<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 March 31, 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 April 29, 1994, was 25,842,007.
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
INDEX
-----
<TABLE>
<CAPTION>
PAGE
NUMBER
------
PART I. FINANCIAL INFORMATION
- - ----------------------------------
<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
- - ------------------------------
Item 1 - Legal Proceedings 13
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 MARCH 31, 1994 DECEMBER 31, 1993
- - ------ -------------- -----------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 9,610 $ 19,368
Accounts receivable - net 115,491 116,637
Deferred income taxes 9,470 9,205
Prepaid expenses and other 6,485 4,230
-------- --------
Total Current Assets 141,056 149,440
-------- --------
PROPERTY AND EQUIPMENT 130,768 124,185
Accumulated depreciation and amortization (74,690) (71,013)
-------- --------
56,078 53,172
INVESTMENTS 16,563 11,764
OTHER ASSETS
Deferred data procurement costs
(net of amortization) 76,269 71,131
Capitalized software costs - net 22,449 21,481
Goodwill - net 3,859 3,931
Other 15,495 16,596
-------- --------
118,072 113,139
-------- --------
$331,769 $327,515
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- - ------------------------------------
CURRENT LIABILITIES
Current maturities of capitalized leases $ 1,700 $ 1,691
Bank borrowings 6,000 --
Accounts payable 14,098 14,512
Accrued expenses 21,933 21,521
Deferred revenue 17,061 13,844
Other 6,712 5,902
-------- --------
Total Current Liabilities 67,504 57,470
-------- --------
LONG-TERM CAPITALIZED LEASES 2,755 3,087
DEFERRED INCOME TAXES 26,259 31,040
DEFERRED GAIN 4,774 4,878
OTHER LIABILITIES 1,508 1,176
MINORITY INTEREST 313 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: 25,822,452 shares;
issued in 1993: 25,416,502 shares 258 254
Capital in excess of par value 165,079 157,972
Retained earnings 64,751 72,333
Cumulative translation adjustment (1,432) (1,897)
-------- --------
Total Stockholders' Equity 228,656 228,662
-------- --------
$331,769 $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
------------------
MARCH 31
-----------------
1994 1993
------- -------
<S> <C> <C>
Revenues $87,678 $75,650
Costs and expenses:
Operating expenses 72,581 59,360
Selling, general and administrative expenses 10,571 7,660
Loss on disposition of assets -- 2,200
------- -------
83,152 69,220
------- -------
Operating profit 4,526 6,430
Other income (expense):
Interest income 151 376
Interest expense (215) (305)
Litigation provision (5,000) --
Other - net 119 111
------- -------
(4,945) 182
------- -------
Equity in loss of affiliated companies (2,258) (312)
------- -------
Earnings (loss) before income taxes, minority interest
and cumulative effect of change in accounting principle (2,677) 6,300
Income tax expense (benefit) (895) 2,670
------- -------
Earnings (loss) before minority interest and cumulative
effect of change in accounting principle (1,782) 3,630
Minority interest 494 297
------- -------
Earnings (loss) before cumulative effect
of change in accounting principle (1,288) 3,927
Cumulative effect on prior years of
change in accounting principle:
Income taxes -- 1,864
Revenue recognition (6,594) --
------- -------
Net earnings (loss) $(7,882) $ 5,791
======= =======
Earnings (loss) per common and
common equivalent share:
Before cumulative effect of accounting change $ (.05) $ .15
Cumulative effect of accounting change (.26) .07
------- -------
Net earnings (loss) $ (.31) $ .22
======= =======
Weighted average common and common equivalent shares 25,579 26,157
======= =======
</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>
THREE MONTHS ENDED MARCH 31
-----------------------------
1994 1993
------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ (7,882) $ 5,791
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:
Depreciation and amortization 6,633 5,131
Amortization of deferred data procurement costs 15,046 11,395
Deferred income taxes (703) 1,004
Equity in loss of affiliated companies 2,258 312
Minority interest (494) (297)
Cumulative effect of change in revenue recognition 6,594 --
Cumulative effect of adoption of FAS 109 -- (1,864)
Litigation provision 5,000 --
Stock option compensation expense 665 --
Loss on disposition of assets -- 2,200
Other 109 42
Change in assets and liabilities:
Increase in current assets (11,160) (12,999)
Decrease (Increase) in other assets 407 (2,943)
Increase (Decrease) in current liabilities (2,590) 6,609
Increase in other liabilities 332 10
-------- --------
Total adjustments 22,097 8,600
-------- --------
Net cash provided by operating activities 14,215 14,391
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment - net (6,507) (6,212)
Software costs (2,974) (2,374)
Deferred data procurement costs (19,757) (15,124)
Net assets acquired in business acquisition -- (901)
Investment in joint ventures (1,236) --
-------- --------
Net cash used in investing activities (30,474) (24,611)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments of capitalized leases (379) (348)
Net bank borrowings 6,000 --
Proceeds from exercise of stock options 679 1,098
-------- --------
Net cash provided by financing activities 6,300 750
EFFECT OF EXCHANGE RATE ON CASH 201 29
-------- --------
NET DECREASE IN CASH (9,758) (9,441)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 19,368 53,593
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 9,610 $ 44,152
======== ========
</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>
THREE MONTHS ENDED MARCH 31
----------------------------
<S> <C> <C>
1994 1993
----- ------
CASH PAID (REFUNDED) DURING THE PERIOD FOR:
Interest $ 215 $ 270
Income taxes (refund) $(799) $1,002
</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.
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 March 31, 1994 and December 31, 1993 and the results of
operations for the three months ended March 31, 1994 and March 31, 1993 and
cash flows for the three months ended March 31, 1994 and March 31, 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.
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 March 31, 1994 and March 31, 1993 since options
outstanding exceeded 20% of the shares of common stock outstanding. In
applying the modified treasury stock method for the period ended 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
Ended Ended
March 31, 1994 March 31, 1993
--------------- --------------
(In thousands)
<S> <C> <C>
Revenues
- Actual $87,678 $75,650
======= =======
- Pro forma $87,678 $77,905
======= =======
Earnings (loss) before
cumulative effect of
accounting change
- Actual $(1,288) $ 3,927
======= =======
- Pro forma $(1,288) $ 5,277
======= =======
Earnings (loss) per
common and common
equivalent share before
cumulative effect of accounting
change
- Actual $ (.05) $ .15
======= =======
- Pro forma $ (.05) $ .20
======= =======
</TABLE>
Year Ended December 31
-------------------------------------------------
(In thousands)
<TABLE>
<CAPTION>
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 (loss) 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 (loss) 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, including a recently filed
shareholder class action.
6. 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 is reflected in the
Company's selling, general and administrative expenses.
7. 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 on October 1, 1994.
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 ENDED THREE MONTHS ENDED
MARCH 31 1994/
1994 1993 1993
------ ------ ------
<S> <C> <C> <C>
Revenues 100.0% 100.0% 15.9%
Operating expenses 82.7 78.5 22.3
Selling, general & admin. 12.1 10.1 38.0
Loss on disposition of assets -- 2.9 *
Operating profit 5.2 8.5 (29.6)
Other income (expense) (5.6) * *
Equity in loss of affiliates (2.6) (.4) *
Income tax expense (benefit) (1.0) 3.5 *
Minority interest * * *
Cumulative effect of
accounting change (7.5) 2.5 *
Net earnings (loss) (9.0) 7.7 *
</TABLE>
* Not meaningful
REVENUES
The Company's revenue from operations for the three months ended March 31, 1994
increased 15.9% to $87.7 million compared to $75.7 million for the first three
months of 1993. The revenue growth resulted principally from growth in InfoScan
revenues and, to a lesser extent, increased revenues from software support
services, principally analytical software.
Revenues from the Company's InfoScan product line for the three months ended
March 31, 1994 were $48.2 million, an increase of 21.4% 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. The Company's competitor
in the information services business, the A.C. Nielsen Company, introduced
unusual price competition late in the fourth quarter 1993 which has continued
into the second quarter 1994. This has had the effect of limiting the Company's
ability to achieve domestic InfoScan revenue growth through new clients
switching from the A.C. Nielsen Company to the Company for scanner-based market
tracking services. It also caused the loss of two clients that had been using
the Company's InfoScan service. Management has no reason to expect that the A.C.
Nielsen Company will not continue its current pricing practices. Management is
investigating whether pricing and other practices by the A.C. Nielsen Company
are anticompetitive, and, if so, what appropriate remedies might be sought.
The Company recently 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 $24.2 million, an
increase of 4.4% over the same three month period in 1993.
10
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D.
The revenue growth in software support services was less than the prior quarter
primarily as a result of delays in the introduction of the Windows versions for
certain of the Company's software products. Windows versions of such products
are now available. BehaviorScan and related testing services revenues for the
three months ended March 31, 1994 were $5.6 million, an increase of 14.9% from
the same period in 1993. The increase in BehaviorScan revenues is principally
due to growth in base BehaviorScan revenues and increased controlled store
testing services.
OPERATING EXPENSES
Operating expenses for the three months ended March 31, 1994 were $72.6
million, an increase of 22.3% over the same period in 1993. This increase was
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 the InfoScan services. In the
software support services area, increased staff and computer hardware and
software expansion to support current and planned revenue growth also
contributed to increases in operating expenses.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the three months ended March
31, 1994 and 1993 were $10.6 million and $7.7 million, respectively, an increase
of 38.0%. This increase was primarily due to expenses of $1.4 million incurred
in connection with the cancelled merger with Asia-based SRG Holdings Limited.
The Company also increased staffing of managerial and staff level positions
associated with the Company's growth in both its domestic and international
operations resulting in higher expenses.
OTHER INCOME (EXPENSE)
Other expense increased to $4.9 million for the three months ended March 31,
1994. For the same period in 1993, the Company recorded other income of
$182,000. The overall increase was due to a pre-tax provision of $5.0 million
related to shareholder litigation, including a recently filed shareholder class
action. See Item 1. Legal Proceedings.
EQUITY IN LOSS OF AFFILIATED COMPANIES
Equity in loss of affiliated companies reflects losses recognized related to
equity investments. The increase resulted principally from the equity loss of
$1.5 million recognized by the Company related to IRI-SECODIP, S.N.C. in the
first quarter of 1994.
INCOME TAXES
The Company's effective tax rate was 33.4% and 42.4% for the three months ended
March 31, 1994 and 1993, respectively. The tax rate on operations including
minority interest was 41.0% and 40.5% for the three months ended March 31, 1994
and 1993, respectively.
11
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D.
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.
NET EARNINGS (LOSS)
As a result of the factors described above, net earnings (loss) was $(7.9)
million and $5.8 million for the three months ended March 31, 1994 and 1993,
respectively.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
Working capital at March 31, 1994 was $73.6 million, a decrease of $18.4 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
a $5.0 million litigation provision.
The Company increased its bank borrowings under its existing credit facility to
$6.0 million by the end of the first quarter of 1994. The Company anticipates
continued borrowings under its credit facility to meet its cash needs through
the end of the year. During May 1994, the Company replaced its $25 million
credit facility with a new $50 million credit facility ($30 million after 1994).
The Company anticipates that it will have sufficient funds from its cash
balances, internally generated funds and its bank credit facility to satisfy
working capital needs through the end of 1994. The Company is currently
exploring several alternatives available to it to satisfy its potential working
capital needs in the future. These include (without limitation) additional bank
borrowings, investments in the Company by strategic partners, issuance of long
term debt, and sale of preferred or common equity in public or private
transactions.
OTHER - SUBSEQUENT DEVELOPMENTS
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 on October 1, 1994.
12
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
On April 21, 1994, two individuals purporting to be stockholders,
Andrew Davitt and Peter Sheridan, each filed a complaint in the United
States District Court for the Northern District of Illinois against the
Company and eleven of its current or former directors and five of its
current or former officers who are not also directors. The complaints
are substantially identical. Each purports to be filed upon behalf of a
class consisting of persons who purchased the Company's stock between
March 26, 1993 and April 5, 1994. The plaintiffs allege Section 10(b),
Rule 10b-5 and Section 20(a) violations of the Securities Exchange Act
of 1934, against the Company and the individual defendants by reason of
alleged omissions made by the Company in setting forth material facts
in disclosures and public statements about the Company. These alleged
omissions include information relating to the Company's finances,
results of operations and prospects of achieving growth in earnings and
revenues during the referenced periods when class members were
acquiring shares of the Company's stock.
The plaintiffs seek an undisclosed amount of compensatory damages, as
well as any other equitable or injunctive relief permitted by law, and
attorneys' fees. The Company has determined to defend the actions
vigorously. The Company believes that it has valid defenses to the
claims raised and that ultimate resolution of the claims will not have
a material impact on the Company's consolidated financial position.
As previously disclosed in the Company's Annual Report on Form 10-K for
the year ended December 31, 1993, the Company is involved in a
shareholder class action suit filed by certain shareholders in 1989.
The trial relating to this action commenced in April 1994 and is
anticipated to be concluded during the second quarter of 1994.
In the first quarter of 1994, the Company made a $5.0 million pre-tax
provision to litigation reserves in connection with all pending
shareholder litigation.
13
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION (CONT'D.)
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits
Exhibit No. Description of Exhibit Page
----------- ---------------------- ----
10 Credit Agreement dated May 13, 1994 EF
between the Company and Harris Trust and
Savings Bank (filed herewith).
11 Computations of earnings per common EF
and common equivalent share (filed
herewith).
18 Letter regarding change in accounting EF
principle (filed herewith).
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)
May 16, 1994
15
<PAGE>
[Harris Bank letterhead]
EXHIBIT 10
- - -----------------------------------------------------------------------------
[Harris Bank LOGO]
May 13, 1994
Mr. Thomas M. Walker
Division President
Chief Financial Officer and Treasurer
Information Resources, Inc.
