and on the Termination Date. The
Borrower may permanently reduce the Aggregate Commitment in whole,
or in part ratably among the Lenders in integral multiples of
$5,000,000, upon at least three Business Days' written notice to
the Agent, which notice shall specify the amount of any such
reduction; provided, however, that the amount of the Aggregate
Commitment may not be reduced below the aggregate principal amount
of the outstanding Advances. All accrued facility fees shall be
payable on the effective date of any termination of the obligations
of the Lenders to make Loans hereunder.
2.7. Minimum Amount of Each Advance. Each Eurodollar Ratable Advance
shall be in the minimum amount of $3,500,000 (and in multiples of
$100,000 if in excess thereof), and each Floating Rate Advance
shall be in the minimum amount of $1,000,000 (and in multiples of
$100,000 if in excess thereof); provided, however, that any
Floating Rate Advance may be in the amount of the unused Aggregate
Commitment. Each Competitive Bid Advance shall be in the minimum
amount of $5,000,000 (and in multiples of $1,000,000 if in excess
thereof). The Borrower shall not request a Fixed Rate Advance if,
after giving effect to the requested Fixed Rate Advance, more than
twelve separate Fixed Rate Advances would be outstanding.
2.8. Optional Principal Payments. The Borrower may from time to time
pay, without penalty or premium, all outstanding Floating Rate
Advances, or, in a minimum aggregate amount of $1,000,000 or any
integral multiple of $100,000 in excess thereof, any portion of the
outstanding Floating Rate Advances. The Borrower may from time to
time pay all (but not less than all) of a Eurodollar Ratable
Advance upon five Business Days' prior notice to the Agent, without
penalty or premium, but subject to any funding indemnification as
provided in Section 3.4. A Competitive Bid Loan may not be paid
prior to the last day of the applicable Interest Period.
2.9. Changes in Interest Rate, etc. Each Floating Rate Advance shall
bear interest on the outstanding principal amount thereof, for each
day from and including the date such Advance is made or is
converted from a Fixed Rate Advance into a Floating Rate Advance
pursuant to Section 2.2.4 to but excluding the date it becomes due
or is converted into a Fixed Rate Advance pursuant to Section 2.2.4
hereof, at a rate per annum equal to the Floating Rate for such
day. Changes in the rate of interest on that portion of any Advance
maintained as a Floating Rate Advance will take effect
simultaneously with each change in the Alternate Base Rate. Each
Fixed Rate Advance shall bear interest on the outstanding principal
amount thereof from and including the first day of the Interest
Period applicable thereto to (but not including) the last day of
such Interest Period at the interest rate determined as applicable
to such Fixed Rate Advance. No Interest Period may end after the
Termination Date.
2.10. Rates Applicable After Default. Notwithstanding anything to the
contrary contained in Section 2.2.3 or Section 2.2.4, during the
continuance of an Unmatured Default under Section 7.2, 7.6 or 7.7
or any Default the Required Lenders may, at their option, by notice
to the Borrower (which notice may be revoked at the option of the
Required Lenders notwithstanding any provision of Section 8.2
requiring unanimous consent of the Lenders to changes in interest
rates), declare that no Ratable Advance may be made as, converted
into or continued as a Fixed Rate Advance. During the continuance
of a Default, the Required Lenders may, at their option, by notice
to the Borrower (which notice may be revoked at the option of the
Required Lenders notwithstanding any provision of Section 8.2
requiring unanimous consent of the Lenders to changes in interest
rates), declare that (i) each Fixed Rate Advance shall bear
interest for the remainder of the applicable Interest Period at the
rate otherwise applicable to such Interest Period plus 2% per annum
and (ii) each Floating Rate Advance shall bear interest at a rate
per annum equal to the Floating Rate otherwise applicable to the
Floating Rate Advance plus 2% per annum.
2.11. Method of Payment. All payments of the Obligations hereunder shall
be made, without setoff, deduction, or counterclaim, in immediately
available funds to the Agent at the Agent's address specified
pursuant to Article XIII, or at any other Lending Installation of
the Agent specified in writing by the Agent to the Borrower, by
noon (Chicago time) on the date when due and shall be applied
ratably by the Agent among the Lenders. Each payment delivered to
the Agent for the account of any Lender shall be delivered promptly
by the Agent to such Lender in the same type of funds that the
Agent received at its address specified pursuant to Article XIII or
at any Lending Installation specified in a notice received by the
Agent from such Lender. The Agent is hereby authorized to charge
the account of the Borrower maintained with First Chicago for each
payment of principal, interest and fees as it becomes due
hereunder.
2.12. Notes; Telephonic Notices. Each Lender is hereby authorized to
record on the schedule attached to its Note, or otherwise record in
accordance with its usual practice, the date and amount of each of
its Loans evidenced by such Note; provided, however, that neither
the failure to so record nor any error in such recordation shall
affect the Borrower's obligations under any such Note. The Borrower
hereby authorizes the Lenders and the Agent to extend, convert or
continue Advances, effect selections of Rate Options, submit
Competitive Bid Quotes and to transfer funds based on telephonic
notices made by any person or persons the Agent or any Lender in
good faith believes to be acting on behalf of the Borrower. The
Borrower agrees to deliver promptly to the Agent a written
confirmation, if such confirmation is requested by the Agent or any
Lender, of each telephonic notice signed by an Authorized Officer.
If the written confirmation differs in any material respect from
the action taken by the Agent and the Lenders, the records of the
Agent and the Lenders shall govern absent manifest error.
2.13. Interest Payment Dates; Interest and Fee Basis. Interest accrued on
each Floating Rate Advance shall be payable on each Payment Date,
commencing with the first such date to occur after the date hereof,
on any date on which the Floating Rate Advance is prepaid, whether
due to acceleration or otherwise, and at maturity. Interest accrued
on that portion of the outstanding principal amount of any Floating
Rate Advance converted into a Eurodollar Ratable Advance on a day
other than a Payment Date shall be payable on the next Payment
Date. Interest accrued on each Fixed Rate Advance shall be payable
on the last day of its applicable Interest Period, on any date on
which the Fixed Rate Advance is prepaid, whether by acceleration or
otherwise, and at maturity. Interest accrued on each Fixed Rate
Advance having an Interest Period longer than three months shall
also be payable on the last day of each three-month interval during
such Interest Period. Interest and commitment fees shall be
calculated for actual days elapsed on the basis of a 360-day year.
Interest shall be payable for the day an Advance is made but not
for the day of any payment on the amount paid if payment is
received prior to noon (Chicago time) at the place of payment. If
any payment of principal of or interest on an Advance shall become
due on a day which is not a Business Day, such payment shall be
made on the next succeeding Business Day and, in the case of a
principal payment, such extension of time shall be included in
computing interest in connection with such payment.
2.14. Notification of Advances, Interest Rates, Prepayments and
Commitment Reductions. Promptly after receipt thereof, the Agent
will notify each Lender of the contents of each Aggregate
Commitment reduction notice, Ratable Borrowing Notice, Rate Option
Notice, Competitive Bid Borrowing Notice, and repayment notice
received by it hereunder. The Agent will notify each Lender of the
interest rate applicable to each Fixed Rate Advance promptly upon
determination of such interest rate and will give each Lender
prompt notice of each change in the Alternate Base Rate.
2.15. Lending Installations. Each Lender may book its Loans at any
Lending Installation selected by such Lender and may change its
Lending Installation from time to time. All terms of this Agreement
shall apply to any such Lending Installation and the Notes shall be
deemed held by each Lender for the benefit of such Lending
Installation. Each Lender may, by written or telex notice to the
Agent and the Borrower, designate a Lending Installation through
which Loans will be made by it and for whose account Loan payments
are to be made.
2.16. Non-Receipt of Funds by the Agent. Unless the Borrower or a Lender,
as the case may be, notifies the Agent prior to the date on which
it is scheduled to make payment to the Agent of (i) in the case of
a Lender, the proceeds of a Loan or (ii) in the case of the
Borrower, a payment of principal, interest or fees to the Agent for
the account of the Lenders, that it does not intend to make such
payment, the Agent may assume that such payment has been made. The
Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such
assumption. If such Lender or the Borrower, as the case may be, has
not in fact made such payment to the Agent, the recipient of such
payment shall, on demand by the Agent, repay to the Agent the
amount so made available together with interest thereon in respect
of each day during the period commencing on the date such amount
was so made available by the Agent until the date the Agent
recovers such amount at a rate per annum equal to (i) in the case
of payment by a Lender, the Federal Funds Effective Rate for such
day or (ii) in the case of payment by the Borrower, the interest
rate applicable to the relevant Loan.
2.17. Increases to Commitments. (a) The Borrower may, at any time and
from time to time, by notice to the Agent, request that the
aggregate amount of the Commitments be increased by an amount not
to exceed $30,000,000 in excess of the aggregate amount of the
Commitments as of the date of this Agreement (each, a "Commitment
Increase") to be effective as of a date (the "Increase Date")
specified in the related notice to the Agent that is (i) prior to
the scheduled Termination Date and (ii) at least 15 Business Days
after the date of such notice; provided, however, that (1) in no
event shall the aggregate amount of the Commitments at any time
exceed $80,000,000 without the consent of all Lenders, (2) no
Default or Unmatured Default shall have occurred and be continuing
as of the date of such request or as of the applicable Increase
Date, or shall occur as a result of the Commitment Increase, (3)
the Borrower may not request a Commitment Increase of less than
$10,000,000 and (4) the Borrower may not request a Commitment
Increase more than once in any period of six consecutive months.
(b) The Agent shall promptly notify the Lenders of the request by
the Borrower for the Commitment Increase, which notice shall
include (A) the proposed amount of the requested Commitment
Increase, (B) the proposed Increase Date and (C) the date by
which Lenders wishing to participate in the Commitment
Increase must commit to an increase in the amount of their
respective Commitments (the "Commitment Date"), which date
shall be no later than five Business Days prior to the
Increase Date.
