<PAGE>
SECURITIES AND EXCHANGE COMMISSION
----------------------------------
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d) of The Securities
___
Exchange Act of 1934.
For the quarterly period ended September 30, 1994
___ Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
For the transition period from to
Commission file number 0-11428
INFORMATION RESOURCES, INC.
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-2947987
------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
150 North Clinton Street, Chicago, Illinois 60661
------------------------------------------- ----------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 726-1221
--------------
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
-------------------
Common, $.01 par value per share
Preferred Stock Purchase Rights
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
_____ _____
The number of shares of the registrant's common stock, $.01 par value per share
outstanding, as of October 31, 1994, was 26,300,675.
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
INDEX
-----
PAGE
NUMBER
------
PART I. FINANCIAL INFORMATION
- - ----------------------------------
<TABLE>
<CAPTION>
<S> <C>
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Operations 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 7
Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
PART II. OTHER INFORMATION
- - -----------------------------
<S> <C>
Item 1 - Legal Proceedings 14
Item 6 - Exhibits and Reports on Form 8-K 14
Signatures 15
</TABLE>
2
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS UNAUDITED
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS SEPTEMBER 30, 1994 DECEMBER 31, 1993
- - ------ ------------------ -----------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 7,146 $ 19,368
Accounts receivable - net 123,078 116,637
Deferred income taxes 14,537 9,205
Prepaid expenses and other 6,351 4,230
--------- --------
Total Current Assets 151,112 149,440
--------- --------
PROPERTY AND EQUIPMENT 140,000 124,185
Accumulated depreciation and amortization ( 81,665) (71,013)
--------- --------
58,335 53,172
INVESTMENTS 17,944 11,764
OTHER ASSETS
Deferred data procurement costs - net 84,359 71,131
Capitalized software costs - net 23,832 21,481
Goodwill - net 3,666 3,931
Other 14,092 16,596
--------- --------
125,949 113,139
--------- --------
$ 353,340 $327,515
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- - ------------------------------------
CURRENT LIABILITIES
Current maturities of capitalized leases $ 1,763 $ 1,691
Bank borrowings 29,515 --
Accounts payable 16,285 14,512
Accrued expenses 17,945 21,941
Deferred revenue 14,113 13,844
Other 7,574 5,902
--------- --------
Total Current Liabilities 87,195 57,890
--------- --------
LONG-TERM CAPITALIZED LEASES 1,939 3,087
DEFERRED INCOME TAXES 27,910 31,040
DEFERRED GAIN 4,567 4,878
OTHER LIABILITIES 1,543 1,176
MINORITY INTEREST 30 1,202
STOCKHOLDERS' EQUITY
Preferred stock-authorized, 1,000,000 shares
$.01 par value, none issued -- --
Common stock - authorized 60,000,000 shares
in 1994 and in 1993, $.01 par value,
issued in 1994: 26,279,884 shares;
issued in 1993: 25,416,502 shares 263 254
Capital in excess of par value 167,886 157,552
Retained earnings 62,047 72,333
Cumulative translation adjustment ( 40) (1,897)
--------- --------
Total Stockholders' Equity 230,156 228,242
--------- --------
$ 353,340 $327,515
========= ========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ --------------------
SEPTEMBER 30 SEPTEMBER 30
------------------ --------------------
1994 1993 1994 1993
------- ------- -------- --------
<S> <C> <C> <C> <C>
Revenues $92,915 $87,784 $272,776 $245,544
Costs and expenses:
Operating expenses 83,020 65,475 234,801 187,695
Selling, general and
administrative expenses 11,202 8,646 32,615 24,990
Loss on disposition of assets -- 805 -- 3,005
------- ------- -------- --------
94,222 74,926 267,416 215,690
------- ------- -------- --------
Operating profit (loss) (1,307) 12,858 5,360 29,854
Other income (expense):
Interest income 100 398 334 1,090
Interest expense (649) (227) (1,419) (805)
Litigation provision (3,000) -- (8,000) --
Other - net 112 77 392 177
------- ------- -------- --------
(3,437) 248 (8,693) 462
------- ------- -------- --------
Equity in loss of affiliated companies (683) (811) (5,012) (1,407)
------- ------- -------- --------
Earnings (loss) before income taxes,
minority interest and cumulative effect
of change in accounting principle (5,427) 12,295 (8,345) 28,909
Income tax expense (benefit) (2,130) 5,350 (3,016) 12,354
------- ------- -------- --------
Earnings (loss) before minority interest
and cumulative effect of change in
accounting principle (3,297) 6,945 (5,329) 16,555
Minority interest 193 413 949 1,189
------- ------- -------- --------
Earnings (loss) before cumulative effect
of change in accounting principle (3,104) 7,358 (4,380) 17,744
Cumulative effect on prior years of
change in accounting principle:
Income taxes -- -- -- 1,864
Revenue recognition -- -- (6,594) --
------- ------- -------- --------
Net earnings (loss) $(3,104) $ 7,358 $(10,974) $ 19,608
======= ======= ======== ========
Earnings (loss) per common and
common equivalent share:
Before cumulative effect of accounting change $ (.12) $ .27 $ (.17) $ .66
Cumulative effect of accounting change -- -- (.25) .07
------- ------- -------- --------
Net earnings (loss) $ (.12) $ .27 $ (.42) $ .73
======= ======= ======== ========
Weighted average common and common
equivalent shares 26,174 27,253 25,948 26,965
======= ======= ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
------------------------------
1994 1993
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $(10,974) $ 19,608
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:
Depreciation and amortization 21,391 15,748
Amortization of deferred data procurement costs 47,921 36,553
Deferred income taxes (4,119) 5,133
Equity in loss of affiliated companies 5,012 1,407
Minority interest (949) (1,189)
Cumulative effect of change in revenue recognition 6,594 --
Cumulative effect of adoption of FAS 109 -- (1,864)
Litigation provision 8,000 --
Stock option and other compensation expense 2,913 --
Other 586 68
Change in assets and liabilities:
Increase in current assets (19,252) (26,497)
Increase in other assets (341) (136)
Increase (Decrease) in current liabilities (11,267) 9,830
Increase in other liabilities 367 147
-------- --------
Total adjustments 56,856 39,200
-------- --------
Net cash provided by operating activities 45,882 58,808
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment - net (16,958) (17,317)
Software costs (8,807) (8,307)
Deferred data procurement costs (60,722) (50,076)
Net assets acquired in business acquisition -- (1,252)
Investment in joint ventures (2,469) (17,229)
-------- --------
Net cash used in investing activities (88,956) (94,181)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments of capitalized leases (1,183) (1,200)
Net bank borrowings 29,515 --
Proceeds from exercise of stock options 1,384 9,268
Capital contributions from minority interest 136 1,164
-------- --------
Net cash provided by financing activities 29,852 9,232
EFFECT OF EXCHANGE RATE ON CASH 1,000 (161)
-------- --------
NET DECREASE IN CASH (12,222) (26,302)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 19,368 53,593
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 7,146 $ 27,291
======== ========
</TABLE>
(continued)
5
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONT'D.
UNAUDITED
(IN THOUSANDS)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
------------------------------
1994 1993
------ ------
<S> <C> <C>
CASH PAID DURING THE PERIOD FOR:
Interest $1,419 $ 811
Income taxes $ 975 $3,879
</TABLE>
In March 1994, the Company and Datos, C.A., formed a joint venture company,
Datos Information Resources, Inc. The Company contributed $5.8 million of stock
for a 49% interest in the joint venture.
In September 1994, the Company acquired a 19.9% ownership interest in AGB
Attwood Holdings, a Dutch consumer panel business. The Company contributed $1.4
million of stock and a $.5 million interest in its existing Holland joint
venture for its ownership interest.
The accompanying notes are an integral part of these statements.
6
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments (consisting only
of normal recurring accruals) necessary to present fairly the financial
position as of September 30, 1994 and December 31, 1993 and the results of
operations for the three months and the nine months ended September 30,
1994 and September 30, 1993 and cash flows for the nine months ended
September 30, 1994 and September 30, 1993.
2. These financial statements are presented in accordance with the
requirements of Form 10-Q and consequently may not include all disclosures
normally required by generally accepted accounting principles or those
normally made in the Company's Annual Report on Form 10-K. Accordingly,
the financial statements and related notes in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1993 should be read in
conjunction with the accompanying condensed consolidated financial
statements.
Certain amounts for 1993 have been reclassified to conform to the 1994
presentation.
3. Earnings (loss) per common and common equivalent share is based on the
weighted average number of shares of common stock and common stock
equivalents outstanding. The effect of dilution from the exercise of stock
options is considered in the computation of earnings (loss) per common and
common equivalent share by the use of the modified treasury stock method
for the quarters ended September 30, June 30, and March 31, 1994 and 1993,
since options outstanding exceeded 20% of the shares of common stock
outstanding. In applying the modified treasury stock method for the period
ended September 30, June 30, and March 31, 1994, stock options were not
included as they were anti-dilutive.
4. Effective January 1, 1994, the Company changed its method of recognizing
revenue on InfoScan, PromotionScan and BehaviorScan products whereby
revenue is recognized over the term of the contract on a straight-line
basis. Previously, the Company recognized a portion of the initial
contract revenue in the period between client commitment and either the
start of forward data or the test commencement in order to match revenue
with the costs associated with the efforts to set up and customize client
reports and furnish the initial historical data (backdata) with the
remaining revenue recognized ratably over the initial contract term.
The Company believes this change is preferable because the new accounting
policy is consistent with the Company's change in business strategies to
emphasize value added service to existing clients. Other factors also
having a bearing on this decision include:
(a) Set-up and backdata activities associated with new customers as a
percentage of total IRI's business have decreased and are expected to
decrease further in the future as customers continue to renew and
extend their existing contracts.
(b) The Company is expanding its business internationally through
acquisitions and has found that contract revenues for information
services have been accounted for on a straight-line basis by many of
the acquired companies. As a result, the implementation of the
Company's accounting policies is difficult because the accounting
systems of many foreign companies often do not routinely provide
adequate cost information.
The cumulative effect of this change for periods prior to January 1, 1994
of $6,594,000 (after reduction for the income tax effect of $4,440,000) is
shown separately in the condensed consolidated statement of operations. The
effect of the change on the quarter ended March 31, 1994 was to reduce the
loss, before the cumulative effect, by approximately $455,000 after tax
($.02 per share).
7
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONT'D.
(UNAUDITED)
The pro forma amounts summarized below have been adjusted for the effect of
retroactive application on revenues and the change in minority interest and
related income taxes that would have been made had the new method been in
effect. The actual amounts for each quarter and year are being reported for
comparative purposes.
<TABLE>
<CAPTION>
Three Months Three Months Three Months Three Months
Ended Ended Ended Ended
March 31, 1993 June 30, 1993 Sept. 30, 1993 Dec. 31, 1993
-------------- ------------- -------------- -------------
(In Thousands, except per share data)
<S> <C> <C> <C> <C>
Revenues
- Actual $75,650 $82,110 $87,784 $89,000
======= ======= ======= =======
- Pro forma $77,905 $82,562 $86,322 $87,812
======= ======= ======= =======
Earnings before
cumulative effect of
accounting change
- Actual $ 3,927 $ 6,459 $ 7,358 $ 4,471
======= ======= ======= =======
- Pro forma $ 5,277 $ 6,781 $ 6,570 $ 3,821
======= ======= ======= =======
Earnings per
common and common
equivalent share before
cumulative effect of
accounting change
- Actual $ .15 $ .24 $ .27 $ .16
======= ======= ======= =======
- Pro forma $ .20 $ .25 $ .24 $ .14
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31
-------------------------------------------------------
(In Thousands, except per share data)
1993 1992 1991 1990
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues
- Actual $334,544 $276,362 $222,689 $179,789
======== ======== ======== ========
- Pro forma $334,601 $279,187 $213,926 $178,552
======== ======== ======== ========
Earnings before
cumulative effect of
accounting change
- Actual $ 22,215 $ 19,247 $ 15,386 $ 5,668
======== ======== ======== ========
- Pro forma $ 22,449 $ 20,971 $ 10,058 $ 4,916
======== ======== ======== ========
Earnings per
common and common
equivalent share before
cumulative effect of
accounting change
- Actual $ .82 $ .78 $ .66 $ .29
======== ======== ======== ========
- Pro forma $ .83 $ .85 $ .43 $ .25
======== ======== ======== ========
</TABLE>
8
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONT'D.
(UNAUDITED)
5. In the first quarter of 1994, the Company established a pre-tax reserve of
$5.0 million related to shareholder litigation. The Company has reached an
agreement to settle the shareholder class action lawsuit filed against the
Company on April 21, 1994. The settlement, which is subject to approval by
the court, contemplates the payment of $12.5 million, of which $7.25 million
will be paid by the Company's insurance carriers. The settlement agreement
provides that the Company may pay the balance in either cash or stock, at
its option. In the third quarter of 1994, the Company recorded an
additional pre-tax reserve of $3.0 million for such settlement and
attendant legal costs.
6. On November 3, 1994, the Company established a three-year unsecured revolving
bank credit facility of $65.0 million replacing its previous credit facility
of $50.0 million dated May 13, 1994, which was scheduled to decrease to $30.0
million on December 31, 1994. The new credit facility allows borrowings of
$65.0 million through December 30, 1995 and is scheduled to decrease to $55.0
million on December 31, 1995 and to $45.0 million on December 31, 1996 at an
interest rate at or below prime. The credit facility contains customary
financial and other covenants.
7. In April 1994, the Company and the privately held Asia-based SRG Holdings
Limited, agreed to cancel plans to merge. The Company recorded a pre-tax
charge of $1.4 million related to expenses incurred in connection with the
cancelled merger. The pre-tax effect of the charge was reflected as of March
31, 1994 in the Company's selling, general and administrative expenses.
8. In April 1994, the Company signed an agreement in principle with Tokyo-based
Mitsui & Co., Ltd., to form a joint venture named Information Resources
Japan, Ltd., to provide efficient consumer response (ECR) initiatives,
syndicated market tracking services, logistics and business intelligence
software products and value-added consulting in Japan. The joint venture
is expected to begin operations in late 1994 or early 1995.
9
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentage
relationship to revenue of certain items in the Condensed Consolidated
Statements of Operations, and the percentage changes from period to period in
such items.
<TABLE>
<CAPTION>
PERCENTAGE INCREASE/(DECREASE)
PERCENTAGE OF REVENUE OVER PRIOR PERIOD
--------------------- ------------------------------
THREE MONTHS NINE MONTHS THREE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
SEPTEMBER 30 SEPTEMBER 30 1994/ 1994/
1994 1993 1994 1993 1993 1993
------ ------ ------ ------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0% 5.8% 11.1%
Operating expenses 89.3 74.6 86.0 76.4 26.8 25.1
Selling, general & admin. 12.1 9.9 12.0 10.2 29.6 30.5
Loss on disposition of assets -- .9 -- 1.2 * *
Operating profit (loss) (1.4) 14.6 2.0 12.2 * *
Other income (expense) * * * * * *
Litigation provision (3.2) -- (2.9) -- * *
Equity in loss of affiliates (.7) (.9) (1.8) (.6) * *
Income tax expense (benefit) (2.3) 6.1 (1.1) 5.0 * *
Minority interest * * * * * *
Cumulative effect of
accounting change -- -- (2.4) .8 -- *
Net earnings (loss) (3.3) 8.4 (4.0) 8.0 * *
</TABLE>
* Not meaningful
REVENUES
The Company's revenue from operations for the nine months ended September 30,
1994 increased 11.1% to $272.8 million compared to $245.5 million for the first
nine months of 1993. Revenue for the three month period ended September 30,
1994 increased 5.8% to $92.9 million compared to $87.8 million for the same
period of 1993. The revenue growth resulted principally from growth in InfoScan
revenues and, to a lesser extent, increased revenues from software support
services.
10
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D.
Revenues from the Company's InfoScan product line for the nine months ended
September 30, 1994 were $149.9 million, an increase of 13.7% over the same
period in 1993. InfoScan revenues for the third quarter of 1994 were $50.2
million, an increase of 4.9% over the same period in 1993. The growth in
InfoScan's revenues was principally the result of increased utilization of
InfoScan services by existing clients. In the first quarter of 1994 the Company
implemented a change in its domestic InfoScan strategy which management believes
will better focus the Company's resources on delivering added value, and thereby
build revenue, with its existing clients.
Revenues from the Company's software support services were $74.3 million, an
increase of 5.8% over the same nine month period in 1993. Third quarter 1994
revenues were $25.1 million, increasing 6.8% over the third quarter of 1993.
The revenue growth in software support services was less than prior quarters of
1993 which the Company attributes to delays in the introduction of, and
transition to, the Windows versions for certain of the Company's software
products.
BehaviorScan and related testing services revenues for the nine months ended
September 30, 1994 were $17.0 million compared to $16.2 million for the same
period in 1993. For the three months ended September 30, 1994 BehaviorScan
revenues were $6.0 million compared to $5.7 million for the same period in 1993.
OPERATING EXPENSES
Operating expenses for the nine months ended September 30, 1994 were $234.8
million, an increase of 25.1% over the same period in 1993. Operating expenses
for the third quarter of 1994 increased 26.8% to $83.0 million from $65.5
million for the same period in 1993. These increases were primarily due to
increases in compensation, amortization of deferred data procurement costs, and
other costs related to increases in the client service staff and computer
operations required to deliver InfoScan services and other information services
which include InfoScan NMRA Limited Joint Venture (NMRA). Client service
staffing increased in support of current and planned future revenue increases,
and computer operations increased in support of the Company's "OMEGA" production
re-engineering and cost reduction program. Deferred data procurement costs
increased primarily due to the Company's expansion of its data collection into
convenience store outlets in the United States and its continuing expansion
through NMRA of data collection in the United Kingdom. In software support
services, increased staff and computer hardware and software expansion to
support current and planned revenue growth also contributed to increases in
operating expenses.
11
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the nine months ended
September 30, 1994 and 1993 were $32.6 million and $25.0 million, respectively,
an increase of 30.5%. SG&A expenses for the third quarter of 1994 were $11.2
million, an increase of 29.6% over the same period of 1993. The increases in
SG&A expenses are attributable to increased spending in recruiting, employee
development, training and professional fees associated with the Company's
domestic and international expansion along with increases in compensation and
related staffing costs. In the first quarter of 1994, the Company recorded
expenses of $1.4 million incurred in connection with the cancelled merger with
Asia-based SRG Holdings Limited.
OTHER INCOME (EXPENSE)
Other expense increased to $8.7 million for the nine months ended September 30,
1994. For the same period in 1993, the Company recorded other income of
$462,000. The overall increase was principally due to interest expense on bank
borrowings and a non-recurring pre-tax provision of $8.0 million related to
shareholder litigation. The Company reached an agreement to settle the
shareholder class action lawsuit filed on April 21, 1994. Subject to approval
by the court, the settlement contemplates the payment of $12.5 million, of which
$7.25 million will be paid by the Company's insurance carriers. The settlement
provides that the Company may pay the balance in either cash or stock, at its
option.
EQUITY IN LOSS OF AFFILIATED COMPANIES
Equity in loss of affiliated companies reflects losses recognized related to
equity investments. The increase for the nine months ended September 30, 1994
related principally to the Company's investments in France and Holland as the
Company continued to expand its InfoScan services in these countries.
INCOME TAXES
The Company's effective tax rate was 36.1% and 42.7% for the nine months ended
September 30, 1994 and 1993, respectively. The tax rate on operations including
minority interest was 40.8% and 41.1% for the nine months ended September 30,
1994 and 1993, respectively.
CUMULATIVE EFFECT ON PRIOR YEARS OF CHANGE IN ACCOUNTING PRINCIPLE
Effective January 1, 1994, the Company changed its method of recognizing
revenue on InfoScan, PromotionScan and BehaviorScan products. Revenue now is
recognized over the term of the contract on a straight-line basis. Previously,
the Company recognized a portion of the initial contract revenue in the period
between client commitment and either the start of forward data or the test
commencement. The cumulative effect of this change as of January 1, 1994 is a
$6.6 million after-tax charge.
The Company adopted Statement of Financial Accounting Standards No. 109 -
Accounting for Income Taxes effective January 1, 1993. The cumulative effect of
this change at January 1, 1993 was to recognize a tax benefit of $1,864,000.
12
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D.
NET EARNINGS (LOSS)
As a result of the factors described above, net earnings (loss), was $(3.1)
million for the third quarter and $(11.0) million for the first nine months of
1994 versus 1993 third quarter and year-to-date net income of $7.4 million and
$19.6 million, respectively. Net earnings (loss) per share was $(.12) and
$(.42) for 1994 third quarter and first nine months, respectively, versus $.27
and $.73 for the comparable periods of 1993.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
Working capital at September 30, 1994 was $63.9 million, a decrease of $27.6
million from December 31, 1993. The decrease results principally from non-cash
charges of $11.2 million relating to the change in the method of recognizing
revenue and an $8.0 million non-recurring litigation provision. The decrease is
also due to continued expansion of the Company's business.
The Company increased its bank borrowings under its existing credit facility to
$29.5 million at the end of the third quarter of 1994. The Company anticipates
continued borrowings under its credit facility to meet its cash needs through
the end of the year. On November 3, 1994, the Company entered into a three-year
unsecured revolving bank credit facility of $65.0 million replacing its previous
credit facility of $50.0 million dated May 13, 1994. The credit facility allows
borrowings of $65.0 million through December 30, 1995 and is scheduled to
decrease to $55.0 million on December 31, 1995 and to $45.0 million on December
31, 1996.
The Company anticipates that it will have sufficient funds from its cash
balances, internally generated funds and its bank credit facility to satisfy its
working capital needs for the foreseeable future. The Company is currently
exploring possible strategic partnerships with other companies. If completed,
such partnerships would likely provide the Company with additional long-term
equity or debt funding.