150 N. Clinton Street
Chicago, IL 60661
Dear Tom:
This letter affirms our understanding regarding the payment of the Closing Fee
as referenced in Section 2.1(c) of the Credit Agreement by and between
Information Resources, Inc. and Harris Trust and Savings Bank dated as of
May 13, 1994. It is our understanding that, at closing, Information Resources,
Inc. will pay Harris Trust and Savings Bank a one time Closing Fee of
$500,000 and that, by execution of this letter, authorizes Harris Trust and
Savings Bank to debit Information Resources, Inc.'s account 294-009-6 for that
amount. It is further understood that a portion of the Closing Fee, at
Harris Trust & Savings Bank's sole discretion, will be used to compensate
participant lenders as an Upfront Fee for the syndication of the above credit.
If this understanding is acceptable to you, as it is to us, would you please
execute and return the enclosed copy to my attention. We again greatly
appreciate this opportunity to be of assistance to Information Resources, Inc.
with your credit requirements.
Sincerely,
/s/ Richard H. Robb
Richard H. Robb
Vice President
Accepted this 13th day of May, 1994
Information Resources, Inc.
By /s/ Thomas M. Walker
---------------------------------
Its Chief Financial Officer
--------------------------------
Wholly owned subsidiary of Harris Bankcorp, Inc.
<PAGE>
===============================================================================
Credit Agreement
by and between
Information Resources, Inc.
and
Harris Trust and Savings Bank
Dated as of May 13, 1994
================================================================================
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
Section 1. The Credit................................................... 1
Section 1.1. The Loan Commitment........................................ 1
Section 1.2. Letters of Credit.......................................... 1
Section 1.3. Applicable Interest Rates.................................. 2
Section 1.4. Minimum Borrowing Amounts.................................. 4
Section 1.5. Manner of Borrowing Loans and Designating Interest Rates
Applicable to Loans........................................ 4
Section 1.6. Interest Periods........................................... 6
Section 1.7. Maturity of Loans.......................................... 7
Section 1.8. Prepayments................................................ 7
Section 1.9. Default Rate............................................... 8
Section 1.10. The Note................................................... 8
Section 1.11. Funding Indemnity.......................................... 9
Section 1.12. Commitment Terminations.................................... 9
Section 2. Fees, Extensions and Borrowing Subsidiaries.................. 10
Section 2.1. Fees....................................................... 10
Section 2.2. Extensions of Termination Date............................. 10
Section 2.3. Borrowing Subsidiaries..................................... 10
Section 3. Place and Application of Payments............................ 11
Section 3.1. Place and Application of Payments.......................... 11
Section 3.2. Payments Free of Withholding............................... 11
Section 4. Definitions.................................................. 12
Section 4.1. Definitions................................................ 12
Section 4.2. Interpretation............................................. 18
Section 5. Representations and Warranties............................... 18
Section 5.1. Organization and Qualification............................. 18
Section 5.2. Subsidiaries............................................... 19
Section 5.3. Margin Stock............................................... 19
Section 5.4. Financial Reports.......................................... 19
Section 5.5. Litigation and Other Controversies......................... 20
Section 5.6. Taxes...................................................... 20
Section 5.7. Approvals.................................................. 20
Section 5.8. Investment Company......................................... 20
Section 5.9. ERISA...................................................... 20
Section 5.10. Compliance with Laws; Environmental Laws................... 21
</TABLE>
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Section 5.11. Other Agreements........................................... 21
Section 6. Representations and Warranties of Borrowing Subsidiaries..... 21
Section 6.1. Corporate Existence........................................ 21
Section 6.2. Corporate and Governmental Authorization; Contravention.... 21
Section 6.3. Binding Effect............................................. 21
Section 7. Conditions Precedent......................................... 22
Section 8. Covenants.................................................... 24
Section 8.1. Corporate Existence, Etc................................... 24
Section 8.2. Maintenance of Properties.................................. 24
Section 8.3. Taxes and Assessments...................................... 24
Section 8.4. Insurance.................................................. 24
Section 8.5. Financial Reports.......................................... 24
Section 8.6. Consolidated Tangible Net Worth............................ 26
Section 8.7. Leverage Ratio............................................. 26
Section 8.8. Current Ratio.............................................. 26
Section 8.9. Cash Flow Coverage Ratio................................... 27
Section 8.10. Indebtedness for Borrowed Money............................ 27
Section 8.11. Liens...................................................... 27
Section 8.12. Investments, Acquisitions, Loans, Advances and Guaranties.. 28
Section 8.13. Leases..................................................... 29
Section 8.14. Sales and Leasebacks....................................... 30
Section 8.15. Restricted Payments........................................ 30
Section 8.16. Mergers, Consolidations and Sales.......................... 30
Section 8.17. Maintenance of Material Subsidiaries....................... 30
Section 8.18. ERISA...................................................... 31
Section 8.19. Compliance with Laws....................................... 31
Section 8.20. Outstanding Receivables.................................... 31
Section 8.21. Consolidated Net Income.................................... 31
Section 8.22. Guaranty Reserve Against Commitment Availability........... 31
Section 9. Events of Default and Remedies............................... 32
Section 9.1. Events of Default.......................................... 32
Section 9.2. Non-Bankruptcy Defaults.................................... 34
Section 9.3. Bankruptcy Defaults........................................ 35
Section 9.4. Collateral for Undrawn Letters of Credit................... 35
Section 10. Change in Circumstances...................................... 35
</TABLE>
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Section 10.1. Change of Law............................................... 35
Section 10.2. Unavailability of Deposits or Inability to Ascertain, or
Inadequacy of, LIBOR........................................ 35
Section 10.3. Increased Cost and Reduced Return........................... 36
Section 10.4. Lending Offices............................................. 37
Section 10.5. Discretion of Bank as to Manner of Funding.................. 37
Section 11. The Guarantee................................................. 37
Section 11.1. The Guarantee............................................... 37
Section 11.2. Guarantee Unconditional..................................... 38
Section 11.3. Discharge Only Upon Payment in Full; Reinstatement in
Certain Circumstances....................................... 39
Section 11.4. Subrogation and Contribution................................ 39
Section 11.5. Waivers..................................................... 39
Section 11.6. Stay of Acceleration........................................ 39
Section 12. Miscellaneous................................................. 39
Section 12.1. Non-Business Days........................................... 39
Section 12.2. No Waiver, Cumulative Remedies.............................. 40
Section 12.3. Amendments, Etc............................................. 40
Section 12.4. Costs and Expenses.......................................... 40
Section 12.5. Currency.................................................... 41
Section 12.6. Currency Equivalence........................................ 41
Section 12.7. Documentary Taxes........................................... 41
Section 12.8. Survival of Representations................................. 41
Section 12.9. Survival of Indemnities..................................... 42
Section 12.10. Notices..................................................... 42
Section 12.11. Submission to Jurisdiction; Waiver of Jury Trial............ 42
Section 12.12. Headings.................................................... 43
Section 12.13. Severability of Provisions.................................. 43
Section 12.14. Counterparts................................................ 43
Section 12.15. Binding Nature, Governing Law, Etc.......................... 43
Signature Page.......................................................................... 44
</TABLE>
Exhibit A - Revolving Credit Note
Exhibit B - Form of Election to Participate
Exhibit C - Form of Election to Terminate
Exhibit D - Opinion of Counsel
Exhibit E - Opinion of Counsel/Borrowing Subsidiaries
Schedule 5.2 - Subsidiaries
Schedule 8.5 - Compliance Certificate
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INFORMATION RESOURCES, INC.
CREDIT AGREEMENT
Harris Trust and Savings Bank
Chicago, Illinois
Gentlemen:
The undersigned, Information Resources, Inc., a Delaware corporation
(the "Company"), applies to you (the "Bank") for your commitment, subject to all
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 Company and any
Borrowing Subsidiary (as hereinafter defined), all as more fully hereinafter set
forth.
Section 1. The Credit.
Section 1.1. The Loan Commitment. Subject to the terms and
conditions hereof, the Bank agrees to make a loan or loans (individually a
"Loan" and collectively "Loans") to the Borrowers from time to time on a
revolving basis in U.S. Dollars and Alternative Currencies in an aggregate
outstanding Original Dollar Amount up to the amount of the Revolving Credit
Commitment then in effect, subject to any reductions thereof pursuant to the
terms hereof, before the Termination Date. The sum of the aggregate Original
Dollar Amount of Loans and of L/C Obligations at any time outstanding to all
Borrowers shall not exceed the Revolving Credit Commitment in effect at such
time. As provided in Section 1.5(a) hereof, the relevant Borrower may elect
that Loans denominated in U.S. Dollars be either Domestic Rate Loans or
Eurocurrency Loans or Offered Rate Loans. All Loans denominated in an
Alternative Currency shall be Eurocurrency Loans. Loans may be repaid and the
principal amount thereof reborrowed before the Termination Date, subject to all
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 Bank shall
issue standby or commercial letters of credit (each a "Letter of Credit") for
the account of any one or more of the Borrowers in U.S. Dollars 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 Commitment in effect at such time and
the aggregate Original Dollar Amount of Loans then outstanding.
(b) Applications. At any time before the Termination Date, the Bank
shall, at the request of the Company, issue one or more Letters of Credit, in a
form satisfactory to the Bank, with expiration dates no later than the earlier
of twenty-four (24) months from the date of issuance or the Termination Date, in
an aggregate face amount as set forth above, upon the receipt of a duly executed
application for the relevant Letter of Credit in the form then customarily
prescribed by the Bank for the type of Letter of Credit, whether standby or
<PAGE>
commercial, requested (each an "Application"). Notwithstanding anything
contained in any Application to the contrary (i) the relevant Borrower shall pay
fees in connection with each Letter of Credit as set forth in Section 2.1
hereof, (ii) before the occurrence of a Default or an Event of Default, the Bank
will not call for the funding by the relevant Borrower of any amount under a
Letter of Credit, or any other form of collateral security for such Borrower's
obligations in connection with such Letter of Credit, before being presented
with a drawing thereunder, and (iii) if the Bank is not timely reimbursed for
the amount of any drawing under a Letter of Credit on the date such drawing is
paid, the relevant Borrower's obligation to reimburse the Bank for the amount of
such drawing shall bear interest (which such 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.
(c) The Reimbursement Obligations. Subject to Section 1.2(b) hereof, the
obligation of a Borrower to reimburse the Bank 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 Bank's principal office in Chicago, Illinois.
Section 1.3. Applicable Interest Rates. (a) Domestic Rate Loans. Each
Domestic Rate Loan 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 Eurocurrency Loan or an
Offered Rate 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 Bank 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 Bank to be the
prevailing rate per annum (rounded upwards, if necessary, to the nearest
one hundred-thousandth of a percentage point) 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 Bank for which such
rate is being determined, plus (y) 1/2 of 1% (0.50%).
(b) Eurocurrency Loans. Each Eurocurrency Loan shall bear interest during
each Interest Period it is outstanding (computed on the basis of a year of 360
days and actual days
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elapsed) on the unpaid principal amount thereof from the date such Loan is
advanced, continued, or created by conversion from a Domestic Rate Loan or an
Offered Rate Loan until maturity (whether by acceleration or otherwise) at a
rate per annum equal to the sum of the Eurocurrency 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 a rate per annum determined in accordance with the
following formula:
Adjusted LIBOR = L I B O R
-------------------------------------
1 - Eurocurrency Reserve Percentage
"LIBOR" means, for an Interest Period of a Eurocurrency Loan, (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 average rate of interest per
annum (rounded upwards, if necessary, to the nearest one hundred-thousandth of a
percentage point) at which deposits in U.S. Dollars or the relevant Alternative
Currency, as appropriate, in immediately available funds are offered to the Bank
at 11:00 a.m. (London, England time) two (2) Business Days before the beginning
of such Interest Period by major banks in the interbank eurocurrency market for
delivery on the first day of and for a period equal to such Interest Period in
an amount equal or comparable to the principal amount of the Eurocurrency Loan
scheduled to be made by the Bank.
"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 or the relevant Alternative
Currency, as appropriate, 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 or Pound Sterling
deposits).
"Eurocurrency Reserve Percentage" means 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 Eurocurrency Loans is determined or any category of extensions
of credit or other assets that include loans by non-United States offices of the
Bank to United States
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residents), subject to any amendments of such reserve requirement by such Board
or its successor, taking into account any transitional adjustments thereto. For
purposes of this definition, the Eurocurrency 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.
"Eurocurrency Margin" means 1.50% per annum.
(c) Offered Rate Loans. Each Offered Rate Loan 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 or a Eurocurrency Loan until maturity (whether by
acceleration or otherwise) at the rate per annum quoted to the Company by the
Bank for the requested Interest Period applicable thereto, payable on the last
day of each Interest Period and at maturity (whether by acceleration or
otherwise), and, if the applicable Interest Period is longer than ninety days,
on each day occurring every ninety days after the commencement of such Interest
Period; provided, however, that the Company understand and agrees that the Bank
has no obligation to quote rates or to make any Offered Rate Loan and may refuse
to make any such Offered Rate Loan after receiving a request therefor from the
Company, and that any such Offered Rate Loan shall be subject to such other
terms and conditions as are mutually agreed upon by the Company, on behalf of
the relevant Borrower, and the Bank.
(d) Rate Determinations. The Bank shall determine each interest rate
applicable to Obligations and the Original Dollar Amount of Loans denominated in
Alternative Currencies, and its determination thereof shall be conclusive and
binding except in the case of manifest error or willful misconduct. The
Original Dollar Amount of each Eurocurrency Loan denominated in an Alternative
Currency shall be determined or redetermined, as applicable, effective as of the
first day of each Interest Period applicable to such Loan.
(e) Alternative Currency Loans. Any Loan made in an Alternative Currency
shall be advanced in such currency, and all payments of principal and interest
thereon shall be made in such Alternative Currency.
Section 1.4. Minimum Borrowing Amounts;. Each Domestic Rate Loan
shall be in an amount not less than $250,000. Each Eurocurrency Loan shall be
in an amount not less than an Original Dollar Amount of $1,000,000 and in
integral multiples of 1,000,000 units of the relevant currency. Each Offered
Rate Loan shall be in an amount equal to $1,000,000 and in integral multiples of
$1,000,000.
Section 1.5. Manner of Borrowing Loans and Designating Interest
Rates Applicable to Loans;. (a) Notice to the Bank. The Company shall give
notice to the Bank by no later than 10:00 a.m. (Chicago time) (i) at least three
(3) Business Days before the date on which the Company requests the Bank to
advance a Eurocurrency Loan denominated in an Alternative Currency, (ii) at
least three (3) Business Days before the date on which the
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Company requests the Bank to advance a Eurocurrency Loan denominated in U.S.