(c) Each Lender that is willing to participate in such requested
Commitment Increase (each, an "Increasing Lender") shall give
written notice to the Agent no later than 10:00 a.m. (Chicago
time) on the Commitment Date of the amount by which it is
willing to increase its Commitment, which amount shall not
exceed the amount of the requested Commitment Increase. It
shall be in each Lender's sole discretion whether to offer to
increase its Commitment in connection with the proposed
Commitment Increase. If the Lenders notify the Agent that
they are willing to increase the amount of their respective
Commitments by an aggregate amount that exceeds the amount of
the requested Commitment Increase, the Commitment Increase
shall be allocated among the Lenders willing to participate
therein in the manner specified by the Borrower and the
Agent.
(d) Promptly following the Commitment Date, the Agent shall
notify the Borrower as to the amount, if any, by which the
Lenders are willing to participate in the requested
Commitment Increase. If the aggregate amount by which the
Lenders are willing to participate in the requested
Commitment Increase on the Commitment Date is less than the
requested Commitment Increase, then the Borrower may extend
offers to one or more financial institutions acceptable to
the Agent and willing to participate in any portion of the
requested Commitment Increase that has not been committed to
by the Lenders on the Commitment Date; provided, however,
that the Commitment of each such financial institution shall
be in a minimum aggregate amount of the lesser of (x)
$5,000,000 or (y) the remaining uncommitted amount of the
requested Commitment Increase.
(e) On the Increase Date, each financial institution that accepts
an offer to participate in the requested Commitment Increase
as a Lender in accordance with Section 2.17(d) shall become a
Lender party to this Agreement as of the Increase Date (each
a "New Lender") and the Commitment of each Increasing Lender
for the requested Commitment Increase shall be increased as
of the Increase Date by the amount set forth in its notice
delivered to the Agent in accordance with Section 2.17(c) (or
by the amount allocated to such Lender pursuant to the last
sentence of Section 2.17(c)); provided, however, that the
Agent shall have received on or before noon (Chicago time) on
the Increase Date the following, each dated such date, and in
sufficient copies for each Lender:
(i) (A) a certificate of a duly authorized officer of the
Borrower stating that no Default or Unmatured Default
has occurred and is continuing, or would result from
the Commitment Increase, (B) certified copies of
resolutions of the board of directors of the Borrower
approving the Commitment Increase and the corresponding
modifications to this Agreement and the Notes, (C)
opinions of counsel to the Borrower, in form and
substance reasonably satisfactory to the Agent and (D)
such other approvals, opinions or documents as any
Lender through the Agent may reasonably request in
connection with the Commitment Increase;
(ii) a counterpart of this Agreement duly executed by each
New Lender; and
(iii) confirmation from each Increasing Lender of the
increase in the amount of its Commitment, in a writing
satisfactory to the Borrower and the Agent.
(f) On the Increase Date, upon fulfillment of the conditions set
forth in Section 2.17(e), the Agent shall notify the Lenders
and the Borrower, on or before 1:00 p.m. (Chicago time), by
facsimile of the occurrence of the Commitment Increase to be
effected on the Increase Date. Each Increasing Lender and
each New Lender shall, before 2:00 p.m. (Chicago time) on the
Increase Date, make available to the Agent in immediately
available funds, (A) in the case of any New Lender, an amount
equal to such New Lender's ratable portion of the Ratable
Advances then outstanding (calculated based on the
relationship its Commitment bears to the Aggregate Commitment
after giving effect to the Commitment Increase) and (B) in
the case of any Increasing Lender, an amount equal to the
excess of (1) such Increasing Lender's ratable portion of the
Ratable Advances then outstanding (calculated based on the
relationship its Commitment bears to the Aggregate Commitment
after giving effect to the relevant Commitment Increase) over
(2) such Increasing Lender's ratable portion of the Loans
then outstanding (calculated based on the relationship its
Commitment bears to the Aggregate Commitment without giving
effect to the relevant Commitment Increase). After the
Agent's receipt of such funds from each such Increasing
Lender and each such New Lender, the Agent will promptly
thereafter cause to be distributed like funds to the other
Lenders in an amount to each other Lender such that the
aggregate amount owing to each Lender after giving effect to
such distribution equals such Lender's ratable share of the
Ratable Advances then outstanding (calculated after giving
effect to the Commitment Increase). If the Increase Date
shall occur on a date that is not the last day of the
Interest Period for all Eurodollar Ratable Advances then
outstanding, (x) the Borrower shall pay any amounts owing
pursuant to Section 3.4 to any Lender whose proportionate
share of any outstanding Eurodollar Ratable Advance is
decreased as a result of the distributions to Lenders under
this Section 2.17(f) and (y) for each outstanding Eurodollar
Ratable Advance the respective Ratable Loans made by the
Increasing Lenders and the New Lenders pursuant to this
Section 2.17(f) shall be deemed to be funded at the
applicable Eurodollar Rate for such Advance.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1. Yield Protection. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive
(whether or not having the force of law), or any interpretation
thereof, or the compliance of any Lender therewith,
(i) subjects any Lender or any applicable Lending Installation to
any tax, duty, charge or withholding on or from payments due
from the Borrower (excluding federal taxation of the overall
net income of any Lender or applicable Lending Installation),
or changes the basis of taxation of payments to any Lender in
respect of its Loans or other amounts due it hereunder, or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender or any
applicable Lending Installation (other than reserves and
assessments taken into account in determining the interest
rate applicable to Fixed Rate Advances), or
(iii) imposes any other condition the result of which is to
increase the cost to any Lender or any applicable Lending
Installation of making, funding or maintaining loans or
reduces any amount receivable by any Lender or any applicable
Lending Installation in connection with loans, or requires
any Lender or any applicable Lending Installation to make any
payment calculated by reference to the amount of loans held
or interest received by it, by an amount deemed material by
such Lender,
then, within 30 days of demand by such Lender, the Borrower shall
pay such Lender that portion of such increased expense incurred or
reduction in an amount received which such Lender determines is
attributable to making, funding and maintaining its Loans and its
Commitment; provided that the Borrower shall not be obligated to
pay any such amount or amounts (i) unless such Lender shall have
first notified the Borrower in writing that it intends to seek
compensation pursuant to this Section and (ii) which are
attributable to any period of time occurring more than 45 days
prior to the date of receipt by the Borrower of the notice provided
for in the preceding clause (i).
3.2. Changes in Capital Adequacy Regulations. If a Lender determines the
amount of capital required or expected to be maintained by such
Lender, any Lending Installation of such Lender or any corporation
controlling such Lender is increased as a result of a Change, then,
within 30 days of demand by such Lender, the Borrower shall pay
such Lender the amount necessary to compensate for any shortfall in
the rate of return on the portion of such increased capital which
such Lender determines is attributable to this Agreement, its Loans
or its obligation to make Loans hereunder (after taking into
account such Lender's policies as to capital adequacy); provided
that the Borrower shall not be obligated to pay any such amount or
amounts (i) unless such Lender shall have first notified the
Borrower in writing that it intends to seek compensation pursuant
to this Section and (ii) which are attributable to any period of
time occurring more than 45 days prior to the date of receipt by
the Borrower of the notice provided for in the preceding clause
(i). "Change" means (i) any change after the date of this Agreement
in the Risk-Based Capital Guidelines or (ii) any adoption of or
change in any other law, governmental or quasi-governmental rule,
regulation, policy, guideline, interpretation, or directive
(whether or not having the force of law) after the date of this
Agreement which affects the amount of capital required or expected
to be maintained by any Lender or any Lending Installation or any
corporation controlling any Lender. "Risk-Based Capital Guidelines"
means (i) the risk-based capital guidelines in effect in the United
States on the date of this Agreement, including transition rules,
and (ii) the corresponding capital regulations promulgated by
regulatory authorities outside the United States implementing the
July 1988 report of the Basle Committee on Banking Regulation and
Supervisory Practices Entitled "International Convergence of
Capital Measurements and Capital Standards," including transition
rules, and any amendments to such regulations adopted prior to the
date of this Agreement.
3.3. Availability of Certain Advances. If any Lender determines that
maintenance of any of its Fixed Rate Advances at suitable Lending
Installation would violate any applicable law, rule, regulation or
directive, whether or not having the force of law, the Agent shall
suspend the availability of Eurodollar Ratable Advances (if
Eurodollar Ratable Advances would be causing the violation) and
require any Fixed Rate Advances of the affected type to be repaid;
or if the Required Lenders determine that (i) deposits of a type or
maturity appropriate to match fund Eurodollar Ratable Advances are
not available, the Agent shall suspend the availability of
Eurodollar Ratable Advances which are to be made or continued after
the date of such determination, or (ii) the Eurodollar Rate does
not accurately reflect the cost of making a Eurodollar Ratable
Advance, then the Agent shall suspend the availability of
Eurodollar Ratable Advances which are to be made or continued after
the date of such determination.
3.4. Funding Indemnification. If any payment of a Fixed Rate Advance
occurs on a date which is not the last day of the applicable
Interest Period, whether because of acceleration, prepayment or
otherwise, or a Fixed Rate Advance is not made on the date
specified by the Borrower for any reason other than default by the
Lenders, the Borrower will indemnify each Lender for any loss or
cost incurred by it resulting therefrom, including, without
limitation, any loss or cost in liquidating or employing deposits
acquired to fund or maintain the Fixed Rate Advance, as set forth
in such Lender's written claim therefor under Section 3.5.
3.5. Lender Statements; Survival of Indemnity. To the extent reasonably
possible, each Lender shall designate an alternate Lending
Installation with respect to its Fixed Rate Loans to reduce any
liability of the Borrower to such Lender under Sections 3.1 and 3.2
or to avoid the unavailability of a Rate Option under Section 3.3,
so long as such designation is not disadvantageous to such Lender.
Each Lender shall deliver a written statement of such Lender to the
Borrower (with a copy to the Agent) as to the amount due, if any,
under Section 3.1, 3.2 or 3.4. Such written statement shall set
forth in reasonable detail the calculations upon which such Lender
determined such amount and shall be final, conclusive and binding
on the Borrower in the absence of manifest error. Determination of
amounts payable under such Sections in connection with a Fixed Rate
Loan shall be calculated as though each Lender funded its Fixed
Rate Loan through the purchase of a deposit of the type and
maturity corresponding to the deposit used as a reference in
determining the Fixed Rate applicable to such Loan, whether in fact
that is the case or not. Unless otherwise provided herein, the
amount specified in the written statement of any Lender shall be
payable on demand after receipt by the Borrower of such written
statement. The obligations of the Borrower under Sections 3.1, 3.2
and 3.4 shall survive payment of the Obligations and termination of
this Agreement.