13
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
As previously disclosed in the Company's Form 10-Q for the quarter ended
March 31, 1994, the Company is involved in a shareholder class action
suit filed by certain shareholders on April 21, 1994. On October 25,
1994, the Company entered into an agreement to settle the class action
lawsuit. The settlement agreement, which is subject to approval by the
court, contemplates the payment of $12.5 million, of which $7.25 million
will be paid by the Company's insurance carriers. The settlement
agreement provides that the Company may pay the balance in either cash
or stock, at its option. In the third quarter of 1994, the Company
recorded an additional $3.0 million pre-tax reserve for such settlement
and attendant legal costs.
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits
Exhibit No. Description of Exhibit Page
----------- ---------------------- ------
10 Credit Agreement dated November 3, 1994 between
the Company and Harris Trust and Savings Bank
(filed herewith). EF
11 Computations of earnings (loss) per common
and common equivalent share (filed herewith). EF
27 Financial Data Schedule (filed herewith) EF
b. The Registrant has not filed any reports on Form 8-K during the quarter
for which this report is filed.
14
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
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, Registrant's principal financial officer, thereunto duly
authorized.
INFORMATION RESOURCES, INC.
---------------------------
(Registrant)
/s/ Thomas M. Walker
--------------------------------------
Thomas M. Walker
Executive Vice President
and Chief Financial Officer
(Authorized officer of Registrant and
principal financial officer)
November 14, 1994
15
<PAGE>
Credit Agreement
Dated as of November 3, 1994
Among
Information Resources, Inc.,
The Banks Party Hereto,
And
Harris Trust and Savings Bank,
as Agent
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Description Page
<S> <C> <C>
Section 1. The Credit Facilities........................................................ 1
Section 1.1. The Revolving Credit Commitments........................................... 1
Section 1.2. Letters of Credit.......................................................... 1
Section 1.3. Applicable Interest Rates.................................................. 3
Section 1.4. Minimum Borrowing Amounts.................................................. 6
Section 1.5. Manner of Borrowing Loans and Designating Applicable Interest Rates........ 6
Section 1.6. Interest Periods........................................................... 7
Section 1.7. Maturity of Loans.......................................................... 8
Section 1.8. Prepayments................................................................ 8
Section 1.9. Default Rate............................................................... 9
Section 1.10. The Notes.................................................................. 9
Section 1.11. Funding Indemnity.......................................................... 10
Section 1.12. Commitment Terminations.................................................... 10
Section 2. Fees and Extensions.......................................................... 11
Section 2.1. Fees....................................................................... 11
Section 2.2. Extensions of Termination Date............................................. 12
Section 3. Place and Application of Payments............................................ 12
Section 4. Definitions; Interpretation.................................................. 12
Section 4.1. Definitions................................................................ 12
Section 4.2. Interpretation............................................................. 19
Section 4.3. Change in Accounting Principles............................................ 20
Section 5. Representations and Warranties............................................... 20
Section 5.1. Organization and Qualification............................................. 20
Section 5.2. Subsidiaries............................................................... 21
Section 5.3. Margin Stock............................................................... 21
Section 5.4. Financial Reports.......................................................... 21
Section 5.5. Litigation and Other Controversies......................................... 22
Section 5.6. Taxes...................................................................... 22
Section 5.7. Approvals.................................................................. 22
Section 5.8. Investment Company......................................................... 22
Section 5.9. ERISA...................................................................... 22
Section 5.10. Compliance with Laws....................................................... 23
Section 5.11. Other Agreements........................................................... 23
Section 6. Conditions Precedent......................................................... 23
Section 6.1. Initial Credit Event....................................................... 23
Section 6.2. All Credit Events.......................................................... 24
Section 7. Covenants.................................................................... 25
Section 7.1. Corporate Existence, Etc................................................... 25
Section 7.2. Maintenance of Properties.................................................. 25
Section 7.3. Taxes and Assessments...................................................... 25
Section 7.4. Insurance.................................................................. 25
Section 7.5. Financial Reports.......................................................... 26
Section 7.6. Consolidated Tangible Net Worth............................................ 27
Section 7.7. Leverage Ratio............................................................. 28
Section 7.8. Current Ratio.............................................................. 28
Section 7.9. Cash Flow Coverage Ratio................................................... 28
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Section 7.10. Indebtedness for Borrowed Money............................................ 28
Section 7.11. Liens...................................................................... 29
Section 7.12. Investments, Acquisitions, Loans, Advances and Guaranties.................. 29
Section 7.13. Leases..................................................................... 31
Section 7.14. Sales and Leasebacks....................................................... 31
Section 7.15. Mergers, Consolidations and Sales.......................................... 31
Section 7.16. Maintenance of Material Subsidiaries....................................... 32
Section 7.17. ERISA...................................................................... 32
Section 7.18. Compliance with Laws....................................................... 32
Section 7.19. Guaranty Reserve Against Commitment Availability........................... 32
Section 8. Events of Default and Remedies............................................... 33
Section 8.1. Events of Default.......................................................... 33
Section 8.2. Non-Bankruptcy Defaults.................................................... 35
Section 8.3. Bankruptcy Defaults........................................................ 36
Section 8.4. Collateral for Undrawn Letters of Credit................................... 36
Section 8.5. Notice of Default.......................................................... 37
Section 8.6. Expenses................................................................... 37
Section 9. Change in Circumstances...................................................... 37
Section 9.1. Change of Law.............................................................. 37
Section 9.2. Unavailability of Deposits or Inability to Ascertain, or
Inadequacy of, LIBOR....................................................... 37
Section 9.3. Increased Cost and Reduced Return.......................................... 38
Section 9.4. Lending Offices............................................................ 39
Section 9.5. Discretion of Bank as to Manner of Funding................................. 39
Section 10. The Agent.................................................................... 39
Section 10.1. Appointment and Authorization of Agent..................................... 39
Section 10.2. Agent and its Affiliates................................................... 39
Section 10.3. Action by Agent............................................................ 40
Section 10.4. Consultation with Experts.................................................. 40
Section 10.5. Liability of Agent; Credit Decision........................................ 40
Section 10.6. Indemnity.................................................................. 41
Section 10.7. Resignation of Agent and Successor Agent................................... 41
Section 11. Miscellaneous................................................................ 41
Section 11.1. Withholding Taxes.......................................................... 41
Section 11.2. No Waiver, Cumulative Remedies............................................. 42
Section 11.3. Non-Business Days.......................................................... 43
Section 11.4. Documentary Taxes.......................................................... 43
Section 11.5. Survival of Representations................................................ 43
Section 11.6. Survival of Indemnities.................................................... 43
Section 11.7. Sharing of Set-Off......................................................... 43
Section 11.8. Notices.................................................................... 44
Section 11.9. Counterparts............................................................... 44
Section 11.10. Successors and Assigns..................................................... 44
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Section 11.11. Participants............................................................... 44
Section 11.12. Assignment of Commitments by Banks......................................... 45
Section 11.13. Amendments................................................................. 45
Section 11.14. Headings................................................................... 46
Section 11.15. Costs and Expenses......................................................... 46
Section 11.16. Set-off.................................................................... 46
Section 11.17. Entire Agreement........................................................... 47
Section 11.18. Governing Law.............................................................. 47
Section 11.19. Severability of Provisions................................................. 47
Section 11.20. Confidentiality............................................................ 47
Section 11.21. Submission to Jurisdiction; Waiver of Jury Trial........................... 47
Signature Page.................................................................................... 48
</TABLE>
Exhibit A - Note
Exhibit B - Opinion of Counsel
Exhibit C - Notice of Payment Request
Exhibit D - Borrowing Base Certificate
Schedule 5.2 - Subsidiaries
Schedule 5.5 - Pending Litigation
Schedule 7.5 - Compliance Certificate
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<PAGE>
INFORMATION RESOURCES, INC.
CREDIT AGREEMENT
To each of the Banks signatory hereto
Ladies and Gentlemen:
The undersigned, Information Resources, Inc., a Delaware corporation
(the "Borrower"), applies to you for your several commitments, subject to the
terms and conditions hereof and on the basis of the representations and
warranties hereinafter set forth, to make a revolving credit for loans and
letters of credit (the "Revolving Credit") available to the Borrower, all as
more fully hereinafter set forth. Each of you is hereinafter referred to as a
"Bank," all of you are hereinafter referred to collectively as the "Banks," and
Harris Trust and Savings Bank in its capacity as agent for the Banks hereunder
is hereinafter referred to as the "Agent."
Section 1. The Credit Facilities.
Section 1.1. The Revolving Credit Commitments;. Subject to the
terms and conditions hereof, each Bank, by its acceptance hereof, severally
agrees to make a loan or loans (individually a "Loan" and collectively "Loans")
to the Borrower from time to time on a revolving basis up to the amount of such
Bank's revolving credit commitment set forth on the applicable signature page
hereof or pursuant to Section 11.12 hereof (its "Revolving Credit Commitment"
and, cumulatively for all the Banks, the "Revolving Credit Commitments"),
subject to any reductions thereof pursuant to the terms hereof, before the
Termination Date. Subject to Section 7.19 hereof, the sum of the aggregate
principal amount of Loans and of L/C Obligations at any time outstanding shall
not exceed the lesser of: (i) the Revolving Credit Commitments in effect at
such time and (ii) the Borrowing Base as then determined and computed. Each
Borrowing of Loans shall be made ratably from the Banks in proportion to their
respective Percentages. As provided in Section 1.5(a) hereof, the Borrower may
elect that each Borrowing of Loans be either Domestic Rate Loans or Eurodollar
Loans. Loans may be repaid and the principal amount thereof reborrowed before
the Termination Date, subject to the terms and conditions hereof.
Section 1.2. Letters of Credit;. (a) General Terms. Subject to
the terms and conditions hereof, as part of the Revolving Credit, the Agent
shall issue standby letters of credit (each a "Letter of Credit") for the
Borrower's account in an aggregate undrawn face amount up to the amount of the
L/C Commitment, provided that the aggregate L/C Obligations at any time
outstanding shall not exceed the difference between the Revolving Credit
Commitments in effect at such time and the aggregate principal amount of Loans
then outstanding. Each Letter of Credit shall be in a face amount of not less
than $100,000 at the time of issuance. Each Letter of Credit shall be issued by
the Agent, but each Bank shall be obligated to reimburse the Agent for such
Bank's Percentage of the amount of each drawing thereunder and, accordingly,
each Letter of Credit shall
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constitute usage of the Revolving Credit Commitment of each Bank pro rata in
accordance with its Percentage.
(b) Applications. At any time before the Termination Date, the Agent
shall, at the request of the Borrower, issue one or more Letters of Credit, in a
form satisfactory to the Agent, with expiration dates no later than the earlier
of twenty-four (24) months from the date of issuance of the relevant Letter of
Credit or the Termination Date, in an aggregate face amount as set forth above,
upon the receipt of an application duly executed by the Borrower for the
relevant Letter of Credit in the form then customarily prescribed by the Agent
(each an "Application"). Notwithstanding anything contained in any Application
to the contrary: (i) the Borrower shall pay fees in connection with each Letter
of Credit as set forth in Section 2.1 hereof, (ii) except as otherwise provided
in Section 1.8 hereof, before the occurrence of a Default or an Event of
Default, the Agent will not call for the funding by the Borrower of any amount
under a Letter of Credit, or for any other form of collateral security for the
Borrower's obligations in connection with such Letter of Credit, before being
presented with a drawing thereunder, and (iii) if the Agent is not timely
reimbursed for the amount of any drawing under a Letter of Credit on the date
such drawing is paid, the Borrower's obligation to reimburse the Agent for the
amount of such drawing shall bear interest (which the Borrower hereby promises
to pay) from and after the date such drawing is paid at a rate per annum equal
to the sum of 2% plus the Domestic Rate from time to time in effect. If the
Agent issues any Letter of Credit with an expiration date that is automatically
extended unless the Agent gives notice that the expiration date will not so
extend beyond its then scheduled expiration date, the Agent will give such
notice of non-renewal before the time necessary to prevent such automatic
extension if before such required notice date (i) the expiration date of such
Letter of Credit if so extended would be after the Termination Date, (ii) the
Commitments have been terminated, or (iii) an Event of Default exists and the
Required Banks have given the Agent instructions not to so permit the extension
of the expiration date of such Letter of Credit. The Agent agrees to issue
amendments to the Letter(s) of Credit increasing the amount, or extending the
expiration date, thereof at the request of the Borrower subject to the
conditions of Section 6.2 hereof and the other terms of this Section 1.2.
(c) The Reimbursement Obligations. Subject to Section 1.2(b) hereof,
the obligation of the Borrower to reimburse the Agent for all drawings under a
Letter of Credit (a "Reimbursement Obligation") shall be governed by the
Application related to such Letter of Credit, except that reimbursement shall be
made by no later than 12:00 Noon (Chicago time) on the date when each drawing is
paid in immediately available funds at the Agent's principal office in Chicago,
Illinois. If the Borrower does not make any such reimbursement payment on the
date due and the
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Participating Banks fund their participations therein in the manner set forth in
Section 1.2(d) below, then all payments thereafter received by the Agent in
discharge of any of the relevant Reimbursement Obligations shall be distributed
in accordance with Section 1.2(d) below.
(d) The Participating Interests. Each Bank (other than the Bank then
acting as Agent in issuing Letters of Credit), by its acceptance hereof,
severally agrees to purchase from the Agent, and the Agent hereby agrees to sell
to each such Bank (a "Participating Bank"), an undivided percentage
participating interest (a "Participating Interest"), to the extent of its
Percentage, in each Letter of Credit issued by, and each Reimbursement
Obligation owed to, the Agent. Upon any failure by the Borrower to pay any
Reimbursement Obligation at the time required on the date the related drawing is
paid, as set forth in Section 1.2(c) above, or if the Agent is required at any
time to return to the Borrower or to a trustee, receiver, liquidator, custodian
or other Person any portion of any payment of any Reimbursement Obligation, each
Participating Bank shall, not later than the Business Day it receives a
certificate in the form of Exhibit C hereto from the Agent to such effect, if
such certificate is received before 1:00 p.m. (Chicago time), or not later than
the following Business Day, if such certificate is received after such time, pay
to the Agent an amount equal to such Participating Bank's Percentage of such
unpaid or recaptured Reimbursement Obligation together with interest on such
amount accrued from the date the related payment was made by the Agent to the
date of such payment by such Participating Bank at a rate per annum equal to (i)
from the date the related payment was made by the Agent to the date two (2)
Business Days after payment by such Participating Bank is due hereunder, the
Federal Funds Rate for each such day and (ii) from the date two (2) Business
Days after the date such payment is due from such Participating Bank to the date
such payment is made by such Participating Bank, the Domestic Rate in effect for
each such day. Each such Participating Bank shall thereafter be entitled to
receive its Percentage of each payment received in respect of the relevant
Reimbursement Obligation and of interest paid thereon, with the Agent retaining
its Percentage as a Bank hereunder.
The several obligations of the Participating Banks to the Agent under
this Section 1.2 shall be absolute, irrevocable and unconditional under any and
all circumstances whatsoever and shall not be subject to any set-off,
counterclaim or defense to payment which any Participating Bank may have or have
had against the Borrower, the Agent, any other Bank or any other Person
whatsoever. Without limiting the generality of the foregoing, such obligations
shall not be affected by any Default or Event of Default or by any reduction or
termination of any Commitment of any Bank, and each payment by a Participating
Bank under this Section 1.2 shall be made without any offset, abatement,
withholding or reduction whatsoever. The Agent shall be entitled
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to offset amounts received for the account of a Bank under this Agreement
against unpaid amounts due from such Bank to the Agent hereunder (whether as
fundings of participations, indemnities or otherwise), but shall not be entitled
to offset against amounts owed to the Agent by any Bank arising outside of this
Agreement.
(e) Indemnification. The Participating Banks shall, to the extent of
their respective Percentages, indemnify the Agent (to the extent not reimbursed
by the Borrower) against any cost, expense (including reasonable counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from the Agent's gross negligence or willful misconduct) that the Agent
may suffer or incur in connection with any Letter of Credit. The obligations of
the Participating Banks under this Section 1.2(e) and all other parts of this
Section 1.2 shall survive termination of this Agreement and of all Applications,
Letters of Credit, and all drafts or other documents presented in connection
with drawings thereunder.
Section 1.3. Applicable Interest Rates;. (a) Domestic Rate
Loans. Each Domestic Rate Loan made or maintained by a Bank shall bear interest
during each Interest Period it is outstanding (computed on the basis of a year
of 360 days and actual days elapsed) on the unpaid principal amount thereof from
the date such Loan is advanced, continued or created by conversion from a
Eurodollar Loan until maturity (whether by acceleration or otherwise) at a rate
per annum equal to the Domestic Rate from time to time in effect, payable on the
last day of its Interest Period and at maturity (whether by acceleration or
otherwise).
"Domestic Rate" means for any day the greater of:
(i) the rate of interest announced by the Agent from time to time as
its prime commercial rate, or equivalent, as in effect on such day, with
any change in the Domestic Rate resulting from a change in said prime
commercial rate to be effective as of the date of the relevant change in
said prime commercial rate; and
(ii) the sum of (x) the rate determined by the Agent to be the
prevailing rate per annum (rounded upwards, if necessary, to the next
higher 1/100 of 1%) at approximately 10:00 a.m. (Chicago time) (or as
soon thereafter as is practicable) on such day (or, if such day is not a
Business Day, on the immediately preceding Business Day) for the purchase
at face value of overnight Federal funds in an amount comparable to the
principal amount owed to the Agent for which such rate is being
determined, plus (y) 1/2 of 1% (0.50%).
(b) Eurodollar Loans. Each Eurodollar Loan made or maintained by a Bank
shall bear interest during each Interest Period it is outstanding (computed on
the basis of a year of 360 days and actual days elapsed) on the unpaid principal
amount thereof from the date such Loan is advanced, continued, or created by
conversion from a Domestic Rate Loan until maturity (whether by acceleration or
otherwise) at a rate per annum equal
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to the sum of the Eurodollar Margin plus the Adjusted LIBOR applicable for such
Interest Period, payable on the last day of the Interest Period and at maturity
(whether by acceleration or otherwise), and, if the applicable Interest Period
is longer than three months, on each day occurring every three months after the
commencement of such Interest Period.
"Adjusted LIBOR" means, for any Borrowing of Eurodollar Loans, a rate per
annum determined in accordance with the following formula:
Adjusted LIBOR = LIBOR
-------------------------------
1 - Eurodollar Reserve Percentage
"LIBOR" means, for an Interest Period for a Borrowing of Eurodollar
Loans, (a) the LIBOR Index Rate for such Interest Period, if such rate is
available, and (b) if the LIBOR Index Rate cannot be determined, the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) at which deposits in U.S. Dollars in immediately
available funds are offered to the Agent at 11:00 a.m. (London, England time)
two (2) Business Days before the beginning of such Interest Period by three (3)
or more major banks in the interbank eurodollar market selected by the Agent for
delivery on the first day of and for a period equal to such Interest Period and
in an amount equal or comparable to the principal amount of the Eurodollar Loan
scheduled to be made by the Agent as part of such Borrowing.
"LIBOR Index Rate" means, for any Interest Period, the rate per annum
(rounded upwards, if necessary, to the next higher one hundred-thousandth of a
percentage point) for deposits in U.S. Dollars for a period equal to such
Interest Period, which appears on the Telerate Page 3750 as of 11:00 a.m.
(London, England time) on the day two (2) Business Days before the commencement
of such Interest Period.
"Telerate Page 3750" means the display designated as "Page 3750" on
the Telerate Service (or such other page as may replace Page 3750 on that
service or such other service as may be nominated by the British Bankers'
Association as the information vendor for the purpose of displaying British
Bankers' Association Interest Settlement Rates for U.S. Dollar deposits).
"Eurodollar Reserve Percentage" means, for any Borrowing of Eurodollar
Loans, the daily average for the applicable Interest Period of the maximum rate,
expressed as a decimal, at which reserves (including, without limitation, any
supplemental, marginal and emergency reserves) are imposed during such Interest
Period by the Board of Governors of the Federal Reserve System (or any
successor) on "eurocurrency liabilities", as defined in such Board's Regulation
D (or in respect of any other category of liabilities that includes deposits by
reference to which the interest rate on Eurodollar Loans is determined or any
category of extensions of credit or other assets that include loans by non-
United States offices of any Bank to United States residents), subject to any
amendments of such reserve requirement
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by such Board or its successor, taking into account any transitional adjustments
thereto. For purposes of this definition, the Eurodollar Loans shall be deemed
to be "eurocurrency liabilities" as defined in Regulation D without benefit or
credit for any prorations, exemptions or offsets under Regulation D.
"Eurodollar Margin" means 2% per annum until the first Pricing Date,
and thereafter from one Pricing Date to the next a rate per annum determined in
accordance with the following schedule:
Cash Flow Coverage Ratio
for such Pricing Date: Eurodollar Margin:
Less than 1.0 to 1.0 2%
Equal to or greater than 1.0 to 1.0, 1-3/4%
but less than or equal to 1.5 to 1.0
Greater than 1.5 to 1.0 1-1/2%
(c) Rate Determinations. The Agent shall determine each interest rate
applicable to the Loans and Reimbursement Obligations hereunder, and its
determination thereof shall be conclusive and binding except in the case of
manifest error or willful misconduct.
Section 1.4. Minimum Borrowing Amounts;. Each Borrowing of Domestic
Rate Loan shall be in an amount equal to $250,000 or such greater amount which
is an integral multiple of $250,000. Each Borrowing of Eurodollar Loan shall be
in an amount equal to $1,000,000 or such greater amount which is an integral
multiple of $1,000,000.