Dollars and (iii) on the date the Company requests the Bank to advance a
Domestic Rate Loan or an Offered Rate Loan. The Loans shall bear interest
initially at the type of rate specified in such notice. Thereafter, the Company
may from time to time elect to change or continue the type of interest rate
borne by each Loan or, subject to Section 1.4's minimum amount requirement for
each outstanding Loan, a portion thereof, as follows: (i) if a Eurocurrency
Loan, on the last day of the Interest Period applicable thereto, the Company may
continue part or all of such Eurocurrency Loan for an Interest Period or
Interest Periods specified by the Company or, if such Eurocurrency Loan is
denominated in U.S. Dollars, convert part or all of such Eurocurrency Loan into
a Domestic Rate Loan or an Offered Loan Rate for an Interest Period or Interest
Periods specified by the Company, (ii) if an Offered Rate Loan, on the last day
of the Interest Period applicable thereto, the Company may continue part or all
of such Offered Rate Loan for an Interest Period or Interest Periods specified
by the Company or convert part or all of such Offered Rate Loan into a Domestic
Rate Loan or a Eurocurrency Loan denominated in U.S. Dollars for an Interest
Period or Interest Periods specified by the Company, or (iii) if a Domestic Rate
Loan, on any Business Day, the Company may convert all or part of such Domestic
Rate Loan into a Eurocurrency Loan denominated in U.S. Dollars or an Offered
Rate Loan for an Interest Period or Interest Periods specified by the Company.
The Company shall give all such notices requesting the advance, continuation, or
conversion of a Loan to the Bank by telephone or telecopy (which notice shall be
irrevocable once given and, if by telephone, shall be promptly confirmed in
writing). Notices of the continuation of a Eurocurrency Loan denominated in U.S.
Dollars for an additional Interest Period or of the conversion of part or all of
a Eurocurrency Loan denominated in U.S. Dollars into a Domestic Rate Loan or an
Offered Rate Loan or of a Domestic Rate Loan or an Offered Rate Loan into a
Eurocurrency Loan 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. Notices of the continuation of a Eurocurrency Loan denominated in an
Alternative Currency must be given no later than 10:00 a.m. (Chicago time) at
least three (3) Business Days before the requested continuation. Notices of the
continuation of an Offered Rate Loan for an additional Interest Period or of the
conversion of part or all of an Offered Rate Loan into a Domestic Rate Loan must
be given no later than 10:00 a.m. (Chicago time) on the Business Day of the
requested continuation or conversion. All such notices concerning the advance,
continuation, or conversion of a Loan shall specify the date of the requested
advance, continuation or conversion of a Loan (which shall be a Business Day),
the amount of the requested Loan to be advanced, continued, or converted, the
type of Loan and, if an Offered Rate Loan, the Interest Period applicable
thereto and, if a Eurocurrency Loan, the currency and Interest Period applicable
thereto and, if such Loan is to be made to a Borrowing Subsidiary, the Borrowing
Subsidiary for whose account such Loan shall be disbursed (which Borrowing
Subsidiary shall maintain a deposit account at the Bank for the receipt of such
proceeds for all Loans denominated in U.S. Dollars). The Borrowers agree that
the Bank 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 Bank has acted in reliance thereon.
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(b) Company's Failure to Notify. Any outstanding Domestic Rate Loans
shall, subject to Section 7.1 hereof, automatically be continued for an
additional Interest Period on the last day of its then current Interest Period
unless the Company has notified the Bank within the period required by Section
1.5(a) that it intends to convert such Loan into a Eurocurrency Loan or an
Offered Rate Loan or notifies the Bank within the period required by Section
1.8(a) that the relevant Borrower intends to prepay such Loan. If the Company
fails to give notice pursuant to Section 1.5(a) above of the continuation or
conversion of any outstanding principal amount of a Eurocurrency Loan
denominated in U.S. Dollars or an Offered Rate Loan before the last day of its
then current Interest Period within the period required by Section 1.5(a) and
has not notified the Bank within the period required by Section 1.8(a) that the
relevant Borrower intends to prepay such Loan, such Loan shall automatically be
converted into a Domestic Rate Loan, subject to Section 7.1 hereof. If the
Company fails to give notice pursuant to Section 1.5(a) above of the
continuation of any outstanding principal amount of a Eurocurrency Loan
denominated in an Alternative Currency before the last day of its then current
Interest Period within the period required by Section 1.5(a) and has not
notified the Bank within the period required by Section 1.8(a) that the relevant
Borrower intends to prepay such Loan, such Loan shall automatically be continued
as a Eurocurrency Loan in the same Alternative Currency with an Interest Period
of one month, subject to Section 7.1 hereof, including the application of
Section 1.4 and of the restrictions contained in the definition of Interest
Period.
(c) Disbursement of Loans. The Bank shall make available to the relevant
Borrower Loans denominated in U.S. Dollars at the Bank's principal office in
Chicago, Illinois and Loans denominated in Alternative Currencies at such office
as the Bank has previously agreed to with the Company on behalf of the relevant
Borrower.
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 Eurocurrency Loan or an Offered Rate Loan, the Company 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 Loan is
advanced, continued, or created by conversion and ending: (a) in the case of a
Domestic Rate Loan, on the last day of the calendar quarter in which such Loan
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), (b) in the case of a
Eurocurrency Loan, 1, 2, or 3 months thereafter, and (c) in the case of an
Offered Rate Loan, 1 to 90 days thereafter, as mutually agreed upon by the
Company, on behalf of the relevant Borrower, and the Bank; provided, however,
that:
(a) any Interest Period for a Domestic Rate Loan that otherwise
would end after the Termination Date shall end on the Termination Date;
(b) for any Fixed Rate Loan, the Company may not select an Interest
Period that extends beyond the Termination Date;
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(c) whenever the last day of any Interest Period 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
Eurocurrency Loan 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
Eurocurrency Loan, 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 relevant Borrower on the Termination Date.
Section 1.8. Prepayments.; (a) Optional. Each Borrower shall have the
privilege of prepaying without premium or penalty and in whole or in part (but,
if in part, then: (i) if a Domestic Rate Loan, in an amount not less than
$250,000, (ii) if a Eurocurrency Loan denominated in U.S. Dollars or an Offered
Rate Loan, in an amount not less than $1,000,000, (iii) if a Eurocurrency Loan
is denominated in an Alternative Currency, an amount for which the U.S. Dollar
Equivalent is not less than $1,000,000 and (iv) in an amount such that the
minimum amount required for a Loan pursuant to Section 1.4 hereof remains
outstanding) any Eurocurrency Loan at any time upon three Business Days' prior
notice to the Bank or, in the case of a Domestic Rate Loan or an Offered Rate
Loan, notice delivered to the Bank 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 a Eurocurrency Loan or an Offered Rate Loan, such
prepayment may only be made on the last day of the Interest Period then
applicable to such Loan. 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. The Borrowers shall, on each date the Revolving Credit
Commitment is reduced pursuant to the definition thereof, prepay the Loans by
the amount, if any, necessary to reduce the aggregate Original Dollar Amount of
Loans and of L/C Obligations to the amount to which the Revolving Credit
Commitment has been reduced in accordance with the definition thereof, each such
prepayment to 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 Bank under Section 1.11 hereof. Unless the Company otherwise directs,
prepayments of principal under this Section 1.8(b) shall be applied first to
Domestic Rate Loans until payment in full thereof with any balance applied to
the Fixed Rate Loans in the order in which their Interest Periods expire.
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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 Fixed Rate 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, if such
Loan is denominated in U.S. Dollars, at a rate per annum equal to the sum
of two percent (2%) plus the Domestic Rate from time to time in effect
or, if such Loan is a Eurocurrency Loan denominated in an Alternative
Currency, at a rate per annum equal to the sum of the Eurocurrency
Margin, plus two percent (2%) plus the rate of interest per annum as
determined by the Bank (rounded upwards, if necessary, to the nearest
whole multiple of one-sixteenth of one percent (1/16%) at which overnight
or weekend deposits of the appropriate currency (or, if such amount due
remains unpaid more than three Business Days, then for such other period
of time not longer than six months as the Bank may elect in its absolute
discretion) for delivery in immediately available and freely transferable
funds would be offered by the Bank to major banks in the interbank market
upon request of such major banks for the applicable period as determined
above and in an amount comparable to the unpaid principal amount of any
such Eurocurrency Loan (or, if the Bank is not placing deposits in such
currency in the interbank market , then the Bank's cost of funds in such
currency for such period).
Section 1.10. The Note. (a) The Loans made to a Borrower by the Bank
shall be evidenced by a single promissory note of such Borrower issued to the
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) The Bank shall record on its books and records or on a schedule to
the appropriate Note the amount of each Loan advanced, continued, or converted
by it to a Borrower, all payments of principal and interest and the principal
balance from time to time outstanding thereon, the type of such Loan, and, for
any Offered Rate Loan, the Interest Period and the interest rate applicable
thereto and, for any Eurocurrency Loan, the Interest Period, the currency in
which such Loan is denominated, and the interest rate applicable thereto. The
record thereof, whether shown on such books and records of the Bank or on a
schedule to any Note, shall be prima facie evidence as to all such matters;
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 each Borrower to repay all Loans made to it hereunder together
with accrued interest thereon. At the request of the Bank and upon the Bank
tendering to the relevant Borrower the Note to be replaced, such Borrower shall
furnish a new Note to the Bank to replace any outstanding Note, and at such time
the first notation appearing on a schedule on the reverse side of, or attached
to, such
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Note shall set forth the aggregate unpaid principal amount of all Loans, if any,
then outstanding thereon.
Section 1.11. Funding Indemnity. If the 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 the Bank to fund or maintain any Fixed
Rate Loan or the relending or reinvesting of such deposits or amounts paid or
prepaid to the Bank) as a result of:
(a) any payment, prepayment or conversion of a Fixed Rate 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 7 or otherwise) by any Borrower to borrow or continue a Fixed
Rate Loan, or to convert a Domestic Rate Loan into a Fixed Rate Loan, or
to convert a Fixed Rate Loan into another Fixed Rate Loan, on the date
specified in a notice given pursuant to Section 1.5(a) or established
pursuant to Section 1.5(b) hereof,
(c) any failure by any Borrower to make any payment of principal on
any Fixed Rate Loan when due (whether by acceleration or otherwise), or
(d) any acceleration of the maturity of a Fixed Rate Loan as a
result of the occurrence of any Event of Default hereunder,
then, upon the demand of the Bank, the relevant Borrower shall pay to the Bank
such amount as will reimburse the Bank for such loss, cost or expense. If the
Bank makes such a claim for compensation, it shall provide to the relevant
Borrower 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. The Company shall have the right
at any time and from time to time, upon five (5) Business Days' prior written
notice to the Bank, to terminate the Revolving Credit Commitment without premium
or penalty, in whole or in part, any partial termination to be in an amount not
less than $1,000,000, provided that the Revolving Credit Commitment may not be
reduced to an amount less than the sum of the Original Dollar Amount of all
Loans and all L/C Obligations then outstanding to all Borrowers. Any termination
of the Revolving Credit Commitment below $2,000,000 shall reduce the L/C
Commitment by a like amount. Any termination of Revolving Credit Commitment
pursuant to this Section 1.12 may not be reinstated.
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Section 2. Fees, Extensions and Borrowing Subsidiaries.
Section 2.1. Fees.
(a) Commitment Fee. The Company shall pay to the Bank 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 portion of the
Revolving Credit Commitment available under Section 1.1 hereof. 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 June 30, 1994) and on the
Termination Date, unless the Revolving Credit Commitment is 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 of each Letter of
Credit, and as a condition thereto, and quarter-annually thereafter, the Company
shall pay to the Bank a Letter of Credit fee computed at the rate of 1.50% per
annum on the maximum amount of the related Letter of Credit which is scheduled
to be outstanding during the immediately succeeding three-month period. In
addition to the letter of credit fee called for above, the Company further
agrees to pay to the Bank such issuing, processing and transaction fees and
charges as the Bank from time to time customarily imposes in connection with the
issuance, negotiation and payment of letters of credit and drafts drawn
thereunder.
(c) Closing Fee. On the date of this Agreement, the Company shall pay to
the Bank a closing fee as previously agreed between the Bank and the Company.
Section 2.2. Extensions of Termination Date. No less than sixty (60) days
prior to April 30, 1995 (and each April 30 thereafter to the extent the
Termination Date may have been extended pursuant to this Section), the Company
may advise the Bank in writing of its desire to extend the Termination Date for
an additional twelve months. In the event that the Bank is agreeable to such
extension (it being understood that the Bank may accept or decline such a
request in its sole discretion and on such terms as it may elect), the Bank
shall so notify the Company on or before thirty (30) days prior to April 30,
1995 (or, to the extent the Termination Date has previously been extended, on or
before thirty (30) days prior to April 30 of the year in question). In the event
that the Bank fails to so notify the Company, the Bank shall be deemed to have
refused to grant the requested extension. In the event the Bank grants the
requested extension, the Company and the Bank shall enter into such documents as
the Bank may deem necessary or appropriate to reflect such extension and such
additional and/or modified terms, if any, required by the Bank in connection
therewith. All costs and expenses incurred by the Bank in connection with each
extension (including reasonable attorneys' fees) shall be paid by the Company in
accordance with Section 12.4 hereof.
Section 2.3. Borrowing Subsidiaries. (a) Designation of Borrowing
Subsidiaries;. The Company may designate any Subsidiary as a Borrower hereunder
(each a "Borrowing Subsidiary") by delivering to the Bank an Election to
Participate in the form of Exhibit B
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hereto executed by the Borrowing Subsidiary and, through an Authorized
Representative, by the Company; provided that the consent of the Bank shall be
required prior to the effectiveness of such designation if any such proposed
Borrowing Subsidiary either (i) is not both a Wholly-owned Subsidiary and a
Consolidated Subsidiary, or (ii) is incorporated under the laws of any
jurisdiction outside the United States of America. Each Borrowing Subsidiary
shall cease to be a Borrower hereunder upon the delivery to the Bank of an
Election to Terminate in the form of Exhibit C hereto or such Borrowing
Subsidiary ceasing to be a Subsidiary. Upon ceasing to be a Borrower pursuant to
the preceding sentence, a Borrower shall lose the right to request Loans and
Letters of Credit hereunder, but such circumstance shall not affect any
obligation of a Borrowing Subsidiary theretofore incurred.