3.6. Replacement Lenders. If any Lender either makes a demand for
compensation pursuant to Section 3.1 or Section 3.2, or is unable
to fund a Eurodollar Ratable Loan at the Eurodollar Rate or
determines that such rate is unavailable or does not accurately
reflect its cost of making or maintaining a Eurodollar Ratable Loan
pursuant to Section 3.3, then the Borrower may require and have
such Lender transfer, pursuant to and in accordance with Section
12.3, all of its rights and obligations under the Credit Documents
to one or more Purchasers selected by the Borrower, consented to by
the Agent (such consent not to be unreasonably withheld), and
willing to accept such assignment. No such assignment shall affect
(a) any liability or obligation of the Borrower or any other Lender
to such replaced Lender, which accrued on or prior to the date of
such assignment or (b) such replaced Lender's rights or obligations
hereunder in respect of any such liability or obligation.
ARTICLE IV
CONDITIONS PRECEDENT; WITHHOLDING TAX EXEMPTION
4.1. Initial Advance. The Lenders shall not be required to make the
initial Advance hereunder unless the Borrower has furnished to the
Agent with sufficient copies for the Lenders:
(i) Copies of the articles of incorporation of the Borrower,
together with all amendments, and a certificate of good
standing, both certified by the appropriate governmental
officer in its jurisdiction of incorporation.
(ii) Copies, certified by the Secretary or Assistant Secretary of
the Borrower, of its by-laws and of its Board of Directors'
resolutions (and resolutions of other bodies, if any are
deemed necessary by counsel for any Lender) authorizing the
execution of the Loan Documents.
(iii) An incumbency certificate, executed by the Secretary or
Assistant Secretary of the Borrower, which shall identify by
name and title and bear the signature of the officers of the
Borrower authorized to sign the Loan Documents and to make
borrowings hereunder, upon which certificate the Agent and
the Lenders shall be entitled to rely until informed of any
change in writing by the Borrower.
(iv) A certificate, signed by an Authorized Officer of the
Borrower, stating that on the initial Borrowing Date no
Default or Unmatured Default has occurred and is continuing.
(v) A written opinion of the Borrower's counsel, addressed to the
Lenders in substantially the form of Exhibit "F" hereto.
(vi) Notes payable to the order of each of the Lenders.
(vii) Written money transfer instructions, in substantially the
form of Exhibit "I" hereto, addressed to the Agent and signed
by an Authorized Officer, together with such other related
money transfer authorizations as the Agent may have
reasonably requested.
(viii) Such other documents as any Lender or its counsel may have
reasonably requested.
4.2. Each Advance. The Lenders shall not be required to make any Advance
(other than an Advance consisting solely of a conversion or
continuation of an existing borrowing as set forth in Section
2.2.4), unless on the applicable Borrowing Date:
(i) There exists no Default or Unmatured Default.
(ii) The representations and warranties contained in Article V are
true and correct as of such Borrowing Date except to the
extent any such representation or warranty is stated to
relate solely to an earlier date, in which case such
representation or warranty shall be true and correct on and
as of such earlier date.
(iii) All legal matters incident to the making of such Advance
shall be satisfactory to the Lenders and their counsel.
Each Ratable Borrowing Notice, Competitive Bid Quote Request or
request for a Swing Line Loan under Section 2.4.1 with respect to
each such Advance shall constitute a representation and warranty by
the Borrower that the conditions contained in Sections 4.2(i) and
(ii) have been satisfied.
4.3. Withholding Tax Exemption. At least five Business Days prior to the
first date on which interest or fees are payable hereunder for the
account of any Lender, each Lender that is not incorporated under
the laws of the United States of America, or a state thereof,
agrees that it will deliver to each of the Borrower and the Agent
two duly completed copies of United States Internal Revenue Service
Form 1001 or 4224, certifying in either case that such Lender is
entitled to receive payments under this Agreement and the Notes
without deduction or withholding of any United States federal
income taxes. Each Lender which so delivers a Form 1001 or 4224
further undertakes to deliver to each of the Borrower and the Agent
two additional copies of such form (or a successor form) on or
before the date that such form expires (currently, three successive
calendar years for Form 1001 and one calendar year for Form 4224)
or becomes obsolete or after the occurrence of any event requiring
a change in the most recent forms so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be
reasonably requested by the Borrower or the Agent, in each case
certifying that such Lender is entitled to receive payments under
this Agreement and the Notes without deduction or withholding of
any United States federal income taxes, unless an event (including
without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or
which would prevent such Lender from duly completing and delivering
any such form with respect to it and such Lender advises the
Borrower and the Agent that it is not capable of receiving payments
without any deduction or withholding of United States federal
income tax.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
5.1. Corporate Existence and Standing. Each of the Borrower and its
Subsidiaries is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of
incorporation and has all requisite authority to conduct its
business in each jurisdiction in which its business is conducted.
5.2. Authorization and Validity. The Borrower has the corporate power
and authority and legal right to execute and deliver the Loan
Documents and to perform its obligations thereunder. The execution
and delivery by the Borrower of the Loan Documents and the
performance of its obligations thereunder have been duly authorized
by proper corporate proceedings, and the Loan Documents constitute
legal, valid and binding obligations of the Borrower enforceable
against the Borrower in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally.
5.3. No Conflict; Government Consent. Neither the execution and delivery
by the Borrower of the Loan Documents, nor the consummation of the
transactions therein contemplated, nor compliance with the
provisions thereof will violate any law, rule, regulation, order,
writ, judgment, injunction, decree or award binding on the Borrower
or any of its Subsidiaries or the Borrower's or any Subsidiary's
articles of incorporation or by-laws or the provisions of any
indenture, instrument or agreement to which the Borrower or any of
its Subsidiaries is a party or is subject, or by which it, or its
Property, is bound, or conflict with or constitute a default
thereunder, or result in the creation or imposition of any Lien in,
of or on the Property of the Borrower or a Subsidiary pursuant to
the terms of any such indenture, instrument or agreement. No order,
consent, approval, license, authorization, or validation of, or
filing, recording or registration with, or exemption by, or other
action in respect of any governmental or public body or authority,
or any subdivision thereof, is required to authorize, or is
required in connection with the execution, delivery and performance
of, or the legality, validity, binding effect or enforceability of,
any of the Loan Documents.
5.4. Financial Statements. The January 31, 1997 consolidated financial
statements of the Borrower and its Subsidiaries heretofore
delivered to the Lenders were prepared in accordance with generally
accepted accounting principles in effect on the date such
statements were prepared and fairly present the consolidated
financial condition and operations of the Borrower and its
Subsidiaries at such date and the consolidated results of their
operations for the period then ended.
5.5. Material Adverse Change. Since January 31, 1997, there has been no
change in the business, Property, prospects, condition (financial
or otherwise) or results of operations of the Borrower and its
Subsidiaries which could reasonably be expected to have a Material
Adverse Effect.
5.6. Taxes. The Borrower and its Subsidiaries have filed all United
States federal tax returns and all other tax returns which are
required to be filed and have paid all taxes due pursuant to said
returns or pursuant to any assessment received by the Borrower or
any of its Subsidiaries, except such taxes, if any, as are being
contested in good faith and as to which adequate reserves have been
provided in accordance with Agreement Accounting Principles and as
to which no Lien exists. The United States income tax returns of
the Borrower and its Subsidiaries have been audited by the Internal
Revenue Service through the fiscal year ended January 31, 1994. No
tax liens have been filed and no claims are being asserted with
respect to any such taxes. The charges, accruals and reserves on
the books of the Borrower and its Subsidiaries in respect of any
taxes or other governmental charges are deemed by the Borrower to
be adequate.
5.7. Litigation and Contingent Obligations. There is no litigation,
arbitration, governmental investigation, proceeding or inquiry
pending or, to the knowledge of any of their officers, threatened
against or affecting the Borrower or any of its Subsidiaries which
could reasonably be expected to have a Material Adverse Effect or
which seeks to prevent, enjoin or delay the making of the Loans or
Advances. Other than any liability incident to such litigation,
arbitration or proceedings, the Borrower has no material contingent
obligations not provided for or disclosed in the financial
statements referred to in Section 5.4.
5.8. Subsidiaries. Schedule "1" hereto contains an accurate list of all
Subsidiaries of the Borrower as of the date of this Agreement,
setting forth their respective jurisdictions of incorporation and
the percentage of their respective capital stock owned by the
Borrower or other Subsidiaries. All of the issued and outstanding
shares of capital stock of such Subsidiaries have been duly
authorized and issued and are fully paid and non-assessable.
5.9. ERISA. Neither the Borrower nor any other member of the Controlled
Group has any liability to any Multiemployer Plan or Single
Employer Plan. Each Plan complies in all material respects with all
applicable requirements of law and regulations, no Reportable Event
has occurred with respect to any Plan, neither the Borrower nor any
other members of the Controlled Group has withdrawn from any Plan
or initiated steps to do so, and no steps have been taken to
reorganize or terminate any Plan.
5.10. Accuracy of Information. No information, exhibit or report
furnished by the Borrower or any of its Subsidiaries to the Agent
or to any Lender in connection with the negotiation of, or
compliance with, the Loan Documents contained any material
misstatement of fact or omitted to state a material fact or any
fact necessary to make the statements contained therein not
misleading.
5.11. Regulation U. Margin stock (as defined in Regulation U) constitutes
less than 25% of those assets of the Borrower and its Subsidiaries
which are subject to any limitation on sale, pledge, or other
restriction hereunder.
5.12. Material Agreements. Neither the Borrower nor any Subsidiary is a
party to any agreement or instrument or subject to any charter or
other corporate restriction which could reasonably be expected to
have a Material Adverse Effect. Neither the Borrower nor any
Subsidiary is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions
contained in any agreement to which it is a party, which default
could reasonably be expected to have a Material Adverse Effect.
5.13. Compliance With Laws. The Borrower and its Subsidiaries have
complied with all applicable statutes, rules, regulations, orders
and restrictions of any domestic or foreign government or any
instrumentality or agency thereof, having jurisdiction over the
conduct of their respective businesses or the ownership of their
respective Property if failure to comply could reasonably be
expected to have a Material Adverse Effect.