Section 1.5. Manner of Borrowing Loans and Designating
Applicable Interest Rates;. (a) Notice to the Agent. The Borrower shall give
notice to the Agent by no later than 10:00 a.m. (Chicago time): (i) at least
three (3) Business Days before the date on which the Borrower requests the Banks
to advance a Borrowing of Eurodollar Loans and (ii) on the date the Borrower
requests the Banks to advance a Borrowing of Domestic Rate Loans. The Loans
included in each Borrowing shall bear interest initially at the type of rate
specified in such notice of a new Borrowing. Thereafter, the Borrower may from
time to time elect to change or continue the type of interest rate borne by each
Borrowing or, subject to Section 1.4's minimum amount requirement for each
outstanding Borrowing, a portion thereof, as follows: (i) if such Borrowing is
of Eurodollar Loans, on the last day of the Interest Period applicable thereto,
the Borrower may continue part or all of such Borrowing as Eurodollar Loans or
convert part or all of such Borrowing into Domestic Rate Loans or (ii) if such
Borrowing is of Domestic Rate Loans, on any Business Day, the Borrower may
convert all or part of such Borrowing into Eurodollar Loans for an Interest
Period or Interest Periods specified by the Borrower. The Borrower shall give
all such notices requesting the advance, continuation or conversion of a
Borrowing to the Agent by telephone or telecopy (which notice
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shall be irrevocable once given and, if by telephone, shall be promptly
confirmed in writing). Notices of the continuation of a Borrowing of Eurodollar
Loans for an additional Interest Period or of the conversion of part or all of a
Borrowing of Eurodollar Loans into Domestic Rate Loans or of Domestic Rate Loans
into Eurodollar Loans must be given by no later than 10:00 a.m. (Chicago time)
at least three (3) Business Days before the date of the requested continuation
or conversion. All such notices concerning the advance, continuation or
conversion of a Borrowing shall specify the date of the requested advance,
continuation or conversion of a Borrowing (which shall be a Business Day), the
amount of the requested Borrowing to be advanced, continued or converted, the
type of Loans to comprise such new, continued or converted Borrowing and, if
such Borrowing is to be comprised of Eurodollar Loans and the Interest Period
applicable thereto. The Borrower agrees that the Agent may rely on any such
telephonic or telecopy notice given by any person it in good faith believes is
an Authorized Representative without the necessity of independent investigation,
and in the event any such notice by telephone conflicts with any written
confirmation, such telephonic notice shall govern if the Agent has acted in
reliance thereon.
(b) Notice to the Banks. The Agent shall give prompt telephonic or
telecopy notice to each Bank of any notice from the Borrower received pursuant
to Section 1.5(a) above and, if such notice requests the Banks to make
Eurodollar Loans, the Agent shall give notice to the Borrower and each Bank by
like means of the interest rate applicable thereto (but, if such notice is given
by telephone, the Agent shall confirm such rate in writing) promptly after the
Agent has made such determination.
(c) Borrower's Failure to Notify; Automatic Continuations and
Conversions. Any outstanding Borrowing of Domestic Rate Loans shall
automatically be continued for an additional Interest Period on the last day of
its then current Interest Period unless the Borrower has notified the Agent
within the period required by Section 1.5(a) that the Borrower intends to
convert such Borrowing, subject to Section 6.2 hereof, into a Borrowing of
Eurodollar Loans or such Borrowing is prepaid in accordance with Section 1.8(a).
If the Borrower fails to give notice pursuant to Section 1.5(a) above of the
continuation or conversion of any outstanding principal amount of a Borrowing of
Eurodollar Loans before the last day of its then current Interest Period within
the period required by Section 1.5(a) or, whether or not such notice has been
given, one or more of the conditions set forth in Section 6.2 for the
continuation or conversion of a Borrowing of Eurodollar Loans would not be
satisfied, and such Borrowing is not prepaid in accordance with Section 1.8(a),
such Borrowing shall automatically be converted into a Borrowing of Domestic
Rate Loans.
(d) Disbursement of Loans. Not later than 12:00 noon (Chicago time) on
the date of any requested advance of a new Borrowing, subject to Section 6
hereof, each Bank shall make
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available its Loan comprising part of such Borrowing in funds immediately
available at the principal office of the Agent in Chicago, Illinois. The Agent
shall make the proceeds of each new Borrowing available to the Borrower at the
Agent's principal office in Chicago, Illinois.
(e) Agent Reliance on Bank Funding. Unless the Agent shall have been
notified by a Bank prior to (or, in the case of a Borrowing of Domestic Rate
Loans, by 12:00 noon (Chicago time) on) the date on which such Bank is scheduled
to make payment to the Agent of the proceeds of a Loan (which notice shall be
effective upon receipt) that such Bank does not intend to make such payment, the
Agent may assume that such Bank has made such payment when due and the Agent may
in reliance upon such assumption (but shall not be required to) make available
to the Borrower the proceeds of the Loan to be made by such Bank and, if any
Bank has not in fact made such payment to the Agent, such Bank shall, on demand,
pay to the Agent the amount made available to the Borrower attributable to such
Bank together with interest thereon in respect of each day during the period
commencing on the date such amount was made available to the Borrower and ending
on (but excluding) the date such Bank pays such amount to the Agent at a rate
per annum equal to the Federal Funds Rate. If such amount is not received from
such Bank by the Agent immediately upon demand, the Borrower will, on demand,
repay to the Agent the proceeds of the Loan attributable to such Bank with
interest thereon at a rate per annum equal to the interest rate applicable to
the relevant Loan, but without such payment being considered a payment or
prepayment of a Loan under Section 1.11 hereof, so that the Borrower will have
no liability under such Section with respect to such payment.
Section 1.6. Interest Periods;. As provided in Section 1.5(a) hereof,
at the time of each request to advance, continue, or create by conversion a
Borrowing of Eurodollar Loans, the Borrower shall select an Interest Period
applicable to such Loans from among the available options. The term "Interest
Period" means the period commencing on the date a Borrowing of Loans is
advanced, continued, or created by conversion and ending: (a) in the case of
Domestic Rate Loans, on the last day of the calendar quarter in which such
Borrowing is advanced, continued, or created by conversion (or on the last day
of the following calendar quarter if such Loan is advanced, continued or created
by conversion on the last day of a calendar quarter) and (b) in the case of a
Eurodollar Loan, 1, 2, 3, or 6 months thereafter; provided, however, that:
(a) any Interest Period for a Borrowing of Domestic Rate Loans that
otherwise would end after the Termination Date shall end on the
Termination Date;
(b) for any Borrowing of Eurodollar Loans, the Borrower may not select
an Interest Period that extends beyond the Termination Date;
(c) whenever the last day of any Interest Period
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would otherwise be a day that is not a Business Day, the last day of such
Interest Period shall be extended to the next succeeding Business Day,
provided that, if such extension would cause the last day of an Interest
Period for a Borrowing of Eurodollar Loans to occur in the following
calendar month, the last day of such Interest Period shall be the
immediately preceding Business Day; and
(d) for purposes of determining an Interest Period for a Borrowing of
Eurodollar Loans, a month means a period starting on one day in a
calendar month and ending on the numerically corresponding day in the
next calendar month; provided, however, that if there is no numerically
corresponding day in the month in which such an Interest Period is to end
or if such an Interest Period begins on the last Business Day of a
calendar month, then such Interest Period shall end on the last Business
Day of the calendar month in which such Interest Period is to end.
Section 1.7. Maturity of Loans.; Each Loan shall mature and become due
and payable by the Borrower on the Termination Date.
Section 1.8. Prepayments.; (a) Optional. The Borrower shall
have the privilege of prepaying without premium or penalty and in whole or in
part (but, if in part, then: (i) if such Borrowing is of Domestic Rate Loans, in
an amount not less than $250,000, (ii) if such Borrowing is of Eurodollar Loans,
in an amount not less than $1,000,000, and (iii) in each case, in an amount such
that the minimum amount required for a Borrowing pursuant to Section 1.4 hereof
remains outstanding) any Borrowing of Eurodollar Loans at any time upon three
(3) Business Days' prior notice to the Agent or, in the case of a Borrowing of
Domestic Rate Loans, notice delivered to the Agent by the Borrower no later than
10:00 a.m. (Chicago time) on the date of prepayment, such prepayment to be made
by the payment of the principal amount to be prepaid and accrued interest
thereon to the date fixed for prepayment. In the case of Eurodollar Loans, such
prepayment may only be made on the last day of the Interest Period then
applicable to such Loans. The Agent will promptly advise each Bank of any such
prepayment notice it receives from the Borrower. Any amount paid or prepaid
before the Termination Date may, subject to the terms and conditions of this
Agreement, be borrowed, repaid and borrowed again.
(b) Mandatory. (i) The Borrower shall, on each date the Revolving
Credit Commitments are reduced pursuant to Section 1.12(b) hereof, prepay the
Loans and, if necessary, prefund the L/C Obligations by the amount, if any,
necessary to reduce the sum of the aggregate principal amount of Loans and of
L/C Obligations then outstanding to the amount to which the Revolving Credit
Commitments have been so reduced.
(ii) If the sum of the aggregate principal amount of Loans and of L/C
Obligations at any time outstanding shall for any
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reason exceed the Borrowing Base as then determined and computed, the Borrower
hereby agrees that it shall immediately and without notice or demand pay over
the amount of the excess as a prepayment of the Loans and, if necessary, as a
prefunding of the L/C Obligations.
(iii) Unless the Borrower otherwise directs, prepayments of Loans
under this Section 1.8(b) shall be applied first to Borrowings of Domestic Rate
Loans until payment in full thereof with any balance applied to Borrowings of
Eurodollar Loans in the order in which their Interest Periods expire. Each
prepayment of Loans under this Section 1.8(b) shall be made by the payment of
the principal amount to be prepaid and accrued interest thereon to the date of
prepayment together with any amounts due the Banks under Section 1.11 hereof.
Each prefunding of L/C Obligations shall be made in accordance with Section 8.4
hereof.
Section 1.9. Default Rate.; If any payment of principal on any
Loan is not made when due (whether by acceleration or otherwise), such Loan
shall bear interest (computed on the basis of a year of 360 days and actual days
elapsed) from the date such payment was due until paid in full, payable on
demand, at a rate per annum equal to:
(a) for any Domestic Rate Loan, the sum of two percent (2%) plus the
Domestic Rate from time to time in effect; and
(b) for any Eurodollar Loan, the sum of two percent (2%) plus the rate
of interest in effect thereon at the time of such default until the end
of the Interest Period applicable thereto and, thereafter, at a rate per
annum equal to the sum of two percent (2%) plus the Domestic Rate from
time to time in effect.
Section 1.10. The Notes.; (a) The Loans made to the Borrower by
a Bank shall be evidenced by a single promissory note of the Borrower issued to
such Bank in the form of Exhibit A hereto. Each such promissory note is
hereinafter referred to as a "Note" and collectively such promissory notes are
referred to as the "Notes."
(b) Each Bank shall record on its books and records or on a schedule
to its Note the amount of each Loan advanced, continued or converted by it, all
payments of principal and interest and the principal balance from time to time
outstanding thereon, the type of such Loan, and, for any Eurodollar Loan, the
Interest Period and the interest rate applicable thereto. The record thereof,
whether shown on such books and records of a Bank or on a schedule to any Note,
shall be prima facie evidence as to all such matters; provided, however, that
the failure of any Bank to record any of the foregoing or any error in any such
record shall not limit or otherwise affect the obligation of the Borrower to
repay all Loans made to it hereunder together with accrued interest thereon. At
the request of any Bank and upon such Bank tendering to the Borrower the Note to
be replaced, the Borrower shall furnish a new Note to such Bank to replace any
outstanding
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Note, and at such time the first notation appearing on a schedule on
the reverse side of, or attached to, such Note shall set forth the aggregate
unpaid principal amount of all Loans, if any, then outstanding thereon.
Section 1.11. Funding Indemnity.; If any Bank shall incur any
loss, cost or expense (including, without limitation, any loss of profit, and
any loss, cost or expense incurred by reason of the liquidation or re-employment
of deposits or other funds acquired by such Bank to fund or maintain any
Eurodollar Loan or the relending or reinvesting of such deposits or amounts paid
or prepaid to such Bank) as a result of:
(a) any payment, prepayment or conversion of a Eurodollar Loan on a
date other than the last day of its Interest Period,
(b) any failure (because of a failure to meet the conditions of
Section 6 or otherwise) by the Borrower to borrow or continue a Eurodollar
Loan, or to convert a Domestic Rate Loan into a Eurodollar Loan, on the
date specified in a notice given pursuant to Section 1.5(a) or established
pursuant to Section 1.5(c) hereof,
(c) any failure by the Borrower to make any payment of principal on
any Eurodollar Loan when due (whether by acceleration or otherwise), or
(d) any acceleration of the maturity of a Eurodollar Loan as a
result of the occurrence of any Event of Default hereunder,
then, upon the demand of such Bank, the Borrower shall pay to such Bank such
amount as will reimburse such Bank for such loss, cost or expense. If any Bank
makes such a claim for compensation, it shall provide to the Borrower, with a
copy to the Agent, a certificate setting forth the amount of such loss, cost or
expense in reasonable detail (including an explanation of the basis for and the
computation of such loss, cost or expense) and the amounts shown on such
certificate if reasonably calculated shall be conclusive.
Section 1.12. Commitment Terminations;. (a) Optional. The
Borrower shall have the right at any time and from time to time, upon five (5)
Business Days' prior written notice to the Agent, to terminate the Revolving
Credit Commitments without premium or penalty and in whole or in part, any
partial termination to be (i) in an amount not less than $1,000,000, and (ii)
allocated ratably among the Banks in proportion to their respective Percentages,
provided that the Revolving Credit Commitments may not be reduced to an amount
less than the sum of the aggregate principal amount of Loans and of L/C
Obligations then outstanding. Any termination of the Revolving Credit
Commitments below $2,000,000 shall reduce the L/C Commitment by a like amount.
The Agent shall give prompt notice to each Bank of any such termination of
Revolving Credit Commitments.
(b) Mandatory. If at any time the Termination Date is not extended for
an additional year pursuant to Section 2.2 hereof,
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then in that event the Revolving Credit Commitments shall automatically reduce
by (i) $10,000,000 on the first December 31st following such non-extension and
(ii) by an additional $10,000,000 on the second December 31st following such
non-extension, with each reduction allocated ratably among the Banks in
proportion to their respective Percentages.
(c) Any termination of the Commitments pursuant to this Section 1.12
may not be reinstated.
Section 2. Fees and Extensions.
Section 2.1. Fees.; (a) Commitment Fee. The Borrower shall pay to the
Agent for the ratable account of the Banks in accordance with their Percentages
a commitment fee at the rate of 3/8 of 1% per annum (computed on the basis of a
year of 360 days and the actual number of days elapsed) on the average daily
Unused Commitments. Such commitment fee shall be payable quarter-annually in
arrears on the last day of each March, June, September and December in each year
(commencing December 31, 1994) and on the Termination Date, unless the Revolving
Credit Commitments are terminated in whole on an earlier date, in which event
the commitment fee for the period to the date of such termination in whole shall
be paid on the date of such termination.
(b) Letter of Credit Fees. On the date of issuance or extension, or
increase in the amount, of any Letter of Credit pursuant to Section 1.2 hereof,
the Borrower shall pay to the Agent for its own account an issuance fee equal to
1/8 of 1% (computed on the basis of a year of 360 days and the actual number of
days elapsed) of the face amount of (or of the increase in the face amount of)
such Letter of Credit. Quarterly in arrears, on the last day of each calendar
quarter, commencing on December 31, 1994, the Borrower shall pay to the Agent,
for the ratable benefit of the Banks in accordance with their Percentages, a
letter of credit fee at a rate per annum equal to the Eurodollar Margin
(computed on the basis of a year of 360 days and the actual number of days
elapsed) in effect during each day of such quarter applied to the daily average
face amount of Letters of Credit outstanding during such quarter. In addition,
the Borrower shall pay to the Agent for its own account the Agent's standard
drawing, negotiation, amendment, and other administrative fees for each Letter
of Credit. Such standard fees referred to in the preceding sentence may be
established by the Agent from time to time.
(c) Closing Fees. On the date hereof, the Borrower shall pay to the
Agent for the benefit of the Banks a closing fee determined as follows: (i) for
each Bank having a Revolving Credit Commitment of $15,000,000 or more, 1/2 of 1%
of its Revolving Credit Commitment and (ii) for each Bank having a Revolving
Credit Commitment of less than $15,000,000, 3/8 of 1% of its Revolving Credit
Commitment.
(d) Agent Fees. The Borrower shall pay to the Agent fees with respect
to the syndication and administration of the credit
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facilities described in this Agreement as are agreed to between the Agent and
the Borrower in that certain letter dated September 14, 1994 (with respect to
syndication fees) and in that certain agent's fee letter dated November 3, 1994
(with respect to administrative fees), or as otherwise agreed to between them.
Section 2.2. Extensions of Termination Date;. No later than sixty (60)
days before each anniversary date of this Agreement the Borrower may make a
request for a one year extension of the Termination Date in a written notice to
the Agent. The Agent will promptly inform the Banks of any such request, and
each Bank shall notify the Agent in writing within thirty (30) days before the
anniversary date following such request whether such Bank agrees to the
requested extension. If a Bank fails to so notify the Agent whether such Bank
agrees to such extension, such Bank shall be deemed to have refused to grant the
requested extension. Upon receipt of the Agent of the written consent of all the
Banks, the Termination Date shall be automatically extended an additional year.
Otherwise, the Termination Date will remain as scheduled. All costs and expenses
incurred by the Agent in connection with each extension request (including
reasonable attorneys' fees) shall be paid by the Borrower in accordance with
Section 11.15 hereof.
Section 3. Place and Application of Payments;.
All payments of principal of and interest on the Loans and the
Reimbursement Obligations, and of all other Obligations payable by the Borrower
under this Agreement and the other Loan Documents, shall be made by the Borrower
to the Agent by no later than 12:00 noon (Chicago time) on the due date thereof
at the principal office of the Agent in Chicago, Illinois (or such other
location in the State of Illinois as the Agent may designate to the Borrower)
for the benefit of the Bank or Banks entitled thereto. Any payments received
after such time shall be deemed to have been received by the Agent on the next
Business Day. All such payments shall be made in U.S. Dollars, in immediately
available funds at the place of payment, in each case without set-off or
counterclaim. The Agent will promptly thereafter cause to be distributed like
funds relating to the payment of principal or interest on Loans and on
Reimbursement Obligations in which the Banks have purchased Participating
Interests ratably to the Banks and like funds relating to the payment of any
other amount payable to any Bank to such Bank, in each case to be applied in
accordance with the terms of this Agreement.
Section 4. Definitions; Interpretation.'
Section 4.1. Definitions.; The following terms when used herein shall
have the following meanings:
"Account" is defined in Section 8.4 hereof.
"Adjusted LIBOR" is defined in Section 1.3(b) hereof.
"Affiliate" means any Person directly or indirectly controlling or
controlled by, or under direct or indirect common control with, another Person.
A Person shall be deemed to control another Person for the purposes of this
definition if
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such Person possesses, directly or indirectly, the power to direct, or cause the
direction of, the management and policies of the other Person, whether through
the ownership of voting securities, common directors, trustees or officers, by
contract or otherwise.
"Agent" means Harris Trust and Savings Bank and any successor
pursuant to Section 10.7 hereof.
"Application" is defined in Section 1.2(b) hereof.
"Authorized Representative" means those persons shown on the list of
officers provided by the Borrower pursuant to Section 6.1(f) hereof or on any
update of any such list provided by the Borrower to the Agent, or any further or
different officer of the Borrower so named by any Authorized Representative of
the Borrower in a written notice to the Agent.
"Bank" is defined in the introductory paragraph of this Agreement and
includes each assignee bank pursuant to Section 11.12 hereof.
"Borrower" is defined in the introductory paragraph of this
Agreement.
"Borrowing" means the total of Loans of a single type advanced,
continued for an additional Interest Period, or converted from a different type
into such type by the Banks on a single date and for a single Interest Period.
Borrowings of Loans are made and maintained ratably from each of the Banks
according to their Percentages. A Borrowing is "advanced" on the day Banks
advance funds comprising such Borrowing to the Borrower, is "continued" on the
date a new Interest Period for the same type of Loans commences for such
Borrowing, and is "converted" when such Borrowing is changed from one type of
Loan to the other, all as requested by the Borrower pursuant to Section 1.5(a).
"Borrowing Base" means, as of any time the same is to be determined,
the sum of 85% of billed Eligible Receivables and 50% of earned but unbilled
Eligible Receivables (valued in each instance at the amount owing less any
prompt payment or other discounts to which the account debtor could under any
circumstances be entitled and also less any amounts owing by the Borrower to
such account debtor). The Borrowing Base shall only be determined as of the
last day of each calendar month and the amount so determined as of the last day
of such calendar month shall, for all purposes of this Agreement constitutes the
Borrowing Base until the next redetermination.
"Business Day" means any day other than a Saturday or Sunday on which
banks are not authorized or required to close in Chicago, Illinois and, if the
applicable Business Day relates to the borrowing or payment of a Eurodollar
Loan, on which banks are dealing in U.S. Dollar deposits in the interbank
eurodollar market in London, England.
"Capital Lease" means any lease of Property which in accordance with
GAAP is required to be capitalized on the balance sheet of the lessee.
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"Capitalized Lease Obligation" means the amount of the liability shown
on the balance sheet of any Person in respect of a Capital Lease determined in
accordance with GAAP.
"Cash Flow Coverage Ratio" is defined in Section 7.9 hereof.
"Code" means the Internal Revenue Code of 1986, as amended, and
any successor statute thereto.
"Commitments" means the Revolving Credit Commitments and the L/C
Commitment.