(b) Appointment of Company as Agent for Borrowing Subsidiaries. Each
Borrowing Subsidiary irrevocably appoints the Company as its agent hereunder to
issue requests for Loans and Letters of Credit on its behalf under this
Agreement and, in connection therewith, to select interest rate options,
Interest Periods, and the relevant currency.
Section 3. Place and Application of Payments.
Section 3.1. 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 Borrowers under this Agreement and the other Loan
Documents, shall be made by the Borrowers to the Bank by no later than 12:00
noon (Chicago time) on the due date thereof at the principal office of the Bank
in Chicago, Illinois (or such other location in the State of Illinois as the
Bank may designate to such Borrower) or, if such payment is to be made in an
Alternative Currency, no later than 12:00 noon local time at the place of
payment to such office as the Bank has previously specified in a notice to the
relevant Borrower for the benefit of the Person or Persons entitled thereto. Any
payments received after such time shall be deemed to have been received by the
Bank on the next Business Day. All such payments shall be made (i) in U.S.
Dollars, in immediately available funds at the place of payment, or (ii) in the
case of amounts payable hereunder in an Alternative Currency, in such
Alternative Currency in such funds then customary for the settlement of
international transactions in such currency, in each case without set-off or
counterclaim.
Section 3.2. Payments Free of Withholding. Each payment by each Borrower
under this Agreement and 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 Bank) imposed by or within the jurisdiction in which
such Borrower is domiciled, any jurisdiction from which such 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 relevant 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 the Bank free and clear of such taxes (including
such taxes on such additional amount) is equal to the amount which the Bank
would have received had such withholding not been made. If the Bank pays any
amount in respect of any such taxes,
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penalties or interest, the relevant Borrower shall reimburse the Bank for that
payment on demand in the currency in which such payment was made. If a Borrower
pays any such taxes, penalties or interest, it shall deliver official tax
receipts evidencing that payment or certified copies thereof to the Bank on or
before the thirtieth day after payment.
Section 4. Definitions; Interpretation.
Section 4.1. Definitions. The following terms when used herein shall have
the following meanings:
"Adjusted LIBOR" is defined in Section 1.3(b) hereof.
"Alternative Currency" means Pound Sterling.
"Application" is defined in Section 1.2(b) hereof.
"Authorized Representative" means those persons shown on the list of
officers provided by the Company pursuant to Section 7.2(a) hereof or on any
update of any such list provided by the Company to the Bank, or any further or
different officer of the Company so named by any Authorized Representative of
the Company in a written notice to the Bank.
"Bank" is defined in the introductory paragraph of this Agreement.
"Borrowers" means the Company and each Borrowing Subsidiary.
"Borrowing Subsidiary" is defined in Section 2.3 hereof.
"Business Day" means any day other than a Saturday or Sunday on which the
Bank is not authorized or required to close in Chicago, Illinois and, if the
applicable Business Day relates to the borrowing or payment of a Eurocurrency
Loan, on which the Bank is dealing in U.S. Dollar deposits or the relevant
Alternative Currency in the interbank market in London, England and, if the
applicable Business Day relates to the borrowing or payment of a Eurocurrency
Loan denominated in an Alternative Currency, on which banks and foreign exchange
markets are open for business in the city where disbursements of or payments on
such Loan are to be made.
"Capital Lease" means any lease of Property which in accordance with
GAAP is required to be capitalized on the balance sheet of the lessee.
"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.
"Code" means the Internal Revenue Code of 1986, as amended, and
any successor statute thereto.
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"Commercial Letter of Credit" means a Letter of Credit that finances a
commercial transaction by paying part or all of the purchase price of goods
against delivery of a document of title covering such goods and any other
required documentation.
"Commitments" means the Revolving Credit Commitment and the L/C
Commitment.
"Company" is defined in the introductory paragraph of this
Agreement.
"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 Company 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 Company
and its Subsidiaries, and (b) 100% of the net cash proceeds received by the
Company from any new offering of equity securities of the Company 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 Company and its Consolidated
Subsidiaries to current liabilities of the Company 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 Company 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 Company and its
Consolidated Subsidiaries during such period, plus (iv) dividends paid by the
Company and, to the extent not received by the Company, 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 Notes 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 and all amortization of debt discount and expense)
of the Company 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 Company and its Consolidated Subsidiaries for such
period as computed on a
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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, but excluding any extraordinary
profits and also excluding any taxes on such profits; provided that, for
purposes of computing Consolidated Cash Flow in Section 8.9 hereof, Consolidated
Net Income for the fiscal quarter ending March 31, 1994, shall be increased by
$6,594,000.
"Consolidated Tangible Net Worth" means, as of any time the same is to
be determined, the excess of total assets of the Company and its Consolidated
Subsidiaries over total liabilities of the Company and its Consolidated Total
Liabilities, 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 Company 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 Company or any Subsidiary, are treated
as a single employer under Section 414 of the Code.
"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.
"Election to Participate" means a letter to the Bank in the form of
Exhibit B hereto executed by a Borrowing Subsidiary and an Authorized
Representative of the Company and acknowledged to by the Bank.
"Election to Terminate" means a letter to the Bank in the form of
Exhibit C hereto executed by a Borrowing Subsidiary and an Authorized
Representative of the Company and acknowledged to by the Bank.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, or any successor statute thereto.
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"Eurocurrency Loan" means a Loan bearing interest prior to
maturity at the rate specified in Section 1.3(b) hereof.
"Eurocurrency Margin" is defined in Section 1.3(b) hereof.
"Eurocurrency Reserve Percentage" is defined in Section 1.3(b)
hereof.
"Event of Default" means any event or condition identified as such
in Section 9.1 hereof.
"Fixed Rate Loans" means and includes Eurocurrency Loans and Offered
Rate Loans, unless the context in which such term is used shall otherwise
require.
"GAAP" means generally accepted accounting principles as in effect
from time to time, applied by the Company and its Subsidiaries on a basis
consistent with the preparation of the Company's financial statements referred
to in Section 5.4 hereof after giving effect to the change in accounting
procedure used by the Company in recognizing income as heretofore disclosed to
the Bank.
"Headquarters Complex Lease" means the Lease Agreement dated as of
September 27, 1990 by and between Randolph/Clinton Limited Partnership and the
Company pursuant to which the Company 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 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 Company identified as
Infoscan Costs on the consolidated balance sheet of the Company dated as at
December 31, 1991, which balance sheet has heretofore been furnished to the
Bank.
"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.
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"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(a) hereof and, as so defined,
includes a Domestic Rate Loan, a Eurocurrency Loan or an Offered Rate Loan, each
of which is a "type" of Loan hereunder.
"Loan Documents" means this Agreement (including each Election to
Participate and Election to Terminate issued hereunder), the Notes and the
Applications.
"Material Plan" is defined in Section 9.1(g) hereof.
"Note" is defined in Section 1.10(a) hereof.
"Obligations" means all fees payable hereunder, all obligations of the
Borrowers to pay principal and interest on Loans and Reimbursement Obligations,
and all other payment obligations of the Borrowers arising under or in relation
to any Loan Document.
"Offered Rate" means the rate per annum quoted to the Company by the
Bank for the applicable Interest Period, such Offered Rate being subject at all
times to the provisions of Section 1.3(c) hereof.
"Offered Rate Loan" means a Loan bearing interest prior to
maturity at the rate specified in Section 1.3(c) hereof.
"Original Dollar Amount" means the amount of any Obligation
denominated in U.S. Dollars and, in relation to any Loan denominated in an
Alternative Currency, the U.S. Dollar Equivalent of such Loan on the day it is
advanced or continued for an Interest Period.
"PBGC" means the Pension Benefit Guaranty Corporation or any Person
succeeding to any or all of its functions under ERISA.
"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 member of the Controlled Group for employees
of a member of the Controlled Group, (ii) is maintained pursuant to a collective
bargaining agreement or any
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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, or (iii) under which a member of the Controlled Group has any
liability, including any liability by reason of having been a substantial
employer within the meaning of Section 4063 of ERISA at any time during the
preceding five years or by reason of being deemed a contributing sponsor under
Section 4064 of ERISA.
"Pound Sterling" means the lawful currency in the United Kingdom.
"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.
"Revolving Credit" is defined in the introductory paragraph of
this Agreement.
"Revolving Credit Commitment" means (a) $50,000,000 during the period
from the date hereof through and including December 30, 1994, (b) $30,000,000
during the period from December 31, 1994 through and including April 29, 1996,
and (c) $25,000,000 during the period from April 30, 1996 and at all times
thereafter through and including the Termination Date.
"Software Costs" means the assets of the Company identified as
Software Costs on the consolidated balance sheet of the Company dated as at
December 31, 1991, which balance sheet has heretofore been furnished to the
Bank.
"Standby Letter of Credit" means a Letter of Credit that is not a
Commercial Letter of Credit.
"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 Company, by one or more of its
Subsidiaries, or by the Company 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
whose accounts are or should be consolidated with those of the Company under
GAAP. "Material Subsidiary" means, as the time of determination, any Subsidiary
having total assets of $5,000,000 or more.
"Termination Date" means April 30, 1997, or such later date to which
the same may be extended pursuant to Section 2.2 hereof, or such earlier date on
which the Revolving Credit Commitment is terminated in whole pursuant to Section
1.12, 9.2 or 9.3 hereof.
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"Unfunded Vested Liabilities" means, for any Plan at any time, the
amount (if any) by which the present value of all vested nonforfeitable accrued
benefits under such Plan exceeds the fair market value of all Plan assets
allocable to such benefits, all determined as of the then most recent valuation
date for such Plan, but only to the extent that such excess represents a
potential liability of a member of the Controlled Group to the PBGC or the Plan
under Title IV of ERISA.
"U.S. Dollar Equivalent" means the amount of U.S. Dollars which would
be realized by converting an Alternative Currency into U.S. Dollars in the spot
market at the exchange rate quoted by the Bank, at approximately 11:00 a.m.
(London time) two Business Days prior to the date on which a computation thereof
is required to be made, to major banks in the interbank foreign exchange market
for the purchase of U.S. Dollars for such Alternative Currency.
"U.S. Dollars" and "$" each means the lawful currency of the
United States of America.
"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 Company
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.
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 5. Representations and Warranties.
The Company represents and warrants to the Bank as follows:
Section 5.1. Organization and Qualification. The Company 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 Company or its business. The
Company has full right and authority to enter into this Agreement, to make the
borrowings herein provided for, to issue its Note in evidence thereof, to
execute and deliver the Applications, to guarantee the Obligations of each
Borrowing Subsidiary, and to perform all
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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 Company 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 Company or any
charter or by-law provision of the Company or any covenant, indenture or
agreement of or affecting the Company or any of its Properties, or result in the
creation or imposition of any Lien on any Property of the Company.
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 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 Company 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 Company or a Subsidiary are owned, beneficially and of record, by
the Company or such Subsidiary free and clear of all Liens. 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 Company nor any of its
Subsidiaries 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 Company and its Subsidiaries as at December 31, 1993 and the related
consolidated statements of income, retained earnings and cash flows of the
Company 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, heretofore furnished to the
Bank, fairly present the consolidated financial condition of the Company and its
Subsidiaries as at said date and the consolidated results of their operations
and cash flows for the period then ended in conformity with GAAP applied on a
consistent basis. Neither the Company 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
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furnished pursuant to Section 8.5 hereof. Since December 31, 1993, there has
been no material adverse change in the condition (financial or otherwise) or
business prospects of the Company or any Subsidiary nor any change to the
Company or any Subsidiary except those occurring in the ordinary course of
business.
Section 5.5. Litigation and Other Controversies. Except as
disclosed to the Bank in writing on or prior to the date hereof, there is no
litigation or governmental proceeding or labor controversy pending, nor to the
knowledge of the Company threatened, against the Company or any Subsidiary which
if adversely determined would result in any material adverse change in the
financial condition, Properties, business or operations of the Company or any
Subsidiary.
Section 5.6. Taxes. The United States federal income tax
returns of the Company and its Subsidiaries for the taxable year ended December
31, 1992, and for all taxable years ended prior to said date, have been filed,
and any taxes due under such returns and any additional assessments in
connection with any of such years have been paid all within the times and in the
manner provided by law. There are no objections to or controversies or
assessments due in respect of the tax returns of the Company and its
Subsidiaries pending, nor to the knowledge of the Company is any such objection,
controversy or assessment threatened.
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 Company or any other Person, is or will be necessary to the
valid execution, delivery or performance by the Company of this Agreement or any
other Loan Document.
Section 5.8. Investment Company; Public Utility Holding
Company. Neither the Company 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 Company and its Subsidiaries are in
compliance in all material respects with ERISA to the extent applicable to them
and have received no notice to the contrary from the PBGC or any other
governmental entity or agency. As of December 31, 1993, the net liability of
the Company and its Subsidiaries to the PBGC in respect of Unfunded Vested
Liabilities would not have been in excess $0 if all employee pension benefit
plans maintained by the Company and its Subsidiaries had been terminated as of
such date. No condition exists nor has any event or transaction occurred with
respect to any Plan which could reasonably be expected to result in the
incurrence by the Company or any Subsidiary of any material liability, fine or
penalty under ERISA or in connection with any Plan. Neither the Company nor any
Subsidiary has any contingent liability for any post-retirement benefits under a
Welfare Plan, other than liability for continuation of coverage described in
Part 6 of Title I of ERISA.
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Section 5.10. Compliance with Laws; Environmental Laws. The
Company and its Subsidiaries are in compliance with the requirements of all
federal, state and local laws, rules and regulations applicable to or pertaining
to the Properties or business operations of the Company or any Subsidiary
(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 Company or any Subsidiary. Neither the Company 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 Company or any Subsidiary.