5.14. Ownership of Properties. Except as set forth on Schedule "2"
hereto, on the date of this Agreement, the Borrower and its
Subsidiaries will have good title, free of all Liens other than
those permitted by Section 6.15, to all of the Property and assets
reflected in the financial statements as owned by it.
5.15. Plan Assets; Prohibited Transactions. The Borrower is not an entity
deemed to hold "plan assets" within the meaning of 29 C.F.R. ss.
2510.3-101 of an employee benefit plan (as defined in Section 3(3)
of ERISA) which is subject to Title I of ERISA or any plan (within
the meaning of Section 4975 of the Code); and neither the execution
of this Agreement and the making of Loans hereunder do not give
rise to a prohibited transaction within the meaning of Section 406
of ERISA or Section 4975 of the Code.
5.16. Environmental Problems. In the ordinary course of its business, the
officers of the Borrower consider the effect of Environmental Laws
on the business of the Borrower and its Subsidiaries, in the course
of which they identify and evaluate potential risks and liabilities
accruing to the Borrower due to Environmental Laws. On the basis of
this consideration, the Borrower has reasonably concluded that
Environmental Laws cannot reasonably be expected to have a Material
Adverse Effect. Neither the Borrower nor any Subsidiary has
received any notice to the effect that its operations are not in
material compliance with any of the requirements of applicable
Environmental Laws or are the subject of any federal or state
investigation evaluating whether any remedial action is needed to
respond to a release of any toxic or hazardous waste or substance
into the environment, which non-compliance or remedial action could
reasonably be expected to have a Material Adverse Effect.
5.17. Investment Company Act. Neither the Borrower nor any Subsidiary
thereof is an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company
Act of 1940, as amended.
5.18. Public Utility Holding Company Act. Neither the Borrower nor any
Subsidiary is a "holding company" or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required Lenders
shall otherwise consent in writing:
6.1. Financial Reporting. The Borrower will maintain, for itself and
each Subsidiary, a system of accounting established and
administered in accordance with generally accepted accounting
principles, and furnish to each Lender:
(i) Within 90 days after the close of each of its fiscal years,
an unqualified audit report from independent auditors,
acceptable to the Lenders, prepared in accordance with
generally accepted accounting principles, applied on a
consistent basis, on a consolidated basis for itself and the
Subsidiaries, including balance sheets as of the end of such
period, together with related statements of income, changes
in stockholders' equity and cash flows. Upon receipt,
Borrower shall deliver to the Lenders any management letter
prepared by said accountants delivered in connection with
such audit report.
(ii) Within 45 days after the close of the first three quarterly
periods of each of its fiscal years, on a consolidated basis
for itself and the Subsidiaries, a consolidated unaudited
balance sheet as at the close of each such period together
with related statements of income and cash flows for the
period from the beginning of such fiscal year to the end of
such quarter, all certified by an Authorized Officer of the
Borrower.
(iii) Together with the financial statements required under
Sections 6.1(i) and (ii), a compliance certificate in
substantially the form of Exhibit "G" hereto signed by an
Authorized Officer of the Borrower showing the calculations
necessary to determine compliance with this Agreement and
stating that no Default or Unmatured Default exists, or if
any Default or Unmatured Default exists, stating the nature
and status thereof.
6.2. Other Information. The Borrower shall furnish to each Lender:
(i) As soon as possible and in any event within 10 days after the
Borrower knows that any Reportable Event has occurred with
respect to any Plan, a statement, signed by an Authorized
Officer of the Borrower, describing said Reportable Event and
the action which the Borrower proposes to take with respect
thereto.
(ii) As soon as possible and in any event within 10 days after
receipt by the Borrower, a copy of (a) any notice or claim to
the effect that the Borrower or any of its Subsidiaries is or
may be liable to any Person as a result of the release by the
Borrower, any of its Subsidiaries, or any other Person of any
toxic or hazardous waste or substance into the environment,
and (b) any notice alleging any violation of any federal,
state or local environmental, health or safety law or
regulation by the Borrower or any of its Subsidiaries, which,
in either case, could reasonably be expected to have a
Material Adverse Effect.
(iii) Promptly upon the furnishing thereof to the shareholders of
the Borrower, copies of all financial statements, reports and
proxy statements so furnished.
(iv) Promptly upon the filing thereof, definitive copies of all
registration statements (except for registration statements
on Form S-8) and periodic or special reports (including Forms
10-Q, 10-K and 8-K) which the Borrower or any of its
Subsidiaries files with the Securities and Exchange
Commission.
(v) Such other information (including non-financial information)
as the Agent or any Lender may from time to time reasonably
request.
6.3. Use of Proceeds. The Borrower will, and will cause each Subsidiary
to, use the proceeds of the Advances to fund working capital, for
general corporate purposes, to repay outstanding Advances and to
make Friendly Acquisitions. The Borrower will not, nor will it
permit any Subsidiary to, use any of the proceeds of the Advances
to purchase or carry any "margin stock" (as defined in Regulation
U).
6.4. Notice of Default. The Borrower will, and will cause each
Subsidiary to, give prompt notice in writing to the Lenders of the
occurrence of any Default or Unmatured Default and of any other
development, financial or otherwise, which could reasonably be
expected to have a Material Adverse Effect.
6.5. Conduct of Business. The Borrower will, and will cause each
Subsidiary to, (i) not engage in any business that would
substantially change the general nature of the business conducted
by the Borrower and its Subsidiaries on a consolidated basis on the
date hereof and (ii) do all things necessary to remain duly
incorporated, validly existing and in good standing as a domestic
corporation in its jurisdiction of incorporation and maintain all
requisite authority to conduct its business in each jurisdiction in
which its business is conducted.
6.6. Taxes. The Borrower will, and will cause each Subsidiary to, timely
file complete United States federal and applicable foreign, state
and local tax returns required by law and pay when due all taxes,
assessments and governmental charges and levies upon it or its
income, profits or Property, except those which are being contested
in good faith by appropriate proceedings and with respect to which
adequate reserves have been set aside in accordance with Agreement
Accounting Principles.
6.7. Insurance. The Borrower will, and will cause each Subsidiary to,
maintain with financially sound and reputable insurance companies
insurance on all their Property in such amounts and covering such
risks as is consistent with sound business practice, and the
Borrower will furnish to any Lender upon request certificates as to
the insurance carried.
6.8. Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply with all laws, rules, regulations, orders,
writs, judgments, injunctions, decrees or awards to which it may be
subject to extent that the failure to so comply would be reasonably
likely to have a Material Adverse Effect.
6.9. Maintenance of Properties. The Borrower will, and will cause each
Subsidiary to, do all things reasonably necessary to maintain,
preserve, protect and keep its Property in good repair, working
order and condition, and make all reasonably necessary and proper
repairs, renewals and replacements so that its business carried on
in connection therewith may be properly conducted at all times.
6.10. Inspection. The Borrower will, and will cause each Subsidiary to,
permit the Agent and the Lenders, by their respective
representatives and agents, to inspect any of the Property,
corporate books and financial records of the Borrower and each
Subsidiary, to examine and make copies of the books of accounts and
other financial records of the Borrower and each Subsidiary, and to
discuss the affairs, finances and accounts of the Borrower and each
Subsidiary with, and to be advised as to the same by, their
respective officers at such reasonable times during normal business
hours and intervals as the Lenders may designate.
6.11. Subsidiary Indebtedness. The Borrower will not permit any
Subsidiary to create, incur or suffer to exist any Indebtedness,
except:
(i) Unsecured Indebtedness in an amount not to exceed $25,000,000
at any one time outstanding.
(ii) Indebtedness secured by Liens permitted under Sections
6.15(viii) and (xi).
(iii) Indebtedness secured by Liens permitted under Section
6.15(xii).
6.12. Merger. The Borrower will not, nor will it permit any Subsidiary
to, merge or consolidate with or into any other Person, except that
a Subsidiary may merge into the Borrower or a Wholly-Owned
Subsidiary.
6.13. Sale of Assets. The Borrower will not, nor will it permit any
Subsidiary to, lease, sell or otherwise dispose of its Property
(collectively, "Dispositions"; the verb "Dispose" having a
correlative meaning), to any other Person, except:
(i) Dispositions of Property in the ordinary course of business
in accordance with the Borrower's past practice (it being
understood that it is the understanding of the parties that
the "ordinary course of business" of the Borrower for
purposes of this clause does not include, by way of example
and not of limitation, Dispositions of fixed assets (other
than obsolete or worn-out equipment), Subsidiaries or
business divisions or units or other material assets).
(ii) Dispositions of its Property that, together with all other
Property of the Borrower and its Subsidiaries previously
Disposed of (other than Dispositions referred to in clause
(i)) as permitted by this Section during the four fiscal
quarter period then most recently completed prior to the time
at which such Disposition occurs, do not constitute a
Substantial Portion of the Property of the Borrower and its
Subsidiaries unless the Borrower (x) provides the Agent with
at least 30 days' prior written notice of such Disposition
and (y) delivers a certificate to the Agent and each Lender
demonstrating compliance with Sections 6.16, 6.17 and 6.18 on
a pro forma basis for the four fiscal quarters of the
Borrower completed immediately prior to such Disposition
(assuming such Disposition had occurred at the beginning of
such period and any Indebtedness permanently repaid as a
result of such Disposition had been repaid at the beginning
of such period, using historical results for such period,
without giving effect to any adjustment for expected cost
savings or other synergies).
6.14. Investments and Acquisitions. The Borrower will not, nor will it
permit any Subsidiary to, make or suffer to exist any Investments
(including without limitation, loans and advances to, and other
Investments in, Subsidiaries), or commitments therefor, or to
create any Subsidiary or to become or remain a partner in any
partnership or joint venture, or to make any Acquisition of any
Person, except:
(i) Short-term obligations of, or fully guaranteed by, the United
States of America.
(ii) Commercial paper rated A-2 or better by Standard and Poor's
Ratings Group, a division of McGraw Hill, Inc. ("S&P") or P-2
or better by Moody's Investors Service, Inc. ("Moody's") or
as to which all payments of principal and interest thereon
are fully supported by a letter of credit issued by a bank
that has a short-term commercial paper rating of at least A-2
or its equivalent from S&P or P-2 or its equivalent from
Moody's.