"Consolidated Cash Flow" means, with reference to any period, the sum
of (a) Consolidated Net Income for such period plus all amounts deducted in
arriving at such Consolidated Net Income amount (but without duplication) in
respect of (i) Consolidated Interest Expense for such period, plus (ii) federal,
state and local income taxes for such period, plus (iii) all amounts properly
charged for depreciation of fixed assets and amortization of intangible assets
during such period on the books of the Borrower and its Consolidated
Subsidiaries, plus (iv) all amounts properly charged for amortization of the
InfoScan Costs and Software Costs during such period on the books of the
Borrower and its Subsidiaries, and (b) 100% of the net proceeds received by the
Borrower from any new offering of equity securities of the Borrower received at
any time during such period.
"Consolidated Current Ratio" means, as of any time the same is to be
determined, the ratio of current assets of the Borrower and its Consolidated
Subsidiaries to current liabilities of the Borrower and its Consolidated
Subsidiaries, all determined on a consolidated basis in accordance with GAAP,
provided there shall be excluded from current liabilities the current portion of
deferred taxes.
"Consolidated Fixed Charges" means, with reference to any period, the
sum of (i) the aggregate amount of payments required to be made by the Borrower
and its Consolidated Subsidiaries during such period in respect of principal on
all Indebtedness for Borrowed Money (whether at maturity, as a result of
mandatory sinking fund redemption, mandatory prepayment, acceleration or
otherwise), plus (ii) Consolidated Interest Expense for such period, plus (iii)
capital expenditures (as determined in accordance with GAAP) of the Borrower and
its Consolidated Subsidiaries during such period, plus (iv) dividends paid by
the Borrower and, to the extent not received by the Borrower, its Subsidiaries
on its capital stock during such period, plus (v) cash payments made in
connection with InfoScan Costs and Software Costs during such period and cash
investments in joint ventures and other investments and acquisitions during such
period; provided, however, that mandatory principal repayments on the Note
required by Section 1.8(b) hereof shall not be included in the computation of
Consolidated Fixed Charges.
"Consolidated Interest Expense" means, with reference to any period,
the sum of all interest charges (including imputed interest charges with respect
to Capitalized Lease Obligations
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and all amortization of debt discount and expense) of the Borrower and its
Consolidated Subsidiaries for such period determined in accordance with GAAP.
"Consolidated Net Income" means, with reference to any period, the net
income (or net loss) of the Borrower and its Consolidated Subsidiaries for such
period as computed on a consolidated basis in accordance with GAAP, and without
limiting the foregoing after deduction from gross income of all expenses and
reserves, including reserves for all taxes on or measured by income.
"Consolidated Tangible Net Worth" means, as of any time the same is to
be determined, the excess of total assets of the Borrower and its Consolidated
Subsidiaries over total liabilities of the Borrower and its Consolidated
Subsidiaries, total assets and total liabilities each to be determined on a
consolidated basis in accordance with GAAP, excluding, however, from the
determination of total assets (i) all assets which would be classified as
intangible assets under GAAP, including, without limitation, goodwill, patents,
trademarks, trade names, copyrights, franchises and deferred charges (including,
without limitation, unamortized debt discount and expense, organization costs
and deferred research and development expense) and similar assets and (ii) the
write-up of assets above cost.
"Consolidated Total Liabilities" means, as of any time the same is to
be determined, the aggregate of all indebtedness, obligations, liabilities,
reserves and any other items which would be listed as a liability on a balance
sheet of the Borrower and its Consolidated Subsidiaries determined on a
consolidated basis in accordance with GAAP.
"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 Subsidiary, are treated
as a single employer under Section 414 of the Code.
"Credit Event" means the advancing of any Loan, the continuation of or
conversion into a Eurodollar Loan, or the issuance of, or extension of the
expiration date or increase in the amount of, any Letter of Credit.
"Default" means any event or condition the occurrence of which would,
with the passage of time or the giving of notice, or both, constitute an Event
of Default.
"Domestic Rate" is defined in Section 1.3(a) hereof.
"Domestic Rate Loan" means a Loan bearing interest prior to
maturity at a rate specified in Section 1.3(a) hereof.
"Eligible Receivables" means the gross accounts receivable of the
Borrower determined in accordance with GAAP provided that an account receivable
shall only be an Eligible Account to the extent it:
(a) is not an obligation of an account debtor which is (i) a debtor
under any proceeding under the United States Bankruptcy Code, as amended,
or any other comparable
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bankruptcy or insolvency law or (ii) an assignor for the benefit of
creditors;
(b) is not subject to any Lien;
(c) is free of defense, offset, counterclaim and/or dispute;
(d) if billed, has not been outstanding for more than 90 days and,
if unbilled, the services represented thereby have been rendered in
compliance with the applicable contract and may properly be invoiced within
75 days of the date of computation and, when invoiced, will be payable
within 30 days; and
(e) the account debtor conducts substantial business in the United
States or Canada or, if it does not, payment of such account is supported
by a letter of credit issued by a commercial bank or other financial
institution or is secured in a manner reasonably acceptable to the Agent.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, or any successor statute thereto.
"Eurodollar Loan" means a Loan bearing interest prior to maturity at
the rate specified in Section 1.3(b) hereof.
"Eurodollar Margin" is defined in Section 1.3(b) hereof.
"Eurodollar Reserve Percentage" is defined in Section 1.3(b) hereof.
"Event of Default" means any event or condition identified as such
in Section 8.1 hereof.
"Federal Funds Rate" means the fluctuating interest rate per annum
described in part (x) of clause (ii) of the definition of Domestic Rate
appearing in Section 1.3(a) hereof.
"GAAP" means generally accepted accounting principles as in effect
from time to time, and, subject to Section 4.3 hereof, applied by the Borrower
and its Subsidiaries on a basis consistent with the preparation of the
Borrower's financial statements referred to in Section 5.4 hereof.
"Headquarters Complex Lease" means the Lease Agreement dated as of
September 27, 1990 by and between Randolph/Clinton Limited Partnership and the
Borrower pursuant to which the Borrower has leased property formerly owned by it
and commonly known as 150 North Clinton Street, 162 North Clinton Street and 564
West Randolph Street, Chicago, Illinois and any buildings or improvements now or
hereafter existing thereon pursuant to the terms and conditions stated therein.
"Indebtedness for Borrowed Money" means for any Person (without
duplication) (i) all indebtedness created, assumed or incurred in any manner by
such Person representing money borrowed (including by the issuance of debt
securities), (ii) all indebtedness for the deferred purchase price of property
or services (other than trade accounts payable arising in the ordinary course of
business), (iii) all indebtedness secured by any Lien upon Property of such
Person, whether or not such Person has assumed or become liable for the payment
of such indebtedness, (iv) all Capitalized Lease Obligations of such
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Person and (v) all obligations of such Person on or with respect to letters of
credit, bankers' acceptances and other extensions of credit whether or not
representing obligations for borrowed money.
"InfoScan Costs" means the assets of the Borrower identified as
Infoscan Costs (consisting of deferred data procurement costs) on the
consolidated balance sheet of the Borrower dated as at December 31, 1993, which
balance sheet has heretofore been furnished to the Banks.
"Interest Period" is defined in Section 1.6 hereof.
"L/C Commitment" means $2,000,000.
"L/C Obligations" means the aggregate undrawn face amounts of all
outstanding Letters of Credit and all unpaid Reimbursement Obligations.
"Lending Office" is defined in Section 9.4 hereof.
"Letter of Credit" is defined in Section 1.2(a) hereof.
"LIBOR" is defined in Section 1.3(b) hereof.
"Lien" means any mortgage, lien, security interest, pledge, charge or
encumbrance of any kind in respect of any Property, including the interests of a
vendor or lessor under any conditional sale, capital lease or other title
retention arrangement.
"Loan" is defined in Section 1.1 hereof and, as so defined, includes a
Domestic Rate Loan or a Eurodollar Loan, each of which is a "type" of Loan
hereunder.
"Loan Documents" means this Agreement, the Notes and the
Applications.
"Note" is defined in Section 1.10(a) hereof.
"Obligations" means all fees payable hereunder, all obligations of the
Borrower to pay principal and interest on Loans and Reimbursement Obligations,
and all other payment obligations of the Borrower arising under or in relation
to any Loan Document.
"Participating Bank" is defined in Section 1.2(d) hereof.
"Participating Interest" is defined in Section 1.2(d) hereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any Person
succeeding to any or all of its functions under ERISA.
"Percentage" means, for each Bank, the percentage of the Revolving
Credit Commitments represented by such Bank's Revolving Credit Commitment or, if
the Revolving Credit Commitments have been terminated, the percentage held by
such Bank (including through participation interests in Reimbursement
Obligations) of the aggregate principal amount of all outstanding Obligations.
"Person" means an individual, partnership, corporation, association,
trust, unincorporated organization or any other entity or organization,
including a government or agency or political subdivision thereof.
"Plan" means any employee pension benefit plan covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the Code
that either (i) is maintained by a
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member of the Controlled Group for employees of a member of the Controlled Group
or (ii) is maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding five plan years made
contributions.
"Pricing Date" means, for any fiscal quarter of the Borrower ended
after the date hereof, the latest date by which the Borrower is required to
deliver a Compliance Certificate for such fiscal quarter pursuant to Section
7.5(b). The Eurodollar Margin established on a Pricing Date shall remain in
effect until the next Pricing Date. If the Borrower has not delivered a
Compliance Certificate by the date such Compliance Certificate is required to be
delivered under Section 7.5(b), until a Compliance Certificate is delivered
before the next Pricing Date, the Eurodollar Margin shall be 2% per annum. If
the Borrower subsequently delivers such a Compliance Certificate before the next
Pricing Date, the Eurodollar Margin established by such late delivered
Compliance Certificate shall take effect from the date of delivery until the
next Pricing Date. In all other circumstances, the Eurodollar Margin
established by a Compliance Certificate shall be in effect from the Pricing Date
that occurs immediately after the end of the Borrower's fiscal quarter covered
by such Compliance Certificate until the next Pricing Date.
"Property" means any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Reimbursement Obligation" is defined in Section 1.2(c) hereof.
"Required Banks" means, as of the date of determination thereof,
Banks holding at least 65% of the Percentages.
"Revolving Credit" is defined in the introductory paragraph of this
Agreement.
"Revolving Credit Commitment" is defined in Section 1.1 hereof.
"Software Costs" means the assets of the Borrower identified as
Software Costs on the consolidated balance sheet of the Borrower dated as at
December 31, 1993, which balance sheet has heretofore been furnished to the
Banks.
"Subsidiary" means any corporation or other Person more than 50% of
the outstanding ordinary voting shares or other equity interests of which is at
the time directly or indirectly owned by the Borrower, by one or more of its
Subsidiaries, or by the Borrower and one or more of its Subsidiaries. "Domestic
Subsidiary" means any Subsidiary organized under the laws of any state of the
United States of America all or substantially all of whose assets are located in
and substantially all of whose revenues are derived from operations in the
United States of America. "Consolidated Subsidiary" means those Subsidiaries
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whose accounts are or should be consolidated with those of the Borrower under
GAAP. "Material Subsidiary" means, as the time of determination, any Subsidiary
having total assets of $5,000,000 or more.
"Termination Date" means October 31, 1997, or such later date to which
the same may be extended pursuant to Section 2.2 hereof, or such earlier date on
which the Revolving Credit Commitments are terminated in whole pursuant to
Section 1.12, 8.2 or 8.3 hereof.
"Unfunded Vested Liabilities" means, for any Plan at any time, the
amount (if any) by which the present value of all vested nonforfeitable accrued
benefits under such Plan exceeds the fair market value of all Plan assets
allocable to such benefits, all determined as of the then most recent valuation
date for such Plan, but only to the extent that such excess represents a
potential liability of a member of the Controlled Group to the PBGC or the Plan
under Title IV of ERISA.
"U.S. Dollars" and "$" each means the lawful currency of the United
States of America.
"Unused Commitments" means, at any time, the difference between the
Revolving Credit Commitments then in effect (without giving effect to Section
7.19 hereof) and the aggregate outstanding principal amount of Loans and L/C
Obligations.
"Welfare Plan" means a "welfare plan" as defined in Section 3(1) of
ERISA.
"Wholly-owned Subsidiary" means a Subsidiary of which all of the
issued and outstanding shares of capital stock (other than directors' qualifying
shares as required by law) or other equity interests are owned by the Borrower
and/or one or more Wholly-owned Subsidiaries within the meaning of this
definition.
Section 4.2. Interpretation.; The foregoing definitions are
equally applicable to both the singular and plural forms of the terms defined.
The words "hereof", "herein", and "hereunder" and words of like import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. All references to time of day herein
are references to Chicago, Illinois time unless otherwise specifically provided.
Where the character or amount of any asset or liability or item of income or
expense is required to be determined or any consolidation or other accounting
computation is required to be made for the purposes of this Agreement, it shall
be done in accordance with GAAP except where such principles are inconsistent
with the specific provisions of this Agreement.
Section 4.3. Change in Accounting Principles;. If, after the
date of this Agreement, there shall occur any change in generally accepted
accounting principles from those used in the preparation of the financial
statements referred to in Section 5.4 hereof and such change shall result in a
change in the method of calculation of any financial covenant, standard or term
found in this Agreement, either the Borrower or the Required Banks may by
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notice to the Banks and the Borrower, respectively, require that the Banks and
the Borrower negotiate in good faith to amend such covenant, standard and term
so as equitably to reflect such change in accounting principles, with the
desired result being that the criteria for evaluating the financial condition of
the Borrower and its Subsidiaries shall be the same as if such change had not
been made. No delay by the Borrower or the Required Banks in requiring such
negotiation shall limit their right to so require such a negotiation at any time
after such a change in accounting principles. Until any such covenant, standard,
or term is amended in accordance with this Section 4.3, financial covenants
shall be computed and determined in accordance with generally accepted
accounting principles in effect prior to such change in accounting principles.
Without limiting the generality of the foregoing, the Borrower shall neither be
deemed to be in compliance with any financial covenant hereunder nor out of
compliance with any financial covenant hereunder if such state of compliance or
noncompliance, as the case may be, would not exist but for the occurrence of a
change in accounting principles after the date hereof.
Section 5. Representations and Warranties.
The Borrower represents and warrants to each Bank as follows:
Section 5.1. Organization and Qualification.; The Borrower is
duly organized, validly existing and in good standing as a corporation under the
laws of the State of Delaware, has full and adequate corporate power to own its
Property and conduct its business as now conducted, and is duly licensed or
qualified and in good standing in each jurisdiction in which the nature of the
business conducted by it or the nature of the Property owned or leased by it
requires such licensing or qualifying, except where the failure to so qualify
would not have a material adverse effect upon the Borrower or its business. The
Borrower has full right and authority to enter into this Agreement, to make the
borrowings herein provided for, to issue its Notes in evidence thereof, to
execute and deliver the Applications, and to perform all of its obligations
hereunder and under the other Loan Documents; and this Agreement and the other
Loan Documents do not, nor does the performance or observance by the Borrower of
any of the matters and things herein or therein provided for, contravene or
constitute a default under any provision of law or any judgment, injunction,
order or decree binding upon the Borrower or any provision of the certificate of
incorporation or by-laws of the Borrower or any covenant, indenture or agreement
of or affecting the Borrower or any of its Properties, or result in the creation
or imposition of any Lien on any Property of the Borrower.
Section 5.2. Subsidiaries.; Each Subsidiary is duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated or organized, as the case may be, has full and adequate
power to own its Property
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and conduct its business as now conducted, and is duly licensed or qualified and
in good standing in each jurisdiction in which the nature of the business
conducted by it or the nature of the Property owned or leased by it requires
such licensing or qualifying, except where the failure to so qualify would not
have a material adverse effect upon such Subsidiary or its business. Schedule
5.2 hereto identifies each Subsidiary, the jurisdiction of its incorporation or
organization, as the case may be, the percentage of issued and outstanding
shares of each class of its capital stock or other equity interests owned by the
Borrower and the Subsidiaries and, if such percentage is not 100% (excluding
directors' qualifying shares as required by law), a description of each class of
its authorized capital stock and other equity interests and the number of shares
of each class issued and outstanding. All of the outstanding shares of capital
stock and other equity interests of each Subsidiary are validly issued and
outstanding and fully paid and nonassessable and all such shares and other
equity interests indicated on Schedule 5.2 as owned by the Borrower or a
Subsidiary are owned, beneficially and of record, by the Borrower or such
Subsidiary free and clear of all Liens. Except as contemplated by the Joint
Venture Agreement dated as of June 12, 1992 by and between the Borrower, GfK,
AG, Taylor Nelson Group, Limited, Addison Consultancy Group, PLC, and Precis
Limited, there are no outstanding commitments or other obligations of any
Subsidiary to issue, and no options, warrants or other rights of any Person to
acquire, any shares of any class of capital stock or other equity interests of
any Subsidiary.
Section 5.3. Margin Stock.; Neither the Borrower nor any Subsidiary is
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System), and no part of the proceeds of any
Loan or Letter of Credit will be used to purchase or carry any such margin stock
or to extend credit to others for the purpose of purchasing or carrying any such
margin stock.
Section 5.4. Financial Reports.; The consolidated balance sheet
of the Borrower and its Subsidiaries as at December 31, 1993, and the related
consolidated statements of income, retained earnings and cash flows of the
Borrower and its Subsidiaries for the fiscal year then ended, and accompanying
notes thereto, which financial statements are accompanied by the audit report of
Grant Thornton, independent public accountants, and the unaudited interim
consolidated balance sheet of the Borrower and its Subsidiaries as at June 30,
1994, and the related consolidated statements of income, retained earnings and
cash flows of the Borrower and its Subsidiaries for the six (6) month then
ended, heretofore furnished to the Banks, fairly present the consolidated
financial condition of the Borrower and its Subsidiaries as at said dates and
the consolidated results of their operations and cash flows for the periods then
ended in conformity with generally accepted accounting principles applied
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on a consistent basis. Neither the Borrower nor any Subsidiary has contingent
liabilities which are material to it other than as indicated on such financial
statements or, with respect to future periods, on the financial statements
furnished pursuant to Section 7.5 hereof. Since June 30, 1994, there has been no
change in the condition (financial or otherwise) or business prospects of the
Borrower or any Subsidiary except those occurring in the ordinary course of
business, none of which individually or in the aggregate have been materially
adverse.
Section 5.5. Litigation and Other Controversies.; Except as
disclosed on Schedule 5.5 attached hereto and made a part hereof, there is no
litigation or governmental proceeding or labor controversy pending, nor to the
knowledge of the Borrower threatened, against the Borrower or any Subsidiary
which if adversely determined would (i) impair the validity or enforceability
of, or impair the ability of the Borrower to perform its obligations under, this
Agreement or any other Loan Document or (ii) result in any material adverse
change in the financial condition, Properties, business or operations of the
Borrower or any Subsidiary.
Section 5.6. Taxes.; All tax returns required to be filed by the
Borrower or any Subsidiary in any jurisdiction have, in fact, been filed, and
all taxes, assessments, fees and other governmental charges upon the Borrower or
any Subsidiary or upon any of their respective Properties, income or franchises,
which are shown to be due and payable in such returns, have been paid. The
Borrower does not know of any proposed additional tax assessment against it or
its Subsidiaries for which adequate provision in accordance with GAAP has not
been made on its accounts. Adequate provisions in accordance with GAAP for
taxes on the books of the Borrower and each Subsidiary have been made for all
open years, and for its current fiscal period.
Section 5.7. Approvals.; No authorization, consent, license, or
exemption from, or filing or registration with, any court or governmental
department, agency or instrumentality, nor any approval or consent of the
stockholders of the Borrower or any other Person, is or will be necessary to the
valid execution, delivery or performance by the Borrower of this Agreement or
any other Loan Document.
Section 5.8. Investment Company; Public Utility Holding Company.';
Neither the Borrower nor any Subsidiary is an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or a "public utility holding company" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
Section 5.9. ERISA.; The Borrower and each other member of its
Controlled Group has fulfilled its obligations under the minimum funding
standards of and is in compliance in all material respects with ERISA and the
Code to the extent applicable to it and has not incurred any liability to the
PBGC or a Plan under
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Title IV of ERISA other than a liability to the PBGC for premiums under Section
4007 of ERISA. Neither the Borrower nor any Subsidiary has any contingent
liabilities with respect to any post-retirement benefits under a Welfare Plan,
other than liability for continuation coverage described in article 6 of Title I
of ERISA.
'Section 5.10. Compliance with Laws.'; The Borrower and its
Subsidiaries are in compliance with the requirements of all federal, state and
local laws, rules and regulations applicable to or pertaining to their
Properties or business operations (including, without limitation, the
Occupational Safety and Health Act of 1970, the Americans with Disabilities Act
of 1990, and laws and regulations establishing quality criteria and standards
for air, water, land and toxic or hazardous wastes and substances), non-
compliance with which could have a material adverse effect on the financial
condition, Properties, business or operations of the Borrower or any Subsidiary.
Neither the Borrower nor any Subsidiary has received notice to the effect that
its operations are not in compliance with any of the requirements of applicable
federal, state or local environmental, health and safety statutes and
regulations or are the subject of any governmental 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 have a material adverse effect on the financial condition,
Properties, business or operations of the Borrower or any Subsidiary.
Section 5.11. Other Agreements.; Neither the Borrower nor any
Subsidiary is in default under the terms of any covenant, indenture or agreement
of or affecting the Borrower, any Subsidiary or any of their Properties, which
default if uncured would have a material adverse effect on the financial
condition, Properties, business or operations of the Borrower or any Subsidiary.
Section 6. Conditions Precedent.