Section 5.11. Other Agreements. Neither the Company nor any
Subsidiary is in default under the terms of any covenant, indenture or agreement
of or affecting the Company, 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 Company or any Subsidiary.
Section 6. Representations and Warranties of Borrowing Subsidiaries.
Each Borrowing Subsidiary shall be deemed by the execution and
delivery of its Election to Participate to have represented and warranted to the
Bank that:
Section 6.1. Corporate Existence. It is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and is a Subsidiary of the Company.
Section 6.2. Corporate and Governmental Authorization;
Contravention. The execution, delivery and performance by it of this
Agreement, its Election to Participate, its Note and the other Loan Documents
executed by it are within its corporate powers, have been duly authorized by all
necessary corporate action, require no action by or in respect of, or filing
with, any governmental body, agency or official and do not contravene, or
constitute a default under, any provision of applicable law or regulation or of
its charter of by-laws or of any agreement or instrument to which it is a party
or is subject, or by which it, or its Property, is bound, or of any judgment,
injunction, order, decree or other instrument binding upon it or result in the
creation or imposition of any Lien on any of its assets or any asset of the
Company or any of its Subsidiaries.
Section 6.3. Binding Effect. This Agreement constitutes a valid
and binding obligation of such Borrowing Subsidiary and the Note and the other
Loan Documents executed by it, when executed and delivered in accordance with
this Agreement, will constitute valid and binding obligations of such Borrowing
Subsidiary.
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Section 7. Conditions Precedent.
The obligation of the Bank to advance, continue or convert any Loan
(other than the continuation of, or conversion into, a Domestic Rate Loan) or to
issue any Letter of Credit under this Agreement shall be subject to the
following conditions precedent:
Section 7.1. As of the time of the making of each Loan or the issuing
of each Letter of Credit (including the initial advance) hereunder:
(a) each of the representations and warranties set forth in Sections
5 and 6 hereof and in each of the other Loan Documents shall be true and
correct as of such time, except to the extent that any such
representation or warranty relates solely to an earlier time; and
(b) no Default or Event of Default shall have occurred and be
continuing hereunder.
A Borrower's request for any Loan or Letter of Credit shall constitute its
warranty as to the foregoing effects. In addition, in the case of the issuance
of any Letter of Credit, the Bank shall have received a properly completed
Application therefor together with the fees called for hereby.
Section 7.2. At or prior to the making of the initial Loan or the
issuance of the initial Letter of Credit hereunder, the following conditions
precedent shall also have been satisfied:
(a) the Bank shall have received the following (each to be properly
executed and completed) and the same shall have been approved as to form
and substance by the Bank:
(i) the Note of the Company;
(ii) copies (executed or certified, as may be appropriate) of
all legal documents or proceedings taken in connection with the
execution and delivery of this Agreement and the other Loan
Documents to the extent the Bank or its counsel may reasonably
request; and
(iii) an incumbency certificate containing the name, title and
genuine signatures of each of the Company's Authorized
Representatives .
(b) the Bank shall have received such valuations and certifications
as it may require in order to satisfy itself as to the financial
condition of the Company and its Subsidiaries and the lack of material
contingent liabilities of the Company and its Subsidiaries;
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(c) legal matters incident to the execution and delivery of this
Agreement and the other Loan Documents and to the transactions
contemplated hereby shall be satisfactory to the Bank and its counsel;
and the Bank shall have received the favorable written opinion of counsel
for the Company in the form attached hereto as Exhibit D and otherwise
satisfactory to the Bank and its counsel; and
(d) the Bank shall have received a good standing certificate for the
Company (dated as of the date no earlier than thirty (30) days prior to
the date hereof) from the office of the secretary of state of the state
of its incorporation and each state in which it is qualified to do
business as a foreign corporation.
Section 7.3. At or prior to the making of the initial Loan or the
issuance of the initial Letter of Credit hereunder for a Borrowing Subsidiary,
the following conditions precedent shall also have been satisfied as to such
Borrowing Subsidiary:
(a) the Bank shall have received the following (each to be properly
executed and completed) and the same shall have been approved as to form
and substance by the Bank:
(i) the Note and Election to Participate of such Borrowing
Subsidiary;
(ii) copies (executed or certified, as may be appropriate) of
all legal documents or proceedings taken in connection with the
execution and delivery of this Agreement, through the Election to
Participate, and the other Loan Documents to be executed by it to
the extent of the Bank or its counsel may reasonably request; and
(iii) an incumbency certificate containing the name, title and
genuine signatures of each authorized representative of such
Borrowing Subsidiary.
(b) legal matters incident to the execution and delivery of this
Agreement, through the Election to Participate, and the other Loan
Documents and to the transactions contemplated hereby shall be
satisfactory to the Bank and its counsel; and the Bank shall have
received the favorable written opinion of counsel for the Company and
such Borrowing Subsidiary substantially in the forms attached hereto as
Exhibits D and E or such other form acceptable to the Bank and its
counsel, and covering such additional matters as the Bank may reasonably
request; and
(c) the Bank shall have received a good standing certificate (or
similar document) for such Borrowing Subsidiary certified by the Office
of the Secretary of the State of its incorporation and each state in
which it is qualified to do business as a foreign corporation or, in the
event the Borrowing Subsidiary is organized under the laws other than the
United States of America, by the appropriate governmental officer in the
jurisdiction of such Borrowing Subsidiary's incorporation.
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Section 7.4. Upon execution of this Agreement by the Company and the
Bank, the commitment of the Bank under that certain Credit Agreement dated as of
December 22, 1992 by and between the Company and Harris Trust and Savings Bank
shall terminate, and any loans or letters of credit issued and outstanding
thereunder shall continue to remain outstanding as Loans and Letters of Credit
outstanding under this Agreement.
Section 8. Covenants.
The Company agrees that, so long as any Note or any L/C Obligation is
outstanding or any credit is available to or in use by any Borrower hereunder,
except to the extent compliance in any case or cases is waived in writing by the
Bank:
Section 8.1. Corporate Existence, Etc. The Company shall, and
shall cause each Subsidiary to, preserve and maintain its corporate existence.
The Company will 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 8.2. Maintenance of Properties. The Company will
maintain, preserve and keep its Properties in good repair, working order and
condition (ordinary wear and tear excepted) and will 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 will cause each Subsidiary to do so in respect of Property owned
or used by it.
Section 8.3. Taxes and Assessments. The Company will duly pay
and discharge, and will 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 and by appropriate proceedings which prevent enforcement
of the matter under contest and adequate reserves are provided therefor.
Section 8.4. Insurance. The Company will insure and keep
insured, and will 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 Company will insure, and 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
Company will upon request of the Bank furnish a certificate setting forth in
summary form the nature and extent of the insurance maintained pursuant to this
Section.
Section 8.5. Financial Reports. The Company will, and will
cause each Domestic Subsidiary to, maintain a standard system of accounting in
accordance with GAAP and the Company will, and will cause each Subsidiary to,
furnish to the Bank and its duly authorized
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representatives such information respecting the business and financial condition
of the Company and its Subsidiaries as the Bank may reasonably request; and
without any request, will furnish to the Bank:
(a) as soon as available, and in any event within forty-five (45)
days (sixty (60) days in the case of the last quarter-annual accounting
period of the Company) after the close of each quarter-annual accounting
period of the Company, 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 Company and its Subsidiaries for such
period, all in reasonable detail showing in comparative form the figures
for the corresponding date and period in the previous fiscal year, prepared
by the Company in accordance with GAAP and certified to by the chief
financial officer of the Company;
(b) as soon as available, and in any event within ninety (90) days
after the close of each fiscal year of the Company, a copy of the
consolidated balance sheet of the Company and its Subsidiaries as of the
close of such fiscal year and the consolidated statements of income,
retained earnings and cash flows of the Company and its Subsidiaries for
such period, and accompanying notes thereto, all in reasonable detail
showing 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 Company and satisfactory to the Bank, 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 Company 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;
(c) within the period provided in clause (b) above, a certificate of
the Company's independent public accountants stating that they have
reviewed this Agreement and stating further whether in conducting their
audit such accountants became aware of any Default or Event of Default
under any of the provisions of this Agreement insofar as such provisions
pertain to or involve accounting matters or the financial covenants herein,
and if any such condition or event then exists or existed and came to their
attention in making their audit, specifying the nature and period of
existence thereof; and
(d) promptly after the sending or filing thereof, copies of each
financial statement, report, notice or proxy statement sent by the Company
to its stockholders, and copies of each regular, periodic or special
report, registration statement or prospectus filed by the Company with any
securities exchange or the Securities Exchange Commission or any successor
agency; and
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<PAGE>
(e) promptly after knowledge thereof shall have come to the
attention of any responsible officer of the Company, written notice of any
threatened or pending litigation or governmental proceeding or labor
controversy against the Company or any Subsidiary which, if adversely
determined, would adversely effect the financial condition, Properties,
business or operations of the Company or any Subsidiary or of the
occurrence of any Default or Event of Default hereunder.
Each of the financial statements furnished to the Bank pursuant to clauses (b)
and (c) of this Section shall be accompanied by a written certificate in the
form attached hereto as Schedule 8.5 signed by the chief financial officer of
the Company 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 Company to
remedy the same. Such certificate shall also set forth the calculations
supporting such statements in respect of Sections 8.6, 8.7, 8.8 and 8.9 of this
Agreement.
Section 8.6. Consolidated Tangible Net Worth. The Company will,
as of the last day of each quarter-annual accounting period of the Company
ending during the periods specified below, maintain Consolidated Tangible Net
Worth of not less than:
<TABLE>
<CAPTION>
Consolidated Tangible
From and To and Net Worth
Including Including Shall not Be less than:
<C> <C> <C>
The date hereof 12/30/94 $210,000,000
12/31/94 12/30/95 $225,000,000
12/31/95 12/30/96 $240,000,000
12/31/96 And at all times $255,000,000
thereafter
</TABLE>
; 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
Company from any offering of equity securities of the Company received at any
time after December 31, 1993 (other than proceeds received from the exercise of
stock options to purchase shares of the Company's common stock existing as of
the date of this Agreement).
Section 8.7. Leverage Ratio. The Company will, as of the last
day of each quarter-annual accounting period of the Company, maintain a ratio of
Consolidated Total Liabilities to Consolidated Tangible Net Worth of not more
than .65 to 1.0.
Section 8.8. Current Ratio. The Company will, as of the last
day of each quarter-annual accounting period of the Company, maintain a
Consolidated Current Ratio of not less than 2.0 to 1.0.
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<PAGE>
Section 8.9. Cash Flow Coverage Ratio. The Company will, as of
the last day of each quarter-annual accounting period of the Company ending
during the periods specified below, maintain the ratio of Consolidated Cash Flow
for the four fiscal quarters of the Company then ended to Consolidated Fixed
Charges for the same four fiscal quarters then ended (the "Cash Flow Coverage
Ratio") of not less than the amounts specified below:
<TABLE>
<CAPTION>
Cash Flow Coverage
From and To and Ratio shall not
Including Including be less than:
<S> <C> <C>
The date hereof 12/30/94 .70 to 1.0
12/31/94 12/30/95 .80 to 1.0
12/31/95 And at all times thereafter .90 to 1.0
</TABLE>
Section 8.10. Indebtedness for Borrowed Money. The Company 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 Company owing to the Bank and other
indebtedness and obligations of the Company or any Subsidiary from time to
time owing to the Bank;
(b) purchase money indebtedness secured by Liens permitted by
Section 8.11(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
8.13 hereof; and
(d) indebtedness owing by Information Resources Japan Ltd. on a
revolving line of credit in an aggregate amount not to exceed JPY
600,000,000 at any one time outstanding.
Section 8.11. Liens. The Company will not, nor will it permit
any Subsidiary to, create, incur or permit to exist any Lien of any kind on any
Property owned by the Company or any Subsidiary; provided, however, that this
Section shall not apply to 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 Company 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
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<PAGE>
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 Company 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; and
(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
(e) mortgages, security interests or other liens (and any extensions
and renewals thereof) securing indebtedness permitted by Section 8.10(b)
hereof placed upon property (not extending to any other property) hereafter
acquired by the Company or any Subsidiary to secure the purchase price of
such property, or indebtedness incurred to pay the purchase price thereof,
provided the amount secured by any given property does not exceed 100% of
the cost thereof at the time of its acquisition.
Section 8.12. Investments, Acquisitions, Loans, Advances and
Guaranties. The Company will not, nor will 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;
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<PAGE>
(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;
(f) investment in and loans and advances to Subsidiaries existing as
of the date hereof and the other existing investments in and loans and
advances to Persons disclosed on Schedule 5.2 attached hereto and made a
part hereof;
(g) the guarantee by the Company of the obligations of its
Subsidiary, Information Resources Japan Ltd., to the extent such
obligations are permitted under Section 8.10(d) hereof, provided that the
obligation of the Company on such guarantee shall not at any one time
exceed JPY 600,000,000; and
(h) cash investments, loans, advances, acquisitions and guarantees
in addition to those otherwise permitted by this Section if, after giving
effect thereto, the aggregate amount of cash investments, loans, advances,
acquisitions and guarantees by the Company and its Subsidiaries permitted
solely by reason of this subsection (g) does not at any time exceed
$65,000,000, inclusive of investments of the Company in European joint
ventures existing as of ___________, 1994 which aggregate $__________.
In determining the amount of investments, acquisitions, loans, advances and
guarantees permitted under this Section, 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 any amounts shown on the
Company'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 Company to any such Subsidiary.
Section 8.13. Leases. The Company will not, nor will 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 Company and its
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Subsidiaries under all such leases or arrangements (which shall include the
current portion of any Capitalized Lease Obligation) would exceed $35,000,000
during any fiscal year of the Company.
Section 8.14. Sales and Leasebacks. The Company will not, nor
will it permit any Subsidiary to, enter into any arrangement with any bank,
insurance company or any other lender or investor providing for the leasing by
the Company 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 8.15. Restricted Payments. The Company will not
directly or indirectly purchase, redeem or otherwise acquire or retire any of
its capital stock (herein, "Restricted Payments"), provided that the Company may
make Restricted Payments up to $5,000,000 in the aggregate during the term of
this Agreement (as the same may be extended) so long as no Default or Event of
Default exists at the time of any such Restricted Payment or would occur after
giving effect to any such Restricted Payment.