(iii) Demand deposit accounts maintained in the ordinary course of
business.
(iv) Certificates of deposit and banker's acceptances issued by
and time deposits (including, without limitation, eurodollar
time deposits) with commercial banks (whether domestic or
foreign) having a short-term commercial paper rating of at
least A-2 or the equivalent thereof by S&P or P-2 or the
equivalent thereof by Moody's.
(v) Repurchase agreements with any Lender or any primary dealer
maturing within one year from the date of acquisition that
are fully collateralized by investment instruments of the
type specified in clause (i) above.
(vi) Existing Investments in Subsidiaries and other Investments in
existence on the date hereof and described in Schedule "1"
hereto.
(vii) Investments by Subsidiaries in the Borrower and Investments
by the Borrower or Subsidiaries in Wholly-Owned Subsidiaries
that are organized under the laws of the United States.
(viii)So long as no Default or Unmatured Default has occurred and
is continuing or would result therefrom, the Borrower and its
Subsidiaries may make Acquisitions; provided, however, that
(a) the Borrower and its Subsidiaries may not make any
Acquisition of assets located outside the United States, or
of a Person organized outside the United States, for a
consideration of $15,000,000 or more (in a single transaction
or in a series of related transactions) unless the Borrower
delivers a certificate to the Agent and each Lender
demonstrating compliance with Sections 6.16, 6.17 and 6.18 on
a pro forma basis for the four fiscal quarters of the
Borrower completed immediately prior to such Acquisition, (b)
the Borrower and its Subsidiaries may not make any
Acquisition of assets located in the United States of
America, or of a Person organized under the laws of the
United States (or any State thereof), for a consideration of
$25,000,000 or more (in a single transaction or a series of
related transactions) unless the Borrower delivers a
certificate to the Agent and each Lender demonstrating
compliance with Sections 6.16, 6.17 and 6.18 on a pro forma
basis for the four fiscal quarters of the Borrower completed
immediately prior to such Acquisition, (c) the Borrower and
its Subsidiaries may not make any Acquisition to the extent
that the aggregate consideration for all Acquisitions made in
a fiscal year of the Borrower would exceed $75,000,000 unless
the Borrower delivers a certificate to the Agent and the
Lenders demonstrating compliance with Sections 6.16, 6.17 and
6.18 on a pro forma basis for the four fiscal quarters
completed immediately prior to such Acquisition, (d) for
purposes of the foregoing clauses (a), (b) and (c),
"consideration" means all cash and non-cash consideration
paid, and liabilities assumed, by the Borrower or the
relevant Subsidiary with respect to the relevant Acquisition,
including, without limitation, noncompetition and other
similar payments, with securities valued at their face amount
and services or other property valued at their fair market
value, as determined by the board of directors of the
Borrower, acting in good faith and (e) for purposes of this
clause (viii), any pro forma covenant calculation for a
period shall assume the related Acquisition occurred (and all
related Indebtedness was incurred) at the beginning of such
period and shall use historical results of the Borrower and
its Subsidiaries and the relevant Acquisition prospect for
such period, without giving effect to any adjustment for
expected cost savings or other synergies.
(ix) Investments in (A) shares of preferred stock funds, money
market preferred stock and adjustable rate preferred stock,
in each case unconditionally redeemable at the option of the
holder at a redemption price equal to the holder's investment
plus accrued interest or dividends within 49 days of the date
of acquisition and (B) taxable or tax exempt bonds
unconditionally redeemable at the option of the holder at a
redemption price of par plus accrued interest within one year
from the date of acquisition; provided, that all Investments
under this clause (ix) must have received a short-term rating
from S&P or Moody's in such rating agency's highest
short-term rating category.
(x) Investments by the Borrower in Subsidiaries (other than
Wholly-Owned Subsidiaries and Subsidiaries organized under
the laws of the United States) in an amount not to exceed 10%
of Consolidated Total Assets at any one time outstanding.
(xi) Other Investments in an amount not to exceed 5% of
Consolidated Total Assets at any one time outstanding;
provided, that all such Investments under this clause (xi)
shall be in Persons engaged in the general nature of the
business conducted by the Borrower and its Subsidiaries on a
consolidated basis on the date hereof.
6.15. Liens. The Borrower will not, nor will it permit any Subsidiary to,
create, incur, or suffer to exist any Lien in, of or on the
Property of the Borrower or any of its Subsidiaries, except:
(i) Liens for taxes, assessments or governmental charges or
levies on its Property if the same shall not at the time be
delinquent or thereafter can be paid without penalty, or are
being contested in good faith and by appropriate proceedings
and for which adequate reserves in accordance with generally
accepted principles of accounting shall have been set aside
on its books.
(ii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the
ordinary course of business which secure payment of
obligations not more than 60 days past due or which are being
contested in good faith by appropriate proceedings and for
which adequate reserves shall have been set aside on its
books.
(iii) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions,
or other social security or retirement benefits, or similar
legislation.
(iv) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a
nature generally existing with respect to properties of a
similar character and which do not in any material way affect
the marketability of the same or interfere with the use
thereof in the business of the Borrower or the Subsidiaries.
(v) Liens existing on the date hereof and described in Schedule
"2" hereto.
(vi) Liens of or resulting from any judgments or awards in an
aggregate amount (disregarding any portion thereof covered by
independent third-party insurance as to which the insurer
does not dispute coverage) not exceeding $10,000,000, the
time for the appeal or petition for rehearing of which shall
not have expired, or in respect of which the Borrower or such
Subsidiary is prosecuting an appeal or proceeding for review.
(vii) Liens arising in the ordinary course of business in
connection with obligations that are not overdue or which are
being contested in good faith and by appropriate proceedings,
including, but not limited to, Liens under bid, performance
and other surety bonds, supersedeas and appeal bonds, Liens
on advance or progress payments received from customers under
contracts for the sale, lease or license of goods, software
or services and upon the products being sold or licensed, in
each case securing performance of the underlying contract or
the repayment of such advances in the event final acceptance
or performance under such contracts does not occur.
(viii)Purchase money security interests on any Property acquired or
held by the Borrower or its Subsidiaries in the ordinary
course of business, securing Indebtedness incurred or assumed
for the purpose of financing all or any part of the cost of
acquiring or constructing such Property; provided that (i)
any such Lien attaches to such Property concurrently with or
within 180 days after the acquisition or construction
thereof, (ii) such Lien attaches solely to the Property so
acquired or constructed in such transaction and (iii) the
principal amount of the Indebtedness secured thereby does not
exceed 100% of the cost of such Property; provided, further,
that the aggregate principal amount of Indebtedness secured
by Liens permitted by this clause (viii), plus the aggregate
principal amount of Indebtedness secured by Liens permitted
by clause (xi) of this Section 6.15, shall not exceed
$30,000,000 in the aggregate at any one time outstanding.
(ix) Liens arising solely by virtue of any statutory or common law
provision relating to bankers' liens, rights of set-off or
similar rights and remedies as to deposit accounts or other
funds maintained with a creditor depository institution.
(x) Any Lien on any asset acquired by the Borrower or any of its
Subsidiaries, which Lien existed at the time such asset was
acquired by the Borrower or any of its Subsidiaries or is
merged into or consolidated with the Borrower or any of its
Subsidiaries and not created in contemplation of such event,
and any extension, renewal or replacement Lien (any
"Replacement Lien") arising out of the extension, renewal or
replacement of the related Indebtedness secured by such Lien;
provided that (1) the aggregate unpaid principal amount of
such Indebtedness secured pursuant to this clause (x)
immediately preceding such extension, renewal or replacement
and (2) any such Replacement Lien shall attach solely to the
Property which was subject to a Lien immediately preceding
such extension, renewal or replacement.
(xi) Any retained interest of a lessor under Capitalized Leases;
provided, that the aggregate principal amount of Indebtedness
secured by Liens permitted by this clause (xi), plus the
aggregate principal amount of Indebtedness secured by Liens
permitted by clause (viii) of this Section 6.15, shall not
exceed $30,000,000 in the aggregate at any one time
outstanding.
(xii) In addition to the foregoing, Liens securing Indebtedness of
the Borrower and its Subsidiaries in an aggregate principal
amount not exceeding $5,000,000 at any one time outstanding.
6.16. Maximum Leverage Ratio. The Borrower shall not permit the Leverage
Ratio at the end of any fiscal quarter to be greater than 2.5 to 1.
6.17. Minimum Fixed Charge Coverage Ratio. The Borrower shall not permit
the Fixed Charge Coverage Ratio at the end of any fiscal quarter to
be less than 1.25 to 1.
6.18. Minimum Net Worth. The Borrower shall not permit its Net Worth at
any time to be less than the sum of (x) $125,000,000 plus (y) 50%
of the Borrower's cumulative consolidated net income from the date
of this Agreement to the date of determination (excluding any
fiscal quarter in which such consolidated net income was a loss).
6.19. Affiliates. The Borrower will not, and will not permit any
Subsidiary to, enter into any transaction (including, without
limitation, the purchase or sale of any Property or service) with,
or make any payment or transfer to, any Affiliate except in the
ordinary course of business and pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business and
upon fair and reasonable terms no less favorable to the Borrower or
such Subsidiary than the Borrower or such Subsidiary would obtain
in a comparable arms-length transaction.
6.20. Limitations on Restriction of Wholly-Owned Subsidiary Dividends and
Distributions. The Borrower will not, and will not permit any
Subsidiary to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction
on the ability of any Wholly-Owned Subsidiary to (a) pay dividends
or make other distributions on its capital stock owned by the
Borrower or any Wholly-Owned Subsidiary, or pay any Indebtedness
owed to the Borrower or any Wholly-Owned Subsidiary, (b) make loans
or advances to the Borrower or (c) transfer any of its Property to
the Borrower, except for such encumbrances or restrictions existing
by reason of or under applicable law.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall
constitute a Default:
7.1. Any representation or warranty made or deemed made by or on behalf
of the Borrower or any of its Subsidiaries to the Lenders or the
Agent under or in connection with this Agreement, any Loan, or any
certificate or information delivered in connection with this
Agreement or any other Loan Document shall be materially false on
the date as of which made.