The obligation of each Bank to advance, continue or convert any Loan
(other than the continuation of, or conversion into, a Domestic Rate Loan) or of
the Agent to issue, extend the expiration date (including by not giving notice
of non-renewal) of or increase the amount of any Letter of Credit under this
Agreement, shall be subject to the following conditions precedent:
Section 6.1. Initial Credit Event.; Before or concurrently
with the initial Credit Event:
(a) the Agent shall have received for each Bank the favorable
written opinions of Freeborn & Peters, counsel to the Borrower, in
substantially the form attached hereto as Exhibit B;
(b) the Agent shall have received for each Bank copies of the
Borrower's Certificate of Incorporation and bylaws (or comparable
constituent documents) and any amendments
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thereto, certified in each instance by its Secretary or Assistant
Secretary;
(c) the Agent shall have received for each Bank copies of
resolutions of the Borrower's Board of Directors authorizing the execution,
delivery and performance of this Agreement and the other Loan Documents to
which it is a party and the consummation of the transactions contemplated
hereby and thereby, together with specimen signatures of the persons
authorized to execute such documents on the Borrower's behalf, all
certified in each instance by its Secretary or Assistant Secretary;
(d) the Agent shall have received for each Bank copies of the
certificates of good standing for the Borrower (dated no earlier than 30
days prior to the date hereof) from the office of the secretary of the
state of its incorporation and of the States of California, Illinois,
Massachusetts and New York where it is qualified to do business as a
foreign corporation;
(e) the Agent shall have received for each Bank such Bank's duly
executed Note of the Borrower dated the date hereof and otherwise in
compliance with the provisions of Section 1.10(a) hereof;
(f) the Agent shall have received for each Bank a list of the
Borrower's Authorized Representatives;
(g) the Agent shall have received for itself and for the Banks the
initial fees called for by Section 2.1 hereof;
(h) the Agent shall have received from the Borrower evidence that
the Credit Agreement dated as of May 13, 1994 between the Borrower and
Harris Trust and Savings Bank has been terminated and, in the case of any
loans outstanding thereunder, all such loans have been or will be repaid in
full upon the initial Borrowing hereunder; and
(i) all legal matters incident to the execution and delivery of the
Loan Documents shall be satisfactory to the Banks.
Section 6.2. All Credit Events.; As of the time of each Credit Event
hereunder:
(a) in the case of a Borrowing, the Agent shall have received the
notice required by Section 1.5 hereof (including any deemed notice under
Section 1.5(c)), in the case of the issuance of any Letter of Credit the
Agent shall have received a duly completed Application for such Letter of
Credit together with any fees called for by Section 2.1 hereof and, in the
case of an extension or increase in the amount of a Letter of Credit, a
written request therefor in a form acceptable to the Agent together with
fees called for by Section 2.1 hereof;
(b) each of the representations and warranties set forth in Section
5 hereof shall be and remain true and correct as of such time, except to
the extent that any such representation or warranty relates solely to an
earlier
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time;
(c) after giving effect to such Credit Event, the sum of the
aggregate principal amount of Loans and of L/C Obligations outstanding
hereunder shall not exceed the lesser of the Revolving Credit Commitments
in effect at such time and the Borrowing Base as then determined and
computed;
(d) the Borrower shall be in full compliance with all of the terms
and conditions hereof, and no Default or Event of Default shall have
occurred and be continuing hereunder or would occur as a result of such
Credit Event; and
(e) such Credit Event shall not violate any order, judgment or
decree of any court or other authority or any provision of law or
regulation applicable to any Bank (including, without limitation,
Regulation U of the Board of Governors of the Federal Reserve System).
Each request for a Borrowing hereunder and each request for the
issuance of, increase in the amount of, or extension of the expiration date of,
a Letter of Credit shall be deemed to be a representation and warranty by the
Borrower on the date on such Credit Event as to the facts specified in
subsections (a) through (d), both inclusive, this Section 6.2.
Section 7. Covenants.
The Borrower agrees that, so long as any Note or any L/C Obligation is
outstanding or any Commitment is available to or in use by the Borrower
hereunder, except to the extent compliance in any case or cases is waived in
writing by the Required Banks:
Section 7.1. Corporate Existence, Etc.; The Borrower shall, and
shall cause each Subsidiary to, preserve and maintain its corporate existence.
The Borrower shall preserve and keep in force and effect, and cause each
Subsidiary to preserve and keep in force and effect, all licenses, permits and
franchises necessary to the proper conduct of its business.
Section 7.2. Maintenance of Properties.; The Borrower shall
maintain, preserve and keep its property, plant and equipment in good repair,
working order and condition (ordinary wear and tear excepted) and shall from
time to time make all needful and proper repairs, renewals, replacements,
additions and betterments thereto so that at all times the efficiency thereof
shall be fully preserved and maintained, and the Borrower shall cause each
Subsidiary to do so in respect of Property owned or used by it.
Section 7.3. Taxes and Assessments.; The Borrower shall duly pay
and discharge, and shall cause each Subsidiary to duly pay and discharge, all
taxes, rates, assessments, fees and governmental charges upon or against it or
its Properties, in each case before the same become delinquent and before
penalties accrue thereon, unless and to the extent that the same are being
contested in good faith by appropriate proceedings which prevent enforcement of
the matter under contest and adequate reserves are provided therefor.
Section 7.4. Insurance.; The Borrower shall insure and keep
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insured, and shall cause each Subsidiary to insure and keep insured, with good
and responsible insurance companies, all insurable Property owned by it which is
of a character usually insured by Persons similarly situated and operating like
Properties against loss or damage from such hazards and risks, and in such
amounts, as are insured by Persons similarly situated and operating like
Properties; and the Borrower shall insure, and shall cause each Subsidiary to
insure, such other hazards and risks (including employers' and public liability
risks) with good and responsible insurance companies as and to the extent
usually insured by Persons similarly situated and conducting similar businesses.
The Borrower shall upon request of the Agent furnish a certificate setting forth
in summary form the nature and extent of the insurance maintained pursuant to
this Section 7.4.
Section 7.5. Financial Reports.; The Borrower shall, and shall
cause each Domestic Subsidiary to independently or in consolidation with the
Borrower, maintain a standard system of accounting in accordance with GAAP and
the Borrower shall, and shall cause each Subsidiary to, furnish to the Bank and
its duly authorized representatives such information respecting the business and
financial condition of the Borrower and its Subsidiaries as any Bank may
reasonably request; and without any request, shall furnish to each Bank:
(a) as soon as available, and in any event within thirty (30) days
after the last day of each calendar month, a borrowing base certificate in
the form attached hereto as Exhibit D showing the computation of the
Borrowing Base in reasonable detail as of the close of business on the last
day of such month, prepared by the Borrower and certified to by the chief
financial officer of the Borrower;
(b) as soon as available, and in any event within fifty (50) days
(ninety-five (95) days in the case of the last quarter-annual accounting
period of the Borrower) after the close of each quarter-annual accounting
period of the Borrower, a copy of the consolidated balance sheet as of the
last day of such period and consolidated statements of income, retained
earnings and cash flows of the Borrower and its Subsidiaries for the fiscal
year-to-date period then ended, all in reasonable detail showing in
comparative form the figures for the corresponding date and period in the
previous fiscal year, prepared by the Borrower in accordance with GAAP and
certified to by the chief financial officer of the Borrower;
(c) as soon as available, and in any event within ninety-five (95)
days after the close of each fiscal year of the Borrower, a copy of the
consolidated balance sheet of the Borrower and its Subsidiaries as of the
last day of such fiscal year and the consolidated statements of income,
retained earnings and cash flows of the Borrower and its Subsidiaries for
the fiscal year then ended, and accompanying notes thereto, all in
reasonable detail showing
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in comparative form the figures for the previous fiscal year, accompanied
by an unqualified opinion thereon of Grant Thornton or another firm of
independent public accountants of recognized national standing, selected by
the Borrower and satisfactory to the Required Banks, to the effect that the
financial statements have been prepared in accordance with GAAP and present
fairly in accordance with GAAP the consolidated financial condition of the
Borrower and its Subsidiaries as of the close of such fiscal year and the
results of their operations and cash flows for the fiscal year then ended
and that an examination of such accounts in connection with such financial
statements has been made in accordance with generally accepted auditing
standards and, accordingly, such examination included such tests of the
accounting records and such other auditing procedures as were considered
necessary in the circumstances;
(d) promptly after the sending or filing thereof, copies of each
financial statement, report, notice or proxy statement sent by the Borrower
to its stockholders, and copies of each regular, periodic or special
report, registration statement or prospectus filed by the Borrower with any
securities exchange or the Securities Exchange Commission or any successor
agency; and
(e) promptly after knowledge thereof shall have come to the
attention of any responsible officer of the Borrower, written notice of any
threatened or pending litigation or governmental proceeding or labor
controversy against the Borrower or any Subsidiary which, if adversely
determined, would adversely effect the financial condition, Properties,
business or operations of the Borrower or any Subsidiary or of the
occurrence of any Default or Event of Default hereunder.
Each of the financial statements furnished to the Banks pursuant to clauses (b)
and (c) of this Section 7.5 shall be accompanied by a written certificate in the
form attached hereto as Schedule 7.5 signed by the chief financial officer of
the Borrower to the effect that to the best of the chief financial officer's
knowledge and belief no Default or Event of Default has occurred during the
period covered by such statements or, if any such Default or Event of Default
has occurred during such period, setting forth a description of such Default or
Event of Default and specifying the action, if any, taken by the Borrower to
remedy the same. Such certificate shall also set forth the calculations
supporting such statements in respect of Sections 7.6, 7.7, 7.8 and 7.9 of this
Agreement.
Section 7.6. Consolidated Tangible Net Worth;. The Borrower shall, as
of the last day of each quarter-annual accounting period of the Borrower ending
during the periods specified below, maintain Consolidated Tangible Net Worth of
not less than:
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Consolidated Tangible Net
From and To and Worth
Including Including Shall not Be less than:
The date hereof 12/30/94 $210,000,000
12/31/94 6/29/95 $220,000,000
6/30/95 12/30/95 $225,000,000
12/31/95 12/30/96 $235,000,000
12/31/96 12/30/97 $280,000,000
12/31/97 and at all times $350,000,000
thereafter
; provided that the minimum required amount of Consolidated Tangible Net Worth
set forth above shall be increased by 100% of the net proceeds received by the
Borrower from any offering of equity securities of the Borrower received at any
time after December 31, 1993 (other than proceeds received from the exercise of
stock options to purchase shares of the Borrower's common stock existing as of
the date of this Agreement).
Section 7.7. Leverage Ratio;. The Borrower shall, as of the last day
of each quarter-annual accounting period of the Borrower ending during the
periods specified below, maintain a ratio of Consolidated Total Liabilities to
Consolidated Tangible Net Worth (the "Leverage Ratio") of not more than:
From and To and Leverage Ratio Shall Not Be
Including Including More Than:
The date hereof 12/30/96 .75 to 1.0
12/31/96 12/30/97 .60 to 1.0
12/31/97 and at all times .50 to 1.0
thereafter
Section 7.8. Current Ratio;. The Borrower shall, as of the last day of
each quarter-annual accounting period of the Borrower, maintain a Consolidated
Current Ratio of not less than 2.0 to 1.0.
Section 7.9. Cash Flow Coverage Ratio;. The Borrower shall, as of the
last day of each quarter-annual accounting period of the Borrower ending during
the periods specified below, maintain the ratio of Consolidated Cash Flow for
the four fiscal quarters of the Borrower then ended to Consolidated Fixed
Charges for the same four fiscal quarters then ended (the "Cash Flow Coverage
Ratio") of not less than:
Cash Flow Coverage
From and To and Ratio shall not
Including Including be less than:
The date hereof 12/30/95 .70 to 1.0
12/31/95 12/30/96 .80 to 1.0
12/31/96 12/30/97 1.10 to 1.0
12/31/97 and at all times 1.35 to 1.0
thereafter
Section 7.10. Indebtedness for Borrowed Money.; The Borrower
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shall not, nor shall it permit any Subsidiary to, issue, incur, assume, create
or have outstanding any Indebtedness for Borrowed Money; provided, however, that
the foregoing provisions shall not restrict nor operate to prevent:
(a) the Obligations of the Borrower owing to the Banks hereunder;
(b) purchase money indebtedness secured by Liens permitted by
Section 7.11(e) hereof in an aggregate amount not to exceed $5,000,000 at
any one time outstanding;
(c) Capitalized Lease Obligations to the extent permitted by Section
7.13 hereof;
(d) indebtedness owing by Information Resources Japan Ltd. on one or
more revolving lines of credit in an aggregate principal amount not to
exceed JPY 1,000,000,000 at any one time outstanding; and
(e) other indebtedness not to exceed $500,000 in the aggregate at
any one time outstanding.
Section 7.11. Liens.; The Borrower shall not, nor shall it permit any
Subsidiary to, create, incur or permit to exist any Lien of any kind on any
Property owned by the Borrower or any Subsidiary; provided, however, that the
foregoing provisions shall not restrict nor operate to prevent:
(a) Liens arising by statute in connection with worker's
compensation, unemployment insurance, old age benefits, social security
obligations, taxes, assessments, statutory obligations or other similar
charges, good faith cash deposits in connection with tenders, contracts or
leases to which the Borrower or any Subsidiary is a party or other cash
deposits required to be made in the ordinary course of business, provided
in each case that the obligation is not for borrowed money and that the
obligation secured is not overdue or, if overdue, is being contested in
good faith by appropriate proceedings which prevent enforcement of the
matter under contest and adequate reserves have been established therefor;
(b) mechanics', workmen's, materialmen's, landlords', carriers', or
other similar Liens arising in the ordinary course of business with respect
to obligations which are not due or which are being contested in good faith
by appropriate proceedings which prevent enforcement of the matter under
contest;
(c) the pledge of assets for the purpose of securing an appeal, stay
or discharge in the course of any legal proceeding, provided that the
aggregate amount of liabilities of the Borrower and its Subsidiaries
secured by a pledge of assets permitted under this clause, including
interest and penalties thereon, if any, shall not be in excess of $500,000
at any one time outstanding;
(d) liens, mortgages and security interests existing as of December
22, 1992 and disclosed in the financial statements referred to in Section
5.4 hereof; and
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(e) Liens upon property of the Borrower or any of its Subsidiaries
created solely for the purpose of securing indebtedness permitted by
Section 7.10(b) hereof, representing or incurred to finance, refinance or
refund the purchase price of Property, provided that no such Lien shall
extend to or cover other property of the Borrower or such Subsidiary other
than the respective Property so acquired, and the principal amount of
indebtedness secured by any such Lien shall at no time exceed the original
purchase price of such Property.
Section 7.12. Investments, Acquisitions, Loans, Advances and
Guaranties.; The Borrower shall not, nor shall it permit any Subsidiary to,
directly or indirectly, make, retain or have outstanding any investments
(whether through purchase of stock or obligations or otherwise) in, or loans or
advances (other than for travel advances and other similar cash advances made to
employees in the ordinary course of business) to, any other Person, or enter
into any partnership or joint venture with any other Person, or acquire all or
any substantial part of the assets or business of any other Person, or be or
become liable as endorser, guarantor, surety or otherwise for any debt,
obligation or undertaking of any other Person, or otherwise agree to provide
funds for payment of the obligations of another, or supply funds thereto or
invest therein or otherwise assure a creditor of another against loss or apply
for or become liable to the issuer of a letter of credit which supports an
obligation of another, or subordinate any claim or demand it may have to the
claim or demand of any other Person; provided, however, that the foregoing
provisions shall not apply to nor operate to prevent:
(a) investments in direct obligations of the United States of
America or of any agency or instrumentality thereof whose obligations
constitute full faith and credit obligations of the United States of
America, provided that any such obligations shall mature within one year of
the date of issuance thereof;
(b) investments in commercial paper rated at least P-1 by Moody's
Investors Services, Inc. and at least A-1 by Standard & Poor's Corporation
maturing within 270 days of the date of issuance thereof;
(c) investments in direct obligations of a state of the United
States of America, or a municipality thereof, given the highest rating by
both Moody's Investors Services, Inc. and Standard & Poor's Corporation and
maturing not more than 2 years from the date of acquisition thereof;
(d) investments in certificates of deposit issued by any United
States commercial bank having capital and surplus of not less than
$100,000,000 which have a maturity of one year or less;
(e) endorsement of items for deposit or collection of commercial
paper received in the ordinary course of business;
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(f) investment in, and loans and advances to, Subsidiaries existing as
of the date hereof, and the other investments in, and loans and advances
to, Persons existing as of the date hereof and disclosed on Schedule 5.2
attached hereto and made a part hereof;
(g) the guarantee by the Borrower of the obligations of its
Subsidiary, Information Resources Japan Ltd., to the extent such
obligations are permitted under Section 7.10(d) hereof, provided that the
obligations of the Borrower on such guarantee shall not at any time exceed
JPY 600,000,000; and
(h) cash investments, loans, advances, acquisitions and guarantees in
addition to those otherwise permitted by this Section 7.12 if, after giving
effect thereto, the aggregate amount of cash investments, loans, advances,
acquisitions and guarantees by the Borrower and its Subsidiaries permitted
solely by reason of this subsection (h) does not at any time exceed
$65,000,000, inclusive of investments of the Borrower in foreign joint
ventures existing as of December 31, 1993 which aggregate $24,993,489 and,
in the case of an acquisition of all or substantially all of the assets of
a Person or all or substantially all of the equity interests in a Person
(the "Target Person"), the following conditions shall also have been
satisfied (i) no Default or Event of Default has occurred and is continuing
or would occur as a result of such transaction and (ii) the Target Person
must be in a related line of business with that of the Borrower or one of
its existing Subsidiaries.
In determining the amount of investments, acquisitions, loans, advances and
guarantees permitted under this Section 7.12, investments and acquisitions shall
always be taken at the original cost thereof (regardless of any subsequent
appreciation or depreciation therein), loans and advances shall be taken at the
principal amount thereof then remaining unpaid and guarantees shall be taken at
the amount of obligations guaranteed thereby. There shall be excluded from
loans and advances for purposes of this Section 7.12 any amounts shown on the
Borrower's books and records as so-called "royalty receivables" from
Subsidiaries so long as such receivables do not arise in connection with cash
investments or cash advances by the Borrower to any such Subsidiary.
Section 7.13. Leases.; The Borrower shall not, nor shall it permit any
Subsidiary to, enter into any operating lease or Capital Lease at any time if,
after giving effect thereto, the aggregate amount of rentals and other
consideration payable by the Borrower and its Subsidiaries under all such leases
or arrangements (which shall include the current portion of any Capitalized
Lease Obligation) would exceed $45,000,000 during any fiscal year of the
Borrower .
Section 7.14. Sales and Leasebacks.; The Borrower shall not, nor shall
it permit any Subsidiary to, enter into any arrangement
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with any bank, insurance company or any other lender or investor providing for
the leasing by the Borrower or any Subsidiary of any Property theretofore owned
by it and which has been or is to be sold or transferred by such owner to such
lender or investor.
Section 7.15. Mergers, Consolidations and Sales.; The Borrower shall
not, nor shall it permit any Subsidiary to, be a party to any merger or
consolidation, or sell, transfer, lease or otherwise dispose of all or any
substantial part of its Property (except for sales of inventory in the ordinary
course of business), or in any event sell or discount (with or without recourse)
any of its notes or accounts receivable; provided, however, that the foregoing
provisions shall not apply to nor operate to prevent:
(a) any Subsidiary from merging into the Borrower or any Wholly-owned
Domestic Subsidiary if the Borrower or such Domestic Subsidiary is the
surviving corporation;
(b) any Subsidiary from selling, transferring or leasing all or any
part of its assets and properties to the Borrower or any Wholly-owned
Domestic Subsidiary; and
(c) leases of store equipment by the Borrower and leases or licenses
by the Borrower of converters, software, computer hardware and other
technology, in each case in the ordinary course of business.
The term "substantial" as used in this Section 7.15 shall mean the sale, lease
or other disposition of five percent (5%) or more of the consolidated total
assets of the Borrower in any fiscal year.
Section 7.16. Maintenance of Material Subsidiaries;. The Borrower
shall not assign, sell or transfer, or permit any Subsidiary to issue, assign,
sell or transfer, any shares of capital stock of a Material Subsidiary;
provided, however, that the foregoing provisions shall not apply to nor operate
to prevent the issuance, sale and transfer to any person of any shares of
capital stock of a Material Subsidiary solely for the purpose of qualifying, and
to the extent legally necessary to qualify, such person as a director of such
Material Subsidiary.
Section 7.17. ERISA;. The Borrower shall, and shall cause each
Subsidiary to, promptly pay and discharge all obligations and liabilities
arising under ERISA of a character which if unpaid or unperformed might result
in the imposition of a Lien against any of its Properties. The Borrower shall,
and shall cause each Subsidiary to, promptly notify the Banks of (i) the
occurrence of any reportable event (as defined in ERISA) with respect to a Plan,
(ii) receipt of any notice from the PBGC of its intention to seek termination of
any Plan or appointment of a trustee therefor, (iii) its intention to terminate
or withdraw from any Plan, and (iv) the occurrence of any event with respect to
any Plan which would result in the incurrence by the Borrower or any Subsidiary
of any material liability, fine or penalty, or any material increase in the
contingent liability of the Borrower or any Subsidiary with respect to any post-
retirement Welfare
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Plan benefit.
Section 7.18. Compliance with Laws.; The Borrower shall, and shall
cause each Subsidiary to, comply in all respects with the requirements of all
federal, state and local laws, rules, regulations, ordinances and orders
applicable to or pertaining to the Properties or business operations of the
Borrower or any Subsidiary, non-compliance with which could have a material
adverse effect on the financial condition, Properties, business or operations of
the Borrower or any Subsidiary or could result in a Lien upon any of their
Property.