Section 8.16. Mergers, Consolidations and Sales. The Company
will not, nor will 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 Company or any Wholly-owned
Domestic Subsidiary if the Company 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 Company or any Wholly-owned
Domestic Subsidiary; and
(c) leases of store equipment by the Company and leases or licenses
by the Company 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 shall mean the sale, lease or
other disposition in any fiscal year of five percent (5%) or more of such
property and assets and for purposes hereof the sale, lease or other disposition
by any Subsidiary of assets shall be deemed to have been made by the Company.
Section 8.17. Maintenance of Material Subsidiaries. The Company
will 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.
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<PAGE>
Section 8.18. ERISA. The Company will, and will 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 Company will,
and will cause each Subsidiary to, promptly notify the Bank 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 Company or any Subsidiary
of any material liability, fine or penalty, or any material increase in the
contingent liability of the Company or any Subsidiary with respect to any post-
retirement Welfare Plan benefit.
Section 8.19. Compliance with Laws. The Company will, and will
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
Company or any Subsidiary, non-compliance with which could have a material
adverse effect on the financial condition, Properties, business or operations of
the Company or any Subsidiary or could result in a Lien upon any of their
Property.
Section 8.20. Outstanding Receivables. If, as of the last day
of any fiscal quarter for the Company, the sum of the aggregate Original Dollar
Amount of all Loans and of L/C Obligations then outstanding shall exceed 66% of
the aggregate principal amount of trade account receivables of the Company and
its Consolidated Subsidiaries as of such date (net of any reserves maintained by
the Company and its Consolidated Subsidiaries as required by GAAP) as reflected
on the consolidated balance sheet of the Company and its Consolidated
Subsidiaries as of such date, the Borrowers shall pay as a prepayment of the
Loans and, if necessary, as a prefunding of Letters of Credit, an amount equal
to such excess. Unless the Company otherwise directs, prepayments of principal
under this Section 8.20 shall be applied first to Domestic Rate Loans until
payment in full thereof with any balance applied to the Fixed Rate Loans in the
order in which their Interest Periods expire.
Section 8.21. Consolidated Net Income. The Company will, as of
the last day of each fiscal quarter of the Company, report, as shown on the
financial statements delivered to the Bank pursuant to Section 8.5(a) hereof,
Consolidated Net Income for such fiscal quarter then ended (taken as a single
accounting period) of not less than (i) $0 for the fiscal quarter ending June
30, 1994 and (ii) $1,000,000 as of the last day of each fiscal quarter ending on
and after September 30, 1994.
Section 8.22. 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 Company shall execute and deliver to the
Bank a written certificate in form and substance satisfactory to the Bank
showing, among other things, (a) the aggregate principal liability of
Information Resources Japan Ltd. outstanding under its revolving line of credit
permitted by Section 8.10(d) hereof (such liability to be stated in Japanese
Yen), (b) the aggregate principal liability of the Company on its guaranty
described in Section 8.12(g) hereof of such liabilities described in subsection
(a) above (such liability to be stated in
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Japanese Yen), and (c) the U.S. dollar equivalent of the liability of the
Company on its guaranty described in Section 8.12(g) hereof of such liabilities
described in subsection (a) above (for purposes of this determination, Company
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).
From and after the date of the Bank's receipt of such certificate, there shall
be established a reserve against the available amount under the Revolving Credit
Commitment hereunder 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 Original Dollar Amount of Loans and of LC
Obligations at any time outstanding during such period to all Borrowers 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
Commitment in effect at such time. In the event at the sum of the aggregate
Original Dollar Amount of Loans and of LC Obligations at any time outstanding
during such period to all Borrowers 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 Commitment in effect at such time, the
Borrowers shall immediately without notice or demand pay over the amount of the
excess to the Bank as and for a mandatory prepayment of the Loans and, if
necessary, as a prefunding of Letters of Credit. Unless the Company otherwise
directs, prepayments of principal under this Section 8.22 shall be applied first
to Domestic Rate Loans until payment in full thereof with any balance applied to
the Fixed Rate Loans in the order in which their Interest Periods expire. The
reserve established against the Revolving Credit Commitment pursuant to this
Section 8.22 shall be recomputed upon the Bank's receipt of each written
certificate delivered pursuant to the first sentence hereof and such reserve
shall continue in effect until the effectiveness of the next redetermination
thereof. Any determination by the Bank of the reserve against the Revolving
Credit Commitment hereunder shall be conclusive and binding upon the Borrowers
provided that it has been made reasonably and in good faith.
Section 9. Events of Default and Remedies.
Section 9.1. Events of Default. Any one or more of the
following shall constitute an "Event of Default" hereunder:
(a) default for the period of five (5) 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 any Borrower hereunder or under any other Loan Document; or
(b) default in the observance or performance of any covenant set
forth in Sections 8.5(e), 8.6, 8.7, 8.8, 8.9, 8.10, 8.14, 8.15, 8.16,
8.17 or 8.21 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 Company by the Bank; or
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(d) any representation or warranty made by the Company or any other
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 evidence of 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 processes in an aggregate amount
in excess of $500,000 shall be entered or filed against the Company 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 Company 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 Company 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
Company 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 Company 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 Company (the fact that particular
Persons are directors, officers or employees of the Company 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
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notice of its intention to exercise, any of its remedies under the
Headquarters Complex Lease; or
(j) any Borrower, or any Person acting on behalf of a Borrower, or
any governmental authority challenges the validity of any Loan Document
or a Borrower's obligations thereunder, or any Loan Document ceases to be
in full force and effect; or
(k) the Company 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 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 9.1(l) hereof; or
(l) a custodian, receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Company or any of its Subsidiaries or
any substantial part of any of their Property, or a proceeding described
in Section 9.1(k)(v) shall be instituted against the Company or any of
its Subsidiaries, and such appointment continues undischarged or such
proceeding continues undismissed or unstayed for a period of ninety (90)
days.
Section 9.2. Non-Bankruptcy Defaults. When any Event of Default described
in subsections (a) through (j), both inclusive, of Section 9.1 has occurred and
is continuing, the Bank or any holder of the Notes may, by notice to the
Borrowers, take either or both of the following actions:
(a) terminate the obligation of the Bank to extend any further
credit hereunder on the date (which may be the date thereof) stated in
such notice; and
(b) declare the principal of and the accrued interest on the Notes
to be forthwith due and payable and thereupon the Notes, including both
principal and interest and all fees, charges and other amounts payable
hereunder, shall be and become immediately due and payable without
further demand, presentment, protest or notice of any kind.
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Section 9.3. Bankruptcy Defaults. When any Event of Default
described in subsection (k) or (l) of Section 9.1 has occurred and is
continuing, then the Notes, including both principal and interest, and all fees,
charges and other amounts payable hereunder, shall immediately become due and
payable without presentment, demand, protest or notice of any kind, and the
obligation of the Bank to extend further credit pursuant to any of the terms
hereof shall immediately terminate.
Section 9.4. Collateral for Undrawn Letters of Credit. When any
Event of Default, other than an Event of Default described in subsection (k) or
(l) of Section 9.1, has occurred and is continuing, the relevant Borrower shall,
upon demand of the Bank, and when any Event of Default described in subsection
(k) or (l) of Section 9.1 has occurred the relevant Borrower shall, without
notice or demand from the Bank, immediately pay to the Bank the full amount of
each Letter of Credit issued to or for its account, the Borrowers each agreeing
to immediately make each such payment and acknowledging and agreeing the Bank
would not have an adequate remedy at law for failure of the relevant Borrower to
honor any such demand and that the Bank shall have the right to require the
relevant Borrower to specifically perform such undertaking whether or not any
draws had been made under any such Letters of Credit.
Section 10. Change in Circumstances.
Section 10.1. 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 the Bank to make or continue to maintain any Fixed Rate Loans or to perform
its obligations as contemplated hereby, the Bank shall promptly give notice
thereof to the Borrowers and the Bank's obligations to make or maintain such
Fixed Rate Loans under this Agreement shall terminate until it is no longer
unlawful for the Bank to make or maintain such Fixed Rate Loans. The relevant
Borrower shall prepay on demand the outstanding principal amount of any such
affected Fixed Rate Loans, together with all interest accrued thereon and all
other amounts then due and payable to the Bank under this Agreement; provided,
however, subject to all of the terms and conditions of this Agreement, such
Borrower may then elect to borrow the principal amount of the affected Fixed
Rate Loans from the Bank by means of another type of Loan available under this
Agreement.
Section 10.2. 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 Eurocurrency Loan:
(a) the Bank determines that deposits in U.S. Dollars or the
applicable Alternative Currency (in the applicable amounts) are not being
offered to it in the eurocurrency interbank market for such Interest
Period, or that by reason of circumstances affecting the interbank
eurocurrency market adequate and reasonable means do not exist for
ascertaining the applicable LIBOR, or
(b) the Bank determines that (i) LIBOR will not adequately and
fairly reflect the cost to the Bank of funding its Eurocurrency Loan for
such Interest Period or
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(ii) the making or funding of the Eurocurrency Loan in the relevant
currency has become impracticable,
then the Bank shall forthwith give notice thereof to the Borrowers, whereupon
until the Bank notifies the Borrowers that the circumstances giving rise to such
suspension no longer exist, the obligations of the Bank to make Eurocurrency
Loans in the currency so affected shall be suspended.
Section 10.3. 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 the Bank (or its
lending office) with any request or directive (whether or not having the force
of law) of any such authority, central bank or comparable agency:
(i) shall subject the Bank (or its lending office) to any tax, duty
or other charge with respect to its Eurocurrency Loans, its Notes, its
Letter(s) of Credit, any Reimbursement Obligations owed to it or its
obligation to make Eurocurrency Loans or issue a Letter of Credit, or shall
change the basis of taxation of payments to the Bank (or its lending
office) of the principal of or interest on its Eurocurrency Loans,
Letter(s) of Credit or any other amounts due under this Agreement or the
other Loan Documents in respect of its Eurocurrency Loans, Letter(s) of
Credit, any Reimbursement Obligations owed to it, or its obligation to make
Eurocurrency Loans or issue a Letter of Credit (except for changes in the
rate of tax on the overall net income of the Bank or its lending office
imposed by the jurisdiction in which the 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 Eurocurrency Loans any such
requirement included in an applicable Eurocurrency Reserve Percentage)
against assets of, deposits with or for the account of, or credit extended
by, the Bank (or its lending office) or shall impose on the Bank (or its
lending office) or on the interbank market any other condition affecting
its Eurocurrency Loans, its Notes, its Letter(s) of Credit, any
Reimbursement Obligation owed to it, or its obligation to make Eurocurrency
Loans or to issue a Letter of Credit;
and the result of any of the foregoing is to increase the cost to the Bank (or
its lending office) of making or maintaining any Eurocurrency Loan, issuing or
maintaining a Letter of Credit, or to reduce the amount of any sum received or
receivable by the Bank (or its lending office) under this Agreement or under the
other Loan Documents with respect thereto, by an amount deemed by the Bank to be
material, then, within fifteen (15) days after demand by the Bank, the relevant
Borrower shall be obligated to pay to the Bank such additional amount or amounts
as will compensate the Bank for such increased cost or reduction.
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(b) If, after the date hereof, the Bank 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
agency charged with the interpretation or administration thereof, or compliance
by the 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 the Bank's capital as a consequence of its obligations
hereunder to a level below that which the Bank could have achieved but for such
adoption, change or compliance (taking into consideration the Bank's policies
with respect to capital adequacy) by an amount deemed by the Bank to be
material, then from time to time, within fifteen (15) days after demand by the
Bank, the Borrowers shall jointly and severally pay to the Bank such additional
amount or amounts as will compensate the Bank for such reduction.
(c) A certificate of the Bank claiming compensation under this Section
10.3 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, the Bank may use any reasonable averaging and attribution methods.
Section 10.4. Lending Offices. The Bank may, at its option, elect to
make its Loans hereunder at such of its branches, offices or affiliates as it
may from time to time elect.
Section 10.5. Discretion of Bank as to Manner of Funding.
Notwithstanding any other provision of this Agreement, the 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 the Bank had actually
funded and maintained each Fixed Rate Loan through the purchase of deposits of
U.S. Dollars or the applicable Alternative Currency in the relevant interbank
market having a maturity corresponding to such Loan's Interest Period and
bearing an interest rate equal to LIBOR or the Offered Rate, as the case may be,
for such Interest Period.
Section 11. The Guarantee.
Section 11.1. The Guarantee. To induce the Bank to provide the several
credits described herein and in consideration of benefits expected to accrue to
the Company by reason of the Commitments and for other good and valuable
consideration, receipt of which is hereby acknowledged, the Company hereby
unconditionally and irrevocably guarantees to the Bank, the due and punctual
payment of all present and future indebtedness of each Borrowing Subsidiary
evidenced by or arising out of the Loan Documents, including, but not limited
to, the due and punctual payment of principal of and interest on the Note of
such Borrowing Subsidiary and the due and punctual payment of all other
Obligations now or hereafter owed by each Borrowing Subsidiary under the Loan
Documents, in each case as and when the same shall become due and payable,
whether at stated maturity, by acceleration or otherwise, according to the terms
hereof and thereof. In case of failure by a Borrowing Subsidiary punctually to
pay any indebtedness guaranteed hereby, the Company hereby
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unconditionally agrees to make such payment or to cause such payment to be made
punctually as and when the same shall become due and payable, whether at stated
maturity, by acceleration or otherwise, and as if such payment were made by the
Borrowing Subsidiary.