7.2. Nonpayment of principal of any Note when due, or nonpayment of
interest upon any Note or of any commitment fee or other
obligations under any of the Loan Documents within five days after
the same becomes due.
7.3. The breach by the Borrower of any of the terms or provisions of
Section 6.3, 6.4, 6.5(i) or 6.10 through 6.20; or the breach by the
Borrower of any of the terms or provisions of Section 6.1 or 6.2
and such breach shall continue unremedied for a period of five days
after written notice from the Agent or any Lender.
7.4. The breach by the Borrower (other than a breach which constitutes a
Default under Section 7.1, 7.2 or 7.3) of any of the terms or
provisions of this Agreement which is not remedied within thirty
days after written notice from the Agent or any Lender.
7.5. (i) Failure of the Borrower or any of its Subsidiaries to pay when
due (subject to any applicable grace period) any Indebtedness
having an aggregate principal amount (including undrawn committed
or available amounts) in excess of $5,000,000, other than the
Obligations ("Material Indebtedness"); or the default by the
Borrower or any of its Subsidiaries in the performance of any term,
provision or condition contained in any agreement under which any
such Material Indebtedness was created or is governed, or any other
event shall occur or condition exist, the effect of which is to
cause, or to permit the holder or holders of such Material
Indebtedness to cause, such Material Indebtedness to become due
prior to its stated maturity; or any Material Indebtedness of the
Borrower or any of its Subsidiaries shall be declared to be due and
payable or required to be prepaid or repurchased (other than by a
regularly scheduled payment) prior to the stated maturity thereof;
or the Borrower or any of its Subsidiaries shall not pay, or admit
in writing its inability to pay, its debts generally as they become
due; or (ii) there occurs under any Rate Hedging Agreement an
"early termination date" or similar event resulting from (a) any
event of default under such Rate Hedging Agreement as to which the
Borrower or any Subsidiary is the defaulting party or (b) any
"termination event" or similar event, as to which the Borrower or
any Subsidiary is an "affected party" or holds similar status, and,
in either event, the Termination Value owed by the Borrower or such
Subsidiary as a result thereof is greater than $5,000,000.
7.6. The Borrower or any of its Subsidiaries shall (i) have an order for
relief entered with respect to it under the Federal bankruptcy laws
as now or hereafter in effect, (ii) make an assignment for the
benefit of creditors, (iii) apply for, seek, consent to, or
acquiesce in, the appointment of a receiver, custodian, trustee,
examiner, liquidator or similar official for it or any Substantial
Portion of its Property, (iv) institute any proceeding seeking an
order for relief under the Federal bankruptcy laws as now or
hereafter in effect or seeking to adjudicate it a bankrupt or
insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its
debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or
other pleading denying the material allegations of any such
proceeding filed against it, (v) take any corporate action to
authorize or effect any of the foregoing actions set forth in this
Section 7.6 or (vi) fail to contest in good faith any appointment
or proceeding described in Section 7.7.
7.7. Without the application, approval or consent of the Borrower or any
of its Subsidiaries, a receiver, trustee, examiner, liquidator or
similar official shall be appointed for the Borrower or any of its
Subsidiaries or any Substantial Portion of its Property, or a
proceeding described in Section 7.6(iv) shall be instituted against
the Borrower or any of its Subsidiaries and such appointment
continues undischarged or such proceeding continues undismissed or
unstayed for a period of 60 consecutive days.
7.8. Any court, government or governmental agency shall condemn, seize
or otherwise appropriate, or take custody or control of (each a
"Condemnation"), all or any portion of the Property of the Borrower
and its Subsidiaries which, when taken together with all other
Property of the Borrower and its Subsidiaries so condemned, seized,
appropriated, or taken custody or control of, during the
twelve-month period ending with the month in which any such
Condemnation occurs, constitutes a Substantial Portion.
7.9. The Borrower or any of its Subsidiaries shall fail within 30 days
to pay, bond or otherwise discharge any judgment or order for the
payment of money in excess of $5,000,000, which is not stayed on
appeal or otherwise being appropriately contested in good faith.
7.10. Any Reportable Event shall occur in connection with any Plan.
7.11. Any Change in Control shall occur.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. Acceleration. If any Default described in Section 7.6 or 7.7 occurs
with respect to the Borrower, the obligations of the Lenders to
make Loans hereunder shall automatically terminate and the
Obligations shall immediately become due and payable without any
election or action on the part of the Agent or any Lender. If any
other Default occurs, the Required Lenders (or the Agent with the
consent of the Required Lenders) may by notice to the Borrower
terminate or suspend the obligations of the Lenders to make Loans
hereunder, or declare the Obligations to be due and payable, or
both, whereupon the Obligations shall become immediately due and
payable, without presentment, demand, protest or other notice of
any kind, all of which the Borrower hereby expressly waives.
8.2. Amendments. Subject to the provisions of this Article VIII, the
Required Lenders (or the Agent with the consent in writing of the
Required Lenders) and the Borrower may enter into agreements for
the purpose of adding or modifying any provisions to the Loan
Documents or changing in any manner the rights of the Lenders or
the Borrower hereunder or waiving any Default hereunder; provided,
however, that no such agreement shall, without the consent of each
Lender affected thereby:
(i) Extend the maturity of any Loan or Note or forgive all or any
portion of the principal amount thereof, or reduce the rate
or extend the time of payment of interest or fees thereon.
(ii) Reduce the percentage specified in the definition of Required
Lenders.
(iii) Extend the Termination Date or increase or decrease the
amount of the Commitment of any Lender hereunder (except for
a ratable decrease in the Commitments of all Lenders), or
permit the Borrower to assign its rights under this
Agreement.
(iv) Amend this Section 8.2.
No amendment of any provision of this Agreement relating to the
Agent shall be effective without the written consent of the Agent.
The Agent may waive payment of the fee required under Section
12.3.2 without obtaining the consent of any other party to this
Agreement.
8.3. Preservation of Rights. No delay or omission of the Lenders or the
Agent to exercise any right under the Loan Documents shall impair
such right or be construed to be a waiver of any Default or an
acquiescence therein, and the making of a Loan notwithstanding the
existence of a Default or the inability of the Borrower to satisfy
the conditions precedent to such Loan shall not constitute any
waiver or acquiescence. Any single or partial exercise of any such
right shall not preclude other or further exercise thereof or the
exercise of any other right, and no waiver, amendment or other
variation of the terms, conditions or provisions of the Loan
Documents whatsoever shall be valid unless in writing signed by the
Lenders required pursuant to Section 8.2, and then only to the
extent in such writing specifically set forth. All remedies
contained in the Loan Documents or by law afforded shall be
cumulative and all shall be available to the Agent and the Lenders
until the Obligations have been paid in full.
ARTICLE IX
GENERAL PROVISIONS
9.1. Survival of Representations. All representations and warranties of
the Borrower contained in this Agreement shall survive delivery of
the Notes and the making of the Loans herein contemplated.
9.2. Governmental Regulation. Anything contained in this Agreement to
the contrary notwithstanding, no Lender shall be obligated to
extend credit to the Borrower in violation of any limitation or
prohibition provided by any applicable statute or regulation.
9.3. Taxes. Any taxes (excluding federal, state and local income taxes
on the overall net income of any Lender) or other similar
assessments or charges made by any governmental or revenue
authority in respect of the Loan Documents shall be paid by the
Borrower, together with interest and penalties, if any.
9.4. Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the
interpretation of any of the provisions of the Loan Documents.
9.5. Entire Agreement. The Loan Documents embody the entire agreement
and understanding among the Borrower, the Agent and the Lenders and
supersede all prior agreements and understandings among the
Borrower, the Agent and the Lenders relating to the subject matter
thereof.
9.6. Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint and
no Lender shall be the partner or agent of any other (except to the
extent to which the Agent is authorized to act as such). The
failure of any Lender to perform any of its obligations hereunder
shall not relieve any other Lender from any of its obligations
hereunder. This Agreement shall not be construed so as to confer
any right or benefit upon any Person other than the parties to this
Agreement and their respective successors and assigns.
9.7. Expenses; Indemnification. The Borrower shall reimburse the Agent
for any reasonable costs, internal charges and out-of-pocket
expenses (including reasonable attorneys' fees and time charges of
attorneys for the Agent, which attorneys may be employees of the
Agent) paid or incurred by the Agent in connection with the
preparation, negotiation, execution, delivery, review, amendment,
modification, and administration of the Loan Documents (but not for
any costs incurred which arise solely out of matters solely between
Lenders or the Agent and any Lender and not involving the
Borrower). The Borrower also agrees to reimburse the Agent and the
Lenders for any costs, internal charges and out-of-pocket expenses
(including attorneys' fees and time charges of attorneys for the
Agent and the Lenders, which attorneys may be employees of the
Agent or the Lenders) paid or incurred by the Agent or any Lender
in connection with the collection and enforcement of the Loan
Documents (but not for any costs incurred which arise solely out of
matters solely between Lenders or the Agent and any Lender and not
involving the Borrower). The Borrower further agrees to indemnify
the Agent and each Lender, its directors, officers and employees
against all losses, claims, damages, penalties, judgments,
liabilities and expenses (including, without limitation, all
expenses of litigation or preparation therefor whether or not the
Agent or any Lender is a party thereto) which any of them may pay
or incur arising out of or relating to this Agreement, the other
Loan Documents, the transactions contemplated hereby or the direct
or indirect application or proposed application of the proceeds of
any Loan hereunder except to the extent that they are determined by
a court of competent jurisdiction in a final and non-appealable
order to have resulted from the gross negligence or willful
misconduct of the party seeking indemnification. The obligations of
the Borrower under this Section shall survive the termination of
this Agreement.
9.8. Number of Documents. All statements, notices, closing documents,
and requests hereunder shall be furnished to the Agent with
sufficient counterparts so that the Agent may furnish one to each
of the Lenders.
9.9. Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all
accounting determinations hereunder shall be made in accordance
with Agreement Accounting Principles.
9.10. Severability of Provisions. Any provision in any Loan Document that
is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative,
unenforceable, or invalid without affecting the remaining
provisions in that jurisdiction or the operation, enforceability,
or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be
severable.