Section 7.19. Guaranty Reserve Against Commitment Availability;. As
soon as available, and in any event within five (5) Business Days after the last
day of each calendar quarter, the Borrower shall execute and deliver to the
Agent a written certificate (in form and substance satisfactory to the Agent)
showing (a) the aggregate principal liability of Information Resources Japan
Ltd. outstanding under its revolving line of credit permitted by Section 7.10(d)
hereof (such liability to be stated in Japanese Yen) as of the last day of the
calendar quarter then ended, (b) the aggregate principal liability of the
Borrower on its guaranty described in Section 7.12(g) hereof of the liabilities
described in subsection (a) above (such liability to be stated in Japanese Yen),
and (c) the U.S. dollar equivalent of the liability of the Borrower on its
guaranty described in Section 7.12(g) hereof of the liabilities described in
subsection (a) above (for purposes of this determination, the Borrower shall
show the U.S. dollar equivalent of such liability by reference to the spot
market exchange rate for Japanese Yen as of the close of business on such day
or, if the last day of such calendar quarter is not a day on which U.S.
commercial banks and foreign exchange markets settle such currency payments, on
the next preceding business day). From and after the date of the Agent's receipt
of such certificate, the amount available to the Borrower under the Revolving
Credit shall be reduced by an amount equal to the U.S. dollar equivalent of the
guaranty liability as determined in accordance with subsection (c) above, such
that the sum of the aggregate principal amount of Loans and of L/C Obligations
at any time outstanding during such period plus the U.S. dollar equivalent of
the guaranty liability as determined in accordance with subsection (c) above
shall not at any time exceed the Revolving Credit Commitments in effect at such
time. In the event that the sum of the aggregate principal amount of Loans and
of L/C Obligations at any time outstanding during such period plus the aggregate
U.S. dollar equivalent of the guaranty liability as determined in accordance
with subsection (c) above shall ever exceed the Revolving Credit Commitments in
effect at such time, the Borrower shall immediately without notice or demand pay
over the amount of the excess to the Banks as and for a mandatory prepayment of
the Loans and, if necessary, as a prefunding of Letters of Credit. Unless the
Borrower otherwise directs,
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prepayments of principal under this Section 7.19 shall be applied first to
Domestic Rate Loans until payment in full thereof with any balance applied to
the Eurodollar Loans in the order in which their Interest Periods expire. The
reduction in the amount available to the Borrower under the Revolving Credit
pursuant to this Section 7.19 shall be recomputed upon the Agent's receipt of
each written certificate delivered pursuant to the first sentence hereof and
such reduction shall continue in effect until the effectiveness of the next
redetermination thereof. Any determination by the Agent of the reduction in the
amount available to the Borrower under the Revolving Credit hereunder shall be
conclusive and binding upon the Borrower and the Banks provided that it has been
made reasonably and in good faith.
Section 8. Events of Default and Remedies.
Section 8.1. Events of Default;. Any one or more of the following
shall constitute an "Event of Default" hereunder:
(a) default for the period of three (3) days in the payment when due
of all or any part of the principal of or interest on any Note (whether at
the stated maturity thereof or at any other time provided for in this
Agreement) or of any Reimbursement Obligation, fee or other amount payable
by the Borrower hereunder or under any other Loan Document; or
(b) default in the observance or performance of any covenant set
forth in Sections 7.5(e), 7.6, 7.7, 7.8, 7.9, 7.10, 7.14, 7.15 or 7.16
hereof; or
(c) default in the observance or performance of any other provision
hereof or of any other Loan Document which is not remedied within twenty
(20) days after written notice thereof to the Borrower by the Agent; or
(d) any representation or warranty made by the Borrower herein or in
any other Loan Document, or in any statement or certificate furnished by it
pursuant hereto or thereto, or in connection with any Loan made or Letter
of Credit issued hereunder, proves untrue in any material respect as of the
date of the issuance or making thereof, and any such breach which is
capable of being cured shall not be remedied within twenty (20) days after
the date of the issuance or making thereof; or
(e) default shall occur under any Indebtedness for Borrowed Money
aggregating more than $500,000 issued, assumed or guaranteed by the Company
or any Subsidiary or under any indenture, agreement or other instrument
under which the same may be issued and such default shall continue for a
period of time sufficient to permit the acceleration of the maturity of any
such Indebtedness for Borrowed Money (whether or not such maturity is in
fact accelerated), or any such Indebtedness for Borrowed Money shall not be
paid when due (whether by lapse of time, acceleration or otherwise); or
(f) any judgment or judgments, writ or writs, or warrant or warrants
of attachment, or any similar process or
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processes in an aggregate amount in excess of $500,000 shall be entered or filed
against the Borrower or any of its Subsidiaries or against any of their Property
and which remains unvacated, unbonded, unstayed or unsatisfied for a period of
thirty (30) days; or
(g) the Borrower or any member of its Controlled Group shall fail to
pay when due an amount or amounts aggregating in excess $500,000 which it
shall have become liable to pay to the PBGC or to a Plan under Title IV of
ERISA; or notice of intent to terminate a Plan or Plans having aggregate
Unfunded Vested Liabilities in excess of $500,000 (collectively, a
"Material Plan") shall be filed under Title IV of ERISA by the Borrower or
any other member of its Controlled Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings under
Title IV of ERISA to terminate or to cause a trustee to be appointed to
administer any Material Plan or a proceeding shall be instituted by a
fiduciary of any Material Plan against the Borrower or any member of its
Controlled Group to enforce Section 515 or 4219(c)(5) of ERISA and such
proceeding shall not have been dismissed within sixty (60) days thereafter;
or a condition shall exist by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any Material Plan must be terminated; or
(h) more than 51% of the capital stock of the Borrower which is
entitled to vote for the election of directors is held, either legally or
beneficially, by any Person or group of Persons acting in concert with
respect to the business affairs of the Borrower (the fact that particular
Persons are directors, officers or employees of the Borrower shall not be
deemed indicative of the fact that they are acting in concert); or
(i) any event of default (as defined in the Headquarters Complex
Lease) occurs under the Headquarters Complex Lease and the lessor exercises
or serves notice of its intention to exercise, any of its remedies under
the Headquarters Complex Lease; or
(j) the Borrower or any Subsidiary shall (i) have entered
involuntarily against it an order for relief under the United States
Bankruptcy Code, as amended, or any other comparable bankruptcy or
insolvency law applicable to it, (ii) not pay, or admit in writing its
inability to pay, its debts generally as they become due, (iii) make an
assignment for the benefit of creditors, (iv) 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 part of
its Property, (v) institute any proceeding seeking to have entered against
it an order for relief under the United States Bankruptcy Code, as amended,
or any other comparable bankruptcy or insolvency
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law applicable to it, to adjudicate it 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, or (vi) fail to contest in good faith any
appointment or proceeding described in Section 8.1(k) hereof; or
(k) a custodian, receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Borrower or any Subsidiary or any
substantial part of any of their Property, or a proceeding described in
Section 8.1(j)(v) shall be instituted against the Borrower or any
Subsidiary, and such appointment continues undischarged or such
proceeding continues undismissed or unstayed for a period of ninety (90)
days.
Section 8.2. Non-Bankruptcy Defaults.; When any Event of Default
other than those described in subsections (j) or (k) of Section 8.1 hereof has
occurred and is continuing, the Agent shall, by written notice to the Borrower:
(a) if so directed by the Required Banks, terminate the remaining Commitments
and all other obligations of the Banks hereunder on the date stated in such
notice (which may be the date thereof); (b) if so directed by the Required
Banks, declare the principal of and the accrued interest on all outstanding
Notes to be forthwith due and payable and thereupon all outstanding Notes,
including both principal and interest thereon, shall be and become immediately
due and payable together with all other amounts payable under the Loan Documents
without further demand, presentment, protest or notice of any kind; and (c) if
so directed by the Required Banks, demand that the Borrower immediately pay to
the Agent the full amount then available for drawing under each or any Letter of
Credit, and the Borrower agrees to immediately make such payment and
acknowledges and agrees that the Banks would not have an adequate remedy at law
for failure by the Borrower to honor any such demand and that the Agent, for the
benefit of the Banks, shall have the right to require the Borrower to
specifically perform such undertaking whether or not any drawings or other
demands for payment have been made under any Letter of Credit. The Agent, after
giving notice to the Borrower pursuant to Section 8.1(c) or this Section 8.2,
shall also promptly send a copy of such notice to the other Banks, but the
failure to do so shall not impair or annul the effect of such notice.
Section 8.3. Bankruptcy Defaults;. When any Event of Default
described in subsections (j) or (k) of Section 8.1 hereof has occurred and is
continuing, then all outstanding Notes shall immediately become due and payable
together with all other amounts payable under the Loan Documents without
presentment, demand, protest or notice of any kind, the obligation of the Banks
to extend further credit pursuant to any of the terms
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hereof shall immediately terminate and the Borrower shall immediately pay to the
Agent the full amount then available for drawing under all outstanding Letters
of Credit, the Borrower acknowledging and agreeing that the Banks would not have
an adequate remedy at law for failure by the Borrower to honor any such demand
and that the Banks, and the Agent on their behalf, shall have the right to
require the Borrower to specifically perform such undertaking whether or not any
draws or other demands for payment have been made under any of the Letters of
Credit.
Section 8.4. Collateral for Undrawn Letters of Credit;. (a) If
the prepayment of the amount available for drawing under any or all outstanding
Letters of Credit is required under Section 1.8(b) or under Section 8.2 or 8.3
above, the Borrower shall forthwith pay the amount required to be so prepaid, to
be held by the Agent as provided in subsection (b) below.
(b) All amounts prepaid pursuant to subsection (a) above shall be held
by the Agent in a separate collateral account (such account, and the credit
balances, properties and any investments from time to time held therein, and any
substitutions for such account, any certificate of deposit or other instrument
evidencing any of the foregoing and all proceeds of and earnings on any of the
foregoing being collectively called the "Account") as security for, and for
application by the Agent (to the extent available) to, the reimbursement of any
payment under any Letter of Credit then or thereafter made by the Agent, and to
the payment of the unpaid balance of any Loans and all other Obligations. The
Account shall be held in the name of and subject to the exclusive dominion and
control of the Agent for the benefit of the Agent and the Banks. If and when
requested by the Borrower, the Agent shall invest funds held in the Account from
time to time in direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America with a remaining maturity of one year or less, provided that the Agent
is irrevocably authorized to sell investments held in the Account when and as
required to make payments out of the Account for application to amounts due and
owing from the Borrower to the Agent or Banks; provided, however, that if (i)
the Borrower shall have made payment of all such obligations referred to in
subsection (a) above, (ii) all relevant preference or other disgorgement periods
relating to the receipt of such payments have passed, and (iii) no Letters of
Credit, Commitments, Loans or other Obligations remain outstanding hereunder,
then the Agent shall release to the Borrower any remaining amounts held in the
Account.
Section 8.5. Notice of Default;. The Agent shall give notice to
the Borrower under Section 8.1(c) hereof promptly upon being requested to do so
by any Bank and shall thereupon notify all the Banks thereof.
Section 8.6. Expenses;. The Borrower agrees to pay to the Agent and
each Bank, and any other holder of any Note outstanding
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hereunder, all expenses reasonably incurred or paid by the Agent and such Bank
or any such holder, including reasonable attorneys' fees and court costs, in
connection with any Default or Event of Default by the Borrower hereunder or in
connection with the enforcement of any of the Loan Documents.
Section 9. Change in Circumstances;.
Section 9.1. Change of Law;. Notwithstanding any other provisions of
this Agreement or any Note, if at any time any change in applicable law or
regulation or in the interpretation thereof makes it unlawful for any Bank to
make or continue to maintain any Eurodollar Loans or to perform its obligations
as contemplated hereby, such Bank shall promptly give notice thereof to the
Borrower and such Bank's obligations to make or maintain Eurodollar Loans under
this Agreement shall terminate until it is no longer unlawful for such Bank to
make or maintain Eurodollar Loans. The Borrower shall prepay on demand the
outstanding principal amount of any such affected Eurodollar Loans, together
with all interest accrued thereon and all other amounts then due and payable to
such Bank under this Agreement; provided, however, subject to all of the terms
and conditions of this Agreement, the Borrower may then elect to borrow the
principal amount of the affected Eurodollar Loans from such Bank by means of
Domestic Rate Loans from such Bank, which Domestic Rate Loans shall not be made
ratably by the Banks but only from such affected Bank.
Section 9.2. Unavailability of Deposits or Inability to
Ascertain, or Inadequacy of, LIBOR;. If on or prior to the first day of any
Interest Period for any Borrowing of Eurodollar Loans:
(a) the Agent determines that deposits in U.S. Dollars (in the
applicable amounts) are not being offered to it in the interbank
eurodollar market for such Interest Period, or that by reason of
circumstances affecting the interbank eurodollar market adequate and
reasonable means do not exist for ascertaining the applicable LIBOR, or
(b) Banks having 50% or more of the aggregate amount of the Revolving
Credit Commitments advise the Agent that (i) LIBOR as determined by the
Agent will not adequately and fairly reflect the cost to such Banks of
funding their Eurodollar Loans for such Interest Period or (ii) that the
making or funding of Eurodollar Loans become impracticable,
then the Agent shall forthwith give notice thereof to the Borrower and the
Banks, whereupon until the Agent notifies the Borrower that the circumstances
giving rise to such suspension no longer exist, the obligations of the Banks to
make Eurodollar Loans shall be suspended.
Section 9.3. Increased Cost and Reduced Return;. (a) If, on or after
the date hereof, the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Lending Office) with any request or directive
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(whether or not having the force of law) of any such authority, central bank or
comparable agency:
(i) shall subject any Bank (or its Lending Office) to any tax, duty or
other charge with respect to its Eurodollar Loans, its Notes, its
Letter(s) of Credit, or its participation in any thereof, any
Reimbursement Obligations owed to it or its obligation to make Eurodollar
Loans, issue a Letter of Credit, or to participate therein, or shall
change the basis of taxation of payments to any Bank (or its Lending
Office) of the principal of or interest on its Eurodollar Loans,
Letter(s) of Credit, or participations therein or any other amounts due
under this Agreement or any other Loan Document in respect of its
Eurodollar Loans, Letter(s) of Credit, any participation therein, any
Reimbursement Obligations owed to it, or its obligation to make
Eurodollar Loans, or issue a Letter of Credit, or acquire participations
therein (except for changes in the rate of tax on the overall net income
of such Bank or its Lending Office imposed by the jurisdiction in which
such Bank's principal executive office or Lending Office is located); or
(ii) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve
System, but excluding with respect to any Eurodollar Loans any such
requirement included in an applicable Eurodollar Reserve Percentage)
against assets of, deposits with or for the account of, or credit
extended by, any Bank (or its Lending Office) or shall impose on any Bank
(or its Lending Office) or on the interbank market any other condition
affecting its Eurodollar Loans, its Notes, its Letter(s) of Credit, or
its participation in any thereof, any Reimbursement Obligation owed to
it, or its obligation to make Eurodollar Loans, or to issue a Letter of
Credit, or to participate therein;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of making or maintaining any Eurodollar Loan, issuing or
maintaining a Letter of Credit, or participating therein, or to reduce the
amount of any sum received or receivable by such Bank (or its Lending Office)
under this Agreement or under any other Loan Document with respect thereto, by
an amount deemed by such Bank to be material, then, within fifteen (15) days
after demand by such Bank (with a copy to the Agent), the Borrower shall be
obligated to pay to such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction.
(b) If, after the date hereof, any Bank or the Agent shall have
determined in good faith that the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable
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agency charged with the interpretation or administration thereof, or compliance
by any Bank (or its Lending Office) with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on such Bank's capital as a consequence of its obligations
hereunder to a level below that which such Bank could have achieved but for such
adoption, change or compliance (taking into consideration such Bank's policies
with respect to capital adequacy) by an amount deemed by such Bank to be
material, then from time to time, within fifteen (15) days after demand by such
Bank (with a copy to the Agent), the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank for such reduction.
(c) A certificate of a Bank claiming compensation under this Section
9.3 and setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of manifest error. In determining
such amount, such Bank may use any reasonable averaging and attribution methods.
Section 9.4. Lending Offices;. Each Bank may, at its option, elect to
make its Loans hereunder at the branch, office or affiliate specified on the
appropriate signature page hereof (each a "Lending Office") for each type of
Loan available hereunder or at such other of its branches, offices or affiliates
as it may from time to time elect and designate in a written notice to the
Borrower and the Agent.
Section 9.5. Discretion of Bank as to Manner of Funding;.
Notwithstanding any other provision of this Agreement, each Bank shall be
entitled to fund and maintain its funding of all or any part of its Loans in any
manner it sees fit, it being understood, however, that for the purposes of this
Agreement all determinations hereunder shall be made as if each Bank had
actually funded and maintained each Eurodollar Loan through the purchase of
deposits in the interbank eurodollar market having a maturity corresponding to
such Loan's Interest Period and bearing an interest rate equal to LIBOR for such
Interest Period.
Section 10. The Agent;.
Section 10.1. Appointment and Authorization of Agent;. Each Bank
hereby appoints Harris Trust and Savings Bank as the Agent under the Loan
Documents and hereby authorizes the Agent to take such action as Agent on its
behalf and to exercise such powers under the Loan Documents as are delegated to
the Agent by the terms thereof, together with such powers as are reasonably
incidental thereto.
Section 10.2. Agent and its Affiliates;. The Agent shall have
the same rights and powers under this Agreement and the other Loan Documents as
any other Bank and may exercise or refrain from exercising the same as though it
were not the Agent, and the Agent and its affiliates may accept deposits from,
lend money to, and generally engage in any kind of business with the Borrower or
any Affiliate of the Borrower as if it were not the Agent under
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the Loan Documents. The term "Bank" as used herein and in all other Loan
Documents, unless the context otherwise clearly requires, includes the Agent in
its individual capacity as a Bank. References in Section 1 hereof to the Agent's
Loans, or to the amount owing to the Agent for which an interest rate is being
determined, refer to the Agent in its individual capacity as a Bank.
Section 10.3. Action by Agent;. If the Agent receives from the
Borrower a written notice of an Event of Default pursuant to Section 7.5(e)
hereof, the Agent shall promptly give each of the Banks written notice thereof.
The obligations of the Agent under the Loan Documents are only those expressly
set forth therein. Without limiting the generality of the foregoing, the Agent
shall not be required to take any action hereunder with respect to any Default
or Event of Default, except as expressly provided in Sections 8.2 and 8.5. In no
event, however, shall the Agent be required to take any action in violation of
applicable law or of any provision of any Loan Document, and the Agent shall in
all cases be fully justified in failing or refusing to act hereunder or under
any other Loan Document unless it shall be first indemnified to its reasonable
satisfaction by the Banks against any and all costs, expense, and liability
which may be incurred by it by reason of taking or continuing to take any such
action. The Agent shall be entitled to assume that no Default or Event of
Default exists unless notified to the contrary by a Bank or the Borrower. In all
cases in which this Agreement and the other Loan Documents do not require the
Agent to take certain actions, the Agent shall be fully justified in using its
discretion in failing to take or in taking any action hereunder and thereunder.
Section 10.4. Consultation with Experts;. The Agent may consult
with legal counsel, independent public accountants and other experts selected by
it and shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the advice of such counsel, accountants or
experts.
Section 10.5. Liability of Agent; Credit Decision';. Neither
the Agent nor any of its directors, officers, agents, or employees shall be
liable for any action taken or not taken by it in connection with the Loan
Documents: (i) with the consent or at the request of the Required Banks or (ii)
in the absence of its own gross negligence or willful misconduct. 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 this Agreement,
any other Loan Document or any Credit Event; (ii) the performance or observance
of any of the covenants or agreements of the Borrower contained herein or in any
other Loan Document; (iii) the satisfaction of any condition specified in
Section 6 hereof, except receipt of items required to be delivered to the Agent;
or (iv) the validity, effectiveness, genuineness, enforceability, perfection,
value,
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worth or collectibility hereof or of any other Loan Document or of any other
documents or writing furnished in connection with any Loan Document; and the
Agent makes no representation of any kind or character with respect to any such
matter mentioned in this sentence. The Agent may execute any of its duties under
any of the Loan Documents by or through employees, agents, and attorneys-in-fact
and shall not be answerable to the Banks, the Borrower, or any other Person for
the default or misconduct of any such agents or attorneys-in-fact selected with
reasonable care. The Agent shall not incur any liability by acting in reliance
upon any notice, consent, certificate, other document or statement (whether
written or oral) believed by it to be genuine or to be sent by the proper party
or parties. In particular and without limiting any of the foregoing, the Agent
shall have no responsibility for confirming the accuracy of any borrowing base
certificate, compliance certificate or other document or instrument received by
it under the Loan Documents and shall be entitled to rely exclusively on
borrowing base certificates prepared by the Borrower in computing the Borrowing
Base. The Agent may treat the payee of any Note as the holder thereof until
written notice of transfer shall have been filed with the Agent signed by such
payee in form satisfactory to the Agent. Each Bank acknowledges that it has
independently and without reliance on the Agent or any other Bank, and based
upon such information, investigations and inquiries as it deems appropriate,
made its own credit analysis and decision to extend credit to the Borrower in
the manner set forth in the Loan Documents. It shall be the responsibility of
each Bank to keep itself informed as to the creditworthiness of the Borrower,
and the Agent shall have no liability to any Bank with respect thereto.
Section 10.6. Indemnity;. The Banks shall ratably, in accordance
with their respective Percentages, indemnify and hold the Agent, and its
directors, officers, employees, agents and representatives harmless from and
against any liabilities, losses, costs or expenses suffered or incurred by it
under any Loan Document or in connection with the transactions contemplated
thereby, regardless of when asserted or arising, except to the extent they are
promptly reimbursed for the same by the Borrower and except to the extent that
any event giving rise to a claim was caused by the gross negligence or willful
misconduct of the party seeking to be indemnified. The obligations of the Banks
under this Section 10.6 shall survive termination of this Agreement.