Section 11.2. Guarantee Unconditional. The obligations of the
Company as a guarantor under this Section 11 shall be unconditional and absolute
and, without limiting the generality of the foregoing, shall not be released,
discharged or otherwise affected by:
(a) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of any Borrowing Subsidiary or of any
other guarantor under this Agreement or under any other Loan Document or by
operation of law or otherwise;
(b) any modification or amendment of or supplement to this Agreement
or any other Loan Document;
(c) any change in the corporate existence, structure or ownership
of, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting, any Borrowing Subsidiary, any other guarantor, or any
of their respective assets, or any resulting release or discharge of any
obligation of any Borrowing Subsidiary or of any other guarantor contained
in any Loan Document;
(d) the existence of any claim, set-off or other rights which the
Company may have at any time against the Bank or any other Person, whether
or not arising in connection herewith or with any other Loan Document;
(e) any failure to assert, or any assertion of, any claim or demand
or any exercise of, or failure to exercise, any rights or remedies against
any Borrowing Subsidiary or any other guarantor or any collateral;
(f) any application of any sums by whomsoever paid or howsoever
realized to any obligation of any Borrowing Subsidiary, regardless of what
obligations of such Borrowing Subsidiary remain unpaid;
(g) any invalidity or unenforceability relating to or against any
Borrowing Subsidiary or any other guarantor for any reason of this
Agreement or of any other Loan Document or any provision of applicable law
or regulation purporting to prohibit the payment by a Borrowing Subsidiary
of the principal of or interest on any Note or any other amount payable by
it under the Loan Documents; or
(h) any other act or omission to act or delay of any kind by the
Bank or any other Person or any other circumstance whatsoever that might,
but for the provisions of this paragraph, constitute a legal or equitable
discharge of the obligations of the Company under this Section 11.
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Section 11.3. Discharge Only Upon Payment in Full; Reinstatement in
Certain Circumstances. The Company's obligations under this Section 11 shall
remain in full force and effect until the Commitments are terminated and the
principal of and interest on the Notes and all other amounts payable by each
Borrowing Subsidiary under this Agreement and all other Loan Documents shall
have been paid in full. If at any time any payment of the principal of or
interest on any Note or any other amount payable by a Borrowing Subsidiary under
the Loan Documents is rescinded or must be otherwise restored or returned upon
the insolvency, bankruptcy or reorganization of such Borrowing Subsidiary or of
a guarantor, or otherwise, the Company's obligations under this Section 11 with
respect to such payment shall be reinstated at such time as though such payment
had become due but had not been made at such time.
Section 11.4. Subrogation and Contribution. The Company hereby
irrevocably waives any claim or other rights which it may now or hereafter
acquire against any Borrowing Subsidiary or any other guarantor or any other
Person that arise from the existence, payment, performance or enforcement of the
Company's obligations under this Section 11 or any other Loan Document,
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution, indemnification, or any right to participate in any
claim or remedy of the Bank against such Borrowing Subsidiary or any other
guarantor or any other Person whether or not such claim, remedy or right arises
in equity or under contract, statute or common law, including, without
limitation, the right to take or receive from such Borrowing Subsidiary or any
other guarantor or any other Person directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security on account of
such claim or other rights.
Section 11.5. Waivers. The Company irrevocably waives acceptance hereof,
presentment, demand, protest and any notice not provided for herein, as well as
any requirement that at any time any action be taken by the Bank or any other
Person against any Borrowing Subsidiary, another guarantor or any other Person.
Section 11.6. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by a Borrowing Subsidiary under this Agreement or
any other Loan Document is stayed upon the insolvency, bankruptcy or
reorganization of such Borrowing Subsidiary, all such amounts otherwise subject
to acceleration under the terms of this Agreement or the other Loan Documents
shall nonetheless be payable by the Company hereunder forthwith on demand by the
Bank.
Section 12. Miscellaneous.
Section 12.1. 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.
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Section 12.2. No Waiver, Cumulative Remedies. No delay or failure on the
part of the Bank or on the part of the holder of the Obligations in the exercise
of any power or right 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 Bank and of the holder
of the Obligations are cumulative to, and not exclusive of, any rights or
remedies which any of them would otherwise have.
Section 12.3. Amendments, Etc. No amendment, modification, termination
or waiver of any provision of this Agreement or of any other Loan Document, nor
consent to any departure by the Borrowers therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Company and the
Bank; provided, however, that no amendment or waiver shall, unless signed by a
Borrowing Subsidiary, (w) subject such Borrowing Subsidiary to any additional
obligation, (x) increase the principal of or rate of interest on any outstanding
Loan or Reimbursement Obligation of such Borrowing Subsidiary, (y) accelerate
the stated maturity of any outstanding Loan or Reimbursement Obligation of such
Borrowing Subsidiary or (z) change this Section 12.3. No notice to or demand on
the Company or any other Borrower in any case shall entitle the Company or such
other Borrower to any other or further notice or demand in similar or other
circumstances.
Section 12.4. Costs and Expenses. The Company agrees to pay on demand
the costs and expenses of the Bank in connection with the negotiation,
preparation, execution and delivery of this Agreement, the other Loan Documents
and the other instruments and documents to be delivered hereunder or thereunder,
and in connection with the transactions contemplated hereby or thereby, and in
connection with any consents hereunder or waivers or amendments hereto or
thereto, including the fees and expenses of Messrs. Chapman and Cutler, counsel
for the Bank, with respect to all of the foregoing (whether or not the
transactions contemplated hereby are consummated). The Borrowers agree to
jointly and severally pay to the Bank or any other holder of the Obligations all
costs and expenses (including court costs and attorneys' fees), if any, incurred
or paid by the Bank or any other holder of the Obligations in connection with
any Default or Event of Default or in connection with the enforcement of this
Agreement or any of the other Loan Documents or any other instrument or document
delivered hereunder or thereunder. The Borrowers further agree to jointly and
severally indemnify the Bank, and any security trustee, and their respective
directors, officers and employees, against all losses, claims, damages,
penalties, judgments, liabilities and expenses (including, without limitation,
all expenses of litigation or preparation therefor, whether or not the
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 Borrowers, upon demand by the Bank at any time,
shall jointly and severally reimburse the 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
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willful misconduct of the party to be indemnified. The obligations of the
Borrowers under this Section shall survive the termination of this Agreement.
Section 12.5. Currency. Each reference in this Agreement to
U.S. Dollars or to an Alternative Currency (the "relevant currency") is of the
essence. To the fullest extent permitted by law, the obligation of a Borrower
in respect of any amount due in the relevant currency under this Agreement
shall, notwithstanding any payment in any other currency (whether pursuant to a
judgment or otherwise), be discharged only to the extent of the amount in the
relevant currency that the Bank may, in accordance with normal banking
procedures, purchase with the sum paid in such other currency (after any premium
and costs of exchange) on the Business Day immediately following the day on
which it receives such payment. If the amount in the relevant currency that may
be so purchased for any reason falls short of the amount originally due, the
relevant Borrower shall pay such additional amounts, in the relevant currency,
as may be necessary to compensate for the shortfall. Any obligations of the
relevant Borrower not discharged by such payment shall, to the fullest extent
permitted by applicable law, be due as a separate and independent obligation
and, until discharged as provided herein, shall continue in full force and
effect.
Section 12.6. Currency Equivalence. If for the purposes of
obtaining judgment in any court it is necessary to convert a sum due from a
Borrower hereunder or under the Notes in the currency expressed to be payable
herein or under the Notes or any other Loan Documents (the "specified currency")
into another currency, the parties agree that the rate of exchange used shall be
that at which in accordance with normal banking procedures the Bank could
purchase the specified currency with such other currency on the Business Day
preceding that on which final judgment is given. The obligation of a Borrower
in respect of any such sum due to the Bank hereunder or under any Note or other
Loan Document shall, notwithstanding any judgment in a currency other than the
specified currency, be discharged only to the extent that, on the Business Day
following receipt, the Bank may in accordance with normal banking procedures
purchase the specified currency with such other currency. If the amount of the
specified currency so purchased is less than the sum originally due to the Bank
in the specified currency, the relevant Borrower agrees, as a separate
obligation and notwithstanding any such judgment, to indemnify the Bank against
such loss.
Section 12.7. Documentary Taxes. The Borrowers jointly and
severally agree 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.
Section 12.8. Survival of Representations. All representations
and warranties made herein or in any other Loan Document or in certificates
given pursuant hereto 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.
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Section 12.9. Survival of Indemnities. All indemnities and
other provisions relative to reimbursement to the Bank of amounts sufficient to
protect the yield of the Bank with respect to the Loans and Letters of Credit,
including, but not limited to, Sections 10.3, 12.5 and 12.6 hereof, shall
survive the termination of this Agreement and the payment of the Obligations.
Section 12.10. Notices. Except as otherwise specified herein,
all notices hereunder shall be in writing (including cable or telecopy) 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 other given 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 hereunder
shall be addressed:
to the Company at:
Information Resources, Inc.
150 North Clinton Street
Chicago, Illinois 60606
Attention: Chief Financial Officer
Telephone: (312) 726-1221
Telecopy: (312) 726-0360
to the Bank at:
Harris Trust and Savings Bank
P.O. Box 755
111 West Monroe Street
Chicago, Illinois 60690
Attention: Division E, Mr. Richard H. Robb
Telephone: (312) 461-3539
Telecopy: (312) 461-2591
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 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; provided that any notice given pursuant
to Section 1 or Section 2 hereof shall be effective only upon receipt.
Section 12.11. Submission to Jurisdiction; Waiver of Jury
Trial. Each 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. Each 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
-42-
<PAGE>
that any such proceeding brought in such a court has been brought in an
inconvenient forum. EACH OF THE BORROWERS AND THE BANK HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY.
Section 12.12. Headings. Section headings used in this Agreement are for
convenience of reference only and are not a part of this Agreement for any other
purpose.
Section 12.13. Severability of Provisions. Any provision of this
Agreement 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 12.14. Counterparts. This Agreement may be executed in any number
of counterparts, and by 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 12.15. Binding Nature, Governing Law, Etc. This Agreement shall
be binding upon the Borrowers and their successors and assigns, and shall inure
to the benefit of the Bank and the benefit of its successors and assigns,
including any subsequent holder of the Obligations. This Agreement and the
rights and duties of the parties hereto shall be governed by, and construed in
accordance with, the internal laws of the State of Illinois without regard to
principles of conflicts of laws. This Agreement and the other Loan Documents
constitute the entire understanding of the parties with respect to the subject
matter hereof and any prior agreements, whether written or oral, with respect
thereto are superseded hereby. No Borrower may assign any of its rights or
obligations hereunder without the written consent of the Bank.
-43-
<PAGE>
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 day of May 13, 1994
Information Resources, Inc.
By /s/ Thomas M. Walker
-------------------------------
Its Chief Financial Officer
---------------------------
Accepted and agreed to at Chicago, Illinois as of the day and year last
above written.
Harris Trust and Savings Bank
By
-------------------------------
Its Vice President
-44-
<PAGE>
NOTE
May 13, 1994
For Value Received, the undersigned, [Insert Name of Borrower], a
Delaware corporation (the "Borrower"), promises to pay to the order of Harris
Trust and Savings Bank (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, (or in the case of Eurocurrency Loans denominated in
an Alternative Currency, at such office as the Bank has previously notified the
Borrower) in the currency of such Loan in accordance with Section 3 of the
Credit Agreement, 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, a Eurocurrency Loan or an Offered Rate Loan, the currency
thereof and 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 May 13, 1994, between Information Resources, Inc. and the Bank (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.
<PAGE>
The Borrower hereby waives demand, presentment, protest or notice of any
kind hereunder.
INFORMATION RESOURCES, INC.
By /s/ Thomas M. Walker
-------------------------------
Its Chief Financial Officer
--------------------------
-2-
<PAGE>
EXHIBIT B
FORM OF ELECTION TO PARTICIPATE
____________, 19__
Harris Trust and Savings Bank
Chicago, Illinois
Dear Sirs:
Reference is made to the Credit Agreement dated as of May 13, 1994
between you and Information Resources, Inc. (the "Credit Agreement"). Terms
not defined herein which are defined in the Credit Agreement shall have for the
purposes hereof the meaning provided therein.
The undersigned, [name of Borrowing Subsidiary], a [jurisdiction of
incorporation] corporation, hereby elects to be a Borrowing Subsidiary for
purposes of the Credit Agreement, effective from the date hereof until an
Election to Terminate shall have been delivered on behalf of the undersigned in
accordance with the Credit Agreement. The undersigned confirms its irrevocable
appointment of the Company as its agent under Section 2.3(b) of the Credit
Agreement and confirms that the representations and warranties set forth in
Section 6 of the Credit Agreement are true and correct as to the undersigned as
of the date hereof, and the undersigned hereby agrees to perform all the
obligations of a Borrowing Subsidiary under, and to be bound in all respects by
the terms of, the Credit Agreement, including without limitation Section 12.11
thereof, as if the undersigned were a signatory party thereto.
The address to which all notices to the undersigned under the Credit
Agreement should be directed is: _________________________________. This
instrument shall be construed in accordance with and governed by the internal
laws of the State of Illinois.
Very truly yours,
[Name of Borrowing Subsidiary]
By _________________________________
Name _______________________________
Title ______________________________
<PAGE>
The undersigned hereby confirms that [name of Borrowing Subsidiary] is
a Borrowing Subsidiary for purposes of the Credit Agreement described above.
Information Resources, Inc.
By ________________________________
Name ______________________________
Title _____________________________
Receipt of the above Election to Participate is hereby acknowledged on
and as of _____________.
Harris Trust and Savings Bank
By ________________________________
Name ______________________________
Title _____________________________
-2-
<PAGE>
EXHIBIT C
FORM OF ELECTION TO TERMINATE
____________, 19__
Harris Trust and Savings Bank
Chicago, Illinois
Dear Sirs:
Reference is made to the Credit Agreement dated as of May 13, 1994. Terms
not defined herein which are defined in the Credit Agreement shall have for the
purposes hereof the meaning provided therein.
The undersigned, [name of Borrowing Subsidiary], a [jurisdiction of
incorporation] corporation, hereby elects to terminate its status as a Borrowing
Subsidiary for purposes of the Credit Agreement, effective as of the date
hereof. The undersigned hereby represents and warrants that all principal and
interest on the Note of the undersigned and all other amounts payable by the
undersigned pursuant to the Credit Agreement have been paid in full on or prior
to the date hereof. Notwithstanding the foregoing, this Election to Terminate
shall not affect any obligation of the undersigned under the Credit Agreement or
under the Note or any other Loan Document heretofore incurred.