9.11. Nonliability of Lenders. The relationship between the Borrower and
the Lenders and the Agent shall be solely that of borrower and
lender. Neither the Agent nor any Lender shall have any fiduciary
responsibilities to the Borrower. Neither the Agent nor any Lender
undertakes any responsibility to the Borrower to review or inform
the Borrower of any matter in connection with any phase of the
Borrower's business or operations. The Borrower agrees that neither
the Agent nor any Lender shall have liability to the Borrower
(whether sounding in tort, contract or otherwise) for losses
suffered by the Borrower in connection with, arising out of, or in
any way related to, the transactions contemplated and the
relationship established by the Loan Documents, or any act,
omission or event occurring in connection therewith, unless it is
determined by a court of competent jurisdiction in a final and
non-appealable order that such losses resulted from the gross
negligence or willful misconduct of the party from which recovery
is sought. Neither the Agent nor any Lender shall have any
liability with respect to, and the Borrower hereby waives, releases
and agrees not to sue for, any special, indirect or consequential
damages suffered by the Borrower in connection with, arising out
of, or in any way related to the Loan Documents or the transactions
contemplated thereby.
9.12. Confidentiality. Each Lender agrees to hold any confidential
information which it may receive from the Borrower pursuant to this
Agreement in confidence, except for disclosure (i) to its
Affiliates and to other Lenders and their respective Affiliates,
(ii) to legal counsel, accountants, and other professional advisors
to that Lender or to a Transferee, (iii) to regulatory officials,
(iv) to any Person as requested pursuant to or as required by law,
regulation, or legal process, (v) to any Person in connection with
any legal proceeding to which that Lender is a party and (vi)
permitted by Section 12.4; provided, however, that any Lender
disclosing confidential information pursuant to clause (i) or (ii)
shall notify the persons referred to in such clauses of the
confidential nature of such information.
9.13. Nonreliance. Each Lender hereby represents that it is not relying
on or looking to any margin stock (as defined in Regulation U of
the Board of Governors of the Federal Reserve System) for the
repayment of the Loans provided for herein.
ARTICLE X
THE AGENT
10.1. Appointment; Nature of Relationship. The First National Bank of
Chicago is hereby appointed by the Lenders as the Agent hereunder
and under each other Loan Document, and each of the Lenders
irrevocably authorizes the Agent to act as the contractual
representative of such Lender with the rights and duties expressly
set forth herein and in the other Loan Documents. The Agent agrees
to act as such contractual representative upon the express
conditions contained in this Article X. Notwithstanding the use of
the defined term "Agent," it is expressly understood and agreed
that the Agent shall not have any fiduciary responsibilities to any
Lender by reason of this Agreement or any other Loan Document and
that the Agent is merely acting as the representative of the
Lenders with only those duties as are expressly set forth in this
Agreement and the other Loan Documents. In its capacity as the
Lenders' contractual representative, the Agent (i) does not hereby
assume any fiduciary duties to any of the Lenders, (ii) is a
"representative" of the Lenders within the meaning of Section 9-105
of the Uniform Commercial Code and (iii) is acting as an
independent contractor, the rights and duties of which are limited
to those expressly set forth in this Agreement and the other Loan
Documents. Each of the Lenders hereby agrees to assert no claim
against the Agent on any agency theory or any other theory of
liability for breach of fiduciary duty, all of which claims each
Lender hereby waives.
10.2. Powers. The Agent shall have and may exercise such powers under the
Loan Documents as are specifically delegated to the Agent by the
terms of each thereof, together with such powers as are reasonably
incidental thereto. The Agent shall have no implied duties to the
Lenders, or any obligation to the Lenders to take any action
thereunder except any action specifically provided by the Loan
Documents to be taken by the Agent.
10.3. General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Borrower, the
Lenders or any Lender for any action taken or omitted to be taken
by it or them hereunder or under any other Loan Document or in
connection herewith or therewith except for its or their own gross
negligence or willful misconduct.
10.4. No Responsibility for Loans, Recitals, etc. Neither the Agent nor
any of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into, or
verify (i) any statement, warranty or representation made in
connection with any Loan Document or any borrowing hereunder; (ii)
the performance or observance of any of the covenants or agreements
of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information
directly to each Lender; (iii) the satisfaction of any condition
specified in Article IV, except receipt of items required to be
delivered to the Agent; (iv) the validity, enforceability,
effectiveness, sufficiency or genuineness of any Loan Document or
any other instrument or writing furnished in connection therewith;
or (v) the value, sufficiency, creation, perfection or priority of
any interest in any collateral security. The Agent shall have no
duty to disclose to the Lenders information that is not required to
be furnished by the Borrower to the Agent at such time, but is
voluntarily furnished by the Borrower to the Agent (either in its
capacity as Agent or in its individual capacity).
10.5. Action on Instructions of Lenders. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder
and under any other Loan Document in accordance with written
instructions signed by the Required Lenders, and such instructions
and any action taken or failure to act pursuant thereto shall be
binding on all of the Lenders and on all holders of Notes. The
Lenders hereby acknowledge that the Agent shall be under no duty to
take any discretionary action permitted to be taken by it pursuant
to the provisions of this Agreement or any other Loan Document
unless it shall be requested in writing to do so by the Required
Lenders. The Agent shall be fully justified in failing or refusing
to take any action hereunder and under any other Loan Document
unless it shall first be indemnified to its satisfaction by the
Lenders pro rata against any and all liability, cost and expense
that it may incur by reason of taking or continuing to take any
such action.
10.6. Employment of Agents and Counsel. The Agent may execute any of its
duties as Agent hereunder and under any other Loan Document by or
through employees, agents, and attorneys-in-fact and shall not be
answerable to the Lenders, except as to money or securities
received by it or its authorized agents, for the default or
misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby
created and its duties hereunder and under any other Loan Document.
10.7. Reliance on Documents; Counsel. The Agent shall be entitled to rely
upon any Note, notice, consent, certificate, affidavit, letter,
facsimile, telegram, statement, paper or document believed by it to
be genuine and correct and to have been signed or sent by the
proper person or persons, and, in respect to legal matters, upon
the opinion of counsel selected by the Agent, which counsel may be
employees of the Agent.
10.8. Agent's Reimbursement and Indemnification. The Lenders agree to
reimburse and indemnify the Agent ratably in proportion to their
respective Commitments (or, if the Commitments have been
terminated, in proportion to their Commitments immediately prior to
such termination) (i) for any amounts not reimbursed by the
Borrower for which the Agent is entitled to reimbursement by the
Borrower under the Loan Documents, (ii) for any other expenses
incurred by the Agent on behalf of the Lenders, in connection with
the preparation, execution, delivery, administration and
enforcement of the Loan Documents and (iii) for any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever
which may be imposed on, incurred by or asserted against the Agent
in any way relating to or arising out of the Loan Documents or any
other document delivered in connection therewith or the
transactions contemplated thereby, or the enforcement of any of the
terms thereof or of any such other documents; provided that no
Lender shall be liable for any of the foregoing to the extent they
arise from the gross negligence or willful misconduct of the Agent.
The obligations of the Lenders under this Section 10.8 shall
survive payment of the Obligations and termination of this
Agreement.
10.9. Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Unmatured Default
hereunder unless the Agent has received written notice from a
Lender or the Borrower referring to this Agreement describing such
Default or Unmatured Default and stating that such notice is a
"notice of default". In the event that the Agent receives such a
notice, the Agent shall give prompt notice thereof to the Lenders.
10.10. Rights as a Lender. In the event the Agent is a Lender, the Agent
shall have the same rights and powers hereunder and under any other
Loan Document as any Lender and may exercise the same as though it
were not the Agent, and the term "Lender" or "Lenders" shall, at
any time when the Agent is a Lender, unless the context otherwise
indicates, include the Agent in its individual capacity. The Agent
may accept deposits from, lend money to, and generally engage in
any kind of trust, debt, equity or other transaction, in addition
to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Subsidiaries in which the Borrower
or such Subsidiary is not restricted hereby from engaging with any
other Person. The Agent, in its individual capacity, is not
obligated to remain a Lender.
10.11. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other
Lender and based on the financial statements prepared by the
Borrower and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter
into this Agreement and the other Loan Documents. Each Lender also
acknowledges that it will, independently and without reliance upon
the Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under
this Agreement and the other Loan Documents.
10.12. Successor Agent. The Agent may resign at any time by giving written
notice thereof to the Lenders and the Borrower, such resignation to
be effective upon the appointment of a successor Agent or, if no
successor Agent has been appointed, forty-five days after the
retiring Agent gives notice of its intention to resign. Upon any
such resignation, the Required Lenders shall have the right to
appoint, on behalf of the Borrower and the Lenders, a successor
Agent. If no successor Agent shall have been so appointed by the
Required Lenders within thirty days after the resigning Agent's
giving notice of its intention to resign, then the resigning Agent
may appoint, on behalf of the Borrower and the Lenders, a successor
Agent, which successor Agent shall (so long as no Default shall
have occurred and be continuing) be subject to approval by the
Borrower (which approval shall not be unreasonably withheld). If
the Agent has resigned and no successor Agent has been appointed,
the Lenders may perform all the duties of the Agent hereunder and
the Borrower shall make all payments in respect of the Obligations
to the applicable Lender and for all other purposes shall deal
directly with the Lenders. No successor Agent shall be deemed to be
appointed hereunder until such successor Agent has accepted the
appointment. Any such successor Agent shall be a commercial bank
having capital and retained earnings of at least $50,000,000. Upon
the acceptance of any appointment as Agent hereunder by a successor
Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the
resigning Agent. Upon the effectiveness of the resignation of the
Agent, the resigning Agent shall be discharged from its duties and
obligations hereunder and under the Loan Documents. After the
effectiveness of the resignation of an Agent, the provisions of
this Article X shall continue in effect for the benefit of such
Agent in respect of any actions taken or omitted to be taken by it
while it was acting as the Agent hereunder and under the other Loan
Documents.
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1. Setoff. In addition to, and without limitation of, any rights of
the Lenders under applicable law, if the Borrower becomes
insolvent, however evidenced, or there occurs any Unmatured Default
under Section 7.2, 7.6 or 7.7 or any Default, any and all deposits
(including all account balances, whether provisional or final and
whether or not collected or available) and any other Indebtedness
at any time held or owing by any Lender to or for the credit or
account of the Borrower may be offset and applied toward the
payment of the Obligations then due and owing to such Lender
(including, for this purpose, all Obligations that would be due but
for any period of grace under Section 7.2).