Section 10.7. Resignation of Agent and Successor Agent;. The
Agent may resign at any time by giving written notice thereof to the Banks and
the Borrower. Upon any such resignation of the Agent, the Required Banks shall
have the right to appoint a successor Agent. If no successor Agent shall have
been so appointed by the Required Banks, and shall have accepted such
appointment, within thirty (30) days after the retiring Agent's giving of notice
of resignation then the retiring Agent may, on
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behalf of the Banks, appoint a successor Agent, which shall be any Bank
hereunder or any commercial bank organized under the laws of the United States
of America or of any State thereof and having a combined capital and surplus of
at least $200,000,000. Upon the acceptance of its appointment as the Agent
hereunder, such successor Agent shall thereupon succeed to and become vested
with all the rights and duties of the retiring Agent under the Loan Documents,
and the retiring Agent shall be discharged from its duties and obligations
thereunder. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 10 and all protective provisions of the other Loan
Documents shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent.
Section 11. Miscellaneous;.
Section 11.1. Withholding Taxes;. (a) Payments Free of
Withholding. Except as otherwise required by law and subject to Section 11.1(b)
hereof, each payment by the Borrower under this Agreement or the other Loan
Documents shall be made without withholding for or on account of any present or
future taxes (other than overall net income taxes on the recipient) imposed by
or within the jurisdiction in which the Borrower is domiciled, any jurisdiction
from which the Borrower makes any payment, or (in each case) any political
subdivision or taxing authority thereof or therein. If any such withholding is
so required, the Borrower shall make the withholding, pay the amount withheld to
the appropriate governmental authority before penalties attach thereto or
interest accrues thereon and forthwith pay such additional amount as may be
necessary to ensure that the net amount actually received by each Bank and the
Agent free and clear of such taxes (including such taxes on such additional
amount) is equal to the amount which that Bank or the Agent (as the case may be)
would have received had such withholding not been made. If the Agent or any Bank
pays any amount in respect of any such taxes, penalties or interest, the
Borrower shall reimburse the Agent or such Bank for that payment on demand in
the currency in which such payment was made. If the Borrower pays any such
taxes, penalties or interest, it shall deliver official tax receipts evidencing
that payment or certified copies thereof to the Bank or Agent on whose account
such withholding was made (with a copy to the Agent if not the recipient of the
original) on or before the thirtieth day after payment.
(b) U.S. Withholding Tax Exemptions. Each Bank that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) shall
submit to the Borrower and the Agent on or before the earlier of the date the
initial Borrowing is made hereunder and thirty (30) days after the date hereof,
two duly completed and signed copies of either Form 1001 (relating to such Bank
and entitling it to a complete exemption from withholding under the Code on all
amounts to be received by such Bank, including fees, pursuant to the Loan
Documents and the Loans) or Form 4224 (relating to all amounts to be received by
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such Bank, including fees, pursuant to the Loan Documents and the Loans) of the
United States Internal Revenue Service. Thereafter and from time to time, each
Bank shall submit to the Borrower and the Agent such additional duly completed
and signed copies of one or the other of such Forms (or such successor forms as
shall be adopted from time to time by the relevant United States taxing
authorities) as may be (i) requested by the Borrower in a written notice,
directly or through the Agent, to such Bank and (ii) required under then-current
United States law or regulations to avoid or reduce United States withholding
taxes on payments in respect of all amounts to be received by such Bank,
including fees, pursuant to the Loan Documents or the Loans.
(c) Inability of Bank to Submit Forms. If any Bank determines, as a
result of any change in applicable law, regulation or treaty, or in any official
application or interpretation thereof, that it is unable to submit to the
Borrower or the Agent any form or certificate that such Bank is obligated to
submit pursuant to subsection (b) of this Section 11.1 or that such Bank is
required to withdraw or cancel any such form or certificate previously submitted
or any such form or certificate otherwise becomes ineffective or inaccurate,
such Bank shall promptly notify the Borrower and Agent of such fact and the Bank
shall to that extent not be obligated to provide any such form or certificate
and will be entitled to withdraw or cancel any affected form or certificate, as
applicable.
Section 11.2. No Waiver, Cumulative Remedies.; No delay or
failure on the part of the Agent or any Bank or on the part of the holder or
holders of any of the Obligations in the exercise of any power or right under
any Loan Document shall operate as a waiver thereof or as an acquiescence in any
default, nor shall any single or partial exercise of any power or right preclude
any other or further exercise thereof or the exercise of any other power or
right. The rights and remedies hereunder of the Agent, the Banks and of the
holder or holders of any of the Obligations are cumulative to, and not exclusive
of, any rights or remedies which any of them would otherwise have.
Section 11.3. Non-Business Days.; If any payment hereunder
becomes due and payable on a day which is not a Business Day, the due date of
such payment shall be extended to the next succeeding Business Day on which date
such payment shall be due and payable. In the case of any payment of principal
falling due on a day which is not a Business Day, interest on such principal
amount shall continue to accrue during such extension at the rate per annum then
in effect, which accrued amount shall be due and payable on the next scheduled
date for the payment of interest.
Section 11.4. Documentary Taxes.; The Borrower agrees to pay on
demand any documentary, stamp or similar taxes payable in respect of this
Agreement or any other Loan Document, including interest and penalties, in the
event any such taxes are assessed, irrespective of when such assessment is made
and whether or not any credit is then in use or available hereunder.
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Section 11.5. Survival of Representations.; All representations
and warranties made herein or in any other Loan Document or in certificates
given pursuant hereto or thereto shall survive the execution and delivery of
this Agreement and the other Loan Documents, and shall continue in full force
and effect with respect to the date as of which they were made as long as any
credit is in use or available hereunder.
Section 11.6. Survival of Indemnities.; All indemnities and
other provisions relative to reimbursement to the Banks of amounts sufficient to
protect the yield of the Banks with respect to the Loans and Letters of Credit,
including, but not limited to, Sections 1.11, 9.3 and 11.15 hereof, shall
survive the termination of this Agreement and the other Loan Documents and the
payment of the Obligations.
Section 11.7. Sharing of Set-Off;. Each Bank agrees with each
other Bank a party hereto that if such Bank shall receive and retain any
payment, whether by set-off or application of deposit balances or otherwise
("Set-off"), on any of the Loans or Reimbursement Obligations in excess of its
ratable share of payments on all such obligations then outstanding to the Banks,
then such Bank shall purchase for cash at face value, but without recourse,
ratably from each of the other Banks such amount of the Loans or Reimbursement
Obligations, or participations therein, held by each such other Banks (or
interest therein) as shall be necessary to cause such Bank to share such excess
payment ratably with all the other Banks; provided, however, that if any such
purchase is made by any Bank, and if such excess payment or part thereof is
thereafter recovered from such purchasing Bank, the related purchases from the
other Banks shall be rescinded ratably and the purchase price restored as to the
portion of such excess payment so recovered, but without interest. For purposes
of this Section 11.7, amounts owed to or recovered by, the Agent in connection
with Reimbursement Obligations in which Banks have been required to fund their
participation shall be treated as amounts owed to or recovered by the Agent as a
Bank hereunder.
Section 11.8. Notices.; Except as otherwise specified herein, all
notices hereunder and under the other Loan Documents shall be in writing
(including cable, telecopy or telex) and shall be given to the relevant party at
its address or telecopier number set forth below, or such other address or
telecopier number as such party may hereafter specify by notice to the Agent and
the Borrower given by courier, by United States certified or registered mail, by
telecopy or by other telecommunication device capable of creating a written
record of such notice and its receipt. Notices under the Loan Documents to the
Banks and the Agent shall be addressed to their respective addresses or
telecopier numbers set forth on the signature pages hereof, and to the Borrower
to:
Information Resources, Inc.
150 North Clinton Street
Chicago, Illinois 60606
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Attention: Chief Financial Officer
Telephone: (312) 726-1221
Telecopy: (312) 726-0360
Each such notice, request or other communication shall be effective (i) if given
by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section 11.8 or on the signature pages hereof and a
confirmation of such telecopy has been received by the sender, (ii) if given by
mail, five (5) days after such communication is deposited in the mail, certified
or registered with return receipt requested, addressed as aforesaid or (iii) if
given by any other means, when delivered at the addresses specified in this
Section 11.8 or on the signature pages hereof; provided that any notice given
pursuant to Section 1 hereof shall be effective only upon receipt.
Section 11.9. Counterparts.; This Agreement may be executed in
any number of counterparts, and by the different parties hereto on separate
counterpart signature pages, and all such counterparts taken together shall be
deemed to constitute one and the same instrument.
Section 11.10. Successors and Assigns;. This Agreement shall be
binding upon the Borrower and its successors and assigns, and shall inure to the
benefit of the Agent and each of the Banks and the benefit of their respective
successors and assigns, including any subsequent holder of any of the
Obligations. The Borrower may not assign any of its rights or obligations under
any Loan Document without the written consent of all of the Banks.
Section 11.11. Participants;. Each Bank shall have the right at
its own cost to grant participations (to be evidenced by one or more agreements
or certificates of participation) in the Loans made and Reimbursement
Obligations and/or Commitments held by such Bank at any time and from time to
time to one or more other Persons; provided that no such participation shall
relieve any Bank of any of its obligations under this Agreement, and, provided,
further that no such participant shall have any rights under this Agreement
except as provided in this Section 11.11, and the Agent shall have no obligation
or responsibility to such participant. Any agreement pursuant to which such
participation is granted shall provide that the granting Bank shall retain the
sole right and responsibility to enforce the
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obligations of the Borrower under this Agreement and the other Loan Documents
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of the Loan Documents, except that such agreement may
provide that such Bank will not agree to any modification, amendment or waiver
of the Loan Documents that would reduce the amount of or postpone any fixed date
for payment of any Obligation in which such participant has an interest. Any
party to which such a participation has been granted shall have the benefits of
Section 1.11 and Section 9.3 hereof. The Borrower authorizes each Bank to
disclose to any participant or prospective participant under this Section 11.11
any financial or other information pertaining to the Borrower, provided such
purchaser or prospective purchaser is advised of the duty of confidentiality
contained in Section 11.20 hereof.
Section 11.12. Assignment of Commitments by Banks;. Each Bank shall
have the right at any time, with the prior consent of the Borrower and the
Agent, which shall not be unreasonably withheld, to sell, assign, transfer or
negotiate all or any part of its Commitments (including the same percentage of
its Note, outstanding Loans and Reimbursement Obligations owed to it) to one or
more commercial banks or other financial institutions, provided that such
assignment shall be of a fixed percentage (and not by its terms of varying
percentage) of the assigning Bank's Commitments; provided, however, that in
order to make any such assignment (i) the assigning Bank shall retain at least
$10,000,000 in Commitments, and (ii) the assignee bank shall have Commitments of
at least $5,000,000, (iii) each such assignment shall be evidenced by a written
agreement executed by such assigning Bank, such assignee bank or banks, the
Borrower and the Agent which agreement shall specify in each instance the
portion of the Obligations which are to be assigned to the assignee bank and the
portion of the Commitments of the assigning Bank to be assumed by the assignee
bank or banks, and (iv) the assigning Bank shall pay to the Agent a processing
fee of $5,000 and any out-of-pocket attorneys' fees and expenses incurred by the
Agent in connection with any such assignment agreement. Any such assignee shall
become a Bank for all purposes hereunder to the extent of the Commitments it
assumes and the
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assigning Bank shall be released from its obligations, and will
have released its rights, under the Loan Documents to the extent of such
assignment. The Borrower authorizes each Bank to disclose to any purchaser or
prospective purchaser of an interest in the Loans and Reimbursement Obligations
owed to it or its Commitments under this Section 11.12 any financial or other
information pertaining to the Borrower.
Section 11.13. Amendments.; Any provision of this Agreement or
the other Loan Documents may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by (a) the Borrower, (b) the
Required Banks, and (c) if the rights or duties of the Agent are affected
thereby, the Agent; provided that:
(i) no amendment or waiver pursuant to this Section 11.13 shall (A)
increase any Commitment of any Bank without the consent of such Bank, (B)
reduce the amount of or postpone the date for payment of any principal of
or interest on any Loan or of any Reimbursement Obligation or of any fee
payable hereunder without the consent of the Bank to which such payment is
owing or which has committed to make such Loan or Letter of Credit (or
participate therein) hereunder or (C) change the definition of the
Termination Date or Section 2.2 without the consent of all the Banks; and
(ii) no amendment or waiver pursuant to this Section 11.13 shall,
unless signed by each Bank, change the provisions of this Section 11.13,
Section 6, Section 9, the definition of Required Banks, or affect the
number of Banks required to take any action hereunder or under any other
Loan Document.
Section 11.14. Headings.; Section headings used in this
Agreement are for reference only and shall not affect the construction of this
Agreement.
Section 11.15. Costs and Expenses.; The Borrower agrees to pay all
costs and expenses of the Agent in connection with the preparation, negotiation,
and administration of the Loan Documents, including, without limitation, the
reasonable fees and disbursements of Chapman and Cutler, counsel to the Agent,
in connection with the preparation and execution of the Loan Documents, and any
amendment, waiver or consent related thereto, whether or not the transactions
contemplated herein are consummated. The Borrower further agrees to indemnify
the Agent, each Bank, and their respective directors, officers and employees,
against all losses, claims, damages, penalties, judgments, liabilities and
expenses
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(including, without limitation, all expenses of litigation or preparation
therefor, whether or not the indemnified Person is a party thereto) which any of
them may pay or incur arising out of or relating to any Loan Document or any of
the transactions contemplated thereby or the direct or indirect application or
proposed application of the proceeds of any Loan or Letter of Credit, other than
those which arise from the gross negligence or willful misconduct of the party
claiming indemnification. The Borrower, upon demand by the Agent or a Bank at
any time, shall reimburse the Agent or such Bank for any legal or other expenses
incurred in connection with investigating or defending against any of the
foregoing except if the same is directly due to the gross negligence or willful
misconduct of the party to be indemnified. The obligations of the Borrower under
this Section 11.15 shall survive the termination of this Agreement.
Section 11.16. Set-off. ; In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such rights,
upon the occurrence of any Event of Default, each Bank and each subsequent
holder of any Obligation is hereby authorized by the Borrower at any time or
from time to time, without notice to the Borrower or to any other Person, any
such notice being hereby expressly waived, to set-off and to appropriate and to
apply any and all deposits (general or special, including, but not limited to,
indebtedness evidenced by certificates of deposit, whether matured or unmatured,
but not including trust accounts, and in whatever currency denominated) and any
other indebtedness at any time held or owing by that Bank or that subsequent
holder to or for the credit or the account of the Borrower, whether or not
matured, against and on account of the obligations and liabilities of the
Borrower to that Bank or that subsequent holder under the Loan Documents,
including, but not limited to, all claims of any nature or description arising
out of or connected with the Loan Documents, irrespective of whether or not (a)
that Bank or that subsequent holder shall have made any demand hereunder or (b)
the principal of or the interest on the Loans or Notes and other amounts due
hereunder shall have become due and payable pursuant to Section 8 and although
said obligations and liabilities, or any of them, may be contingent or
unmatured.
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Section 11.17. Entire Agreement;. The Loan Documents constitute
the entire understanding of the parties thereto with respect to the subject
matter thereof and any prior or contemporaneous agreements, whether written or
oral, with respect thereto are superseded hereby.
Section 11.18. Governing Law;. This Agreement and the other Loan
Documents, and the rights and duties of the parties hereto, shall be construed
and determined in accordance with the internal laws of the State of Illinois.
Section 11.19. Severability of Provisions.; Any provision of any
Loan Document which is unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 11.20. Confidentiality;. The Agent and each Bank agrees
to hold any information designated as confidential by the Borrower which it may
receive from the Borrower pursuant to this Agreement in confidence, except for
information that becomes publicly available, and except for disclosures to (i)
other parties to the Agreement, (ii) legal counsel, accountants and other
professional advisors to the Agent or a Bank, (iii) as required by law,
regulation, or legal process, (iv) in connection with any legal proceeding to
which the Agent or a Bank is a party and (v) as permitted in accordance with
Section 11.11 hereof.
Section 11.21. Submission to Jurisdiction; Waiver of Jury
Trial';. The Borrower hereby submits to the nonexclusive jurisdiction of the
United States District Court for the Northern District of Illinois and of any
Illinois State court sitting in the City of Chicago for purposes of all legal
proceedings arising out of or relating to this Agreement, the other Loan
Documents or the transactions contemplated hereby or thereby. The Borrower
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum. THE BORROWER, THE AGENT AND
EACH BANK HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL
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PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED THEREBY.
Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall constitute a contract between us for the uses and purposes
hereinabove set forth.
Dated as of this 3rd day of November, 1994
Signature Page;
Information Resources, Inc.
By:
Name:
Title:
Accepted and agreed to as of the day and year last above written.
Harris Trust and Savings Bank,
in its individual capacity as
a Bank and as Agent
Address and Amount of Commitments: By:
Name:
Address: Title:
Vice President
111 West Monroe Street
Chicago, Illinois 60603
Attention: Richard H. Robb
Telecopy: (312) 461-2591
Telephone: (312)461-2801
Revolving Credit Commitment:
$22,000,000
Lending Offices:
Domestic Rate Loans:
111 West Monroe Street
Chicago, Illinois
Eurodollar Loans:
111 West Monroe Street
Chicago, Illinois
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NBD Bank, National Association
Address and Amount of Commitments: By:
Name:
Address: Title:
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Steven K. Wagner
Telecopy: (313) 225-3269
Telephone: (313) 225-2175
Revolving Credit Commitment:
$15,000,000
Lending Offices:
Domestic Rate Loans:
611 Woodward Avenue
Detroit, Michigan 48226
Eurodollar Loans:
611 Woodward Avenue
Detroit, Michigan 48226
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Mercantile Bank of St. Louis
National Association
Address and Amount of Commitments: By:
Name:
Address: Title:
721 Locust Street (Tram 12-3)
St. Louis, Missouri 63101
Attention: T. W. Hassler
Telecopy: (314) 425-2162
Telephone: (314) 425-8046
Revolving Credit Commitment:
$15,000,000
Lending Offices:
Domestic Rate Loans:
721 Locust Street (Tram 12-3)
St. Louis, Missouri 63101
Eurodollar Loans:
721 Locust Street (Tram 12-3)
St. Louis, Missouri 63101
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Comerica Bank -- Illinois
Address and Amount of Commitments: By:
Name:
Address: Title:
4747 West Dempster Street
Skokie, Illinois 60076
Attention: Harve C. Light
Telecopy: (708) 933-2209
Telephone: (708) 933-2203
Revolving Credit Commitment:
$8,000,000
Lending Offices:
Domestic Rate Loans:
4747 West Dempster Street
Skokie, Illinois 60076
Eurodollar Loans:
4747 West Dempster Street
Skokie, Illinois 60076
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The Sakura Bank, Limited
Address and Amount of Commitments: By:
Name:
Address: Title:
227 West Monroe Street, Suite 4700
Chicago, Illinois 60606
Attention: Kristin Hays
Telecopy: (312) 332-5345
Telephone: 312-201-5141
Revolving Credit Commitment:
$5,000,000
Lending Offices:
Domestic Rate Loans:
Chicago Branch
The Sakura Bank, Limited
Eurodollar Loans:
Chicago Branch
The Sakura Bank, Limited
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EXHIBIT A
NOTE
U.S. $_________________________________, 19___
For Value Received, the undersigned, Information Resources, Inc., a
Delaware corporation (the "Borrower"), hereby promises to pay to the order of
______________________ (the "Bank") on the Termination Date of the hereinafter
defined Credit Agreement, at the principal office of Harris Trust and Savings
Bank, in Chicago, Illinois, in immediately available funds, the principal sum of
___________________ Dollars ($__________) or, if less, the aggregate unpaid
principal amount of all Loans made by the Bank to the Borrower pursuant to the
Credit Agreement, together with interest on the principal amount of each Loan
from time to time outstanding hereunder at the rates, and payable in the manner
and on the dates, specified in the Credit Agreement.
The Bank shall record on its books or records or on a schedule
attached to this Note, which is a part hereof, each Loan made by it pursuant to
the Credit Agreement, together with all payments of principal and interest and
the principal balances from time to time outstanding hereon, whether the Loan is
a Domestic Rate Loan or a Eurodollar Loan, the interest rate and Interest Period
applicable thereto, provided that prior to the transfer of this Note all such
amounts shall be recorded on a schedule attached to this Note. The record
thereof, whether shown on such books or records or on a schedule to this Note,
shall be prima facie evidence of the same, provided, however, that the failure
of the Bank to record any of the foregoing or any error in any such record shall
not limit or otherwise affect the obligation of the Borrower to repay all Loans
made to it pursuant to the Credit Agreement together with accrued interest
thereon.
This Note is one of the Notes referred to in the Credit Agreement
dated as of November 3, 1994, among Information Resources, Inc., Harris Trust
and Savings Bank, as Agent, and the Banks party thereto (the "Credit
Agreement"), and this Note and the holder hereof are entitled to all the
benefits provided for thereby or referred to therein, to which Credit Agreement
reference is hereby made for a statement thereof. All defined terms used in this
Note, except terms otherwise defined herein, shall have the same meaning as in
the Credit Agreement. This Note shall be governed by and construed in accordance
with the internal laws of the State of Illinois.
Prepayments may be made hereon and this Note may be declared due prior
to the expressed maturity hereof, all in the events, on the terms and in the
manner as provided for in the Credit Agreement.
The Borrower hereby waives demand, presentment, protest or notice of
any kind hereunder.
Information Resources, Inc.