This instrument shall be construed in accordance with and governed by the
internal laws of the State of Illinois.
Very truly yours,
[Name of Borrowing Subsidiary]
By __________________________________
Name ________________________________
Title _______________________________
<PAGE>
The undersigned hereby confirms that the status of [name of Borrowing
Subsidiary] as a Borrowing Subsidiary for purposes of the Credit Agreement
described above is terminated as of the date hereof.
Information Resources, Inc.
By ________________________________
Name ______________________________
Title _____________________________
Receipt of the above Election to Terminate is hereby acknowledged on and
as of _____________.
Harris Trust and Savings Bank
By ________________________________
Name ______________________________
Title _____________________________
-2-
<PAGE>
EXHIBIT D
(TO BE RETYPED ON LETTERHEAD OF COUNSEL)
______________, 19___
Harris Trust and Savings Bank
Chicago, Illinois
Gentlemen:
We have served as counsel to Information Resources, Inc., a Delaware
corporation (the "Company"), in connection with a revolving credit and letter of
credit facility being made available by you to the Company. 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 Company, we are familiar with the articles of incorporation,
charter, by-laws and any other agreements under which the Company 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 and upon our examination of the articles of
incorporation, charter and by-laws of the Company, we are of the opinion that:
1. The Company 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 the States of Illinois and
__________________.
2. The Company has full right, power and authority to borrow from you, to
guarantee the obligations of each Borrowing Subsidiary (as such term is defined
in the Credit Agreement) designated as such on or prior to the date of this
letter, 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 Company does not, nor will the
observance or performance of any of the matters or things therein provided for,
contravene any provision of law or of the articles of incorporation, charter or
by-laws of the Company (there being no other agreements under which the Company
is organized) or, to the best of our knowledge after due inquiry, of any
covenant, indenture or agreement binding upon or affecting the Company or any of
its properties or assets.
<PAGE>
3. The Loan Documents executed by the Company have been duly authorized
by all necessary corporate action (no stockholder approval being required), have
been executed and delivered by the proper officers of the Company and constitute
valid and binding agreements of the Company enforceable against it in accordance
with their respective terms, except as such terms may be limited by bankruptcy,
insolvency or similar laws and legal or equitable principles affecting or
limiting the enforcement of creditors' rights generally.
4. No order, authorization, consent, license or exemption of, 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 Company of any of the terms
thereof.
5. To the best of our knowledge after due inquiry, 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 Company 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 Company or in the value of the collateral security for your
loans and other credit accommodations to the Company.
In rendering the opinions expressed above, we have examined originals, or
copies of originals certified to our satisfaction, of such agreements,
documents, certificates and other statements of government officials and
corporate officers and such other papers and evidence as we have deemed relevant
and necessary as a basis for these opinions. We have assumed the authenticity
of all documents submitted to us as originals and the conformity with the
original documents of any copies thereof submitted to us for our examination.
Our opinions expressed above are limited to the laws of the State of
Illinois, the corporate laws of the State of Delaware and the federal laws of
the United States of America.
Respectfully submitted,
-2-
<PAGE>
EXHIBIT A
THE LOAN DOCUMENTS
(All Loan Documents are dated as of May 13, 1994. Harris Trust and
Savings Bank is referred to below as the "Bank".)
1. Credit Agreement by and between the Company and the Bank.
2. Note of the Company payable to the order of the Bank in the
principal amount of $50,000,000.
-3-
<PAGE>
EXHIBIT E
(TO BE RETYPED ON LETTERHEAD OF COUNSEL)
_______________, 19___
Harris Trust and Savings Bank
Chicago, Illinois
Gentlemen:
We have acted as counsel to [Name of Borrowing Subsidiary], a
__________________ corporation (the "Borrower"), in connection with the
authorization of and the execution and delivery of the Credit Agreement dated as
of May 13, 1994 between Information Resources, Inc. and Harris Trust and Savings
Bank (the "Credit Agreement"). All capitalized terms used and not defined herein
shall have the meanings assigned to them in the Credit Agreement.
In our capacity as such counsel, we have made such investigations of fact
and have considered such questions of law as we have deemed necessary for the
purposes of this opinion, which is delivered to you pursuant to Section 7.3 of
the Credit Agreement. Based on the foregoing, it is our opinion that:
(i) the Borrower is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation; has the
corporate power to carry on its present business; is duly licensed or
qualified in all states and jurisdictions wherein the nature of the
business carried on by it or the assets and properties owned or leased by
it requires such qualification or licensing; and the Borrower has the
corporate power and authority to enter into the Credit Agreement, to make
the borrowings therein provided for, to issue its Note, to execute and
deliver the Applications, and to perform all of its obligations under the
Credit Agreement and the other Loan Documents.
(ii) The Credit Agreement and the Note delivered on the date hereof
have been duly authorized, executed, and delivered by and on behalf of
the Borrower and constitute, and each other Loan Document when executed
and delivered by and on behalf of the Borrower will constitute, legal,
valid, and enforceable obligations of the Borrower, except to the extent
affected by bankruptcy, insolvency or other similar laws relating to or
affecting the enforcement of creditors' rights and remedies generally and
general principles of equity.
<PAGE>
(iii) The Credit Agreement and the other Loan Documents executed by
the Borrower, do not, nor will the performance or observance by the
Borrower of any of the matters and things therein provided for,
contravene any provision of law applicable to the Borrower, any judgment
or decree applicable to the Borrower, the Articles of Incorporation, or
By-laws of the Borrower, or, any indenture or material agreement to which
the Borrower is a party or by which it or any of its properties or bound.
(iv) All authorizations, consents, approvals, filings,
registrations, exemptions and regulatory approvals necessary to permit
execution of the Credit Agreement and other Loan Documents and
performance of its obligations thereunder by the Borrower, and to permit
borrowings by the Borrower under the Credit Agreement and the issuance of
its Note and the execution and delivery of the Applications, have been
obtained and remain in full force and effect.
(v) There is no litigation or governmental proceeding pending or to
the best of our knowledge threatened, against the Borrower which could
reasonably be expected to (i) materially adversely affect the business
and properties of the Borrower on a consolidated basis or (ii) impair the
validity or enforceability of the Credit Agreement or the other Loan
Documents executed by the Borrower or materially impair the ability of
the Borrower to perform its obligations under the Credit Agreement or any
other Loan Document executed by it.
[(vi) The execution and delivery of the Credit Agreement, the Note
and the other Loan Documents by the Borrower are not subject to any tax,
duty, fee or other charge, including, without limitation, any
registration or transfer tax, stamp duty or similar levy, imposed by or
within [insert] jurisdiction of incorporation] or any political
subdivision or taxing authority thereof or therein.
(vii) Neither the Borrower nor its property has any right of
immunity on grounds of sovereignty or otherwise from jurisdiction,
attachment (before or after judgment) or execution in respect of any
action or proceeding relating in any way to the Credit Agreement or any
other Loan Document executed by it that may be brought in the courts of
[insert jurisdiction of incorporation].
(viii) There are no legal impediments to your access to the courts
of [insert relevant jurisdiction] nor shall you be required to qualify
under any statute or law or pay any franchise tax, stamp tax or similar
fee to gain such access, whether in respect of a direct suit on the
Credit Agreement or any other Loan Document or a proceeding to register a
judgment obtained before a court in the United States, except for such
fees as would be required of plaintiffs, both resident and non-resident,
in seeking access to the courts of [insert relevant jurisdiction]; nor
will you be resident, domiciled, carrying on business or otherwise
subject to taxation in [insert relevant jurisdiction] by reason only of
your execution, delivery or performance the Credit Agreement or any other
Loan Document or enforcement of the Credit Agreement or any other Loan
Document;
-2-
<PAGE>
(ix) The Borrower has the power to submit and pursuant to the Credit
Agreement has legally, validly, effectively and irrevocably submitted, to
the jurisdiction of the courts of the State of Illinois and of the United
States for the Northern District of Illinois in respect of any action or
proceeding relating in any way to the Credit Agreement or any other Loan
Document.
(x) The choice by the parties to the Credit Agreement of the law of
the State of Illinois as governing law is legal, valid and binding.]/*/
In rendering the opinions expressed above, we have examined originals, or
copies of originals certified to our satisfaction, of such agreements,
documents, certificates and other statements of government officials and
corporate officers and such other papers and evidence as we have deemed relevant
and necessary as a basis for this opinion.
Respectfully submitted,
- - ------------------------
* Insert for Non-U.S. Borrowing Subsidiaries
-3-
<PAGE>
SCHEDULE 5.2
SUBSIDIARIES
<TABLE>
<CAPTION>
Jurisdiction of Percentage
Name Incorporation Ownership
---- --------------- ----------
<S> <C> <C>
Domestic
IRI French Holdings, Inc. Delaware 100%
Information Resources DHC, Delaware 100%
Inc.
Towne-Oller & Associates, New York 100%
Inc.
Shoppers Hotline, Inc. Delaware 100%
North Clinton Corporation Illinois 100%
564 Randolph Co. #2 Illinois 100%
Catalina Information Delaware 50%
Resources, Inc.
LogiCNet, Inc.* Delaware Less than 20%
Richard E. Shulman, Inc. New York 100%
Medialink Parent California 100%
Incorporated
Medialink International California 100%
Corporation**
Medialink VAR Corpor- California 100%
ation**
IRI Venezuela Holdings, Inc. Delaware 100%
Market Trends, Inc. (to be Puerto Rico 100%
renamed IRI Puerto Rico,
Inc.)
</TABLE>
*IRI has an option to acquire a substantial majority of the stock from the
current majority stockholder
**Medialink International and Medialink VAR are wholly-owned subsidiaries of
Medialink Parent Incorporated
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Foreign
Information Resources, Federal Republic 100%
GmbH of Germany
IRI Software, S.A. (formerly France 100%
Information Resources,
S.A.)
Information Resources New New Zealand 100%
Zealand Pty Limited
Information Resources Japan Japan 100%
Ltd.
Information Resources Singapore 100%
Singapore Pte Limited
IRI Software, Ltd. (formerly United Kingdom 100%
Management Decision
Systems, Limited)
Information Resources Australia 100%
Australia Pty Limited
IRAUS, Pty. Limited* Australia 100%
Apollo Information Australia 100%
Resources Pty Limited*
Panel Pazur Arastirma ve Republic of Turkey 100%
Dansimanlik A.S.
Precis (1136) Limited United Kingdom 95%
IRI Software (India) Private India 100%
Limited
IRI Software de Mexico, Mexico 100%
S.A. de C.V.
IRI InfoScan S.r.t. Italy 100%
GfK Panel Services GmbH Federal Republic 15%
of Germany
IRI-SECODIP, S.N.C.** France 45%
InfoScan NMRA Limited** United Kingdom 75%
IRI InfoScan B.V.** Holland 40% capital int.
50% voting
Datos Information Venezuela 49%
Resources**
</TABLE>
*In process of liquidation
**Operating subsidiaries of foreign joint ventures
-2-
<PAGE>
EXHIBIT 11
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
COMPUTATIONS OF EARNINGS (LOSS) PER COMMON
AND COMMON EQUIVALENT SHARE
THREE MONTHS ENDED
MARCH 31, 1994
------------------
Earnings (loss) for the period (A):
Before cumulative effect of accounting change $(1,288,000)
Cumulative effect of accounting change (6,594,000)
-----------
Net earnings (loss) $(7,882,000)
===========
Weighted common shares outstanding during
the period 25,579,000
Dilutive effect of options outstanding
during the period pursuant to
modified treasury stock method --
-----------
Total common and common equivalent shares (B) 25,579,000
===========
Earnings (loss) per common and common equivalent
shares (A)/(B):
Before cumulative effect of accounting change $ (0.05)
Cumulative effect of accounting change (0.26)
-----------
Net earnings (loss) $ (0.31)
===========
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1993
------------------
<S> <C>
Earnings for the period (A):
Before cumulative effect of accounting change $ 3,927,000
Cumulative effect of accounting change 1,864,000
-----------
Net earnings $ 5,791,000
===========
Weighted common shares outstanding during
the period 24,602,453
Dilutive effect of options outstanding
during the period pursuant to
modified treasury stock method 1,554,775
-----------
Total common and common equivalent shares (B) 26,157,228
===========
Earnings per common and common equivalent
shares (A)/(B):
Before cumulative effect of accounting change $ .15
Cumulative effect of accounting change .07
-----------
Net earnings $ .22
===========
</TABLE>
<PAGE>
EXHIBIT 18
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
LETTER REGARDING CHANGE IN ACCOUNTING PRINCIPLE
Board of Directors
Information Resources, Inc. and Subsidiaries
As stated in Note 4 to the condensed consolidated financial statements of
Information Resources, Inc. and Subsidiaries (the Company) for the three months
ended March 31, 1994, the Company changed its accounting policy for recognizing
revenue for InfoScan, PromotionScan and BehaviorScan products whereby revenue
will be recognized over the term of the contract on a straight-line basis.
Management believes the newly adopted accounting principle is preferable in the
circumstances because of the reasons stated in Note 4. At your request, we have
reviewed and discussed with management the circumstances, business judgment and
planning that formed the basis for making this change in accounting principle.
It should be recognized that professional standards have not been
established for selecting among alternative principles that exist in this area
or for evaluating the preferability of alternative accounting principles.
Accordingly, we are furnishing this letter solely for purposes of the Company's
compliance with the requirements of the Securities and Exchange Commission, and
it should not be used or relied on for any other purpose.
Based on our review and discussion, we concur with management's judgment
that the newly adopted accounting principle is preferable in the circumstances.
In formulating this position, we are relying on management's business planning
and judgment, which we do not find unreasonable.
We have not audited any consolidated financial statements of Information
Resources, Inc. and Subsidiaries as of any date or for any period subsequent to
December 31, 1993. Accordingly, we are unable to express an opinion on whether
the method of accounting for the effect of the change is in conformity with
generally accepted accounting principles or if the financial information
included in Part I of the Form 10-Q is fairly presented.
Very truly yours,
GRANT THORNTON
Chicago, Illinois
April 26, 1994