11.2. Ratable Payments. Except for payments received from the Agent
pursuant to Section 2.11, if any Lender, whether by setoff or
otherwise, has payment made to it upon its Loans (other than
payments received pursuant to Section 3.1, 3.2 or 3.4) in a greater
proportion than that received by any other Lender, such Lender
agrees, promptly upon demand, to purchase a portion of the Loans
held by the other Lenders so that after such purchase each Lender
will hold its ratable proportion of Loans. If any Lender, whether
in connection with setoff or amounts which might be subject to
setoff or otherwise, receives collateral or other protection for
its Obligations or such amounts which may be subject to setoff,
such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the benefits of such
collateral ratably in proportion to their Loans. In case any such
payment is disturbed by legal process, or otherwise, appropriate
further adjustments shall be made.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1. Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the
Borrower and the Lenders and their respective successors and
assigns, except that (i) the Borrower shall not have the right to
assign its rights or obligations under the Loan Documents and (ii)
any assignment by any Lender must be made in compliance with
Section 12.3. Notwithstanding clause (ii) of the preceding
sentence, any Lender may at any time, without the consent of the
Borrower or the Agent, assign all or any portion of its rights
under this Agreement and its Notes to a Federal Reserve Bank;
provided, however, that no such assignment to a Federal Reserve
Bank shall release the transferor Lender from its obligations
hereunder. The Agent may treat the payee of any Note as the owner
thereof for all purposes hereof unless and until such payee
complies with Section 12.3 in the case of an assignment thereof or,
in the case of any other transfer, a written notice of the transfer
is filed with the Agent. Any assignee or transferee of a Note
agrees by acceptance thereof to be bound by all the terms and
provisions of the Loan Documents. Any request, authority or consent
of any Person, who at the time of making such request or giving
such authority or consent is the holder of any Note, shall be
conclusive and binding on any subsequent holder, transferee or
assignee of such Note or of any Note or Notes issued in exchange
therefor.
12.2. Participations
12.2.1. Permitted Participants; Effect. Any Lender may, in accordance with
applicable law, at any time sell to one or more banks or other
entities ("Participants") participating interests in any Loan owing
to such Lender, any Note held by such Lender, any Commitment of
such Lender or any other interest of such Lender under the Loan
Documents. In the event of any such sale by a Lender of
participating interests to a Participant, such Lender's obligations
under the Loan Documents shall remain unchanged, such Lender shall
remain solely responsible to the other parties hereto for the
performance of such obligations, such Lender shall remain the
holder of any such Note for all purposes under the Loan Documents,
all amounts payable by the Borrower under this Agreement shall be
determined as if such Lender had not sold such participating
interests, and the Borrower and the Agent shall continue to deal
solely and directly with such Lender in connection with such
Lender's rights and obligations under the Loan Documents.
12.2.2. Voting Rights. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, modification
or waiver of any provision of the Loan Documents other than any
amendment, modification or waiver with respect to any Loan or
Commitment in which such Participant has an interest which forgives
principal, interest or fees or reduces the interest rate or fees
payable with respect to any such Loan or Commitment, postpones any
date fixed for any regularly-scheduled payment of principal of, or
interest or fees on, any such Loan or Commitment, releases any
guarantor of any such Loan or releases any substantial portion of
collateral, if any, securing any such Loan.
12.2.3. Benefit of Setoff. The Borrower agrees that each Participant that
has notified the Borrower and the Agent in writing of its
participating interests shall be deemed to have the right of setoff
provided in Section 11.1 in respect of its participating interest
in amounts owing under the Loan Documents to the same extent as if
the amount of its participating interest were owing directly to it
as a Lender under the Loan Documents; provided that each Lender
shall retain the right of setoff provided in Section 11.1 with
respect to the amount of participating interests sold to each
Participant. The Lenders agree to share with each Participant, and
each Participant, by exercising the right of setoff provided in
Section 11.1, agrees to share with each Lender, any amount received
pursuant to the exercise of its right of setoff, such amounts to be
shared in accordance with Section 11.2 as if each Participant were
a Lender.
12.3. Assignments
12.3.1. Permitted Assignments. Any Lender may, in accordance with
applicable law, at any time assign to one or more banks or other
entities ("Purchasers") all or any part of its rights and
obligations under the Loan Documents. Such assignment shall be
substantially in the form of Exhibit "H" hereto or in such other
form as may be agreed to by the parties thereto. The consent of the
Borrower and the Agent shall be required prior to an assignment
becoming effective with respect to a Purchaser which is not a
Lender or an Affiliate thereof (such consents not to be
unreasonably withheld); provided, however, that if a Default has
occurred and is continuing, the consent of the Borrower shall not
be required. Such consent shall not be unreasonably withheld or
delayed. Each such assignment shall be in an amount not less than
the lesser of (i) $10,000,000 or (ii) the remaining amount of the
assigning Lender's Commitment (calculated as at the date of such
assignment).
12.3.2. Effect; Effective Date. Upon (i) delivery to the Agent of a notice
of assignment, substantially in the form attached as Exhibit "I" to
Exhibit "H" hereto (a "Notice of Assignment"), together with any
consents required by Section 12.3.1, and (ii) payment of a $3,500
fee to the Agent for processing such assignment, such assignment
shall become effective on the effective date specified in such
Notice of Assignment. The Notice of Assignment shall contain a
representation by the Purchaser to the effect that none of the
consideration used to make the purchase of the Commitment and Loans
under the applicable assignment agreement are "plan assets" as
defined under ERISA and that the rights and interests of the
Purchaser in and under the Loan Documents will not be "plan assets"
under ERISA. On and after the effective date of such assignment,
such Purchaser shall for all purposes be a Lender party to this
Agreement and any other Loan Document executed by the Lenders and
shall have all the rights and obligations of a Lender under the
Loan Documents, to the same extent as if it were an original party
hereto, and no further consent or action by the Borrower, the
Lenders or the Agent shall be required to release the transferor
Lender with respect to the percentage of the Aggregate Commitment
and Loans assigned to such Purchaser. Upon the consummation of any
assignment to a Purchaser pursuant to this Section 12.3.2, the
transferor Lender, the Agent and the Borrower shall make
appropriate arrangements so that replacement Notes are issued to
such transferor Lender and new Notes or, as appropriate,
replacement Notes, are issued to such Purchaser, in each case in
principal amounts reflecting their Commitment, as adjusted pursuant
to such assignment, and the Notes so replaced are returned to the
Borrower marked "replaced."
12.4. Dissemination of Information. The Borrower authorizes each Lender
to disclose to any Participant or Purchaser or any other Person
acquiring an interest in the Loan Documents by operation of law
(each a "Transferee") and any prospective Transferee any and all
information in such Lender's possession concerning the
creditworthiness of the Borrower and its Subsidiaries; provided
that each Transferee and prospective Transferee agrees to be bound
by Section 9.12 of this Agreement.
12.5. Tax Treatment. If any interest in any Loan Document is transferred
to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the
transferor Lender shall cause such Transferee, concurrently with
the effectiveness of such transfer, to comply with the provisions
of Section 4.3.
ARTICLE XIII
NOTICES
13.1. Notices. Except as otherwise permitted by Section 2.12 with respect
to borrowing notices, all notices, requests and other
communications to any party hereunder shall be in writing
(including bank wire, facsimile transmission or similar writing)
and shall be given to such party: (x) in the case of the Borrower
or the Agent, at its address or facsimile number set forth on the
signature pages hereof, (y) in the case of any Lender, at its
address or facsimile number set forth below its signature hereto or
(z) in the case of any party, such other address or facsimile
number as such party may hereafter specify for the purpose by
notice to the Agent and the Borrower. Each such notice, request or
other communication shall be effective (i) if given by facsimile
transmission, when transmitted to the facsimile number specified in
this Section, (ii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid or (iii) if given by any other
means, when delivered at the address specified in this Section;
provided that notices to the Agent under Article II shall not be
effective until received.
13.2. Change of Address. The Borrower, the Agent and any Lender may each
change the address for service of notice upon it by a notice in
writing to the other parties hereto.
ARTICLE XIV
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all
of which taken together shall constitute one agreement, and any of
the parties hereto may execute this Agreement by signing any such
counterpart. This Agreement shall be effective when it has been
executed by the Borrower, the Agent and the Lenders and each party
has notified the Agent by telex, facsimile transmission or
telephone, that it has taken such action.
ARTICLE XV
CHOICE OF LAW, CONSENT TO JURISDICTION, WAIVER OF JURY TRIAL
15.1. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF
THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE
TO NATIONAL BANKS.
15.2. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION
OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A
COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN
SHALL LIMIT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING
PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE
AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING
OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE
BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
15.3. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH LENDER
HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED
THEREUNDER.
<PAGE>
IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have
executed this Agreement as of the date first above written.
Commitments NATIONAL COMPUTER SYSTEMS, INC.
By:_______________________________________
Russell A. Gullotti
Chairman, President and Chief Executive
Officer
By:_______________________________________
Print Name:
Title:
111000 Prairie Lakes Drive - P.O. Box 9365
Minneapolis, Minnesota 55440
Facsimile: (612) 829-3181
Attention: J.W. Fenton, Jr., Treasurer
$14,000,000 THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Agent
By:_______________________________________
Print Name:
Title:
One First National Plaza
Chicago, Illinois 60670
Mail Suite 0173
Facsimile: (312) 732-1117
Attention: J. Garland Smith
$12,000,000 NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
By:_______________________________________
Print Name:
Title:
Sixth & Marquette
Minneapolis, Minnesota 55479-0085
Facsimile: (612) 667-4145
Attention: Mary D. Falck
$12,000,000 SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL
ASSOCIATION
By:_______________________________________
Print Name:
Title:
200 South Orange Avenue, MC 0-1043
Orlando, Florida 32801
Facsimile: (407) 237-6894
Attention: Joseph B. Kabourek
$12,000,000 THE BANK OF TOKYO-MITSUBISHI, LTD.,
CHICAGO BRANCH
By:_______________________________________
Print Name:
Title:
90 South Seventh Street
5100 Norwest Center
Minneapolis, Minnesota 55402
Attention: Peter Kline
$50,000,000