By
Name
Title
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EXHIBIT B
[TO BE PRINTED ON LETTERHEAD OF COUNSEL TO BORROWER]
NOVEMBER 3, 1994
To each of the Banks named in the
hereinafter defined Credit Agreement
c/o Harris Trust and Savings Bank,
as Agent under the Credit Agreement
defined below
Gentlemen:
We have served as counsel to Information Resources, Inc., a Delaware
corporation (the "Borrower"), in connection with a revolving credit and letter
of credit facility being made available by you to the Borrower. As such
counsel, we have supervised the taking of the corporate proceedings necessary to
authorize the execution and delivery of, and have examined executed originals
of, the instruments and documents identified on Exhibit A to this letter
(collectively the "Loan Documents", individual Loan Documents and other
capitalized terms used below being hereinafter referred to by the designations
appearing on Exhibit A). As counsel to the Borrower, we are familiar with the
certificate of incorporation and by-laws under which the Borrower is organized.
We have also examined such other instruments and records and inquired into such
other factual matters and matters of law as we deem necessary or pertinent to
the formulation of the opinions hereinafter expressed.
Based upon the foregoing, we are of the opinion that:
1. The Borrower is a corporation duly organized and validly existing and
in good standing under the laws of the State of Delaware with full and adequate
corporate power and authority to carry on its business as now conducted and is
duly licensed or qualified and in good standing in each State of the United
States of America in which its ownership or leasing of property requires such
qualification (except where the failure to be so qualified would not have a
material adverse effect on the business, properties, financial condition or
earnings of the Borrower and its subsidiaries taken as a whole).
2. The Borrower has full right, power and authority to borrow from you, to
execute and deliver the Loan Documents executed by it and to observe and perform
all the matters and things therein provided for. The execution and delivery of
the Loan Documents executed by the Borrower does not, nor will the observance or
performance of any of the matters or things therein provided for, contravene any
provision of law or the certificate of incorporation or by-laws of the Borrower
(there being no other agreements under which the Borrower is organized) or, to
the best of our knowledge after due inquiry, of any covenant, indenture or
agreement binding upon or affecting the Borrower or any of its properties or
assets.
3. The Loan Documents executed by the Borrower have been duly authorized
by all necessary corporate action (no stockholder approval being required) have
been executed and delivered by the proper offices of the Borrower and constitute
valid and binding agreements of the Borrower enforceable against it in
accordance with their respective terms.
4. No order, authorization, consent, license or exemption from, or filing
or registration with, any court or governmental department, agency,
instrumentality or regulatory body, whether local, state or federal, is or will
be required in connection with the lawful execution and delivery of the Loan
Documents or the observance and performance by the Borrower of any of the terms
thereof.
5. To the best of our knowledge after due inquiry, except as previously
disclosed to you as set forth in the Borrower's filings with the Securities and
Exchange Commission, there is no action, suit, proceeding or investigation at
law or in equity before or by any court or public body pending or threatened
against or affecting the Borrower or any of its assets and properties which, if
adversely determined, could result in any material adverse change in the
properties, business, operations or financial condition of the Borrower.
The foregoing opinions are subject to the following qualifications:
(i) Our opinions stated in paragraph 3 with respect to the validity and
enforceability of the Loan Documents are subject to (a) applicable laws relating
to bankruptcy, insolvency, reorganization, rehabilitation, moratorium or other
laws now or hereafter in effect affecting creditors' rights generally, and (b)
to general principles of equity, whether enforcement is considered at law or in
equity, and to the discretion of the court before which any proceeding therefor
may be brought.
(ii) We have relied as to certain factual matters on certificates by
officers of the Borrower and upon certificates of public officials. Although we
have made no independent investigation or verification of each matter set forth
therein, nothing has come to our attention indicating that such reliance by us
or by you is not justified.
(iii) We are members of the Bar of the State of Illinois. We do not
purport to be experts in the law of any state other than Illinois, and the
opinions expressed above are limited to the internal laws of the State of
Illinois, the State of Delaware General Corporation Law, and the laws of the
United States of America applicable to the transactions or the documents
referred to herein.
(iv) In examining all documents and agreements examined by us in
connection with our opinions herein expressed, we have assumed the genuineness
of all signatures (other than those on behalf of the Borrower), the authenticity
of all documents submitted to us as originals and the conformity with originals
of all documents submitted to us as copies.
(v) This opinion is given as of the date set forth above and we assume no
obligation to update or supplement this opinion to reflect any facts or
circumstances which may hereafter come to our attention or any changes in law
which may hereafter occur.
This opinion is being furnished to you solely for your benefit. It may not
be relied upon by, nor a copy of it delivered to, any other party without our
prior written consent.
Respectfully submitted,
<PAGE>
EXHIBIT A
THE LOAN DOCUMENTS
(All Loan Documents are dated as of November 3, 1994.
1. Credit Agreement among the Company, Harris Trust and Savings Bank, as
Agent, and the Banks party thereto.
2. Note of the Company payable to the order of Harris Trust and Savings
Bank in the principal amount of $22,000,000.
3. Note of the Company payable to the order of NBD Bank, National
Association in the principal amount of $15,000,000.
4. Note of the Company payable to the order of Mercantile Bank of St.
Louis National Association in the principal amount of $15,000,000.
5. Note of the Company payable to the order of Comerica Bank -- Illinois
in the principal amount of $8,000,000.
6. Note of the Company payable to the order of The Sakura Bank, Limited
in the principal amount of $5,000,000.
-4-
<PAGE>
EXHIBIT C
NOTICE OF PAYMENT REQUEST
[Name of Bank] [Date]
[Address]
Attention:
Reference is made to the Credit Agreement, dated as of November 3,
1994 among Information Resources, Inc., the Banks party thereto, and Harris
Trust and Savings Bank, as Agent (the "Credit Agreement"). Capitalized terms
used herein and not defined herein have the meanings assigned to them in the
Credit Agreement. [The Borrower has failed to pay its Reimbursement Obligation
in the amount of $_________. Your Bank's Percentage of the unpaid Reimbursement
Obligation is $_________] or [Harris Trust and Savings Banks has been required
to return a payment by the Borrower of a Reimbursement Obligation in the amount
of $________. Your Bank's Percentage of the returned Reimbursement Obligation
is $_________.]
Very truly yours,
Harris Trust and Savings Bank
By
Its
-1-
<PAGE>
EXHIBIT D
BORROWING BASE CERTIFICATE
To: Harris Trust and Savings Bank, as Agent under, and the Banks party to, the
Credit Agreement described below.
Pursuant to the terms of the Credit Agreement dated as of November 3,
1994 among us (the "Credit Agreement"), we submit this Borrowing Base
Certificate to you and certify that the information set forth below and on any
attachments to this Certificate is true, correct and complete as of the date of
this Certificate.
I. Borrowing Base
A. Billed Accounts in Borrowing Base
1. Gross Accounts ----------------
A1
Less
(a) Ineligible sales (i.e., ----------------
account debtor not
within the U.S. or Canada)
(b) Owed by an account ---------------
debtor who is in an
insolvency or reorganization
proceeding
(c) Credits/allowances ----------------
(d) Unpaid more than ----------------
90 days
(e) Otherwise ineligible -------------------
2. Total Deductions ------------------
(sum of lines A1a - A1e)
A2
3. Eligible Billed Accounts -----------------
(line A1 minus line A2)
A3
4. Billed Accounts in Borrowing ===================
Base (line A3 x .85)
A4
B. Unbilled Accounts in Borrowing Base
1. Gross Accounts -------------------
-1-
<PAGE>
B1
Less
(a) Ineligible sales (i.e., -------------
account debtor not
within the U.S. or Canada)
(b) Owed by an account ------------------
debtor who is in an
insolvency or reorganization
proceeding
(c) Credits/allowances --------------
(d) Not billable within 75 -----------------
days or, when billed, not
payable within 30 days
(e) Otherwise ineligible -----------------
2. Total Deductions ---------------
(sum of lines B1a - B1e)
B2
3. Eligible Unbilled Accounts ----------------
(line B1 minus line B2)
B3
4. Unbilled Accounts in Borrowing =====================
Base (line B3 x .50)
B4
Total Borrowing Base ========================
(sum of lines A4 and B4) I
II. Revolving Credit Outstanding
A. Revolving Credit Loans -----------------
B. Letters of Credit -----------------
Total Revolving Credit Outstanding ==================
(line IIA plus IIB)
II
III. Unused Availability ================
III
Dated as of this ___________ day of __________________, 19____.
-2-
<PAGE>
.............................. ,
(Name) (Title)
-3-
<PAGE>
SCHEDULE 5.2
------------
SUBSIDIARIES
------------
<TABLE>
<CAPTION>
JURISDICTION PERCENTAGE
NAME OF INCORPORATION OWNERSHIP
- - ---- ---------------- -------------
<S> <C> <C>
DOMESTIC
IRI French Holdings, Inc. Delaware 100%
Information Resources DHC, Inc. * Delaware 100%
Towne-Oller & Associates, Inc. ** New York 100%
Shoppers Hotline, Inc. Delaware 100%
North Clinton Corporation Illinois 100%
564 Randolph Co. #2 Illinois 100%
Richard E. Shulman, Inc. * New York 100%
Medialink Parent Incorporated California 100%
Medialink International Corporation *** California 100%
Medialink VAR Corporation *** California 100%
IRI Venezuela Holdings, Inc. Delaware 100%
IRI Puerto Rico, Inc. Puerto Rico 100%
Neo, Inc. Connecticut 100%
IRI Guatemala Holdings, Inc. Delaware 100%
IRI Greek Holdings, Inc. Delaware 100%
IRI Italy Holdings, Inc. Delaware 100%
InfoScan Italy Holdings, Inc. Delaware 100%
LogiCNet, Inc. **** Delaware Less than 20%
Catalina Information Resources, Inc. Delaware 50%
</TABLE>
* Inactive.
** An application for merger into Borrower is pending in the State of New York
and the State of Delaware. Anticipated effective date is September 30,
1994.
*** Inactive. Medialink International and Medialink VAR are wholly-owned
subsidiaries of Medialink Parent Incorporated.
**** IRI has an option to acquire a substantial majority of the stock from the
current majority stockholder.
<PAGE>
<TABLE>
<CAPTION>
JURISDICTION PERCENTAGE
NAME INCORPORATION OWNERSHIP
- - ---- ------------- ----------
<S> <C> <C>
FOREIGN
Information Resources, GmbH Federal Republic of Germany 100%
Information Resources, S.A France 100%
Information Resources New Zealand
Pty Limited New Zealand 100%
Information Resources Japan Ltd Japan 100%
Information Resources Singapore Pte Limited Singapore 100%
IRI Software, Ltd. (formerly Management
Decision Systems, Limited) United Kingdom 100%
Information Resources Australia Pty Limited Australia 100%
IRAUS Pty Limited * Australia 100%
Apollo Information Resources Pty Limited * Australia 100%
Panel Pazar Arastirma ve Dansimanlik A.S. Republic of Turkey 100%
Precis (1136) Limited United Kingdom Approx. 95% (see
attached Exhibit A)
IRI Software (India) Private Limited India 100%
IRI Software de Mexico, S.A. de C.V. Mexico 100%
IRI InfoScan S.r.l. Italy 100% (79% through IRI
Italy and 21% through
InfoScan Italy Holdings,
Inc.)
GfK Panel Services GmbH ** Federal Republic of Germany 15%
IRI-SECODIP, S.N.C. ** France 50%
IRI InfoScan Limited (formerly
InfoScan NMRA Limited) ** United Kingdom Approx. 75% through
Precis 1136 (see
attached Exhibit A)
IRI InfoScan B.V. ** Holland 26.5%
Datos Information Resources ** Venezuela 49%
ABG Atwood Holdings B.V. Netherlands 19.9%
GfK Belgium S.A. ** Belgium 19.9%
Grupo de Servicios de Information S.A. ** Guatemala 19.9% (through IRI
Guatemala Holdings,
Inc.)
IRI Hellas, S.A. Greece 100% (through IRI Greek
Holdings, Inc.)
</TABLE>
* In process of liquidation.
** Operating subsidiaries of foreign joint ventures.
<PAGE>
EXHIBIT A TO SCHEDULE 5.2
PRECIS 1136 LIMITED
Preference Shares (at 1 British Pound Sterling each)
- - -----------------
Information Resources, Inc. 1,000,000
Ordinary Shares (at 1 British Pound Sterling each)
- - ---------------
Information Resources, Inc. 4,289,857
GfK AG 225,309
---------
4,515,165
IRI INFOSCAN LIMITED (FORMERLY INFOSCAN NMRA LIMITED)
Preference Shares (at 1 British Pound Sterling each)
- - -----------------
Information Resources, Inc. 1,000,000
Ordinary Shares (at 1 British Pound Sterling each)
- - ---------------
Precis 1136 Limited 4,515,165 (Class A)*
Taylor Nelson Group Ltd 725,290 (Class B)
GfK AG 659,545 (Class C)
---------
5,900,000
* Pursuant to the terms of the Joint Venture Agreement, Precis 1136 issued
options to Taylor Nelson Group Ltd. to acquire up to 750,300 shares of the
IRI InfoScan shares held by Precis 1136 (500,200 of which were issued
July 31, 1993 and 250,100 of which were issued August 31, 1993), which
options are exercisable over a three-year period at the greater of fair
market value or the cost of such shares plus simple interest.
<PAGE>
SCHEDULE 5.5
PENDING LITIGATION
1. 1989 Shareholder Class Action. As disclosed in the Borrower's Form
10-Q for the quarter ended June 30, 1994, on June 7, 1994, a federal district
court jury returned a unanimous verdict in favor of the Borrower and the four
individual defendants named in the shareholder class action lawsuit filed in
1989. Post-trial motions are pending. The verdict may be appealed following
resolution of the post-trial motions.
2. 1994 Shareholder Class Action. As reported in the Borrower's Form 10-Q
for the quarter ended March 31, 1994, a class action shareholder suit was filed
against the Borrower and certain of its directors and officers on April 21,
1994. On October 17, 1994, the Board of Directors of the Borrower approved a
settlement agreement in this case providing for the settlement of these claims.
The settlement agreement is subject to the approval of the court. The Borrower
anticipates that it will make an additional pre-tax provision for litigation
reserves of $3,000,000 in connection with the legal fees and other costs
relating to such settlement. Such reserve will be made in the quarter ended
September 30, 1994.
<PAGE>
SCHEDULE 7.5
COMPLIANCE CERTIFICATE
This Compliance Certificate is furnished to Harris Trust and Savings
Bank, as Agent (the "Agent") pursuant to that certain Credit Agreement dated as
of November 3, 1994, among Information Resources, Inc. (the "Company"), Harris
Trust and Savings Bank, as Agent, and the Banks party thereto (the "Credit
Agreement"). Unless otherwise defined herein, the terms used in this Compliance
Certificate have the meanings ascribed thereto in the Credit Agreement.
The Undersigned hereby certifies that:
1. I am the duly elected _____________________________________ of
the Borrower;
2. I have reviewed the terms of the Credit Agreement and I have
made, or have caused to be made under my supervision, a detailed review of
the transactions and conditions of the Borrower and its Subsidiaries during
the accounting period covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or the occurrence of
any event which constitutes a Default or Event of Default during or at the
end of the accounting period covered by the attached financial statements
or as of the date of this Certificate, except as set forth below; and
4. The Attachment hereto sets forth financial data and computations
evidencing the Borrower's compliance with certain covenants of the Credit
Agreement, all of which data and computations are, to the best of my
knowledge, true, complete and correct and have been made in accordance with
the relevant Sections of the Credit Agreement.
Described below are the exceptions, if any, to paragraph 3 by listing,
in detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:
----------------------------------------------
----------------------------------------------
------------------------
----------------------------------------------
----------------------------------------------
------------------------
----------------------------------------------
----------------------------------------------
------------------------
----------------------------------------------
-70-
<PAGE>
_____________________
___________
The foregoing certifications, together with the computations set forth
in the Attachment hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this _________ day of
__________________ 19___.
. . . . . . . . . ,
(Name) (Title)
-2-
<PAGE>
ATTACHMENT TO COMPLIANCE
CERTIFICATE
INFORMATION RESOURCES, INC.
Compliance Calculations for
Credit Agreement
Dated as of November 3, 1994
Calculations as of
_____________, 19___
_____________________________
_____________________________
_______________
A. Consolidated Tangible Net Worth (Section 7.6)
1. Consolidated total assets
$_________
2. Intangible assets
$_________
3. Line A.1 minus A.2
$_________
4. Consolidated Total Liabilities
$_________
5. Line A.3 minus A.4 (Consolidated Tangible
Net Worth) $
========
======
6. Line A.5 shall not be less than
$_________
B. Leverage Ratio (Section 7.7)
1. Consolidated Total Liabilities (Line
A.4 above)
$_________
2. Consolidated Tangible Net Worth (Line
A.5 above)
$_________
3. Ratio of Line B.1 to B.2 ____
: 1.0
4. Line B.3 Ratio shall not be more than ____
: 1.0
C. Consolidated Current Ratio (Section 7.8)
-1-
<PAGE>
1. Consolidated current assets
$__________
2. Consolidated current liabilities
$___________
3. Current portion of deferred tax
liability
$___________
4. Line C.2 minus C.3
$___________
5. Ratio of Line C.1 to C.4 (Consolidated
Current Ratio) ____
: 1.0
6. Line C.5 Ratio shall not be less than 2.0 :
1.0
D. Cash Flow Coverage Ratio (Section 7.9)
1. Consolidated Net Income
$___________
2. Consolidated Interest Expense
$___________
3. Income Taxes
$___________
4. Depreciation and amortization
$___________
5. Amortization of InfoScan Costs and Software
Costs
$___________
6. Net Proceeds from Equity Security Offerings
$___________
7. Sum of Lines D.1 through D.6 (Consolidated
Cash Flow) $
========
======
8. Principal payments on Indebtedness for
Borrowed Money
$___________
-2-
<PAGE>
9. Consolidated Interest Expense
$___________
10. Capital expenditures
$___________
11. Dividends
$___________
12. Cash Payments made in connection with
InfoScan Costs and Software Costs
$___________
13. Cash Investments
$___________
14. Sum of Lines D.8 through D.13 (Consolidated
Fixed Charges) $
=======
======
15. Ratio of Line D.7 to D.14 ____ : 1.0
16. Line D.15 Ratio shall not be less than ____
: 1.0
-3-
<PAGE>
EXHIBIT 11
----------
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
COMPUTATIONS OF EARNINGS (LOSS) PER COMMON
AND COMMON EQUIVALENT SHARE
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, 1994 ENDED SEPTEMBER 30, 1994
--------------------------- -------------------------
<S> <C> <C>
Loss for the period (A)
Before cumulative effect of accounting change: $(3,104,000) $ (4,380,000)
Cumulative effect of accounting change -- (6,594,000)
----------- ------------
Net loss $(3,104,000) $(10,974,000)
=========== ============
Weighted common shares outstanding during the period 26,174,000 25,948,000
Net additional shares in excess of 20% of
outstanding issuable pursuant to
modified treasury stock method -- --
----------- ------------
Total common and common equivalent shares (B) 26,174,000 25,948,000
=========== ============
Loss per common and common equivalent shares (A)/(B):
Before cumulative effect of accounting change $ (.12) $ (.17)
Cumulative effect of accounting change -- (.25)
----------- ------------
Net loss $ (.12) $ (.42)
=========== ============
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, 1993 ENDED SEPTEMBER 30, 1993
FULLY FULLY
PRIMARY DILUTED PRIMARY DILUTED
----------- ----------- ----------- -----------
Earnings for the period (A)
Before cumulative effect of accounting change: $ 7,358,000 $ 7,358,000 $17,744,000 $17,744,000
Cumulative effect of accounting change -- -- 1,864,000 1,864,000
----------- ----------- ----------- -----------
Net earnings 7,358,000 7,358,000 19,608,000 19,608,000
Adjustment of net income for the period for assumed
interest income, net of the tax effect, pursuant to
modified treasury stock method 6,000 -- 6,000 --
----------- ----------- ----------- -----------
Adjusted net earnings $ 7,364,000 $ 7,358,000 $19,614,000 $19,608,000
=========== =========== =========== ===========
Weighted common shares outstanding during the period 25,168,000 25,168,000 24,879,000 24,880,000
Net additional shares in excess of 20% of
outstanding issuable pursuant to
modified treasury stock method 1,947,000 2,085,000 1,741,000 2,085,000
----------- ----------- ----------- -----------
Total common and common equivalent shares (B) 27,115,000 27,253,000 26,620,000 26,965,000
=========== =========== =========== ===========
Earnings per common and common equivalent
shares (A)/(B):
Before cumulative effect of accounting change $ .27 $ .27 $ .67 $ .66
Cumulative effect of accounting change -- -- .07 .07
----------- ----------- ----------- -----------
Net earnings $ .27 $ .27 $ .74 $ .73
=========== =========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 7,146
<SECURITIES> 0
<RECEIVABLES> 125,718
<ALLOWANCES> 2,640
<INVENTORY> 0
<CURRENT-ASSETS> 151,112
<PP&E> 140,000
<DEPRECIATION> 81,665
<TOTAL-ASSETS> 353,340
<CURRENT-LIABILITIES> 87,195
<BONDS> 0
<COMMON> 263
0
0
<OTHER-SE> 229,893
<TOTAL-LIABILITY-AND-EQUITY> 353,340
<SALES> 272,776
<TOTAL-REVENUES> 272,776
<CGS> 0
<TOTAL-COSTS> 234,801
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,419
<INCOME-PRETAX> (8,345)
<INCOME-TAX> (3,016)
<INCOME-CONTINUING> (4,380)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (6,594)
<NET-INCOME> (10,974)
<EPS-PRIMARY> (.42)
<EPS-DILUTED> (.42)
</TABLE>
